<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1998
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
XEROX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
NEW YORK 16-0468020
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
P.O. BOX 1600
STAMFORD, CONNECTICUT 06904-1600
(203) 968-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
MARTIN S. WAGNER
ASSISTANT SECRETARY
XEROX CORPORATION
P.O. BOX 1600
STAMFORD, CONNECTICUT 06904-1600
(203) 968-3000
(NAME, ADDRESS , INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
COPY TO:
JOHN W. WHITE
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the initial offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible Subordinated
Debentures............ $1,012,198,000 57.938% $586,447,278 $173,002
- ------------------------------------------------------------------------------------------
Common Stock, par value
$1.00 per share....... (2)
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee, in
accordance with Rule 457(c) under the Securities Act of 1933, as amended
(the "Securities Act"), on the basis of the average of the bid and asked
prices of $579.38 quoted on the PORTAL system on July 14, 1998 for $1,000
principal amount at maturity.
(2) Also being registered is such indeterminate number of shares of Common
Stock as may be issuable upon conversion and/or redemption of the
Convertible Subordinated Debentures registered hereby, which registration
is not subject to an additional registration fee pursuant to Rule 457(i)
under the Securities Act.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 17, 1998
PROSPECTUS $1,012,198,000 THE
XEROX CORPORATION DOCUMENT
[LOGO] CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018 COMPANY
INTEREST PAYABLE APRIL 21 AND OCTOBER 21 XEROX
----------
This Prospectus relates to $1,012,198,000 aggregate principal amount at
maturity of Convertible Subordinated Debentures ("Debentures") of Xerox
Corporation, a New York corporation (the "Company" or "Xerox"), and such
indeterminate number of shares of Common Stock, par value $1.00 per share, of
the Company (the "Common Stock") as may be issuable upon the conversion of the
Debentures, that may be offered and sold from time to time by the several
holders thereof (the "Selling Holders"). The Debentures were issued or deemed
issued by the Company on April 21, 1998 pursuant to an Indenture, dated as of
April 21, 1998 (the "Indenture"), between the Company and The First National
Bank of Chicago, as trustee (the "Trustee"), at the issue price of $568.07 per
$1,000 principal amount at maturity (the "Issue Price").
The Debentures will mature on April 21, 2018. Interest on the Debentures at
the rate of 0.57% per annum on the principal amount due at maturity is payable
semiannually in arrears on April 21 and October 21 of each year, commencing
October 21, 1998. Such rate of cash interest and accrual of Original Issue
Discount (as defined herein) represent a yield to maturity of 3.625% per annum
(computed on a semiannual bond equivalent basis) calculated from April 21,
1998. Upon the occurrence of a Tax Event (as defined herein), the Company may
elect to have interest in lieu of future Original Issue Discount accrue. The
Debentures are subordinated to all existing and future Senior Indebtedness (as
defined herein) of the Company. The Debentures are also effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries. At March 31, 1998, the Company and its consolidated subsidiaries
had outstanding approximately $13.557 billion of indebtedness ranking senior to
the Debentures. See "Description of Debentures--Subordination of Debentures."
Each Debenture is convertible at the option of the holder thereof (the
"Holder") at any time on or prior to maturity, unless previously redeemed or
otherwise purchased. Upon conversion, the Company may elect to deliver Common
Stock at a conversion rate of 3.904 shares per $1,000 principal amount at
maturity (the "Conversion Rate") or cash in an amount based upon the market
value of the shares of Common Stock into which the Debentures are convertible.
The Conversion Rate will not be adjusted for accrued Original Issue Discount or
accrued cash interest but will be subject to adjustment upon the occurrence of
certain events affecting the Common Stock. Subject to certain exceptions, upon
conversion, the Holder will not receive any cash payment representing accrued
Original Issue Discount or accrued cash interest; such accrued Original Issue
Discount and cash interest will be deemed paid by the Common Stock or cash
received on conversion. See "Description of Debentures--Conversion Rights." The
Common Stock is listed and traded on the New York Stock Exchange (the "NYSE")
and the Chicago Stock Exchange under the symbol "XRX."
The Debentures will be purchased by the Company, at the option of the Holder,
on April 21, 2003 (the "Purchase Date"), for a Purchase Price per Debenture of
$648.91 (which amount represents the Issue Price plus accrued Original Issue
Discount to the Purchase Date), plus accrued cash interest to the Purchase
Date. The Company, at its option, may elect to pay the Purchase Price on the
Purchase Date in cash or shares of Common Stock based on the market value
thereof, or in any combination thereof. See "Description of Debentures--
Purchase of Debentures at the Option of the Holder." In addition, as of 35
business days after the occurrence of any Change in Control (as defined herein)
of the Company occurring on or prior to April 21, 2003, the Debentures will be
purchased for cash by the Company, at the option of the Holder, for a Change in
Control Purchase Price (as defined herein) equal to the Issue Price plus
accrued Original Issue Discount and cash interest to the date set for such
purchase. In certain circumstances, the Company's ability to pay the Change in
Control Purchase Price may be limited. See "Description of Debentures--Change
in Control Permits Purchase of Debentures at the Option of the Holder."
The Debentures are not redeemable by the Company prior to April 21, 2003. On
and after such date, the Debentures are redeemable for cash at any time at the
option of the Company, in whole or in part, at Redemption Prices equal to the
Issue Price plus accrued Original Issue Discount, together with accrued cash
interest, to the date of redemption. See "Description of Debentures--Redemption
of Debentures at the Option of the Company."
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is July 17, 1998.
<PAGE>
From and after a Tax Event (as defined herein), at the option of the
Company, interest in lieu of future Original Issue Discount and regular
interest shall accrue on each Debenture from the Option Exercise Date (as
defined herein) at 3.625% per annum on the Restated Principal Amount (as
defined herein) and shall be payable semiannually on each Interest Payment
Date (as defined herein) to holders of record at the close of business on each
Regular Record Date immediately preceding such Interest Payment Date. See
"Description of Debentures--Optional Conversion to Semiannual Coupon Debenture
upon Tax Event."
For a discussion of certain United States federal income tax consequences
for Holders of Debentures, see "Certain United States Federal Income Tax
Considerations."
The Debentures and Common Stock issued upon conversion of the Debentures may
be offered for sale and sold by the Selling Holders from time to time in
varying amounts at prices and on terms to be determined at the time of sale.
To the extent required, the name(s) of the Selling Holder(s), the number of
Debentures or shares of Common Stock to be sold, the purchase price, the
public offering price, if applicable, the name of any agent or broker-dealer,
and any applicable commissions, discounts or other items constituting
compensation thereto with respect to a particular offering will be set forth
in a supplement or supplements to this Prospectus (each, a "Prospectus
Supplement"). See "Plan of Distribution." The Company will not receive any
proceeds from any sale of Debentures or Common Stock hereunder.
Selling Holders and any broker-dealers or agents that participate with a
Selling Holder in the distribution of any of the Debentures or Common Stock
issued upon conversion of the Debentures may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and any discount or commission received by them and any profit on the
resale of the Debentures or Common Stock issued upon conversion of the
Debentures purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission at 450 Fifth
Street N.W. (Room 1024), Judiciary Plaza, Washington, D.C. 20549, as well as
at the Regional Offices of the Commission located at Northwestern Atrium
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661-2511;
and Seven World Trade Center (13th Floor), New York, New York 10048. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission maintains a Web site that contains reports, proxy
statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. Such reports, proxy
statements and other information concerning the Company also may be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005, and the Chicago Stock Exchange, One Financial Plaza, 120
South LaSalle Street, Chicago, Illinois 60603.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents filed
with the Commission (File No. 1-4471) by the Company pursuant to the Exchange
Act:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
(2) Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1998;
(3) Current Reports on Form 8-K dated January 16, 1998, March 5, 1998,
March 11, 1998, April 1, 1998, April 7, 1998 and May 20, 1998;
(4) The description of the Company's Shareholders Rights Plan (the
"Rights Plan"), contained in Form 8-A filed with the Commission on April 7,
1997, and the Rights Agreement dated as of April 7, 1997, between the
Company and The First National Bank of Boston, as Rights Agent (the "Rights
Agreement"), with respect to the Rights Plan, which is filed as Exhibit
4.10 to the Company's Current Report on Form 8-K dated April 7, 1997, in
each case, relating to the Rights to Purchase Series A Cumulative Preferred
Stock (the "Preferred Stock Purchase Rights"); and
(5) The description of the Company's Common Stock which is contained in
Amendment No. 3 on Form 8-A dated April 7, 1997, relating to the Company's
Common Stock and Preferred Stock Purchase Rights.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
(other than the information required by paragraphs (k) and (l) of (S)229.402
of Regulation S-K) or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Debentures
offered hereby shall be deemed to be incorporated by reference into this
Prospectus. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, including any beneficial owner, upon written or oral
request of such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents). Requests should be directed to The First National Bank of Chicago,
One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126, telephone
(800) 524-9472.
4
<PAGE>
THE COMPANY
Xerox is a New York corporation with its principal executive offices located
at 800 Long Ridge Road, Stamford, Connecticut 06904, telephone (203) 968-3000.
Xerox is The Document Company and a leader in the global document market,
providing document solutions that enhance productivity. References herein to
"Xerox" refer to Xerox and consolidated subsidiaries unless the context
specifically requires otherwise. Xerox distributes its products in the Western
Hemisphere through divisions and wholly-owned subsidiaries. In Europe, Africa,
the Middle East and parts of Asia, including Hong Kong, India and China, Xerox
distributes through Xerox Limited and related companies ("Xerox Limited"). In
June 1997, Xerox completed the acquisition of The Rank Group's remaining 20%
financial interest in Xerox Limited for (Pounds)940 million, or approximately
$1.5 billion. As a result of this transaction, Xerox now owns 100% of Xerox
Limited. Fuji Xerox Co., Limited ("Fuji Xerox"), an unconsolidated entity
jointly owned by Xerox Limited and Fuji Photo Film Company Limited, develops,
manufactures and distributes document processing products in Japan and the
Pacific Rim. Japan represents approximately 90% of Fuji Xerox revenues, and
Australia, New Zealand, Singapore and Malaysia represent the remaining 10%.
Fuji Xerox conducts business in other Pacific Rim countries through joint
ventures and distributors.
Xerox has engaged in Insurance and Other Financial Services ("IOFS")
businesses. In 1993, however, Xerox announced its decision to sell or
otherwise disengage from these businesses. Beginning in 1995, the results of
Xerox' Insurance operations were accounted for as discontinued operations.
Since that time, the Document Processing business has been the only component
of continuing operations.
Xerox' Document Processing activities encompass developing, manufacturing,
marketing, servicing and financing a complete range of document processing
products and services designed to make offices around the world more
productive. Xerox has traditionally had a strong position in the general
office document market. Its production systems market segment includes
production publishing and production printing. Xerox' other market segments
include the small office/home office/personal document processing market and
the document outsourcing market. Xerox offers a wide range of other document
processing products, including ink-jet and electrostatic printers,
multifunction products, facsimile products, scanners, personal computer and
workstation software, and integrated systems solutions. Xerox also sells cut-
sheet paper to its customers for use in their document processing products.
The financing of Xerox equipment is generally carried out by Xerox Credit in
the United States and internationally by foreign financing subsidiaries and
divisions in most countries in which Xerox operations.
On April 7, 1998, Xerox announced a worldwide restructuring program
associated with enhancing its competitive position and lowering its overall
cost structure. Xerox will record a second quarter 1998 provision of
approximately $1.0 billion after taxes related to severance and other exit
costs and the write-down of certain assets.
In May, 1998 Xerox acquired XLConnect Solutions, Inc., an information
technology services company, and its parent company, Intelligent Electronics,
Inc., for $415 million, strengthening Xerox' worldwide service capabilities to
design, build, and support networks that implement enterprise-wide document
solutions.
During the disposal process of the IOFS businesses, Xerox will continue to
be subject to all business risks and rewards of the insurance businesses. All
of the insurance businesses have been sold except for Crum & Forster Holdings,
Inc. ("CFI"). An agreement to sell CFI was announced in March 1998 and the
sale is expected to close by the third quarter of 1998. Upon completion of the
CFI sale, Xerox will have effectively completed its strategy for the
disengagement from the IOFS businesses. In connection with its disengagement
from the IOFS businesses, Xerox recorded an after-tax write-off of $190
million in the first quarter of 1998.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Debentures or
shares of Common Stock sold from time to time hereunder. The Company has
agreed to bear certain expenses in connection with the registration of the
Debentures and Common Stock issuable upon conversion of the Debentures being
offered and sold by the Selling Holders.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges for the
periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- -------------------------
1998 1997 1997 1996 1995 1994 1993*
------ ------ ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
(1)(2)............................... 3.20 3.41 3.64 3.71 3.54 3.23 0.66
</TABLE>
- --------
(1) The ratio of earnings to fixed charges has been computed based on the
Company's continuing operations by dividing total earnings available for
fixed charges, excluding capitalized interest and preferred stock
dividends of subsidiaries, by total fixed charges. Fixed charges consist
of interest, including capitalized interest and preferred stock dividends
of subsidiaries, and one-third of rent expense as representative of the
interest portion of rentals. Debt has been assigned to discontinued
operations based on historical levels assigned to the businesses when they
were continuing operations, adjusted for subsequent paydowns. Discontinued
operations consist of the Company's Insurance, Other Financial Services,
and Third Party Financing and Real Estate businesses.
(2) The Company's ratio of earnings to fixed charges includes the effect of
the Company's finance subsidiaries, which primarily finance Xerox
equipment. Financing businesses are more highly leveraged and, therefore,
tend to operate at lower earnings to fixed charges ratio levels than do
non-financial businesses.
* 1993 earnings were inadequate to cover fixed charges. The coverage
deficiency was $249 million.
6
<PAGE>
DESCRIPTION OF DEBENTURES
The Debentures were issued under the Indenture. A copy of the Indenture is
available for inspection during normal business hours at the corporate trust
office of the Trustee. The following summaries of certain provisions of the
Debentures and the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all of the provisions of
the Debentures and the Indenture, including the definitions therein of certain
terms which are not otherwise defined in this Prospectus. Wherever particular
provisions or defined terms of the Indenture (or of the form of Debenture
which is a part thereof) are referred to, such provisions or defined terms are
incorporated herein by reference.
GENERAL
The Debentures are unsecured subordinated obligations of the Company limited
to $1,012,198,000 aggregate principal amount at maturity and will mature on
April 21, 2018. The principal amount at maturity of each Debenture is $1,000
(except as may be adjusted upon conversion of the Debentures to semiannual
coupon debentures following a Tax Event) and will be payable at the office of
the Paying Agent, which initially will be the Trustee, or an office or agency
maintained by the Company for such purpose in the Borough of Manhattan, The
City of New York.
The Debentures were originally issued at a substantial discount from their
principal amount at maturity. See "Certain United States Federal Income Tax
Considerations--Original Issue Discount." The calculation of the accrual of
Original Issue Discount (the difference between the Issue Price and the
principal amount at maturity of a Debenture) in the period during which a
Debenture remains outstanding will be on a semiannual bond equivalent basis
using a 360-day year composed of twelve 30-day months. Such accrual commenced
on the issue date of the Debentures (the "Issue Date"). The Debentures bear
interest at the rate of 0.57% per annum on the principal amount due at
maturity from the Issue Date, or from the most recent date to which interest
has been paid or provided for until the Debentures are paid in full or funds
are made available for payment in full of the Debentures in accordance with
the Indenture. Cash interest will be payable at maturity (or earlier
conversion, purchase or redemption) and semiannually on April 21 and October
21 of each year (each an "Interest Payment Date"), commencing on October 21,
1998, to holders of record at the close of business on April 7 or October 7
(whether or not a business day) immediately preceding each Interest Payment
Date. Each payment of cash interest on the Debentures will include interest
accrued through the day before the applicable Interest Payment Date or the
date of maturity (or earlier conversion, purchase or redemption), as the case
may be. Any payment of principal and cash interest required to be made on any
day that is not a business day will be made on the next succeeding business
day. In the event of the maturity, conversion, purchase by the Company at the
option of a Holder or redemption of a Debenture, Original Issue Discount and
cash interest will cease to accrue on such Debenture, under the terms and
subject to the conditions (summaries of which are set forth below) of the
Indenture. The Company may not reissue a Debenture that has matured or been
converted, purchased by the Company at the option of a Holder, redeemed or
otherwise cancelled (except for registration of transfer, exchange or
replacement thereof).
Because certain of the operations of the Company are conducted through
subsidiaries, the Company's cash flow and consequent ability to meet its debt
obligations are dependent in part upon the earnings of its subsidiaries and on
dividends and other payments therefrom. Since the Debentures are solely an
obligation of the Company, the Company's subsidiaries are not obligated or
required to pay any amounts due pursuant to the Debentures or to make funds
available therefor in the form of dividends or advances to the Company. At
March 31, 1998, the Company and its consolidated subsidiaries had outstanding
approximately $13.557 billion of indebtedness ranking senior in right of
payment to the Debentures. In addition, the Company and its consolidated
subsidiaries had outstanding on such date foreign exchange contracts and
interest rate swap contracts to which the Debentures would have been
contractually or effectively subordinated.
FORM, DENOMINATION AND REGISTRATION
The Debentures were issued in definitive registered form, without coupons,
in minimum denominations of $1,000 principal amount at maturity and in
integral multiples of $1,000 in principal amount at maturity in excess
7
<PAGE>
thereof. The Debentures were issued in fully registered book-entry form and
are represented by one or more global Debentures without coupons (each, a
"Global Debenture") deposited with a custodian for and registered in the name
of Cede & Co. (DTC's partnership nominee) in New York, New York. Beneficial
interests in any such Global Debenture are shown on, and transfers thereof
will be effected only through, records maintained by DTC and its direct and
indirect participants, and any such interest may not be exchanged for
Debentures in certificated form except in the limited circumstances described
herein. The Debentures offered hereby may be transferred only in denominations
of $1,000 principal amount at maturity and integral multiples thereof.
So long as DTC, or its nominee, is the registered owner or Holder of a
Global Debenture, DTC or such nominee, as the case may be, will be considered
the sole owner or Holder of the Debentures represented by such Global
Debenture for all purposes under the Indenture and the Debentures. No
beneficial owner of an interest in a Global Debenture will be able to transfer
that interest except in accordance with DTC's applicable procedures (in
addition to those under the Indenture referred to herein).
No service charge will be made for any registration of transfer or exchange
of Debentures but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Ownership of beneficial interests in a Global Debenture will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the
Global Debentures will be shown on, and the transfer of that ownership will be
effected through, records maintained by DTC (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants).
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among participants
in deposited securities through electronic book-entry changes to accounts of
its participants, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Certain of such participants (or their representatives), together with other
entities, own DTC. The rules applicable to DTC and its participants are on
file with the Commission.
Payments on Global Debentures will be made to DTC or its nominee, as the
registered owner thereof. Neither the Company, the Trustee nor any Paying
Agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment in
respect of a Global Debenture held by it or its nominee, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Debenture as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in
such Global Debenture held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments, however, will be the
responsibility of such participants.
DTC will take any action permitted to be taken by a Holder of Debentures
(including the presentation of Debentures for exchange as described below)
only at the direction of one or more participants to whose account interests
in the Global Debentures are credited and only in respect of such portion of
the aggregate principal amount of the Debentures as to which such participant
or participants has or have give such direction. However, if there is an Event
of Default under the Debentures, DTC will exchange the Global Debentures for
Debentures in certificated form, which it will distribute to its participants.
8
<PAGE>
Transfers between participants in DTC will be effected in accordance with
DTC rules and will be settled in same-day funds. The laws of some states,
however, require that certain persons take physical delivery of securities in
definitive form.
DTC may discontinue providing its services as securities depositary with
respect to the Debentures at any time by giving reasonable notice to the
Company. If DTC or any successor depositary notifies the Company that it is
unwilling or unable to continue as depositary for a Global Debenture or ceases
to be a "Clearing Agency" registered or in good standing under the Exchange
Act or other applicable statute or regulation and a successor depositary is
not appointed by the Company within 90 days, or an Event of Default has
occurred and is continuing, owners of beneficial interests in such Global
Debenture will receive physical delivery of Debentures in certificated form
and will be considered to be the owners or Holders of such Debentures under
the Indenture.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In such event,
certificates representing the Debentures will be printed and delivered.
In case any Debenture in certificated form shall become mutilated, defaced,
destroyed, lost or stolen, the Company will execute and upon the Company's
request the Trustee will authenticate and deliver a new Debenture, of like
tenor (including the same date of issuance) and equal principal amount at
maturity, registered in the same manner, dated the date of its authentication
in exchange and substitution for such Debenture (upon surrender and
cancelation thereof) or in lieu of and substitution for such Debenture. In
case such Debenture is destroyed, lost or stolen, the applicant for a
substituted Debenture shall furnish to the Company and the Trustee such
security or indemnity as may be required by them to hold each of them
harmless, and, in every case of destruction, loss or theft of such Debenture,
the applicant shall also furnish to the Company satisfactory evidence of the
destruction, loss or theft of such Debenture and of the ownership thereof.
Upon the issuance of any substituted Debenture, the Company may require the
payment by the registered Holder thereof of a sum sufficient to cover fees and
expenses connected therewith.
SUBORDINATION OF DEBENTURES
Indebtedness evidenced by the Debentures is subordinated in right of payment
as set forth in the Indenture, to the prior payment in full of all existing
and future Senior Indebtedness (as defined herein). No payment of the
principal amount at maturity, Issue Price, accrued Original Issue Discount,
Redemption Price, Change in Control Purchase Price or cash interest with
respect to any Debenture may be made by the Company, nor may the Company pay
cash with respect to the Purchase Price of any Debenture (other than for
fractional shares) or acquire any Debentures for cash or property except as
set forth in the Indenture if (i) any payment default on any Senior
Indebtedness has occurred and is continuing beyond any applicable grace period
or (ii) any default (other than a payment default) with respect to Senior
Indebtedness occurs and is continuing that permits the acceleration of the
maturity thereof and such default is either the subject of judicial
proceedings or the Company receives notice of the default. Notwithstanding the
foregoing, payments with respect to the Debentures may resume and the Company
may acquire Debentures for cash when (a) the default with respect to the
Senior Indebtedness is cured or waived or (b) in the case of a default
described in (ii) above, 179 or more days pass after notice of the default is
received by the Company, provided that the terms of the Indenture otherwise
permit the payment or acquisition of the Debentures at that time. If the
Company receives a notice of default referred to in clause (ii) of the
preceding sentence, then a similar notice received within nine months
thereafter relating to the same default on the same issue of Senior
Indebtedness shall not be effective to prevent the payment or acquisition of
the Debentures as provided above. In addition, no payment may be made on the
Debentures if any Debentures are declared due and payable prior to their
Stated Maturity by reason of the occurrence of an Event of Default until the
earlier of (i) 120 days after the date of such acceleration or (ii) the
payment in full of all Senior Indebtedness, but only if such payment is then
otherwise permitted under the terms of the Indenture. Upon any payment or
distribution of assets of the Company to creditors upon any dissolution,
winding up, liquidation or reorganization of the Company, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other similar
9
<PAGE>
proceedings, the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of all amounts due or to become due thereon, or
payment of such amounts shall have been provided for, before the Holders of
the Debentures shall be entitled to receive any payment or distribution with
respect to any Debentures.
By reason of the subordination described herein, in the event of insolvency,
upon any distribution of the assets of the Company, (i) the Holders of the
Debentures are required to pay over their share of such distribution to the
trustee in bankruptcy, receiver or other person distributing the assets of the
Company for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all holders of Senior Indebtedness in
full and (ii) unsecured creditors of the Company who are not Holders of
Debentures or holders of Senior Indebtedness of the Company may recover less,
ratably, than holders of Senior Indebtedness of the Company and may recover
more, ratably, than the Holders of Debentures.
The term "Senior Indebtedness" of the Company means, without duplication,
the principal, premium (if any) and unpaid interest on all present and future
(i) indebtedness of the Company for borrowed money, (ii) obligations of the
Company evidenced by bonds, debentures, notes or similar instruments,
(iii) all obligations of the Company under (x) interest rate swaps, caps,
collars, options and similar arrangements, (y) any foreign exchange contract,
currency swap contract, futures contract, currency option contract or other
foreign currency hedge, and (z) credit swaps, caps, floors, collars and
similar arrangements, (iv) indebtedness incurred, assumed or guaranteed by the
Company in connection with the acquisition by it or a subsidiary of any
business, properties or assets (except purchase-money indebtedness classified
as accounts payable under generally accepted accounting principles), (v)
obligations of the Company as lessee under leases required to be capitalized
on the balance sheet of the lessee under generally accepted accounting
principles, (vi) reimbursement obligations of the Company in respect of
letters of credit relating to indebtedness or other obligations of the Company
that qualify as indebtedness or obligations of the kind referred to in clauses
(i) through (v) above, and (vii) obligations of the Company under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vi) above, in each case unless in the
instrument creating or evidencing the indebtedness or obligation or pursuant
to which the same is outstanding it is provided that such indebtedness or
obligation is not superior in right of payment to the Debentures.
The Debentures are effectively subordinated to all existing and future
liabilities of the Company's subsidiaries. Any right of the Company to
participate in any distribution of the assets of any of the Company's
subsidiaries upon the liquidation, reorganization or insolvency of such
subsidiary (and the consequent right of the Holders of the Debentures to
participate in those assets) will be subject to the claims of the creditors
(including trade creditors) of such subsidiary, except to the extent that
claims of the Company itself as a creditor of such subsidiary may be
recognized, in which case the claims of the Company would still be subordinate
to any security interest in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by the Company.
At March 31, 1998, the Company and its consolidated subsidiaries had
outstanding approximately $13.557 billion of indebtedness ranking senior to
the Debentures. In addition, the Company and its consolidated subsidiaries had
outstanding on such date foreign exchange contracts and interest rate swap
contracts to which the Debentures would have been contractually or effectively
subordinated. There is no restriction under the Indenture on the Company's
incurring additional indebtedness, including Senior Indebtedness.
CONVERSION RIGHTS
A Holder of a Debenture may convert it into shares of Common Stock at any
time before the close of business on April 21, 2018; provided, however, that
if a Debenture is called for redemption, the Holder may convert it at any time
before the close of business on the Redemption Date. On conversion of a
Debenture, the Company may elect to deliver shares of Common Stock or an
amount of cash determined as described below. A
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<PAGE>
Debenture in respect of which a Holder has delivered a Purchase Notice or a
Change in Control Purchase Notice exercising the option of such Holder to
require the Company to purchase such Debenture may be converted only if such
notice is withdrawn by a written notice of withdrawal delivered by the Holder
to the Paying Agent prior to the close of business on the Purchase Date or the
Change in Control Purchase Date, as the case may be, in accordance with the
terms of the Indenture.
The initial Conversion Rate for the Debentures is 3.904 shares of Common
Stock per $1,000 principal amount at maturity, subject to adjustment upon the
occurrence of certain events described below. See "Price Range of Common Stock
and Dividends." A Holder otherwise entitled to a fractional share of Common
Stock will receive cash in an amount equal to the product of such fractional
share and the Sale Price on the Trading Day immediately preceding the
Conversion Date. A Holder may convert a portion of such Holder's Debentures so
long as such portion is $1,000 principal amount at maturity or an integral
multiple thereof.
To convert a Debenture, a Holder must (i) complete and manually sign the
conversion notice on the back of the Debenture (or complete and manually sign
a facsimile thereof) and deliver such notice to the Conversion Agent
(initially the Trustee) at the office maintained by the Conversion Agent for
such purpose, (ii) surrender the Debenture to the Conversion Agent, (iii) if
required, furnish appropriate endorsements and transfer documents, and (iv) if
required, pay all transfer or similar taxes. Pursuant to the Indenture, the
date on which all of the foregoing requirements have been satisfied is the
Conversion Date.
Upon conversion of a Debenture, a Holder will not receive any cash payment
representing accrued Original Issue Discount or (except as provided below)
accrued cash interest thereon. The Company's delivery to the Holder of the
fixed number of shares of Common Stock (or cash in the applicable amount as
described below) into which the Debenture is convertible (together with the
cash payment, if any, in lieu of any fractional shares) will satisfy the
Company's obligation to pay the principal amount at maturity of the Debenture,
including the accrued Original Issue Discount and accrued cash interest
attributable to the period from the Issue Date to the Conversion Date. Thus,
the accrued Original Issue Discount and accrued cash interest will be deemed
to be paid in full rather than cancelled, extinguished or forfeited.
Notwithstanding the foregoing, accrued but unpaid cash interest will be
payable upon any conversion of Debentures at the option of the Holder made
concurrently with or after acceleration of the Debentures following an Event
of Default described under "--Events of Default; Notice and Waiver" below. The
Conversion Rate will not be adjusted at any time during the term of the
Debentures for accrued Original Issue Discount or accrued cash interest. A
certificate for the number of full shares of Common Stock into which any
Debenture is converted (and for cash in lieu of fractional shares) will be
delivered through the Conversion Agent no later than the seventh business day
following the Conversion Date. For a discussion of the tax treatment of a
Holder receiving Common Stock upon conversion, see "Certain United States
Federal Income Tax Considerations--Disposition or Conversion of Debentures."
In lieu of delivering shares of Common Stock upon notice or conversion of
any Debentures, the Company may elect to pay the Holder surrendering such
Debentures an amount in cash per Debenture equal to the Sale Price (as defined
under "--Purchase of Debentures at the Option of the Holder") of a share of
Common Stock on the Trading Day immediately prior to the Conversion Date
multiplied by the Conversion Rate in effect on such Trading Day, subject to
adjustment upon the occurrence of certain events described below; provided,
that if such payment of cash is not permitted pursuant to the provisions of
the Indenture or otherwise, the Company shall deliver shares of Common Stock
(and cash in lieu of fractional shares) as set forth below. Upon conversion of
any Debentures, the Company shall inform the Holders through the Conversion
Agent of its election to deliver shares of Common Stock or to pay cash in lieu
of delivery of such shares no later than two Business Days following the
Conversion Date. If the Company elects to deliver shares of Common Stock, such
shares will be delivered through the Conversion Agent no later than the
seventh Business Day following the Conversion Date. If the Company elects to
pay cash, such cash payment will be made to the Holder surrendering such
Debentures no later than the fifth Business Day following such Conversion
Date.
The Conversion Rate will be adjusted for dividends or distributions on
Common Stock payable in Common Stock or other capital stock of the Company;
certain subdivisions, combinations or reclassifications of Common Stock;
distributions to all holders of Common Stock of certain rights, warrants or
options to purchase Common
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<PAGE>
Stock or securities convertible into Common Stock for a period expiring within
60 days after the record date for such distribution at a price per share less
than the Sale Price at the time; and distributions to all holders of Common
Stock of assets or debt Securities of the Company or rights, warrants or
options to purchase securities of the Company (excluding cash dividends or
other cash distributions (except to the extent cash dividends or other cash
distributions constitute Extraordinary Cash Dividends) from consolidated
current net earnings or earned surplus or dividends payable in Common Stock).
However, no adjustment need be made if Holders may participate in the
transactions on a basis and with notice that the Board of Directors of the
Company determines to be fair and appropriate, or in certain other cases. In
cases where the fair market value of the portion of assets, debt securities or
rights, warrants or options to purchase securities of the Company applicable
to one share of Common Stock distributed to shareholders exceeds the Average
Sale Price per share of Common Stock, or such Average Sale Price exceeds such
fair market value of such portion of assets, debt securities or rights,
warrants or options so distributed by less than $1.00, rather than being
entitled to an adjustment in the Conversion Rate, the Holder of a Debenture
upon conversion thereof will be entitled to receive, in addition to the shares
of Common Stock into which such Debenture is convertible, the kind and amounts
of assets, debt securities or rights, options or warrants comprising the
distribution that such Holder would have received if such Holder had converted
such Debenture immediately prior to the record date for determining the
shareholders entitled to receive the distribution. The Indenture permits the
Company to increase the Conversion Rate from time to time.
"Average Sale Price" means the average of the Sale Prices of the Common
Stock for the shorter of: (i) 30 consecutive Trading Days ending on the last
full Trading Day prior to the Time of Determination with respect to the
rights, options, warrants or distribution in respect of which the Average Sale
Price is being calculated, or (ii) the period (x) commencing on the date next
succeeding the first public announcement of (a) the issuance of rights,
options or warrants or (b) the distribution, in each case, in respect of which
the Average Sale Price is being calculated and (y) proceeding through the last
full Trading Day prior to the Time of Determination with respect to the
rights, warrants or distribution in respect of which the Average Sale Price is
being calculated, or (iii) the period, if any, (x) commencing on the date next
succeeding the Ex-Dividend Time with respect to the next preceding (a)
issuance of rights, warrants, or options or (b) distribution, in each case,
for which an adjustment is required by the provisions of the Indenture and (y)
proceeding through the last full Trading Day prior to the Time of
Determination with respect to the rights, warrants, or options or distribution
in respect of which the Average Sale Price is being calculated. "Time of
Determination" means the time and date of the earlier of (i) the determination
of stockholders entitled to receive rights, warrants, or options or a
distribution, in each case, to which Sections 13.07 and 13.08 of the Indenture
apply and (ii) the time ("Ex-Dividend Time") immediately prior to the
commencement of "ex-dividend" trading for such rights, options, warrants or
distribution on the NYSE or such other national or regional exchange or market
on which shares of the Common Stock are then listed or quoted.
If the Company is party to a consolidation, merger or binding share exchange
or a transfer of all or substantially all of its assets which is otherwise
permitted under the terms of the Indenture, the right to convert a Debenture
into Common Stock may be changed into a right to convert it into the kind and
amount of securities, cash or other assets which the Holder would have
received if the Holder had converted such Holder's Debentures immediately
prior to the transaction.
In the event of a taxable distribution to holders of Common Stock which
results in an adjustment of the Conversion Rate (or in which Holders otherwise
participate) or in the event the Conversion Rate is increased at the
discretion of the Company, the Holders of the Debentures may in certain
circumstances, be deemed to have received a distribution subject to United
States federal income tax as a dividend. See "Certain United States Federal
Income Tax Considerations--Adjustment of Conversion Rate."
In the event the Company exercises its option to have interest in lieu of
Original Issue Discount accrue on a Debenture following a Tax Event, the
Holder will be entitled on conversion to receive the same number of shares of
Common Stock such Holder would have received if the Company had not exercised
such option. If the Company exercises such option, Debentures surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business of
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<PAGE>
such Interest Payment Date (except Debentures to be redeemed on a date within
such period) must be accompanied by payment of an amount equal to the interest
thereon that the registered Holder is to receive. Except where Debentures
surrendered for conversion must be accompanied by payment as described above,
no interest on converted Debentures will be payable by the Company on any
Interest Payment Date subsequent to the date of conversion. See "--Optional
Conversion to Semiannual Coupon Debenture upon Tax Event."
REDEMPTION OF DEBENTURES AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Debentures. Prior to April 21, 2003, the
Debentures will not be redeemable at the option of the Company. Thereafter,
the Company may redeem the Debentures for cash as a whole at any time, or from
time to time in part, upon not less than 30 days' nor more than 60 days'
notice of redemption given by mail to Holders of Debentures (unless a shorter
notice shall be satisfactory to the Trustee) at the Redemption Prices set
forth below plus accrued cash interest to the Redemption Date. Any such
redemption must be in integral multiples of $1,000 principal amount at
maturity.
The table below shows Redemption Prices of a Debenture per $1,000 principal
amount at maturity on April 21, 2003, at each April 21 thereafter prior to
maturity, and at maturity on April 21, 2018, which prices reflect the accrued
Original Issue Discount calculated to each such date. The Redemption Price of
a Debenture redeemed between such dates would include an additional amount
reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to the Redemption Date.
<TABLE>
<CAPTION>
(3)
(2) REDEMPTION
(1) ACCRUED ORIGINAL PRICE
REDEMPTION DATE ISSUE PRICE ISSUE DISCOUNT (1) + (2)
--------------- ----------- ---------------- ----------
<S> <C> <C> <C>
April 21, 2003....................... $568.07 $ 80.84 $ 648.91
April 21, 2004....................... 568.07 98.82 666.89
April 21, 2005....................... 568.07 117.46 685.53
April 21, 2006....................... 568.07 136.79 704.86
April 21, 2007....................... 568.07 156.82 724.89
April 21, 2008....................... 568.07 177.58 745.65
April 21, 2009....................... 568.07 199.11 767.18
April 21, 2010....................... 568.07 221.42 789.49
April 21, 2011....................... 568.07 244.54 812.61
April 21, 2012....................... 568.07 268.52 836.59
April 21, 2013....................... 568.07 293.37 861.44
April 21, 2014....................... 568.07 319.12 887.19
April 21, 2015....................... 568.07 345.82 913.89
April 21, 2016....................... 568.07 373.50 941.57
April 21, 2017....................... 568.07 402.19 970.26
At Stated Maturity................... 568.07 431.93 1,000.00
</TABLE>
If converted to semiannual coupon debentures following the occurrence of a
Tax Event, the Debentures will be redeemable at the Restated Principal Amount
(as defined below) plus accrued and unpaid interest from the date of such
conversion to the Redemption Date; provided, however, that in no event may the
Debentures be redeemed prior to April 21, 2003. See "--Optional Conversion to
Semiannual Coupon Debenture upon Tax Event."
If fewer than all of the Debentures are to be redeemed, the Trustee shall
select the Debentures to be redeemed in principal amounts at maturity of
$1,000 or integral multiples thereof by lot, pro rata or by another method the
Trustee considers fair and appropriate. If a portion of a Holder's Debentures
is selected for partial redemption and such Holder converts a portion of such
Debentures prior to such redemption, such converted portion shall be deemed,
solely for purposes of determining the aggregate Principal Amount of
Debentures to be redeemed by the Company, to be of the portion selected for
redemption.
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<PAGE>
PURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
On April 21, 2003 (the "Purchase Date"), the Company will become obligated
to purchase, at the option of the Holder thereof, any outstanding Debenture
for which a written notice (a "Purchase Notice") has been delivered by the
Holder to the Paying Agent or an office or agency maintained by the Company
for such purpose in the Borough of Manhattan, The City of New York, at any
time from the opening of business on the date that is 20 business days
preceding the Purchase Date until the close of business on the Purchase Date
and for which such Purchase Notice has not been withdrawn, subject to certain
additional conditions set forth in part in the following paragraphs. The
Purchase Price for such Debentures will be $648.91 per $1,000 principal amount
at maturity plus accrued cash interest to the Purchase Date.
If prior to the Purchase Date the Debentures have been converted to
semiannual coupon debentures following the occurrence of a Tax Event, the
Purchase Price will be equal to the Restated Principal Amount plus accrued and
unpaid cash interest from the date of such conversion to, but excluding, the
Purchase Date. See "--Optional Conversion to Semiannual Coupon Debenture upon
Tax Event."
The Company, at its option, may elect to pay such Purchase Price in cash or
Common Stock, or any combination thereof. For a discussion of the tax
treatment of such a transaction, see "Certain United States Federal Income Tax
Considerations--Disposition or Conversion of Debentures."
The Company will give notice (the "Company Notice") not less than 20
business days prior to the Purchase Date (the "Company Notice Date") to all
Holders at their addresses shown in the register of the Registrar (and to
beneficial owners as required by applicable law) stating, among other things
(i) whether the Company will pay the Purchase Price of the Debentures in cash
or Common Stock, or any combination thereof, and (ii) the procedures that
Holders must follow to require the Company to purchase Debentures from such
Holders.
The Purchase Notice given by any Holder requiring the Company to purchase
Debentures shall state (i) the certificate numbers of the Debentures to be
delivered by such Holder for purchase by the Company; (ii) the portion of the
principal amount at maturity of Debentures to be purchased, which portion must
be $1,000 or an integral multiple thereof; (iii) that such Debentures are to
be purchased by the Company pursuant to the applicable provisions of the
Debentures; and (iv) if the Company elects, pursuant to the Company Notice, to
pay a specified percentage of the Purchase Price in Common Stock but such
specified percentage is ultimately to be paid in cash because any of the
conditions to payment of such specified percentage of the Purchase Price in
Common Stock contained in the Indenture is not satisfied prior to the close of
business on the Purchase Date, as described below, that such Holder elects (a)
to withdraw such Purchase Notice as to some or all of the Debentures; to which
it relates (stating the principal amount at maturity and certificate numbers
of the Debentures as to which such withdrawal shall relate) or (b) to receive
cash in respect of the Purchase Price of all Debentures subject to such
Purchase Notice. If the Holder fails to indicate such Holder's choice with
respect to the election described in clause (iv) above in the Purchase Notice,
such Holder shall be deemed to have elected to receive cash for the specified
percentage that was to have been payable in Common Stock.
Any Purchase Notice may be withdrawn by the Holder by a written notice of
withdrawal delivered to the Paying Agent prior to the close of business on the
Purchase Date. The notice of withdrawal shall state the principal amount at
maturity and the certificate numbers of the Debentures as to which the
withdrawal notice relates and the principal amount at maturity, if any, which
remains subject to the Purchase Notice.
If the Company elects to pay the Purchase Price, in whole or in part, in
shares of Common Stock, the number of shares to be delivered in respect of the
specified percentage of the Purchase Price to be paid in Common Stock shall be
equal to the dollar amount of such specified percentage of the Purchase Price
divided by the Market Price (as defined below) of a share of Common Stock.
However, no fractional shares of Common Stock will be delivered upon any
purchase by the Company of Debentures in payment, in whole or in part, of the
Purchase Price. Instead, the Company will pay cash based on the Market Price
for all fractional shares of Common Stock. Each Holder whose Debentures are
purchased at the option of such Holder as of the Purchase Date shall receive
the same percentage of cash or Common Stock in payment of the Purchase Price
for such Debentures, except as described above with regard to the payment of
cash in lieu of fractional shares of Common
14
<PAGE>
Stock. For a discussion of the resulting tax consequences, see "Certain United
States Federal Income Tax Considerations--Disposition or Conversion of
Debentures."
The "Market Price" means the average of the Sale Price of the Common Stock
for the five Trading Day period ending on the third Trading Day prior to the
applicable Purchase Date, appropriately adjusted to take into account the
actual occurrence, during the seven Trading Days preceding such Purchase Date,
of certain events that would result in an adjustment of the Conversion Rate
with respect to the Common Stock. The "Sale Price" on any Trading Day means
the closing per share sale price for the Common Stock (or, if no closing sale
price is reported, the average of the bid and ask prices or, if more than one
in either case, the average of the average bid and average ask prices) on such
Trading Day as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is traded or, if the
Common Stock is not listed on a United States national or regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System. A "Trading Day" means each day on which the
securities exchange or quotation system which is used to determine the Sale
Price is open for trading or quotation. Because the Market Price of the Common
Stock is determined prior to the Purchase Date, Holders of Debentures bear the
market risk with respect to the value of the Common Stock to be received from
the date such Market Price is determined to the Purchase Date. The Company may
pay the Purchase Price, in whole or in part, in Common Stock only if the
information necessary to calculate the Market Price at that time is reported
in The Wall Street Journal or another daily newspaper of national circulation.
The Company's right to purchase Debentures, in whole or in part, with shares
of Common Stock is subject to the Company's satisfying various conditions,
including the registration of the Common Stock under the Securities Act and
the Exchange Act, unless there exists an applicable exemption from
registration thereunder. If such conditions are not satisfied prior to the
close of business on the Purchase Date, the Company will pay the Purchase
Price of the Debentures in cash. The Company will comply with the provisions
of Rule 13e-4 and any other tender offer rules under the Exchange Act which
may then be applicable and will file Schedule 13e-4 or any other schedule
required thereunder in connection with any offer by the Company to purchase
Debentures at the option of the Holders thereof on a Purchase Date. The
Company may not change the form of consideration (or components or percentages
of components thereof) to be paid once the Company has given its Company
Notice to Holders of Debentures except as described in the second sentence of
this paragraph.
Payment of the Purchase Price for a Debenture for which a Purchase Notice
has been delivered and not withdrawn is conditioned upon delivery of such
Debenture (together with any necessary endorsements) to the Paying Agent or an
office or agency maintained by the Company for such purpose in the Borough of
Manhattan, The City of New York, at any time (whether prior to, on or after
the Purchase Date) after delivery of such Purchase Notice. Payment of the
Purchase Price for such Debenture will be made promptly following the later of
the business day following the Purchase Date and the time of delivery of such
Debenture. If the Paying Agent holds, in accordance with the terms of the
Indenture, money or securities sufficient to pay the Purchase Price of such
Debenture on the business day following the Purchase Date, then, on and after
the Purchase Date, such Debenture will cease to be outstanding and cash
interest and Original Issue Discount on such Debenture will cease to accrue
and will be deemed paid, whether or not such Debenture is delivered to the
Paying Agent, and all other rights of the Holder shall terminate (other than
the right to receive the Purchase Price upon delivery of such Debenture).
The Company's ability to purchase Debentures with cash may be limited by the
terms of its then-existing borrowing agreements. No Debentures may be
purchased pursuant to the provisions described above if there has occurred and
is continuing an Event of Default described under "Events of Default; Notice
and Waiver" below (other than a default in the payment of the Purchase Price
with respect to such Debentures).
CHANGE IN CONTROL PERMITS PURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
In the event of any Change in Control (as defined below) of the Company
occurring on or prior to April 21, 2003, each Holder of Debentures will have
the right, at the Holder's option, subject to the terms and conditions of the
Indenture, to require the Company to purchase all or any part (provided that
the principal amount at
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maturity must be $1,000 or an integral multiple thereof) of the Holder's
Debentures on the date that is 35 business days after the occurrence of such
Change in Control (the "Change in Control Purchase Date") at a cash price
equal to the Issue Price plus accrued Original Issue Discount and accrued cash
interest to the Change in Control Purchase Date (the "Change in Control
Purchase Price"). If prior to a Change in Control Purchase Date the Debentures
have been converted to semiannual coupon debentures following the occurrence
of a Tax Event, the Company will be required to purchase the Debentures at a
cash price equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of such conversion to, but excluding, the Change in
Control Purchase Date. Holders will not have any right to require the Company
to purchase Debentures in the event of any Change in Control of the Company
occurring after April 21, 2003.
Within 15 business days after the Change in Control, the Company shall mail
to the Trustee and to each Holder (and to beneficial owners as required by
applicable law) a notice regarding the Change in Control, which notice shall
state, among other things: (i) the date of such Change in Control and,
briefly, the events causing such Change in Control, (ii) the date by which the
Change in Control Purchase Notice (as defined below) must be given, (iii) the
Change in Control Purchase Date, (iv) the Change in Control Purchase Price,
(v) the name and address of the Paying Agent and the Conversion Agent, (vi)
the Conversion Rate and any adjustments thereto, (vii) that Debentures with
respect to which a Change in Control Purchase Notice is given by the Holder
may be converted into shares of Common Stock only if the Change in Control
Purchase Notice has been withdrawn in accordance with the terms of the
Indenture, (viii) the procedures that Holders must follow to exercise these
rights, (ix) the procedures for withdrawing a Change in Control Purchase
Notice, (x) that Holders who want to convert Debentures must satisfy the
requirements set forth in the Debentures and (xi) briefly, the conversion
rights of Holders of Debentures. The Company will cause a copy such notice to
be published in The Wall Street Journal or another daily newspaper of national
circulation.
To exercise the purchase right, the Holder must deliver written notice of
the exercise of such right (a "Change in Control Purchase Notice") to the
Paying Agent or an office or agency maintained by the Company for such purpose
in the Borough of Manhattan, The City of New York, prior to the close of
business on the Change in Control Purchase Date. The Change in Control
Purchase Notice shall state (i) the certificate numbers of the Debentures to
be delivered by the Holder thereof for purchase by the Company; (ii) the
portion of the principal amount at maturity of Debentures to be purchased,
which portion must be $1,000 or an integral multiple thereof; and (iii) that
such Debentures are to be purchased by the Company pursuant to the applicable
provisions of the Debentures.
Any Change in Control Purchase Notice may be withdrawn by the Holder by a
written notice of withdrawal delivered to the Paying Agent prior to the close
of business on the Change in Control Purchase Date. The notice of withdrawal
shall state the principal amount at maturity and the certificate numbers of
the Debentures as to which the withdrawal notice relates and the principal
amount at maturity, if any, which remains subject to a Change in Control
Purchase Notice.
Payment of the Change in Control Purchase Price for a Debenture for which a
Change in Control Purchase Notice has been delivered and not withdrawn is
conditioned upon delivery of such Debenture (together with any necessary
endorsements) to the Paying Agent or an office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York, at
any time (whether prior to, on or after the Change in Control Purchase Date)
after the delivery of such Change in Control Purchase Notice. Payment of the
Change in Control Purchase Price for such Debenture will be made promptly
following the later of the business day following the Change in Control
Purchase Date and the time of delivery of such Debenture. If the Paying Agent
holds, in accordance with the terms of the Indenture, money sufficient to pay
the Change in Control Purchase Price of such Debenture on the business day
following the Change in Control Purchase Date, then, on and after the Change
in Control Purchase Date, such Debenture will cease to be outstanding and cash
interest and Original Issue Discount on such Debenture will cease to accrue
and will be deemed paid, whether or not such Debenture is delivered to the
Paying Agent, and all other rights of the Holder shall terminate (other than
the right to receive the Change in Control Purchase Price upon delivery of
such Debenture).
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Under the Indenture, a "Change in Control" of the Company is deemed to have
occurred at such time as (i) any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than the
Company, any Subsidiary of the Company, or any employee benefit plan of either
the Company or any Subsidiary of the Company, files a Schedule 13D or Schedule
14D-1 under the Exchange Act (or any successor schedule, form or report)
disclosing that such person has become the beneficial owner of 50% or more of
the total voting power in the aggregate of all classes of Capital Stock of the
Company then outstanding normally entitled to vote in elections of directors,
or (ii) there shall be consummated any consolidation or merger of the Company
pursuant to which the Common Stock would be converted into cash, securities or
other property, in each case other than a consolidation or merger of the
Company in which the holders of Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a majority of
the total voting power in the aggregate of all classes of capital stock of the
continuing or surviving corporation immediately after the consolidation or
merger. The Indenture does not permit the Board of Directors to waive the
Company's obligation to purchase Debentures at the option of a Holder in the
event of a Change in Control of the Company.
The Company will comply with the provisions of Rule 13e-4, Rule 14e-1 and
any other tender offer rules under the Exchange Act which may then be
applicable, and will file Schedule 13E-4 or any other schedule required
thereunder in connection with any offer by the Company to purchase Debentures
at the option of the Holders thereof upon a Change in Control. The Change in
Control purchase feature of the Debentures may in certain circumstances make
more difficult or discourage a takeover of the Company and, thus, the removal
of incumbent management. The Change in Control purchase feature, however, is
not the result of management's knowledge of any specific effort to accumulate
shares of Common Stock or to obtain control of the Company by means of a
merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of anti-takeover provisions. Instead, the Change
in Control purchase feature is a standard term contained in other offerings of
securities comparable to the Debentures that have been marketed by the
Purchasers and the terms of such feature result from negotiations between the
Company and the Purchasers.
If a Change in Control were to occur, there can be no assurance that the
Company would have funds sufficient to pay the Change in Control Purchase
Price for all of the Debentures that might be delivered by Holders seeking to
exercise the purchase right since the Company might also be required to prepay
certain Senior Indebtedness having financial covenants with change of control
provisions in favor of the holders thereof. In addition, the Senior
Indebtedness of the Company may have cross-default provisions that could be
triggered by a default under the change of control provisions in such Senior
Indebtedness, thereby possibly accelerating the maturity of such Senior
Indebtedness. In such case, the Holders of the Debentures would be
subordinated to the prior claims of the holders of such Senior Indebtedness.
In addition, the Company's ability to purchase Debentures with cash may be
limited by the terms of its then-existing borrowing agreements. No Debentures
may be purchased pursuant to the provisions described above if there has
occurred and is continuing an Event of Default described under "--Events of
Default, Notice and Waiver" below (other than a default in the payment of the
Change in Control Purchase Price with respect to such Debentures).
REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement dated as of April 21, 1998,
among the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P.
Morgan Securities Inc., the Company has agreed to use reasonable efforts to
keep the registration statement of which this Prospectus forms a part
effective with respect to the Debentures until two years from the date of
initial issuance of the Debentures or such earlier date as all securities
registrable thereunder (the "Registrable Securities") shall have been disposed
of (the "Effectiveness Period").
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may, without the consent of any Holders of outstanding
Debentures, consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to, any individual, corporation, partnership,
joint venture, trust, association, unincorporated organization or limited
liability company (each a "Person") organized under the laws of any United
States jurisdiction, provided that (i) the successor Person assumes the
Company's obligations on the Debentures and under the Indenture and (ii)
immediately after giving effect to the
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transaction no Event of Default, and no event which, after notice or lapse of
time would become an Event of Default, shall have occurred and be continuing.
Certain of the foregoing transactions, if they occur on or prior to April 21,
2003, could constitute a Change in Control of the Company permitting each
Holder to require the Company to purchase the Debentures of such Holder as
described above.
OPTIONAL CONVERSION TO SEMIANNUAL COUPON DEBENTURE UPON TAX EVENT
From and after the date (the "Tax Event Date") of the occurrence of a Tax
Event (as defined below), the Company shall have the option to elect to have
interest in lieu of future Original Issue Discount (and other cash interest
provided for under the Indenture) accrue at 3.625% per annum on a principal
amount per Debenture (the "Restated Principal Amount") equal to the Issue
Price plus Original Issue Discount accrued to the date immediately prior to
the Tax Event Date or the date on which the Company exercises the option
described herein, whichever is later (such date hereinafter referred to as the
"Option Exercise Date"). Such interest shall accrue from the Option Exercise
Date and shall be payable semiannually on each Interest Payment Date to
holders of record at the close of business on the Regular Record Date
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date to which interest has been paid or, if no interest
has been paid, from the Option Exercise Date.
A "Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after the date of this Prospectus, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, in each case which
amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after
the date of this Prospectus, there is more than an insubstantial risk that
interest (including Original Issue Discount) payable on the Debentures either
(i) would not be deductible on a current accrual basis or (ii) would not be
deductible under any other method, in either case in whole or in part, by the
Company (by reason of deferral, disallowance, or otherwise) for United States
federal income tax purposes.
President Clinton's fiscal year 1998 budget proposed a series of tax law
changes that would have, if enacted and made applicable to the Debentures,
prevented the Company from deducting interest (including Original Issue
Discount) payable on the Debentures on a current accrual basis for United
States federal income tax purposes and could have caused some or all of the
interest (including Original Issue Discount) payable on the Debentures to fail
to be deductible by the Company under any other method for United States
federal income tax purposes. This proposal was not adopted by Congress and was
not part of the Taxpayer Relief Act of 1997, although a similar proposal was
included in President Clinton's fiscal year 1999 budget proposal. If the
President's current proposal or a similar proposal were ever made applicable
to the Debentures in a manner that would limit the ability of the Company to
either (i) deduct the interest (including Original Issue Discount) payable on
the Debentures on a current accrual basis or (ii) deduct the interest
(including Original Issue Discount) payable on the Debentures under any other
method for United States federal income tax purposes, such enactment would
result in a Tax Event and the terms of the Debentures would be subject to
modification at the option of the Company as described above. The modification
of the terms of Debentures by the Company upon a Tax Event as described above
could possibly alter the timing of income recognition by holders of the
Debentures with respect to the semiannual payments of interest due on the
Debentures after the Option Exercise Date. See "Certain United States Federal
Income Tax Considerations--Tax Event."
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, either the Trustee or the Holders of not less
than 25% in aggregate principal amount at maturity of the Debentures then
outstanding may declare the Issue Price plus Original Issue Discount accrued,
together with any accrued cash interest (or if the Debentures have been
converted to semiannual coupon debentures following a Tax Event,
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the Restated Principal Amount, plus accrued cash interest) to the date of
default (in the case of an Event of Default specified in (i), (ii) or (iii) of
the following paragraph) or to the date of such declaration (in the case of an
Event of Default specified in (iv) of the following paragraph) on all the
Debentures to be immediately due and payable. In the case of certain events of
bankruptcy or insolvency, the Issue Price of the Debentures plus the Original
Issue Discount accrued thereon, together with any accrued cash interest (or if
the Debentures have been converted to semiannual coupon debentures following a
Tax Event, the Restated Principal Amount, plus accrued cash interest) to the
occurrence of such event shall automatically become and be immediately due and
payable. Upon any such acceleration, the subordination provisions of the
Indenture preclude any payment being made to Holders of Debentures until the
earlier of (i) 120 days or more after the date of such acceleration and (ii)
the payment in full of all Senior Indebtedness, but only if such payment is
then otherwise permitted under the terms of the Indenture. See "Subordination
of Debentures" above. Under certain circumstances, the Holders of a majority
in aggregate principal amount at maturity of the outstanding Debentures may
rescind any such acceleration with respect to the Debentures and its
consequences. Interest shall accrue and be payable on demand upon a default in
the payment of principal amount at maturity, Issue Price, accrued Original
Issue Discount, cash interest when due, Redemption Price, Purchase Price,
Change in Control Purchase Price or shares of Common Stock (and cash in lieu
of fractional shares) or cash in lieu of such Common Stock to be delivered on
conversion of Debentures, in each case to the extent that the payment of such
interest shall be legally enforceable.
Under the Indenture, Events of Default include: (i) default in payment of
the principal amount at maturity, Issue Price, accrued Original Issue
Discount, cash interest or interest upon conversion to a semiannual coupon
debenture following a Tax Event (if such default in payment of interest shall
continue for 31 days), Redemption Price, Purchase Price or Change in Control
Purchase Price with respect to any Debenture, when the same becomes due and
payable (whether or not such payment is prohibited by the provisions of the
Indenture); (ii) failure by the Company to deliver shares of Common Stock
(including cash in lieu of fractional shares) or cash in lieu thereof when
such Common Stock (and cash in lieu of fractional shares) or cash is required
to be delivered following conversion of a Debenture and continuance of such
default for 10 days; (iii) failure by the Company to comply with any of its
other agreements in the Debentures or the Indenture upon the receipt by the
Company of notice of such default from the Trustee or from Holders of not less
than 25% in aggregate principal amount at maturity of the Debentures then
outstanding and the Company's failure to cure such default within 90 days
after receipt by the Company of such notice; or (iv) certain events of
bankruptcy or insolvency.
The Trustee shall, within 90 days after the occurrence of any default, mail
to all Holders of the Debentures notice of all defaults of which the Trustee
shall be aware, unless such defaults shall have been cured or waived before
the giving of such notice; provided, that the Trustee may withhold such notice
as to any default other than a payment default, if it determines in good faith
that withholding the notice is in the interest of the Holders.
The Holders of a majority in aggregate principal amount at maturity of the
outstanding Debentures may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided that such direction shall not be in
conflict with any law or the Indenture and subject to certain other
limitations. The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense. No Holder of any Debenture will have any right to pursue
any remedy with respect to the Indenture or the Debentures unless (i) such
Holder shall have previously given the Trustee written notice of a continuing
Event of Default; (ii) the Holders of at least 25% in aggregate principal
amount at maturity of the outstanding Debentures shall have made a written
request to the Trustee to pursue such remedy; (iii) such Holder or Holders
shall have offered to the Trustee reasonable security or indemnity against any
loss, liability or expense satisfactory to it; (iv) the Trustee shall have
failed to comply with the request within 60 days after receipt of such notice,
request and offer of security or indemnity; and (v) the Holders of a majority
in aggregate principal amount at maturity of the outstanding Debentures shall
not have given the Trustee a direction inconsistent with such request within
60 days after receipt of such request.
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The right of any Holder: (a) to receive payment of the principal amount at
maturity, Issue Price, accrued Original Issue Discount, Redemption Price,
Purchase Price, Change in Control Purchase Price or interest in respect of the
Debentures held by such Holder on or after the respective due dates expressed
in the Debentures or as of any Redemption Date or (b) to bring suit for the
enforcement of any such payment on or after such respective dates or the right
to convert, shall not be impaired or adversely affected without such Holder's
consent.
The Holders of a majority in aggregate principal amount at maturity of
Debentures at the time outstanding may waive any existing default and its
consequences except (i) any default in any payment on the Debentures, (ii) any
default with respect to the conversion rights of the Debentures, or (iii) any
default in respect of certain covenants or provisions in the Indenture which
may not be modified without the consent of the Holder of each Debenture as
described in "Modification" below. When a default is waived it is deemed cured
and shall cease to exist, but no such waiver shall extend to any subsequent or
other default or impair any consequent right.
The Company is required to furnish to the Trustee annually a statement as to
any default by the Company in the performance and observance of its
obligations under the Indenture. In addition, the Company shall file with the
Trustee written notice of the occurrence of any default or Event of Default
within five Business Days of its becoming aware of such default or Event of
Default.
MODIFICATION
Modification and amendment of the Indenture or the Debentures may be
effected by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount at maturity of the
Debentures then outstanding. However, without the consent of each Holder
affected thereby, no amendment may, among other things, (i) reduce the
principal amount at maturity, Issue Price, Purchase Price, Change in Control
Purchase Price, Redemption Price or amount of cash paid in lieu of shares of
Common Stock on conversion with respect to any Debenture, or extend the stated
maturity of any Debenture or alter the manner or rate of accrual of Original
Issue Discount or cash interest, or make any Debenture payable in money or
securities other than that stated in the Debenture; (ii) make any change to
the principal amount at maturity of Debentures whose Holders must consent to
an amendment or any waiver under the Indenture or modify the Indenture
provisions relating to such amendments or waivers; (iii) make any change that
adversely affects the right to convert any Debenture or the right to require
the Company to purchase a Debenture; (iv) modify the provisions of the
Indenture relating to the subordination of the Debentures in a manner adverse
to the Holders of the Debentures; or (v) impair the right to institute suit
for the enforcement of any payment with respect to, or conversion of, the
Debentures. No change that adversely affects the rights of any holder of
Senior Indebtedness of the Company under the subordination provisions of the
Indenture may be made unless requisite consents to such change are obtained
from holders of Senior Indebtedness pursuant to the terms of the related
Senior Indebtedness instrument.
Without the consent of any Holder of Debentures, the Company and the Trustee
may amend the Indenture to (i) cure any ambiguity, defect or inconsistency;
provided, however, that such amendment does not adversely affect the rights of
any Holder, (ii) provide for the assumption by a successor to the Company of
the obligations of the Company under the Indenture, (iii) provide for
uncertificated Debentures in addition to certificated Debentures, as long as
such uncertificated Debentures are in registered form for United States
federal income tax purposes, (iv) make any change that does not adversely
affect the rights of any Holder of Debentures, (v) make any change necessary
to comply with the Trust Indenture Act of 1939, as amended, or (vi) add to the
covenants or obligations of the Company under the Indenture or surrender any
right, power or option conferred by the Indenture on the Company.
DISCHARGE OF THE INDENTURE
The Company may satisfy and discharge its obligations under the Indenture by
delivering to the Trustee for cancellation all outstanding Debentures or by
depositing with the Trustee, the Paying Agent or the Conversion Agent, if
applicable, after the Debentures have become due and payable, whether at
stated maturity, or any Redemption Date, or any Purchase Date, a Change of
Control Purchase Date, or upon conversion or otherwise,
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cash or Common Stock (as applicable under the terms of the Indenture)
sufficient to pay all of the outstanding Debentures and paying all other sums
payable under the Indenture by the Company.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of the Company, under
Title 11 of the United States Code, the claim of the Holder of a Debenture may
be limited to (i) the Issue Price of the Debenture plus that portion of the
Original Issue Discount, together with any cash interest, that is deemed to
have accrued from the date of issue to the commencement of the proceeding or
(ii) if the Debentures have been converted to semiannual coupon debentures,
the Restated Principal Amount plus accrued but unpaid interest to such
commencement.
INFORMATION CONCERNING THE TRUSTEE
The First National Bank of Chicago is the Trustee, Registrar, Paying Agent
and Conversion Agent under the Indenture. The Company has banking and certain
other relationships with one or more affiliates of the Trustee.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership, disposition, and conversion of
Debentures. Unless otherwise stated, this summary deals only with Debentures
held as capital assets (generally, assets held for investment under the
Internal Revenue Code of 1986, as amended (the "Code"), by Holders who
purchase Debentures upon original issuance. The tax treatment of a Holder of
Debentures may vary depending on his particular situation. This summary does
not address all of the tax consequences that may be relevant to Holders who
may be subject to special tax treatment such as, for example, insurance
companies, broker-dealers, tax-exempt organizations, or, except to the extent
described below, foreign taxpayers. In addition, this summary does not address
any aspects of state, local, or foreign tax laws. This summary is based on the
United States federal income tax law in effect as of the date hereof, which is
subject to change, possibly on a retroactive basis. Each investor is urged to
consult his tax advisor as to the particular tax consequences of purchasing,
owning, and disposing of Debentures, including the application and effect of
United States federal, state, local, and foreign tax laws.
The Company has been advised by its counsel that, based on current laws,
regulations and administrative and judicial standards, all of which are
subject to change, the Debentures will be treated as indebtedness for United
States federal income tax purposes.
ORIGINAL ISSUE DISCOUNT
The Debentures are being issued at a substantial discount from their stated
principal amount at maturity. For United States federal income tax purposes,
the difference between the issue price (the initial offering price to the
public at which a substantial amount of the Debentures are sold for money,
other than sales to bond houses, brokers, or similar persons acting in the
capacity of underwriters, placement agents, or wholesalers) and the stated
principal amount at maturity of each Debenture constitutes original issue
discount ("Original Issue Discount"). Holders of Debentures will be required
to include Original Issue Discount in income periodically over the term of the
Debentures before receipt of the cash or other payment attributable to such
income.
For United States federal income tax purposes, each Holder of a Debenture
must generally include in gross income a portion of the Original Issue
Discount in each taxable year during which the Debenture is held in an amount
equal to the Original Issue Discount that accrues on the Debenture during such
period, determined by using a constant yield to maturity method. The Original
Issue Discount included in income for each year will be calculated under a
compounding formula that will result in the allocation of less Original Issue
Discount to the earlier years of the term of the Debenture and more Original
Issue Discount to later years. For the approximate cumulative total amount of
the Original Issue Discount accrued annually, see the chart under "Description
of Debentures--Redemption of Debentures at the Option of the Company." Any
amount included in income as Original Issue Discount will increase a Holder's
basis in the Debenture.
DISPOSITION OR CONVERSION OF DEBENTURES
Except as described below, gain or loss upon a sale or other disposition of
a Debenture will generally be capital gain or loss, which will be subject to
tax as described below in the discussion of the Taxpayer Relief Act of 1997
and the Internal Revenue Service Restructuring and Reform Act of 1998. If a
Holder elects to exercise his option to tender a Debenture to the Company on a
Purchase Date or a Change in Control Purchase Date for cash, such tender will
be treated as a sale of the Debenture.
A Holder that receives Common Stock in exchange for a Debenture (whether
upon conversion of a Debenture or at the Company's option upon tender of a
Debenture) will generally not recognize gain or loss (except with respect to
cash received in lieu of a fractional share). A Holder's tax basis in the
Common Stock received on conversion or tender of a Debenture will be the same
as the Holder's adjusted tax basis in the Debenture at the time of conversion
or tender (exclusive of any basis allocable to a fractional share), and the
holding period for the Common Stock received on conversion or tender will
include the holding period of the Debenture converted. It is possible,
however, the Internal Revenue Service may argue that the holding period of the
Common Stock allocable to accrued Original Issue Discount will commence on the
date of accrual or conversion.
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If a Holder elects to exercise his option to tender a Debenture to the
Company on the Purchase Date and the Company issues Common Stock in
satisfaction of the Purchase Price, such exchange will be treated the same as
a conversion. If a Holder elects to exercise his option to tender a Debenture
to the Company on the Purchase Date and the Company delivers a combination of
cash and Common Stock in satisfaction of the Purchase Price, a Holder that is
an original purchaser of the Debenture generally should not have gain or loss.
A Holder's basis in the Common Stock received would be the same as the
Holder's basis in the Debenture, reduced by the cash received and increased by
any gain recognized (exclusive of any basis allocable to a fractional share).
Under the Taxpayer Relief Act of 1997, net capital gain (i.e., generally,
capital gain in excess of capital loss) recognized by an individual Holder
upon the disposition of such Common Stock or Debentures that has been held for
more than 18 months is generally be subject to tax at a rate not to exceed
20%. Net capital gain recognized by an individual Holder upon the disposition
of such Common Stock or Debentures that has been held for more than 12 months
but not for more than 18 months will continue to be subject to tax at a rate
not to exceed 28% and capital gain recognized from the disposition of Common
Stock or Debentures that has been held for 12 months or less will continue to
be subject to tax at ordinary income tax rates. The U.S. Congress recently
passed the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act") which, if signed into law by the President, would reduce the 18
month holding period to one year for net capital gain realized by individuals,
generally effective for net capital gains realized on or after January 1,
1998. Thus, capital gain recognized from the disposition of Common Stock or
Debentures that has been held for more than one year will generally be subject
to tax at a rate not to exceed 20% if the 1998 Act is enacted in its current
form. However, capital gain recognized by a corporate taxpayer will continue
to be subject to tax at the ordinary income tax rates applicable to
corporations.
ADJUSTMENT OF CONVERSION PRICE
If at any time the Company makes a distribution of property to shareholders
that would be taxable to such shareholders as a dividend for United States
federal income tax purposes and, in accordance with the anti-dilution
provisions of the Debentures, the Conversion Rate of the Debentures is
increased, the amount of such increase may be deemed to be the payment of a
taxable dividend to holders of the Debentures. For example, an increase in the
Conversion Rate in the event of distributions of evidences of indebtedness or
assets of the Company will generally result in deemed dividend treatment to
holders of the Debentures, but generally a decrease in the event of stock
dividends or a stock split will not. In addition, if the Conversion Rate is
increased at the discretion of the Company, such increase may result in
taxable income for the Holders of the Debentures.
TAX EVENT
The modification of the terms of the Debentures by the Company upon a Tax
Event as described in "Description of Debentures--Optional Conversion to
Semiannual Coupon Debenture upon Tax Event," could possibly alter the timing
of income recognition by the Holders of the Debentures with respect to the
semiannual payments of interest due on the Debentures after the Option
Exercise Date.
TAX CONSEQUENCES TO NON-US HOLDERS
General. The following is a summary of certain special tax consequences to
Non-U.S. Holders. As used herein, "Non-U.S. Holder" means a beneficial owner
of the Debentures or Common Stock that is not (i) a citizen or resident of the
United States, (ii) a corporation or other entity taxable as a corporation
created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate that is subject to United
States federal income taxation without regard to the source of its income or
(iv) a trust whose administration is subject to the primary supervision of a
United States court and which has one or more fiduciaries who have authority
to control substantial decisions of the trust.
(a) Payments of Interest. Subject to the discussion of Backup Withholding
and Information Reporting below, no withholding of United States federal
income tax will be required with respect to accruals of Original Issue
Discount and payments by the Company of cash interest (including amounts in
respect of Original Issue Discount) on a Debenture to a Non-U.S. Holder of
such Debenture, provided that, in the case of Original Issue Discount and
cash interest (i) the Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote, is not a controlled foreign corporation that is
related to the Company through stock ownership, a
23
<PAGE>
foreign tax-exempt organization or foreign private foundation for United
States federal income tax purposes, and (ii) the requirements of section
871(h) or 881(c) of the Code, as set forth in paragraph (f) below, are
satisfied. Notwithstanding the above, a Non-U.S. Holder that is engaged in
the conduct of a United States trade or business will be subject to (i)
United States federal income tax on Original Issue Discount and interest
that is effectively connected with such trade or business and (ii) if the
Non-U.S. Holder is a corporation, a United States branch profits tax equal
to 30% of its "effectively connected earnings and profits" (as adjusted)
for the taxable year, unless it qualifies for an exemption from such tax or
a lower tax rate under an applicable treaty.
(b) Gain on Sale of Debentures or Common Stock. An individual Non-U.S.
Holder who does not have a United States trade or business will generally
not be subject to tax on any capital gains recognized upon the sale,
exchange, redemption or other disposition of a Debenture or upon a sale,
exchange, redemption or other disposition of Common Stock unless (i) such
gains are effectively connected with the conduct of a United States trade
or business by the Non-U.S. Holder or (ii) in the case of a Non-U.S. Holder
who is a nonresident alien individual, such holder is present in the United
States for 183 or more days in the taxable year and certain other
requirements are met. In such a case, the Non-U.S. Holder will be subject
to tax at a rate of 30% on any such capital gains to the extent that such
capital gains exceed his United States source capital losses.
(c) Conversion of Debentures. No United States federal income tax will be
imposed upon the conversion of a Debenture into shares of Common Stock for
a Non-U.S. Holder who does not have a connection with or status with
respect to the United States as described in paragraph (a) above except
that such Holder may be subject to United States federal withholding tax on
constructive dividends, if any, upon conversion.
(d) Dividends. Dividends on shares of Common Stock held by a Non-U.S.
Holder will be subject to United States withholding tax at a rate of 30%
(or graduated rates if such dividends are effectively connected with the
conduct of a trade or business within the United States) or such lower rate
as may be provided by an applicable tax treaty and the Company must report
to the Internal Revenue Service the amount of the dividends paid to the
registered holder of the Common Stock but the payment will not be subject
to, any additional backup withholding or information reporting.
(e) Federal Estate Tax. A Debenture held by an individual who at the time
of death is not a citizen or resident of the United States will not be
subject to United States federal estate tax as a result of such
individual's death, provided that the individual does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote and that the Original
Issue Discount and cash interest accrued on such Debenture was not
effectively connected with a United States trade or business. Shares of
Common Stock held by an individual at the time of his death (or theretofore
transferred subject to certain rights and powers) will be subject to United
States federal estate tax unless otherwise provided by applicable treaty.
(f) Owner Statement Requirement. Sections 871(h) and 881(c) of the Code
require that either the beneficial owner of a Debenture or a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"Financial Institution") and that holds a Debenture on behalf of such owner
file a statement with the Company or its agent to the effect that the
beneficial owner is not a U.S. person in order to avoid withholding of
United States federal income tax. Under current regulations, this
requirement will be satisfied if the Company or its agent receives (i) a
statement (an "Owner's Statement") from the beneficial owner of a Debenture
in which such owner certifies, under penalties of perjury, that such owner
is not a U.S. person and provides such owner's name and address, or (ii) a
statement from the Financial Institution holding the Debenture on behalf of
the beneficial owner in which the Financial Institution certifies, under
penalties of perjury, that it has received the Owner's Statement together
with a copy of the Owner's Statement. The beneficial owner must inform the
Company or its agent (or, in the case of a statement described in clause
(ii) of the immediately preceding sentence, the Financial Institution)
within 30 days of any change in information on the Owner's Statement.
24
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, a 31% "backup"
withholding tax is applied to certain payments (including amounts in respect
of Original Issue Discount) made to, and to the proceeds of sales before
maturity by, certain U.S. persons if such persons (i) fail to furnish their
taxpayer identification numbers which, for an individual, would be his Social
Security number or (ii) in certain circumstances, fail to certify, under
penalties of perjury, that they have both furnished a correct taxpayer
identification number and not been notified by the Internal Revenue Service
that they are subject to backup withholding for failure to report interest and
dividend payments. Under current regulations, this backup withholding will not
apply to payments made outside the United States by the Company or a paying
agent on a Debenture if the Owner's Statement is received, provided in each
case that the Company or the paying agent, as the case may be, does not have
actual knowledge that the payee is a U.S. person.
Under current regulations, payments of the proceeds of the sale of a
Debenture or Common Stock to or through a foreign office of a "broker" will
not be subject to backup withholding but will be subject to information
reporting if the broker is a U.S. person, a controlled foreign corporation for
United States federal income tax purposes, or a foreign person 50% or more of
whose gross income is from a United States trade or business for a specified
three-year period ("U.S. Connected Broker"), unless the broker has in its
records documentary evidence that the holder of a Debenture or Common Stock is
not a U.S. person and certain conditions are met or the holder of a Debenture
or Common Stock otherwise establishes an exemption. Payment of the proceeds of
a sale to or through the United States office of a broker is subject to backup
withholding and information reporting unless the holder certifies its non-
United States status under penalties of perjury or otherwise establishes an
exemption.
On October 7, 1997, the Treasury Department released new Treasury
Regulations governing the backup withholding and information reporting
requirements described above. The new regulations would not generally alter
the treatment of Non-U.S. Holders who furnish an Owner's Statement to the
payor. The new regulations would alter the procedures for claiming treaty
benefits, such as in the case of dividends, and may change certain procedures
applicable to U.S. Connected Brokers. The new regulations are generally
effective for payments made after December 31, 1999.
25
<PAGE>
SELLING SECURITY HOLDERS
The Debentures were originally issued by the Company and resold by Merrill
Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc., as
initial purchasers (the "Initial Purchasers"), in transactions exempt from the
registration requirements of the Securities Act, to persons reasonably
believed by the Initial Purchasers to be "qualified institutional buyers," as
defined in Rule 144A promulgated under the Securities Act. The Selling Holders
(which term includes their transferees, pledgees, donees or their successors)
may from time to time offer and sell pursuant to this Prospectus any or all of
the Debentures and Common Stock issued upon conversion of the Debentures.
The following table sets forth information with respect to the Selling
Holders and the respective principal amounts at maturity of Debentures
beneficially owned by each Selling Holder. Such information has been obtained
from the Selling Holders. Except as otherwise disclosed herein, none of the
Selling Holders has, or within the past three years has had, any position,
office or other material relationship with the Company or any of its
predecessors or affiliates. Because the Selling Holders may offer all or some
portion of the Debentures or the Common Stock issuable upon conversion thereof
pursuant to this Prospectus, no estimate can be given as to the amount of the
Debentures or the Common Stock issuable upon conversion thereof that will be
held by the Selling Holders upon termination of any such sales. In addition,
the Selling Holders identified below may have sold, transferred or otherwise
disposed of all or a portion of their Debentures, since the date on which they
provided to the Company the information regarding their Debentures, in
transactions exempt from the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
Principal Amount at
Maturity of Debentures
Beneficially Owned and
Selling Holder that may be Offered Hereby
-------------- --------------------------
<S> <C>
Allstate Insurance Company...................... 3,500,000
Allstate Life Insurance Company................. 5,000,000
American Community Mutual Insurance Company..... 640,000
American Pioneer Life Insurance Company of New
York........................................... 110,000
American Progressive Life & Health Insurance
Company of New York............................ 110,000
American Public Entity Excess Pool.............. 120,000
American Republic Insurance Company............. 1,390,000
Amwest Surety Insurance Company................. 825,000
Anthracite Mutual Fire Insurance Company........ 25,000
Argent Classic Convertible Arbitrage Fund L.P... 129,000,000
Argent Classic Convertible Arbitrage Fund
(Bermuda) L.P.................................. 115,000,000
Argent Convertible Arbitrage Fund Ltd........... 5,000,000
Argent Offshore Fund L.P........................ 40,000,000
Arpeggio Fund, LP............................... 2,900,000
Associated Physicians Insurance Company......... 50,000
Baltimore Life Insurance Company................ 80,000
BancAmerica Robertson Stephens.................. 2,000,000
Bankers Trust Trustee For Chrysler Corp. Emp. #1
Pension Plan dated 4/1/89...................... 4,380,000
BCS Life Insurance Company...................... 500,000
Blue Cross of the Rochester Area c/o Income
Research and Management........................ 10,560,000
Blue Shield of the Rochester Area c/o Income
Research and Management........................ 3,450,000
Bond Fund Series--Oppenheimer Convertible
Securities Fund................................ 12,000,000
Bostik Inc...................................... 100,000
BT Holdings (New York) Inc...................... 15,000,000
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Amount at
Maturity of Debentures
Beneficially Owned and
Selling Holder that may be Offered Hereby
-------------- --------------------------
<S> <C>
California Public Employees' Retirement System.. 8,500,000
Capital Markets Transactions Inc................ 31,000,000
Care America Life Insurance Company............. 190,000
Century-National Insurance Company ............. 700,000
Chase Manhattan NA Trustee For IBM Retirement
Plan dated 12/18/45............................ 7,060,000
Chicago Mutual Insurance Company................ 100,000
Chrysler Insurance Company...................... 4,920,000
Commonwealth Dealers Life Insurance............. 120,000
Compass Variable Accounts--Total Return Variable
Account........................................ 1,180,000
Condor Insurance Company........................ 250,000
CSA Fraternal Life Insurance Company............ 190,000
Davis Convertible Securities Fund............... 9,600,000
DeMoss Foundation............................... 300,000
Deutsche Bank Securities Inc.(1)................ 4,000,000
EQ Financial Consultants Equi-Vest Total Return
Fund........................................... 1,020,000
Farmers Home Mutual Insurance Company........... 420,000
Federated Rural Electric Insurance Corp......... 460,000
Financial American Life Insurance Company....... 70,000
Finger Lakes Long Term Care Insurance Co. c/o
Income Research and Management................. 1,915,000
First Delaware Insurance Company................ 20,000
First Mercury Insurance Company................. 680,000
First Patriot Insurance Company................. 100,000
Franklin & Marshall College..................... 310,000
Frontier Insurance Company...................... 1,800,000
GLG Global Convertible Fund..................... 15,000,000
Goldman, Sachs & Co............................. 1,100,000
Goodville Mutual Casualty Company............... 80,000
Gopher State Mutual Insurance Company........... 160,000
Grain Dealers Mutual Insurance ................. 330,000
Healthcare Underwriters Mutual Insurance
Company........................................ 1,700,000
Highbridge Capital Corporation.................. 37,500,000
Holy Family Society............................. 80,000
HSBC Securities Inc............................. 3,150,000
IL Annuity and Insurance........................ 10,000,000
Illinois Founders Insurance Company............. 140,000
Illinois Health Care Insurance Company.......... 160,000
Illinois State Bar Association Mutual Insurance
Company........................................ 350,000
Indiana Lumbermens Mutual Insurance Company..... 650,000
Integrity Mutual Insurance Company.............. 470,000
Investcorp--Sam Fund Limited.................... 8,200,000
Kanawha Insurance Company....................... 100,000
LB Series Fund, Inc., Income Portfolio ......... 1,250,000
Lebanon Mutual Insurance Company................ 160,000
Lincoln Mutual Life Insurance Company........... 80,000
Lipper Convertibles, L.P........................ 45,600,000
Lipper Offshore Convertibles, L.P............... 14,400,000
Lone Star Life Insurance Company................ 2,190,000
Lutheran Brotherhood ........................... 6,000,000
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Principal Amount at
Maturity of Debentures
Beneficially Owned and
Selling Holder that may be Offered Hereby
-------------- --------------------------
<S> <C>
Lutheran Brotherhood Income Fund................ 1,000,000
Med America Insurance Co. c/o Income Research
and Management................................. 3,700,000
Medical Liability Mutual Insurance Company...... 35,000,000
Medico Life Insurance Company................... 1,200,000
Medmarc Insurance Company....................... 600,000
Merrill Lynch, Pierce, Fenner & Smith, Inc.(2).. 16,748,000
MFS Series Trust I--MFS Equity Income Fund...... 260,000
MFS Series Trust V--MFS Total Return Fund....... 16,400,000
MFS/Sunlife Series Trust--Equity Income Series.. 25,000
MFS/Sunlife Series Trust--Total Return Series... 6,750,000
MFS Total Return Portfolio LPT Variable
Insurance Series Trust......................... 35,000
MFS Variable Insurance Trust--MFS Total Return
Series ........................................ 460,000
Michigan Mutual Insurance Company............... 3,000,000
Mid America Life Insurance Company.............. 160,000
Middle Cities Risk Management Trust............. 350,000
Midwest Security Life........................... 440,000
Midwestern National Life Insurance Company of
Ohio........................................... 700,000
Millville Mutual Insurance Company.............. 170,000
Mutual Protective Insurance Company............. 1,700,000
New Castle Mutual Insurance Company............. 50,000
The Northwestern Mutual Life Insurance Company.. 6,000,000
OHIC Insurance Company.......................... 1,850,000
Old Guard Fire Insurance Company................ 310,000
Old Guard Insurance Company..................... 750,000
Ozark National Life Insurance Company........... 2,100,000
Pacific Life Insurance Company.................. 1,000,000
Paloma Securities LLC........................... 12,000,000
Physicians Mutual Insurance Company............. 560,000
Pioneer Insurance Company....................... 40,000
Police & Firemen's Insurance Association........ 170,000
Reassurance Company of Hannover................. 490,000
Secura Insurance, A Mutual Company.............. 820,000
Security Mutual Life Insurance Company of
Lincoln, NE ................................... 240,000
Service Life and Casualty Insurance Company..... 100,000
Service Lloyds Insurance Company................ 130,000
Shepherd Investments International, Ltd......... 6,625,000
Standard Mutual Insurance Company............... 430,000
State Street Bank Custodian for GE Pension
Trust.......................................... 2,250,000
Tennessee Consolidated Retirement System........ 14,000,000
Texas Builders Insurance Company................ 220,000
The Travelers Indemnity Company................. 9,916,000
The Travelers Insurance Company................. 6,340,000
The Travelers Life & Annuity Company............ 744,000
Transguard Insurance Company Inc................ 1,400,000
Travelers Total Return Series Trust............. 1,370,000
Tufts Associated Health Maintenance
Organization, Inc.............................. 3,000,000
Tufts Associated Health Plan c/o Income Research
and Management................................. 3,000,000
UBS A.G.--London Branch......................... 40,000,000
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Principal Amount at
Maturity of Debentures
Beneficially Owned and
Selling Holder that may be Offered Hereby
-------------- --------------------------
<S> <C>
University of Massachusetts Medical Center c/o
Income Research and Management................ 2,375,000
Warburg Dillon Read LLC........................ 44,450,000
Western Home Insurance Company................. 300,000
Westward Life Insurance Company................ 200,000
William M. Keck Jr. Foundation................. 200,000
Wisconsin Lawyers Mutual Insurance Company..... 330,000
Wisconsin Mutual Insurance Company............. 330,000
World Insurance Company........................ 750,000
</TABLE>
- --------
(1) Deutsche Bank Securities Inc. and affiliates have engaged, and may in the
future engage, in commercial banking transactions, which include or may
include foreign exchange, lending, credit and other financial
transactions, with the Company and its affiliates.
(2) Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan
Securities Inc. were the initial purchasers of the Debentures. Each of
Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan
Securities Inc. has provided from time to time, and may continue to
provide in the future, investment banking and investment advisory services
to the Company, for which it has received and may receive customary fees
and commissions.
29
<PAGE>
PLAN OF DISTRIBUTION
The Debentures and Common Stock issued upon conversion thereof may be
offered for sale and sold by the several Selling Holders in one or more
transactions, including block transactions, at a fixed price or fixed prices
(which may be changed), at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at prices determined on a
negotiated or competitive bid basis. Debentures and Common Stock issued upon
conversion thereof may be sold by a Selling Holder directly, through agents
designated from time to time or to or through broker-dealers designated from
time to time, or by such other means as may be specified in the applicable
Prospectus Supplement.
Debentures and Common Stock issued upon conversion thereof may be sold
through a broker-dealer acting as agent or broker for the Selling Holders or
to a broker-dealer acting as principal. In the latter case, the broker-dealer
may then resell such Debentures or Common Stock to the public at varying
prices to be determined by such broker-dealer at the time of resale.
The Selling Holders and any agents or broker-dealers that participate with
the Selling Holders in the distribution of any of the Debentures or Common
Stock issued upon conversion thereof may be deemed to be "underwriters" within
the meaning of the Securities Act, and any discount or commission received by
them and any profit on the resale of the Debentures or Common Stock issued
upon conversion thereof purchased by them may be deemed to be underwriting
discounts or commissions under the Securities Act.
To the extent required, the number of Debentures or shares of Common Stock
issued upon conversion thereof to be sold, certain information relating to the
Selling Holders, the purchase price, the public offering price, if applicable,
the name of any underwriter, agent or broker-dealer, and any applicable
commissions, discounts or other items constituting compensation to such
underwriters, agents or broker-dealers with respect to a particular offering
will be set forth in an accompanying Prospectus Statement.
LEGAL MATTERS
The validity of the Debentures offered hereby and the shares of Common Stock
issuable upon conversion thereof was passed upon for the Company by Martin S.
Wagner, Esq., Associate General Counsel, Corporate Finance and Ventures of the
Company. Certain United States Federal income tax consequences resulting from
the purchase, ownership, disposition and conversion of the Debentures was
passed upon for the Company by Ivins, Phillips & Barker, Chartered, 1700
Pennsylvania Avenue, N.W., Washington, D.C.
EXPERTS
The consolidated financial statements and schedule of the Company and
consolidated subsidiaries as of December 31, 1997 and 1996, and for each of
the years in the three-year period ended December 31, 1997, included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, have been incorporated by reference herein, in reliance upon the reports
set forth therein of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
30
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTA-
TIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OF-
FERING MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRE-
SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
THE PURCHASERS. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE DEBENTURES OFFERED HEREBY IN ANY JURIS-
DICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HERE-
UNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY THE COMPANY THAT
WOULD PERMIT A PUBLIC OFFERING OF THE DEBENTURES OR POSSESSION OR DISTRIBUTION
OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS
REQUIRED. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY
THE COMPANY TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO
THE OFFERING OF THE DEBENTURES AND THE DISTRIBUTION OF THIS PROSPECTUS.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 4
The Company................................................................ 5
Use of Proceeds............................................................ 5
Ratio of Earnings to Fixed Charges......................................... 6
Description of Debentures.................................................. 7
Certain United States Federal Income Tax Considerations.................... 22
Selling Security Holders................................................... 26
Plan of Distribution....................................................... 30
Legal Matters.............................................................. 30
Experts.................................................................... 30
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$1,012,198,000
XEROX CORPORATION
CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2018
----------------
PROSPECTUS
----------------
JULY 17, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
The following statement sets forth the expenses to be borne by the Company
in connection with the issuance and distribution of the Debentures.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $173,002
Printing and Engraving.......................................... 40,000
Legal Fees and Expenses......................................... 10,000
Fees of Company's Independent Auditors.......................... 50,000
Trustee Fees and Expenses (including counsel fees).............. 50,000
--------
Total......................................................... $323,002
========
</TABLE>
- --------
* The foregoing expenses, other than the Securities and Exchange Commission
Registration Fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VIII, Section 2 of the Company's By-laws states:
"Indemnification of Directors and Officers: Except to the extent
expressly prohibited by law, the Company shall indemnify any person, made
or threatened to be made, a party in any civil or criminal action or
proceeding, including an action or proceeding by or in the right of the
Company to procure a judgment in its favor or by or in the right of any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any Director or officer of the Company served in any
capacity at the request of the Company, by reason of the fact that he, his
testator or intestate is or was a Director or officer of the Company or
serves or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, in any capacity, against
judgments, fines, penalties, amounts paid in settlement and reasonable
expenses, including attorneys' fees, incurred in connection with such
action or proceeding, or any appeal therein, provided that no such
indemnification shall be required with respect to any settlement unless the
Company shall have given its prior approval thereto. Such indemnification
shall include the right to be paid advances of any expenses incurred by
such person in connection with such action, suit or proceeding, consistent
with the provisions of applicable law. In addition to the foregoing, the
Company is authorized to extend rights to indemnification and advancement
of expenses to such persons by i) resolution of the shareholders, ii)
resolution of the Directors or iii) an agreement, to the extent not
expressly prohibited by law."
Reference is made to Sections 721 through 726 of the Business Corporation
Law of the State of New York.
ITEM 16. EXHIBITS.
(4)(a) --Indenture between the Company and The First National Bank of
Chicago, as Trustee.
(4)(b) --Form of Convertible Subordinated Debenture.
(4)(c) --Restated Certificate of Incorporation of the Company filed by
the Department of State of New York on October 29, 1996
(incorporated by reference to Exhibit 3(a)(1) to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996).
II-1
<PAGE>
(4)(d) --By-Laws of the Company, as amended through February 2, 1998
(incorporated by reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997).
(5)(a) --Opinion of Martin S. Wagner, Esq., as to legality of securities
being registered.
(5)(b) --Opinion of Ivins, Phillips & Barker, Chartered, special tax
counsel to the Company, as to material tax consequences.
(10)--Registration Rights Agreement among the Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities
Inc.
(12)--Computation of Ratio of Earnings to Fixed Charges.
(23)(a) --Consent of Independent Auditors (see page II-5).
(23)(b) --Consent of Martin S. Wagner, Esq. (see Exhibit 5(a)).
(23)(c) --Consent of Ivins, Phillips & Barker, Chartered, special tax
counsel to the Company (see Exhibit 5(b)).
(24)(a) --Certified Resolution.
(24)(b) --Power of Attorney.
(25)--Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 on Form T-1 of The First National Bank of Chicago to
act as Trustee under the Indenture.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales of the securities
registered hereby are being made, a post-effective amendment to the
registration statement: (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (the "Act"); (ii) to reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and (iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement, provided, however, that paragraphs (i) and (ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Act, such
filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the Prospectus, to each person to whom the Prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the Prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange
Act; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the Prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
(6) That, for the puposes of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore unenforceable. In the event that a claim for
indemnifiation against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF STAMFORD AND STATE OF CONNECTICUT, ON THE 17TH DAY
OF JULY, 1998.
XEROX CORPORATION (Registrant)
By: Paul A. Allaire*
-----------------------------------
(Chairman of the Board and Chief
Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON JULY 17, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
PRINCIPAL EXECUTIVE OFFICER:
Paul A. Allaire* Chairman of the Board, Chief Executive and
Director
PRINCIPAL FINANCIAL OFFICER:
Barry D. Romeril* Executive Vice President and Chief Financial
Office
PRINCIPAL ACCOUNTING OFFICER:
Philip D. Fishbach* Vice President and Controller
DIRECTORS:
Antonia Ax:son Johnson }
Vernon E. Jordan, Jr. }
Yotaro Kobayashi }
Hilmar Kopper }
Ralph S. Larsen }
John D. Macomber }
N.J. Nicholas, Jr. } *
John E. Pepper }
Patricia F. Russo }
Martha R. Seger }
Thomas C. Theobald }
G. Richard Thoman }
</TABLE>
Martin S. Wagner
*By: ________________________________
(MARTIN S. WAGNER,ATTORNEY-IN-FACT)
II-4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Xerox Corporation:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
Stamford, Connecticut
July 17, 1998
II-5
<PAGE>
EXHIBIT INDEX
(4)(a) --Indentures between the Company and The First National Bank of
Chicago, as Trustee.
(4)(b) --Form of Convertible Subordinated Debenture.
(4)(c) --Restated Certificate of Incorporation of the Company filed by the
Department of State of New York on October 29, 1996 (incorporated by
reference to Exhibit 3(a)(1) to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1996).
(4)(d) --By-Laws of the Company, as amended through February 2, 1998
(incorporated by reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997).
(5)(a) --Opinion of Martin S. Wagner, Esq., as to legality of securities
being registered.
(5)(b) --Opinion of Ivins, Phillips & Barker, Chartered, special tax counsel
to the Company, as to material tax consequences.
(10) --Registration Rights Agreement among the Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.
(12) --Computation of Ratio of Earnings to Fixed Charges.
(23)(a) --Consent of Independent Auditors (see page II-5).
(23)(b) --Consent of Martin S. Wagner, Esq. (see Exhibit 5(a)).
(23)(c) --Consent of Ivins, Phillips & Barker, Chartered, special tax counsel
to the Company (see Exhibit 5(b)).
(24)(a) --Certified Resolution.
(24)(b) --Power of Attorney.
(25) --Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 on Form T-1 of The First National Bank of Chicago to act
as Trustee under the Indenture.
<PAGE>
EXHIBIT (4)(a)
EXECUTION COPY
================================================================================
INDENTURE
between
XEROX CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO, Trustee
Convertible Subordinated Debentures Due April 21, 2018
Dated as of April 21, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
Parties.................................................................... 1
Recitals of the Company.................................................... 1
ARTICLE I
Definitions and Other Provisions of
-----------------------------------
General Application
-------------------
SECTION 1.01. Definitions................................................. 1
SECTION 1.02. Compliance Certificates and
Opinions.................................................. 11
SECTION 1.03. Form of Documents Delivered to
Trustee................................................... 11
SECTION 1.04. Acts of Holders; Record Dates............................... 12
SECTION 1.05. Notices, Etc., to Trustee and
Company................................................... 15
SECTION 1.06. Notice to Holders; Waiver................................... 15
SECTION 1.07. Conflict with Trust Indenture Act........................... 16
SECTION 1.08. Effect of Headings and Table of
Contents.................................................. 16
SECTION 1.09. Successors and Assigns...................................... 16
SECTION 1.10. Separability Clause......................................... 16
SECTION 1.11. Benefits of Indenture....................................... 16
SECTION 1.12. Governing Law............................................... 17
SECTION 1.13. Legal Holidays.............................................. 17
ARTICLE II
Security Forms
--------------
SECTION 2.01. Forms Generally............................................. 17
SECTION 2.02. Form of Face of Security.................................... 18
SECTION 2.03. Form of Reverse of Security................................. 21
SECTION 2.04. Form of Trustee's Certificate of
Authentication............................................ 34
SECTION 2.05. Form of Conversion Notice................................... 34
SECTION 2.06. Form of Certification....................................... 36
ARTICLE III
The Securities
--------------
SECTION 3.01. Title and Terms............................................. 37
SECTION 3.02. Denominations............................................... 38
<PAGE>
Contents, p(ii)
SECTION 3.03. Execution, Authentication, Delivery
and Dating.............................................. 38
SECTION 3.04. Temporary Securities...................................... 38
SECTION 3.05. Registration; Registration of Transfer
and Exchange............................................ 39
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Securities.............................................. 45
SECTION 3.07. Payment of Interest; Interest Rights
Preserved............................................... 46
SECTION 3.08. Persons Deemed Owners..................................... 48
SECTION 3.09. Cancellation.............................................. 49
SECTION 3.10. Computation of Interest................................... 49
ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of
Indenture............................................... 49
SECTION 4.02. Application of Trust Money................................ 50
ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default......................................... 51
SECTION 5.02. Acceleration of Maturity;
Rescission and Annulment................................ 53
SECTION 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee.............................. 54
SECTION 5.04. Trustee May File Proofs of Claim.......................... 55
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Securities................................ 55
SECTION 5.06. Application of Money Collected............................ 56
SECTION 5.07. Limitation on Suits....................................... 56
SECTION 5.08. Unconditional Right of Holders to
Receive Principal, Premium and
Interest and to Convert................................. 57
SECTION 5.09. Restoration of Rights and Remedies........................ 57
SECTION 5.10. Rights and Remedies Cumulative............................ 57
SECTION 5.11. Delay or Omission Not Waiver.............................. 58
SECTION 5.12. Control by Holders........................................ 58
SECTION 5.13. Waiver of Past Defaults................................... 58
SECTION 5.14. Undertaking for Costs..................................... 59
SECTION 5.15. Waiver of Usury, Stay or Extension
Laws.................................................... 59
<PAGE>
Contents, p. (iii)
ARTICLE VI
The Trustee
-----------
SECTION 6.01. Certain Duties and
Responsibilities........................................ 59
SECTION 6.02. Notice of Defaults........................................ 61
SECTION 6.03. Certain Rights of Trustee................................. 61
SECTION 6.04. Not Responsible for Recitals or
Issuance of Securities.................................. 62
SECTION 6.05. May Hold Securities....................................... 62
SECTION 6.06. Money Held in Trust....................................... 62
SECTION 6.07. Compensation and Reimbursement............................ 63
SECTION 6.08. Disqualification; Conflicting
Interests............................................... 63
SECTION 6.09. Corporate Trustee Required;
Eligibility............................................. 63
SECTION 6.10. Resignation and Removal; Appointment
of Successor............................................ 64
SECTION 6.11. Acceptance of Appointment by
Successor............................................... 65
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business.................................. 66
SECTION 6.13. Preferential Collection of Claims
Against Company......................................... 66
SECTION 6.14. Appointment of Authenticating Agent....................... 66
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
SECTION 7.01. Company to Furnish Trustee Names and
Addresses of Holders.................................... 68
SECTION 7.02. Preservation of Information;
Communications to Holders............................... 69
SECTION 7.03. Reports by Trustee........................................ 69
SECTION 7.04. Reports by Company........................................ 69
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
----------------------------------------------------
SECTION 8.01. Company May Consolidate, Etc., Only
on Certain Terms......................................... 70
SECTION 8.02. Successor Substituted..................................... 71
<PAGE>
Contents, p. (iv)
ARTICLE IX
Amendments
----------
SECTION 9.01. Without Consent of Holders................................ 71
SECTION 9.02. With Consent of Holders................................... 72
SECTION 9.03. Compliance with Trust Indenture........................... 74
SECTION 9.04. Revocation and Effect of Consents,
Waivers and Actions..................................... 74
SECTION 9.05. Notation on or Exchange of Securities..................... 74
SECTION 9.06. Trustee to Sign Supplemental
Indentures.............................................. 74
SECTION 9.07. Effect of Supplemental Indentures......................... 74
ARTICLE X
Covenants
---------
SECTION 10.01. Payment of Securities..................................... 75
SECTION 10.02. Maintenance of Office or Agency........................... 75
SECTION 10.03. Money for Security Payments To Be
Held in Trust........................................... 76
SECTION 10.04. Statement by Officers as to Default....................... 77
SECTION 10.05. Existence................................................. 77
SECTION 10.06. Calculation of Original Issue............................. 78
SECTION 10.07. Delivery of Certain Information........................... 78
ARTICLE XI
Redemption of Securities
------------------------
SECTION 11.01. Right To Redeem; Notice to Trustee........................ 78
SECTION 11.02. Selection of Securities to Be
Redeemed................................................ 79
SECTION 11.03. Notice of Redemption...................................... 79
SECTION 11.04. Effect of Notice of Redemption............................ 80
SECTION 11.05. Deposit of Redemption Price............................... 81
SECTION 11.06. Securities Redeemed in Part............................... 81
SECTION 11.07. Conversion Arrangement on Call
for Redemption.......................................... 81
<PAGE>
Contents, p. (v)
ARTICLE XII
Subordination of Securities
---------------------------
SECTION 12.01. Securities Subordinate to Senior
Indebtedness............................................ 82
SECTION 12.02. Payment Over of Proceeds Upon
Dissolution, Etc. ...................................... 82
SECTION 12.03. No Payment When Senior Indebtedness
in Default.............................................. 84
SECTION 12.04. Payment Permitted If No Default........................... 85
SECTION 12.05. Subrogation to Rights of Holders of
Senior Indebtedness..................................... 86
SECTION 12.06. Provisions Solely To Define Relative
Rights.................................................. 86
SECTION 12.07. Trustee to Effectuate Subordination....................... 87
SECTION 12.08. No Waiver of Subordination Provisions..................... 87
SECTION 12.09. Notice to Trustee......................................... 87
SECTION 12.10. Reliance on Judicial Order or
Certificate of Liquidating Agent........................ 88
SECTION 12.11. Trustee Not Fiduciary for Holders
of Senior Indebtedness.................................. 89
SECTION 12.12. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of
Trustee's Rights........................................ 89
SECTION 12.13. Article Applicable to Paying Agents....................... 89
SECTION 12.14. Certain Conversions Deemed Payment........................ 90
ARTICLE XIII
Conversion of Securities
------------------------
SECTION 13.01. Conversion Privilege...................................... 90
SECTION 13.02. Conversion Procedure...................................... 92
SECTION 13.03. Fractional Shares......................................... 94
SECTION 13.04. Taxes on Conversion....................................... 94
SECTION 13.05. Company to Provide Stock.................................. 95
SECTION 13.06. Adjustment for Change in Capital
Stock................................................... 95
SECTION 13.07. Adjustment for Rights Issue............................... 96
SECTION 13.08. Adjustments for Other Distributions....................... 97
SECTION 13.09. When Adjustment May Be Deferred........................... 100
SECTION 13.10. When No Adjustment Required............................... 100
SECTION 13.11. Notice of Adjustment...................................... 101
SECTION 13.12. Voluntary Increase........................................ 101
SECTION 13.13. Notice of Certain Transactions............................ 102
SECTION 13.14. Reorganization of Company
Special Distributions................................... 102
<PAGE>
Contents, p. (vi)
SECTION 13.15. Company Determination Final............................... 103
SECTION 13.16. Trustee's Adjustment Disclaimer........................... 103
SECTION 13.17. Simultaneous Adjustments.................................. 104
SECTION 13.18. Successive Adjustments.................................... 104
ARTICLE XIV
Right To Require Repurchase
---------------------------
SECTION 14.01. Purchase of Securities at Option of the
Holder upon Change in Control........................... 104
SECTION 14.02. Purchase of Securities at the Opinion
of the Holder........................................... 108
SECTION 14.03. Effect of Purchase Notice or Change
in Control Purchase Notice.............................. 115
SECTION 14.04. Deposit of Purchase Price or Change
in Control Purchase Price............................... 117
SECTION 14.05. Securities Repurchased in Part............................ 117
SECTION 14.06. Covenant to Comply with Securities
Laws upon Purchase of Securities........................ 117
SECTION 14.07. Repayment to the Company.................................. 118
ARTICLE XV
Special Tax Event Conversion
----------------------------
SECTION 15.01. Optional Conversion to Semiannual
Coupon Debenture Upon Tax Event......................... 118
<PAGE>
INDENTURE, dated as of April 21, 1998, between XEROX
CORPORATION, a corporation duly organized and existing under the
laws of the State of New York (herein called the "Company"), and
THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association banking corporation duly organized and existing under
the laws of the United States of America, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its Convertible
Subordinated Debentures Due April 21, 1998 (herein called the "Securities"), to
be issued in one or more series as in this Indenture provided.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:
ARTICLE I
Definitions and Other Provisions
--------------------------------
of General Application
----------------------
SECTION 1.01. Definitions. For all purposes of this Indenture,
------------
except as otherwise expressly provided or unless the context otherwise requires:
1. the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
<PAGE>
2
2. all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
3. all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation;
4. unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or Section, as the case may be, of
this Indenture; and
5. the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used in Article XIV have the meanings specified therein.
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.04.
"Affiliate" of any specified Person means any other Person who
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent Members" has the meaning specified in Section 3.05.
"Applicable Procedures" has the meaning specified in Section 3.05.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
<PAGE>
3
"Average Sale Price" has the meaning specified in Section 13.01.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means a day on which banking institutions are open for
business and carrying out transactions in Dollars at the relevant place of
payment.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" means the Common Stock of the Company, par value $1 per
share, as it exists on the date of this Indenture and any other shares of
capital stock of the Company into which such common stock shall be reclassified
or changed.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Corporate Trust Agency" means the corporate trust agency located at
14 Wall Street, 8th Floor, New York, New York 10005 or such other location as
designated in writing by the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
One First National Plaza,
<PAGE>
4
Suite 0126, Chicago, IL 60670-0186 at which at any particular time its corporate
trust business shall be administered.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Definitive Security" means a certificated Security bearing the
restricted securities legend set forth in Section 2.02 and which is held by an
Institutional Accredited Investor in accordance with Section 2.01(c).
"Depositary" means, with respect to the Securities issued in whole or
in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 3.05.
"Dollar" means a Dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"Event of Default" has the meaning specified in Section 5.01.
"Ex-Dividend Time" has the meaning specified in Section 13.01.
"Excess Shares" has the meaning specified in Section 2.03.
"Exchange Act" means the Securities Exchange Act of 1934 as it may be
amended from time to time, and any successor act thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.04.
"Global Security" has the meaning specified in Section 2.01.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
<PAGE>
5
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J.P. Morgan Securities Inc.
"Institutional Accredited Investor" means an institutional "accredited
investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means the date of first issuance of the Securities under
this Indenture.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is sold
as set forth on the face of the Security.
"Market Price" means the average of the Sale Price of the Common Stock
for the five Trading Day period ending on and including the third Trading Day
immediately prior to but not including, the applicable Purchase Date
appropriately adjusted to take into account the actual occurrence, during the
seven Trading Days preceding such Purchase Date, of any event described in
Section 13.06, 13.07 or 13.08; subject, however, to the conditions set forth in
------- -------
Sections 13.09 and 13.10.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, exercise of the conversion or
repurchase right or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.01(3) or 5.01(4).
<PAGE>
6
"Officers' Certificate" means a certificate signed by any of the
Chairman of the Board, the President or a Vice President, and by any of the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of the Company.
"Original Issue Discount" of any Security means the difference, if
any, between the Issue Price and the Principal Amount of such Security as set
forth on the face of such Security.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
------
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
--------
to be redeemed, notice of such redemption shall have been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee shall have been made;
(iii) Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; and
(iv) Securities which have been defeased pursuant to Section 15.02;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
Principal Amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
<PAGE>
7
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Amount" of a Security means the Principal Amount at Stated
Maturity as set forth on the face of the Security.
"Purchase Notice" has the meaning specified in Section 14.02.
"Qualified Institutional Buyer" means a "qualified institutional
buyer" as defined in Rule 144A.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed as set forth in the
Securities.
<PAGE>
8
"Regular Record Date" for the interest payable on any Interest Payment
Date means the close of business on April 7 or October 7 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means
any officer or authorized employee of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Rule 144A" has the meaning specified in Section 2.01.
"Rule 144A Information" has the meaning specified in Section 10.09.
"Sale Price" on any Trading Day means the closing per share sale price
for the Common Stock (or if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case the average of the
average bid and the average ask prices) on the New York Stock Exchange or, if
the Common Stock is not then listed thereon, such other national or regional
securities exchange upon which the Common Stock is listed on such Trading Day,
as reported in composite transactions for such exchange or, if the Common Stock
is not listed on the New York Stock Exchange or a United States national or
regional stock exchange, as reported by the National Association of Securities
Dealers Automated Quotation System. In the absence of one or more such
quotations, the Company shall be entitled to determine "Sale Price" on the basis
of such quotations as it deems appropriate.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture and "Security" means one of such Securities.
"Securities Act" means the Securities Act of 1933 as it may be amended
from time to time, and any successor act thereto, and the rules and regulations
of the Commission promulgated thereunder.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Senior Indebtedness" means without duplication, the principal,
premium (if any) and unpaid interest on all present and future (i) indebtedness
of the Company for borrowed money, (ii) obligations of the Company evidenced by
bonds, debentures, notes or similar instruments, (iii) all
<PAGE>
9
obligations of the Company under (a) interest rate swaps, caps, collars, options
and similar arrangements, (b) any foreign exchange contract, currency swap
contract, futures contract, currency option contract or other foreign currency
hedge, and (c) credit swaps, caps, floors, collars and similar arrangements,
(iv) indebtedness incurred, assumed or guaranteed by the Company in connection
with the acquisition by it or a Subsidiary of any business, properties or assets
(except purchase-money indebtedness classified as accounts payable under
generally accepted accounting principles), (v) obligations of the Company as
lessee under leases required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles, (vi) reimbursement
obligations of the Company in respect of letters of credit relating to
indebtedness or other obligations of the Company that qualify as indebtedness or
obligations of the kind referred to in clauses (i) through (v) above, and (vii)
obligations of the Company under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (vi)
above, in each case unless in the instrument creating or evidencing the
indebtedness or obligation or pursuant to which the same is outstanding it is
provided that such indebtedness or obligation is not superior in right of
payment to the Securities
"Share Certificate" means a certificate evidencing ownership of shares
of Common Stock.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
<PAGE>
10
"Surrendered Securities" has the meaning specified in Section 2.06.
"Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after April 16, 1998, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations by any legislative body, court, governmental agency
or regulatory authority, in each case which amendment or change is enacted,
promulgated, issued or announced or which interpretation is issued or announced
or which action is taken, on or after April 16, 1998, there is more than an
insubstantial risk that interest (including Original Issue Discount) payable on
the Securities either (i) would not be deductible on a current accrual basis or
(ii) would not be deductible under any other method, in either case in whole or
in part, by the Company (by reason of deferral, disallowance, or otherwise) for
United States federal income tax purposes.
"Time of Determination" means the time and date of the determination
of stockholders entitled to receive rights, warrants, options or a distribution,
in each case, to which Sections 13.07 or 13.08 apply.
"Trading Day" means each day on which the securities exchange or
quotation system which is used to determine the Sale Price is open for trading
or quotation.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed and the rules and
regulations thereunder; provided, however, that in the event the Trust Indenture
-------- -------
Act of 1939 or such rules and regulations are amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 and such rules and regulations as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including the
States thereof and the District of Columbia),
<PAGE>
11
its territories, its possessions and other areas subject to its jurisdiction.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 1.02. Compliance Certificates and Opinions. Upon any
-------------------------------------
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investiga tion as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any case
---------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify
<PAGE>
12
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders; Record Dates. Any request, demand,
------------------------------
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments(and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the indivi-
<PAGE>
13
dual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may, but shall not be obligated to, set any day as a
record date for the purpose of determining the Holders of Outstanding Securities
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given or taken by Holders of Securities; provided that the Company may not set a
--------
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities on such record date,
and no other Holders, shall be entitled to take the relevant action, whether or
not such Holders remain Holders after such record date; provided that no such
--------
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite Principal Amount of Outstanding
Securities on such record date; and provided, further, that for the purpose of
-------- -------
determining whether Holders of the requisite Principal Amount of such Securities
have taken such action, no Security shall be deemed to have been Outstanding
on such record date unless it is also Outstanding on the date such action is to
become effective. Nothing in this paragraph shall prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), nor shall anything in
<PAGE>
14
this paragraph be construed to render ineffective any action taken by Holders of
the requisite Principal Amount of Outstanding Securities on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities in the manner set forth in
Section 1.06.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.02, (iii) any request to institute proceedings referred
to in Section 5.07(2) or (iv) any direction referred to in Section 5.12. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
--------
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite Principal Amount of Outstanding Securities on such
record date; and provided, further, that for the purpose of determining whether
-------- -------
Holders of the requisite Principal Amount of such Securities have taken such
action, no Security shall be deemed to have been Outstanding on such record date
unless it is also Outstanding on the date such action is to become effective.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be cancelled and of no
effect), nor shall anything in this paragraph be construed to render ineffective
any action taken by Holders of the requisite Principal Amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section, the
party hereto that sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
--------
proposed new Expiration Date is given
<PAGE>
15
to the other party hereto in writing, and to each Holder of Securities in the
manner set forth in Section 1.06, on or before the existing Expiration Date.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date and, if an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have designated the
180th day after such record date as the Expiration Date with respect thereto.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the Principal Amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such Principal Amount.
SECTION 1.05. Notices, Etc., to Trustee and Company. Any request,
--------------------------------------
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficiently
given if made, given, furnished or filed in writing to or with the Trustee
at its Corporate Trust Office, Attention: Corporate Finance, or
(2) the Company by the Trustee or by any Holder shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, to the Company addressed to it at the
address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture
--------------------------
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular
<PAGE>
16
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Conflict with Trust Indenture Act. If any provision
----------------------------------
hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act which is required under such Act to be a part of and govern this Indenture,
the latter provision shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be. To the extent a Security
conflicts with a provision in the Indenture, the Indenture governs.
SECTION 1.08. Effect of Headings and Table of Contents. The Article
-----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and agreements
-----------------------
in this Indenture by the Company shall bind its successors and assigns, whether
so expressed or not.
SECTION 1.10. Separability Clause. In case any provision in this
--------------------
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in
----------------------
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior
Indebtedness and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
<PAGE>
17
SECTION 1.12. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
--------------
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
SECTION 1.13. Legal Holidays. In any case where any Interest Payment
---------------
Date, Redemption Date, Repurchase Date or Stated Maturity of any Security or the
last date on which a Holder has the right to convert his Securities shall not be
a Business Day then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest or principal (and premium, if any) or
conversion of the Securities need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, Redemption Date, Repurchase Date or at the Stated
Maturity, or on such last day for conversion, provided that no interest or
--------
Original Issue Discount shall accrue for the period from and after such Interest
Payment Date, Redemption Date, Repurchase Date or Stated Maturity, as the case
may be.
ARTICLE II
Security Forms
--------------
SECTION 2.01. Forms Generally. The Securities and the Trustee's
----------------
certificate of authentication shall be in substantially the form set forth in
this Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
In certain cases described elsewhere herein, the legends set forth in
the first four paragraphs of Section 2.02 may be omitted from Securities
issued hereunder.
(a) Rule 144A Securities. Securities offered and sold in reliance on
---------------------
Rule 144A ("Rule 144A") under the Securities Act and to subsequent transferees,
directly or
<PAGE>
18
indirectly, of such Securities shall be issued in fully registered book-entry
form one or more Global Securities (each a "Global Security") without interest
coupons, substantially in the form of Security set forth in Sections 2.02 and
2.03, with such applicable legends as are provided for in Section 2.02, except
as otherwise permitted herein. Such Global Securities shall be registered in
the name of a nominee of the Depositary and deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate Principal Amount of the
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depositary, in
consequence of the issue of Definitive Securities, as hereinafter provided.
(b) Definitive Securities. Except as provided in this Section 2.01
----------------------
or Section 3.05, owners of beneficial interests in Global Securities will not be
entitled to receive physical delivery of certificated Securities. Purchasers of
Securities who are Institutional Accredited Investors and are not Qualified
Institutional Buyers will receive Definitive Securities; provided, however, that
-------- -------
upon transfer of such Definitive Securities to a Qualified Institutional Buyer,
such Definitive Securities will, unless the Global Security has previously been
exchanged, be exchanged for an interest in a Global Security pursuant to the
provisions of Section 3.05.
SECTION 2.02. Form of Face of Security. FOR PURPOSES OF SECTIONS
-------------------------
1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT OF THIS
SECURITY IS $431.93, THE ISSUE DATE IS APRIL 21, 1998, AND THE YIELD TO STATED
MATURITY IS 3.625% PER ANNUM (COMPUTED ON A SEMIANNUAL BOND EQUIVALENT BASIS).
[INCLUDE UNLESS PURSUANT TO SECTION 3.05(d) OF THE INDENTURE, THE
ISSUER DETERMINES THAT THE FOLLOWING LEGEND MAY BE REMOVED--THIS SECURITY AND
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
<PAGE>
19
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY AND THE COMMON STOCK ISSUABLE
UPON THE CONVERSION THEREOF, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OR SUCCESSOR OF SUCH
SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (E)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY DEPOSITED WITH DTC -- UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
<PAGE>
20
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE THREE OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]
[INCLUDE IF SECURITY IS A DEFINITIVE SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR--IN CONNECTION WITH ANY TRANSFER, THE HOLDER
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]
Xerox Corporation
Convertible Subordinated Debentures Due , 2018
No. ____________ Principal Amount at
Stated Maturity:
Cusip No. ___________ $________________________
Issue Date: April 21, 1998 Issue Price: $568.07
(for each $1,000
Principal Amount at
Stated Maturity)
Original Issue Discount: $431.93 (for each
$1,000 Principal Amount at Stated Maturity)
Xerox Corporation, a corporation duly organized and existing under the
laws of New York (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to __________, or registered assigns, the principal sum of
___________ Dollars on April 21, 2018, and to pay cash interest thereon as
specified on the other side of this Security.
Original Issue Discount will accrue as specified on the other side of
this Security. This Security is convertible as specified on the other side of
this Security. All capitalized terms used herein without definition shall have
the respective meanings assigned thereto in the Indenture referred to on the
other side of this Security.
<PAGE>
21
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _________________
XEROX CORPORATION,
by
_______________________
Name:
Title:
[Seal]
Attest:
____________________________
Name:
Title:
SECTION 2.03. Form of Reverse of Security.
----------------------------
1. Cash Interest; Original Issue Discount
--------------------------------------
The Company promises to pay interest in cash on the Principal Amount
of this Security at the rate per annum of 0.57%. The Company will pay cash
interest semiannually on April 21 and October 21 of each year (each an "Interest
Payment Date") to holders of record at the close of business on each April 7 or
October 7 (whether or not a business day) (each a "Regular Record Date")
immediately preceding such Interest Payment Date. Cash interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the Issue Date. Cash interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay cash interest on overdue principal, or if shares of Common Stock (or
cash in lieu of fractional shares) in respect of a conversion of this Security
in accordance with the terms of
<PAGE>
22
Article XIII of the Indenture are not delivered when due, at the rate borne by
the Securities plus 1% per annum, and it shall pay interest in cash on overdue
installments of cash interest at the same rate to the extent lawful. All such
overdue cash interest shall be payable on demand.
Original Issue Discount shall accrue on this Security as set forth
below so long as this Security remains outstanding, calculated on a semiannual
bond equivalent basis using a 360-day year composed of twelve 30-day months,
from the Issue Date of this Security. As of any date (the "Specified Date"),
the amount of Original Issue Discount accrued on this Security per $1,000
Principal Amount shall be:
(i) If the Specified Date occurs on one of the Interest Payment Dates
set forth below, the amount of accumulated Original Issue Discount will
equal the amount set forth below for such Interest Payment Date:
<TABLE>
<CAPTION>
Accretion of Accreted Amount
Original Issue (per $1,000
Discount (per $1,000 Principal
Date Principal Amount) Amount)
- ---------------------- ------------------------- ----------------
<S> <C> <C>
$ 568.07
October 21, 1998 $ 7.44 575.51
April 21, 1999 7.59 583.10
October 21, 1999 7.71 590.81
April 21, 2000 7.86 598.67
October 21, 2000 8.00 606.67
April 21, 2001 8.15 614.82
October 21, 2001 8.29 623.11
April 21, 2002 8.45 631.56
October 21, 2002 8.59 640.15
April 21, 2003 8.76 648.91
October 21, 2003 8.91 657.82
April 21, 2004 9.07 666.89
October 21, 2004 9.24 676.13
April 21, 2005 9.40 685.53
October 21, 2005 9.58 695.11
April 21, 2006 9.75 704.86
October 21, 2006 9.92 714.78
April 21, 2007 10.11 724.89
October 21, 2007 10.29 735.18
April 21, 2008 10.47 745.65
October 21, 2008 10.67 756.32
April 21, 2009 10.86 767.18
October 21, 2009 11.05 778.23
April 21, 2010 11.26 789.49
</TABLE>
<PAGE>
23
<TABLE>
<CAPTION>
Accretion of Accreted Amount
Original Issue (per $1,000
Discount (per $1,000 Principal
Date Principal Amount) Amount)
- ---------------------- ------------------------- ----------------
<S> <C> <C>
October 21, 2010 11.46 800.95
April 21, 2011 11.66 812.61
October 21, 2011 11.88 824.49
April 21, 2012 12.10 836.59
October 21, 2012 12.31 848.90
April 21, 2013 12.54 861.44
October 21, 2013 12.76 874.20
April 21, 2014 12.99 887.19
October 21, 2014 13.23 900.42
April 21, 2015 13.47 913.89
October 21, 2015 13.72 927.61
April 21, 2016 13.96 941.57
October 21, 2016 14.22 955.79
April 21, 2017 14.47 970.26
October 21, 2017 14.74 985.00
At Stated Maturity 15.00 1,000.00
</TABLE>
(ii) if the Specified Date occurs before the first Interest Payment
Date, the amount of accrued Original Issue Discount will equal the sum of
(A) the Issue Price of this Security and (B) an amount equal to the amount
of accrued Original Issue Discount for the first Interest Payment Date
multiplied by a fraction, the numerator of which is the number of days
elapsed from the Issue Date to the Specified Date, using a 360-day year of
twelve 30-day months, and the denominator of which is the number of days
from the Issue Date to the first Interest Payment Date, using a 360-day
year of twelve 30-day months;
(iii) if the Specified Date occurs between two Interest Payment
Dates, the amount of accrued Original Issue Discount will equal the sum of
(A) the amount of accrued Original Issue Discount set forth in paragraph
(i) for the Interest Payment Date immediately preceding such Specified Date
and (B) an amount equal to the product of (1) the amount of accrued
Original Issue Discount for the immediately following Interest Payment Date
less the amount of accrued Original Issue Discount for the immediately
preceding Interest Payment Date multiplied by (2) a fraction, the numerator
of which is the number of days elapsed from the immediately preceding
Interest Payment Date to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is 180; or
<PAGE>
24
(iv) if the Specified Date occurs after the Stated Maturity of this
Security, the amount of accrued Original Issue Discount will equal the
amount of accrued Original Issue Discount as of such Stated Maturity.
2. Special Tax Event Conversion.
-----------------------------
From and after the date (the "Tax Event Date") of the occurrence of a
Tax Event, at the option of the Company, interest in lieu of future Original
Issue Discount and regular cash interest shall accrue at 3.625% per annum on a
principal amount per Security (the "Restated Principal Amount") equal to the
Issue Price plus Original Issue Discount accrued to the date immediately prior
to the Tax Event Date or the date on which the Company exercises the option
described in this paragraph, whichever is later (such date hereunder referred to
as the "Option Exercise Date"), and shall be payable semiannually on each
Interest Payment Date to holders of record at the close of business on the
Regular Record Date immediately preceding such Interest Payment Date. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months and will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the Option Exercise Date.
3. Method of Payment.
------------------
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of the principal of, premium, if any, and cash interest
on this Security, and in respect of Redemption Prices to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. The Company will pay cash amounts in money of the United States of
America that at the time of payment is legal tender for payment of public and
private debts. However, the Company may make such cash payments by check
payable in such money.
4. Paying Agent; Registrar; Exchange Agent.
----------------------------------------
Initially, The First National Bank of Chicago(the "Trustee"), will act
as Paying Agent, Registrar and Exchange Agent. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice, other than
notice to the Trustee, except that the Company will maintain at least one Paying
Agent in the State of New York, City of New York, Borough of Manhattan. The
Company or any of its Subsidiaries or Affiliates incorporated in the United
States may act as Paying Agent, Registrar or co-registrar.
<PAGE>
25
5. Indenture.
----------
The Company issued the Securities under an Indenture dated as of April
21, 1998 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as in effect from time to time
(the "TIA"). Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Holders are referred to the Indenture and the TIA for a
statement of those terms.
The Securities are unsecured subordinated obligations of the Company
limited to the aggregate Principal Amount specified in Section 3.01 of the
Indenture.
6. Redemption at the Option of the Company.
----------------------------------------
No sinking fund is provided for this Security. On and after April 21,
2003, this Security is redeemable for cash as a whole, or from time to time in
part, at any time at the option of the Company at the prices set forth below
(each a "Redemption Price") (equal to its Issue Price plus accrued Original
Issue Discount, together with accrued cash interest, to the Redemption Date).
The table below shows Redemption Prices of a Security per $1,000
Principal Amount at maturity on April 21, 2003, at each April 21 thereafter
prior to maturity, and at maturity on April 21, 2018, which prices reflect the
accrued Original Issue Discount calculated to each such date. The Redemption
Price of a Security redeemed between such dates would include an additional
amount reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to, but excluding, the Redemption Date, calculated
as set forth under paragraph 1(iii).
<PAGE>
26
<TABLE>
<CAPTION>
(2)
Accrued
Original (3)
(1) Issue Redemption Price
Redemption Date Issue Price Discount (1)+(2)
- -------------------- ----------- -------- ----------------
<S> <C> <C> <C>
April 21, 2003 $568.07 $ 80.84 $ 648.91
April 21, 2004 568.07 98.82 666.89
April 21, 2005 568.07 117.46 685.53
April 21, 2006 568.07 136.79 704.86
April 21, 2007 568.07 156.82 724.89
April 21, 2008 568.07 177.58 745.65
April 21, 2009 568.07 199.11 767.18
April 21, 2010 568.07 221.42 789.49
April 21, 2011 568.07 244.54 812.61
April 21, 2012 568.07 268.52 836.59
April 21, 2013 568.07 293.37 861.44
April 21, 2014 568.07 319.12 887.19
April 21, 2015 568.07 345.82 913.89
April 21, 2016 568.07 373.50 941.57
April 21, 2017 568.07 402.19 970.26
At Stated Maturity 568.07 431.93 1,000.00
</TABLE>
If converted to a semiannual coupon security following the occurrence
of a Tax Event, this Security will be redeemable at the Restated Principal
Amount plus accrued and unpaid interest from the date of such conversion to, but
excluding, the Redemption Date; provided, however, that in no event may this
-------- -------
Security be redeemed prior to April 21, 2003.
7. Notice of Redemption.
---------------------
Notice of Redemption will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Securities to be redeemed at the
Holder's registered address. If money sufficient to pay the Redemption Price of
all Securities (or portions thereof which are in an integral multiple of $1,000
in Principal Amount) to be redeemed on the Redemption Date is deposited with the
Paying Agent prior to or on the Redemption Date, immediately after such
Redemption Date cash interest and
<PAGE>
27
Original Issue Discount shall cease to accrue on such Securities or portions
thereof.
8. Purchase by the Company at the Option of the Holder.
----------------------------------------------------
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, this Security
on April 21, 2003 at a Purchase Price per $1,000 in Principal Amount of $648.91
(equal to the Issue Price plus accrued Original Issue Discount to such Purchase
Date), plus accrued cash interest to the Purchase Date, upon delivery by the
Holder of a Purchase Notice containing the information set forth in the
Indenture, at any time from the opening of business on the date that is 20
Business Days prior to such Purchase Date until the close of business on such
Purchase Date and upon delivery of this Security to the Paying Agent by the
Holders as set forth in the Indenture. Such Purchase Price may be paid, at the
option of the Company, in cash or by the delivery of Common Stock, or in any
combination thereof.
Notwithstanding anything herein to the contrary, if prior to the
Purchase Date this Security has been converted to a semiannual coupon security
following the occurrence of a Tax Event, the Purchase Price will be equal to the
Restated Principal Amount plus accrued cash interest from the date of conversion
to, but excluding, the Purchase Date.
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase this Security held
by such Holder 35 Business Days after the occurrence of a Change in Control for
a Change in Control Purchase Price equal to the Issue Price plus accrued
Original Issue Discount and cash interest to the Change in Control Purchase
Date, which shall be paid in cash.
The Holder has the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent
prior to the close of business on the Purchase Date a written notice of
withdrawal in accordance with the provisions of the Indenture.
If cash sufficient to pay the Purchase Price or Change in Control
Purchase Price, as the case may be, of all Securities (or any portion thereof
which is in an integral multiple of $1,000 in Principal Amount) to be purchased
prior to or on the Purchase Date or the Change in Control Purchase Date, as the
case may be, is deposited with the Paying Agent on the Purchase Date or the
Change in Control
<PAGE>
28
Purchase Date, as the case may be, this Security shall cease to be outstanding
and cash interest and Original Issue Discount shall cease to accrue on this
Security (or such portions thereof) and will be deemed paid, whether or not this
Security is delivered to the Paying Agent, immediately after such Purchase Date
or Change in Control Purchase Date, as the case may be, and the Holder shall
have no other rights as such (other than the right to receive the Purchase Price
or Change in Control Purchase Price, as the case may be, upon surrender of this
Security or portion hereof).
9. Conversion Rights.
------------------
At the option of the Holder and subject to the terms and conditions of
the Indenture, this Security (or any portion hereof which is an integral
multiple of $1,000 in Principal Amount) may be surrendered for conversion into
shares of Common Stock at an initial conversion rate (the "Conversion Rate") of
3.904 shares of Common Stock per $1,000 Principal Amount of this Security. The
Conversion Rate is subject to adjustment as set forth in the Indenture. The
Holder's right to convert this Security for Common Stock is subject to the
Company's right to elect to pay the Holder surrendering this Security pursuant
to Article XIII of the Indenture an amount of cash as set forth in the
succeeding sentence, in lieu, in whole or in part, of delivering such Common
Stock. The amount of cash to be paid in lieu of shares pursuant to such
election by the Company upon conversion of this Security shall be equal to the
Sale Price of a share of Common Stock on the Trading Day immediately preceding
the Conversion Date multiplied by the Conversion Rate in effect on such Trading
Day. The right to surrender this Security for conversion pursuant to Article
XIII of the Indenture shall terminate on the close of business on April 21,
2018, or, if this Security or any portion hereof shall be called for redemption
pursuant to the terms hereof, then in respect of any portion so called for
redemption, at the close of business on the Redemption Date (unless in the case
of any such redemption the Company shall default in the payment due upon the
redemption hereof).
Except as otherwise expressly provided in the Indenture, no payment or
adjustment shall be made on account of any dividends or distributions on Common
Stock delivered upon such conversion. The Conversion Rate will not be adjusted
at any time during the term of this Security for accrued Original Issue Discount
or cash interest. Upon conversion of this Security, that portion of accrued
Original Issue Discount or (except as provided below) accrued cash interest
thereon attributable to the period from the Issue Date through the Conversion
Date with respect
<PAGE>
29
to this Security shall not be canceled, extinguished or forfeited, but rather
shall be deemed to be paid in full to the Holder thereof through the delivery of
the Common Stock (together with the cash payment(s), if any, in lieu thereof, in
whole or in part, or in lieu of fractional interests therein) in exchange for
this Security; and the fair market value of such Common Stock (together with any
such cash payment(s)), if any, shall be treated as delivered or paid, to the
extent thereof, first in exchange for accrued Original Issue Discount and
accrued cash interest through the Conversion Date, and the balance, if any, of
such fair market value of such Common Stock (and any such cash payment(s)) shall
be treated as delivered or paid in exchange for the Issue Price of this
Security, to the extent of such Issue Price. Notwithstanding the foregoing,
accrued but unpaid cash interest will be payable upon conversion of this
Security if such conversion is made concurrently with or after acceleration of
the indebtedness represented by this Security following an Event of Default.
No fractional shares of Common Stock shall be delivered upon exchanges
but the Conversion Agent on behalf of the Company shall make a cash payment in
lieu thereof equal to the product of such fractional share and the Sale Price on
the Trading Day immediately preceding the Conversion Date.
To convert this Security the Holder must (1) complete and manually
sign the conversion notice hereon (or complete and manually sign a facsimile of
such notice) and deliver such notice to the Conversion Agent (initially the
Trustee) or, if applicable, complete and deliver to the Depository Trust Company
("DTC") the appropriate instruction form for conversion pursuant to DTC's book
entry conversion program, (2) surrender (or arrange for book-entry delivery of)
this Security to the Conversion Agent (which is not necessary in the case of
conversion pursuant to DTC's book entry conversion program), (3) furnish
appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer or similar tax if
required. Book entry delivery of a Security to the Conversion Agent may be made
by any financial institution that is a participant in DTC; conversion through
DTC's book entry conversion program is available for any security that is held
in an account maintained at DTC by any such Participant. A conversion shall be
deemed to have been effected at the close of business on the date all such
requirements have been satisfied (the "Conversion Date"). A Holder may convert
a portion of this Security only if the portion if $1,000 Principal Amount or an
integral multiple of $1,000.
<PAGE>
30
In the event the Company exercises its option pursuant to Section
15.01 of the Indenture to have interest in lieu of Original Issue Discount
accrue on this Security following a Tax Event, the Holder will be entitled on
conversion to receive the same number of shares of Common Stock such Holder
would have received if the Company had not exercised such option. If the
Company exercises such option, Securities surrendered for conversion during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
(except Securities to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment as described above, no interest on
converted Securities will be payable by the Company on any Interest Payment Date
subsequent to the date of conversion.
The Conversion Rate shall be adjusted as provided in Article XIII of
the Indenture.
10. Conversion Arrangement on Call for Redemption.
----------------------------------------------
Any Securities called for redemption, unless surrendered for exchange
before the close of business on the Redemption Date, may be deemed to be
purchased from the Holders of such Securities at an amount not less than the
Redemption Price plus accrued cash interest to the Redemption Date, by one or
more third parties who may agree with the Company to purchase such Securities
from the Holders, to exchange them for Common Stock and to make payment for such
Securities to the Trustee in trust for such Holders.
11. Subordination.
--------------
The Securities are subordinated to Senior Indebtedness of the Company.
To the extent provided in the Indenture, Senior Indebtedness of the Company must
be paid before the Securities may be paid. The Company and each Holder of
Securities, by accepting a Security, agrees to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
12. Denominations; Transfer; Exchange.
----------------------------------
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount and integral multiples of $1,000.
The Holder may
<PAGE>
31
transfer or exchange this Security in accordance with the Indenture. The
Registrar may require the Holder, among other things, to furnish appropriate
endorsements and transfer documents. The Registrar need not transfer or
exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities in respect of which a Purchase Notice or Change in Control
Purchase Notice has been given and not withdrawn (except, in the case of a
Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
13. Persons Deemed Owners.
----------------------
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
14. Unclaimed Money for Securities.
-------------------------------
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to this Security that remain unclaimed for two years. After
return to the Company, the Holder must look to the Company for payment.
15. Amendment; Waiver.
------------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount of the Securities
at the time Outstanding and (ii) certain Defaults may be waived with the written
consent of the Holders of a majority in the aggregate Principal Amount of the
Securities at the time outstanding. Subject to certain exceptions set forth in
the Indenture, without the consent of any Holder, the Company and the Trustee
may amend the Indenture or the Securities to cure any ambiguity, omission,
defect, or inconsistency, or to comply with Article VIII or Section 13.14 of the
Indenture, to provide for uncertificated Securities in addition to or in place
of certificated Securities, to make any change that does not adversely affect
the rights of any Holder, to comply with any requirement of the Commission in
connection with the qualification of the Indenture under the TIA or to add to
the covenants or obligations of the Company under the Indenture or surrender any
right, power or option conferred by the Indenture on the Company.
<PAGE>
32
16. Defaults and Remedies.
----------------------
Under the Indenture, Events of Default include, among other things (i)
default by the Company in (A) payment of the Principal Amount, Issue Price,
accrued Original Issue Discount, the Redemption Price, the Purchase Price or the
Change in Control Purchase Price, as the case may be, in respect of the
Securities when the same becomes due and payable, (B) cash interest or interest
upon conversion to a semiannual coupon security following a Tax Event, when due
(if such default in payment of any such interest shall continue for 31 days) or
(C) the delivery of shares of Common Stock (including cash in lieu of fractional
shares of Common Stock), or cash in lieu thereof in accordance with the terms of
the Indenture when such are required to be delivered upon conversion of a
Security (if such default shall continue for 10 days); (ii) failure by the
Company to comply with any other agreements in the Indenture or the Securities
upon the receipt by the Company of notice of such default from the Trustee or
Holders of not less than 25% in aggregate Principal Amount of the Securities
then Outstanding and the Company's failure to cure such default within 90 days
after receipt by the Company of such notice; and (iii) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding, may by notice to the Company declare the
Issue Price of, plus accrued Original Issue Discount and accrued cash interest
through the date of such declaration on, all the Securities to be immediately
due and payable. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Issue Price plus accrued Original Issue
Discount and accrued cash interest through the occurrence of such Event of
Default on the Securities becoming due and payable immediately upon the
occurrence of such Event of Default.
Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withheld from Holders notice of any continuing
Default (except a Default in payment of amounts specified in clause (i) above)
if it in good faith determines that withholding notice is in their interests.
<PAGE>
33
17. Trustee Dealings with the Company.
----------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates with the same rights it would have if it
were not Trustee.
18. No Recourse Against Others.
---------------------------
A director, officer, employee, agent or stock holder, as such, of the
Company shall not have any liability for any obligations of the Company under
this Security or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
19. Authentication.
---------------
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
20. Abbreviations.
--------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (-tenants in common), TEN ENT (-tenants by the
entireties), JT TEN (-joint tenants with right of survivorship and not as
tenants in common), CUST (-custodian), and U/G/M/A (-Uniform Gift to Minors
Act).
21. GOVERNING LAW.
--------------
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
34
SECTION 2.04. Form of Trustee's Certificate of Authentication.
------------------------------------------------
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: _________________ The First National Bank of
Chicago,
_____________________________,
as Trustee
by
_____________________________
Authorized Signatory
SECTION 2.05. Form of Conversion Notice.
--------------------------
CONVERSION NOTICE
To: Xerox Corporation
The undersigned registered owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion hereof (which is
$1,000 Principal Amount or an integral multiple thereof), below designated into
shares of Common Stock (in the form of a Share Certificate) in accordance with
the terms of the Indenture referred to in this Security, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for a fractional share and any Security representing any unconverted
Principal Amount hereof, be issued and delivered to the registered owner hereof
unless a different name has been provided below. If shares or any portion of
this Security not converted are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer
<PAGE>
35
have been complied with. Any amount required to be paid by the undersigned on
account of interest accompanies this Security.
DATE: _______________
__________________________________
Signature(s)
(If a corporation, partnership or
fiduciary, the title of the Person
signing must be stated.)
Signature(s) must be Medallion
Guaranteed by a national bank or
trust company or a member firm
of a national stock exchange or
a member of the National
Association of Securities
Dealers, Inc. if shares of
Common Stock are to be
delivered, or unconverted
Securities are to be issued,
other than to and in the name of
the registered owner.
______________________________
Signature Guarantee
Fill in for registration of
shares if they are to be
delivered, or unconverted
Securities if they are to be
issued, other than to and in the
name of the registered owner:
______________________________
(Name)
______________________________
(Street Address)
______________________________
(City, State and zip code)
(Please print name and address)
Register: __ Common Stock
__ Securities
<PAGE>
36
(Check appropriate line(s))
Principal Amount to be converted
(if less than all):
$_____,000
__________________________________
Social Security or other Taxpayer
Identification Number of owner
SECTION 2.06. Form of Certification.
----------------------
TRANSFER CERTIFICATE
The undersigned registered owner of this Security hereby certifies
with respect to $________ Principal Amount of the above-captioned securities
presented or surrendered on the date hereof (the "Surrendered Securities") for
registration of transfer, or for exchange or conversion where the securities
issuable upon such exchange or conversion are to be registered in a name other
than that of the undersigned registered owner (each such transaction being a
"transfer"), that such transfer complies with the restrictive legend set forth
on the face of the Surrendered Securities for the reason checked below:
___________ The transfer of the Surrendered Securities complies with
Rule 144 under the U.S. Securities Act of 1933, as amended
(the "Securities Act"); or
___________ The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
___________ The transfer of the Surrendered Securities is to an
institutional accredited investor, as defined under Rule 501
of Regulation D under the Securities Act; or
<PAGE>
37
___________ The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act.
DATE: ___________________
___________________
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of such
registered owner must be stated.)
ARTICLE III
The Securities
--------------
SECTION 3.01. Title and Terms. The aggregate Principal Amount of
----------------
Securities which may be authenticated and delivered under this Indenture is
$880,173,000 upon a Company Order without any further action by the Company;
provided, however, that if the Company sells any Securities pursuant to the
- -------- -------
over-allotment option granted pursuant to Section 2 of the Purchase Agreement
between the Company and the Initial Purchasers dated April 16, 1998, then the
Trustee shall authenticate and deliver Securities for original issue in an
aggregate Principal Amount of $880,173,000 plus up to $132,025,000 aggregate
Principal Amount upon receipt by the Trustee of a Company Order.
The principal of (and premium, if any) and cash interest on the
Securities shall be payable at the Corporate Trust Office and at any other
office or agency maintained by the Company for such purpose by check drawn on an
account maintained with a bank in New York, New York; provided, however, that
-------- -------
upon application by the Holder to the Security Registrar not later than the
April 7 or October 7 immediately preceding the relevant Interest Payment Date,
such Holder may receive payment by wire transfer to a U.S. Dollar account (such
transfers to be made only to Holders of an aggregate Principal Amount in excess
of U.S. $10,000,000 in Principal Amount) maintained by the payee with a bank in
the United States upon compliance with the reasonable regulations of the
Trustee.
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38
The Securities shall be redeemable by the Company as provided in
Article XI.
The Securities shall be subordinated in right of payment to the prior
payment in full of Senior Indebtedness as provided in Article XII.
The Securities shall be convertible as provided in Article XIII.
The Securities shall be subject to purchase by the Company at the
option of the Holder as provided in Article XIV.
SECTION 3.02. Denominations. The Securities shall be issuable only
--------------
in registered form without coupons and only in denominations of $1,000 in
Principal Amount and any integral multiple thereof.
SECTION 3.03. Execution, Authentication, Delivery and Dating. The
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Securities shall be executed on behalf of the Company by any of its Chairman of
the Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwith standing that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 3.04. Temporary Securities. Pending the preparation of
---------------------
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they
<PAGE>
39
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 10.02, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like Principal Amount of definitive Securities of
authorized denominations. Until so exchanged, the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 3.05. Registration; Registration of Transfer and Exchange.
----------------------------------------------------
(a) The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers and exchanges thereof. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges thereof as herein provided. Upon
surrender for registration of transfer or exchange of any Security at an office
or agency of the Company designated pursuant to Section 10.02 for such purpose,
accompanied by a written instrument of transfer or exchange in the form provided
by the Company, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series, of any authorized denominations and of a
like aggregate Principal Amount.
(b) Notwithstanding any other provisions of this Indenture or the
Securities, (A) transfers of a Global Security, in whole or in part, shall be
made only in accordance with Section 3.05(b)(i), and (B) transfers of a
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40
Definitive Security shall comply with Section 3.05(b)(iii) and (iv) below.
(i) Transfer of Global Security. A Global Security may not be
----------------------------
transferred, in whole or in part, to any Person other than the Depositary
or a nominee or any successor thereof, and no such transfer to any such
other Person may be registered; provided that this clause (i) shall not
--------
prohibit any transfer of a Security that is issued in exchange for a Global
Security but is not itself a Global Security. No transfer of a Security to
any Person shall be effective under this Indenture or the Securities unless
and until such Security has been registered in the name of such Person.
Nothing in this Section 3.05(b)(i) shall prohibit or render ineffective any
transfer of a beneficial interest in a Global Security effected in
accordance with the other provisions of this Section 3.05(b).
(ii) Other Exchanges. In the event that a Global Security or any
----------------
portion thereof is exchanged for Securities other than Global Securities,
such other Securities may in turn be exchanged (on transfer or otherwise)
for Securities that are not Global Securities or for beneficial interests
in a Global Security (if any is then outstanding) only in accordance with
such procedures (including the certification requirements intended to
insure that transfers of beneficial interests in a Global Security comply
with Rule 144A or Rule 144 under the Securities Act, as the case may be)
and any procedures, as may be from time to time adopted by the Company and
the Trustee.
(iii) Transfer and Exchange of Definitive Securities. When
-----------------------------------------------
Definitive Securities are presented to the Security Registrar with a
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal Principal
Amount of Definitive Securities of other authorized denominations,
the Security Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided,
--------
however, that the Definitive Securities surrendered for transfer or exchange:
- -------
<PAGE>
41
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (A),
(B) or (C) below, and are accompanied by the following additional
information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Security Registrar by a Holder for registration in the name of such
Holder, with out transfer, a certification from such Holder to that
effect (in the form set forth in Section 2.06); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth in
Section 2.06); or
(C) if such Definitive Securities are being transferred pursuant
to an exemption from registration in accordance with Rule 144, (i) a
certification to that effect (in the form set forth in Section 2.06)
and (ii) if the Company or Security Registrar so requests, an opinion
of counsel or other evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the legend set forth in
Section 2.02.
(iv) Restrictions on Transfer of a Definitive Security for a
-------------------------------------------------------
Beneficial Interest in a Global Security. A Definitive Security may not be
-----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A; and
<PAGE>
42
(ii) written instructions directing the Trustee to make, or to direct
the Securities Registrar to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate Principal Amount of the Securities represented by the Global
Security, such instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Registrar to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Registrar, the
aggregate Principal Amount of Securities represented by the Global Security to
be increased by the aggregate Principal Amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Security
equal to the Principal Amount of the Definitive Security so cancelled. If no
Global Securities are then Outstanding, the Company shall issue and the Trustee
shall authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate Principal
Amount.
(c) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the legend set forth in the
first paragraph of Section 2.02. Whenever any Security is presented or
surrendered for registration of transfer or for exchange for a Security
registered in a name other than that of the Holder, such Security must be
accompanied by a certificate in substantially the form set forth in Section
2.06, dated the date of such surrender and signed by the Holder of such
Security, as to compliance with such restrictions on transfer. The Security
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.
(d) The restrictions imposed by the legend set forth in the first
paragraph of Section 2.02 upon the transferability of any Security shall cease
and terminate when such Security has been sold pursuant to an effective
registration statement under the Securities Act or transferred in compliance
with Rule 144 under the Securities Act (or any successor provision thereto).
Any Security as to which such restrictions on transfer shall have expired in
accordance with their terms or shall have terminated may, upon surrender of such
Security for exchange to the Security
<PAGE>
43
Registrar in accordance with the provisions of this Section 3.05 (accompanied,
in the event that such restrictions on transfer have terminated by reason of a
transfer in compliance with Rule 144 or any successor provision, by an opinion
of counsel having substantial experience in practice under the Securities Act
and otherwise reasonably acceptable to the Company, addressed to the Company and
in form acceptable to the Company, to the effect that the transfer of such
Security has been made in compliance with Rule 144 or such successor provision),
be exchanged for a new Security, of like tenor and aggregate Principal Amount,
which shall not bear the restrictive legend set forth in the first paragraph of
Section 2.02. The Company shall inform the Trustee of the effective date of any
registration statement registering the Securities under the Securities Act. The
Trustee shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the aforementioned opinion of counsel or
registration statement.
(e) As used in the preceding two paragraphs of this Section 3.05, the
term "transfer" encompasses any sale, pledge, transfer, hypothecation or other
disposition of any Security.
(f) No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.04, 9.06, 11.06, 13.02 or 14.01 not
involving any transfer.
(g) The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 11.02 and ending at the close
of business on the day of such mailing, (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part or (iii) to register
the transfer of or exchange any Securities in respect of which a Purchase Notice
or a Change of Control Purchase Notice has been given and not withdrawn by the
Holder thereof in accordance with the terms of this Indenture and such
Securities (except, in the case of Securities to be purchased in part, the
portion thereof not be purchased).
<PAGE>
44
(h) The provisions of clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or the
Securities, a Global Security shall not be exchanged in whole or in part
for a Security registered in the name of any Person other than the
Depositary or one or more nominees thereof, provided that a Global Security
--------
may be exchanged for Securities registered in the names of any person
designated by the Depositary in the event that (i) the Depositary has
notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or such Depositary has ceased to be a
"clearing agency" registered under Exchange Act, (ii) an Event of Default
has occurred and is continuing with respect to the Securities, or (iii) a
request for certificates has been made upon 60 days' prior written notice
given to the Trustee in accordance with the Depositary's customary
procedures and a copy of such notice has been received by the Company from
the Trustee. Any Global Security exchanged pursuant to clause (i) above
shall be so exchanged in whole and not in part and any Global Security
exchanged pursuant to clause (ii) or (iii) above may be exchanged in whole
or from time to time in part as directed by the Depositary. Any Security
issued in exchange for a Global Security or any portion thereof shall be a
Global Security; provided that any such Security so issued that is
--------
registered in the name of a Person other than the Depositary or a nominee
thereof shall not be a Global Security.
(2) Securities issued in exchange for a Global Security or any portion
thereof shall be issued in definitive, fully registered form, without
interest coupons, shall have an aggregate Principal Amount equal to that of
such Global Security or portion thereof to be so exchanged, shall be
registered in such names and be in such authorized denominations as the
Depositary shall designate and shall bear the applicable legends provided
for herein. Any Global Security to be exchanged in whole shall be
surrendered by the Depositary to the Trustee, as Security Registrar. With
regard to any Global Security to be exchanged in part, either such Global
Security shall be so surrendered for exchange or, if the Trustee is acting
as custodian for the Depositary or its nominee with respect to such Global
Security, the Principal Amount thereof shall be reduced, by an amount equal
to the portion thereof to be so exchanged, by means of an appropriate
adjustment
<PAGE>
45
made on the records of the Trustee. Upon any such surrender or adjustment,
the Trustee shall authenticate and deliver the Security issuable on such
exchange to or upon the order of the Depositary or an authorized
representative thereof.
(3) Subject to the provisions of clause (5) below, the registered
Holder may grant proxies and otherwise authorize any Person, including
Agent Members and persons that may hold interests through Agent Members, to
take any action which a holder is entitled to take under this Indenture or
the Securities.
(4) In the event of the occurrence of any of the events specified in
clause (1) above, the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully
registered form, without interest coupons.
(5) Neither any members of, or participants in, the Depositary
("Agent Members") nor any other Persons on whose behalf Agent Members may
act shall have any rights under this Indenture with respect to any Global
Security registered in the name of the Depositary or any nominee thereof,
or under any such Global Security, and the Depositary or such nominee, as
the case may be, may be treated by the Company, the Trustee and any agent
of the Company or the Trustee as the absolute owner and holder of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or
such nominee, as the case may be, or impair, as between the Depositary, its
Agent Members and any other person on whose behalf an Agent Member may act,
the operation of customary practices of such Persons governing the exercise
of the rights of a holder of any Security.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If
-------------------------------------------------
(i) any mutilated Security is surrendered to the Trustee, or if there shall be
delivered to the Company and the Trustee evidence to their satisfaction of the
destruction, loss or theft of any Security and (ii) such security or indemnity
as may be required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and deliver, in exchange
<PAGE>
46
for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new
Security of like tenor and Principal Amount and bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security.
Upon the issuance, authentication and delivery by the Trustee of any
new Security under this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security issued, authenticated and delivered by the Trustee
pursuant to this Section in lieu of any destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Cash Interest; Interest Rights Preserved.
----------------------------------------------------
Cash interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for payment of such cash interest.
If the Company shall be required by law to deduct any taxes from any
sum of cash interest payable hereunder to a Holder, (i) the Company shall make
such deductions and shall pay the full amount deducted to the relevant taxing
authority in accordance with applicable law and (ii) the amount of such
deduction shall be treated for purposes hereof as a payment of cash interest.
Any cash interest on any Security which is payable, but is not
punctually paid or duly provided for, on
<PAGE>
47
any Interest Payment Date (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause (1) provided. Thereupon, the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after
<PAGE>
48
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause (2), such manner of payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the corresponding Interest Payment Date, cash
interest on such Security whose Stated Maturity is on such Interest Payment Date
shall be deemed to continue to accrue and shall be payable on such Interest
Payment Date notwithstanding such conversion and notwithstanding that such
Security may have been called for redemption on a Redemption Date within such
period, and such interest (whether or not punctually paid or duly provided for)
shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on such Regular
Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security which is converted, cash
interest whose Stated Maturity is after the date of conversion of such Security
shall not be payable (although such accrued and unpaid interest will be deemed
paid by the appropriate portion of the Common Stock received by the holders upon
such conversion).
SECTION 3.08. Persons Deemed Owners. Prior to due presentment of a
----------------------
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.07) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or from maintaining, supervising or reviewing any
records relating to such beneficial ownership
<PAGE>
49
interests and they shall be protected in acting on any such information provided
by the Depositary.
SECTION 3.09. Cancellation. All Securities surrendered for payment,
-------------
redemption, registration of transfer or exchange or conversion shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a Company Order.
SECTION 3.10. Computation of Interest. Interest on the Securities of
------------------------
each series shall be computed on the basis of a 360-day year of twelve 30-day
months.
ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of Indenture. This
----------------------------------------
Indenture shall upon Company request cease to be of further effect (except as to
any surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.06 and (ii)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.03) have been delivered to the Trustee for cancellation; or
<PAGE>
50
(B) all such Securities not theretofore delivered to the Trustee
for cancellation have become due and payable and the Company has
deposited or caused to be deposited irrevocably with the Trustee as
trust cash or, if expressly permitted by the terms hereof, Common
Stock in trust for the benefit of Holders of Outstanding Securities in
an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest to the
date of such deposit;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with; and
(4) no Event of Default which, with notice or lapse of time, or both,
would become an Event of Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.02 and the last
paragraph of Section 10.03 shall survive.
SECTION 4.02. Application of Trust Money. Subject to the provisions
---------------------------
of the last paragraph of Section 10.03, all money deposited with the Trustee
pursuant to Section 4.01 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee. All moneys deposited with the Trustee
pursuant to Section 4.01 (and held by it or any Paying Agent) for the
<PAGE>
51
payment of Securities subsequently converted shall be returned to the Company
upon Company Request.
ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default. "Event of Default", wherever used
------------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XII or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any cash interest upon any Security when
it becomes due and payable, and continuance of such default for a period of
31 days; or
(2) the Company defaults in the payment of the Principal Amount, Issue
Price, accrued Original Issue Discount, Redemption Price, Purchase Price or
Change in Control Purchase Price on any Security, when the same becomes due
and payable at its Stated Maturity, upon redemption, upon declaration, when
due for purchase by the Company or otherwise, whether or not such payment
shall be prohibited by this Indenture;
(3) the Company fails to comply with any of its agreements in the
Securities or this Indenture and such failure continues for 90 days after
receipt by the Company of a Notice of Default;
(4) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case or the commencement of any case against it;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property;
<PAGE>
52
(D) makes a general assignment for the benefit of its creditors;
(E) files a petition in bankruptcy or answer or consent seeking
reorganization or relief; or
(F) consents to the filing of such petition or the appointment of
or taking possession by a Custodian;
(5) a court of competent jurisdiction enters an orders or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case, or
adjudicates the Company insolvent or bankrupt;
(B) appoints a Custodian of the Company or for any substantial
part of its property; or
(C) order the winding up or liquidation of the Company;
and the order or decree remains unstayed and in effect for 60 days; or
(6) the Company fails to deliver shares of Common Stock (including
cash in lieu of fractional shares) or cash in lieu of shares of Common
Stock in accordance with the terms hereof when such Common Stock (and cash
in lieu of fractional shares) or cash is required to be delivered, upon
conversion of a Security and such failure is not remedied for a period of
10 days.
A Default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time Outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default
within the time specified in clause (3) above after receipt of such notice. Any
such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 90 days after it
becomes aware of the occurrence thereof, written notice of any event which with
the giving of notice and the lapse of time or both would become an Event of
Default under clause (3) or clause (6), its status and what
<PAGE>
53
action the Company is taking or proposes to take with respect thereto.
SECTION 5.02. Acceleration of Stated Maturity; Rescission and
-----------------------------------------------
Annulment. If an Event of Default (other than an Event of Default specified in
- ----------
Section 5.01(4) or 5.01(5)) occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in Principal Amount of the
Outstanding Securities may declare the Issue Price, accrued Original Issue
Discount and accrued cash interest (or if the Securities have been converted to
a semiannual coupon Debenture following a Tax Event, the Restated Principal
Amount, plus accrued interest) through the date of declaration on all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such Issue Price, accrued Original Issue Discount and accrued cash interest (or
if the Securities have been converted to a semiannual coupon debenture following
a Tax Event, the Restated Principal Amount, plus accrued interest) shall become
immediately due and payable. If an Event of Default specified in Section 5.01(4)
or 5.01(5) occurs, the Issue Price, accrued Original Issue Discount and accrued
cash interest (or if the Securities have been converted to a semiannual coupon
debenture following a Tax Event, the Restated Principal Amount, plus accrued
interest) through the date of declaration on all the Securities shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article V provided, the Holders of a
majority in Principal Amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) the Issue Price, accrued Original Issue Discount and accrued
cash interest (or if the Securities have been converted to a
semiannual coupon debenture following a Tax Event, the Restated
Principal Amount, plus accrued interest) through the date of
declaration on the Securities,
<PAGE>
54
(B) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee. If
- --------
(1) default is made in the payment of any cash interest on any
Security when such interest becomes due and payable and such default
continues for a period of 31 days, or
(2) default is made in the payment of the Issue Price on accrued
Original Issue Discount (or if the Securities have been converted to a
semiannual coupon note following a Tax Event, the Restated Principal
Amount, plus accrued interest),
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and payable
on such Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or
<PAGE>
55
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of any
---------------------------------
judicial proceeding relative to the Company (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount owing and unpaid in
respect of the Securities and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Securities. All rights of action and claims under this Indenture or the
- -----------
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after
<PAGE>
56
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06. Application of Money Collected. Any money collected by
-------------------------------
the Trustee pursuant to this Article V shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: Subject to Article XII to the payment of all amounts due the
Trustee under Section 6.07;
SECOND: Subject to Article XII to the payment of the amounts then due
and unpaid for first, interest on, and, second, for principal of (and
premium, if any, on) the Securities in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for interest and principal (and premium, if any) respectively;
and
THIRD: The balance, if any, to the Company.
SECTION 5.07. Limitation on Suits. No Holder of any Security shall
--------------------
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in Principal Amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
<PAGE>
57
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
Principal Amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 5.08. Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest and to Convert. Notwithstanding any other provision in this
- ------------------------------------
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the Issue Price, accrued Original Issue
Discount and accrued cash interest (or if the Securities have been converted to
a semiannual coupon note following a Tax Event, the Restated Principal Amount,
plus accrued interest) (subject to Section 3.07) interest on such Security on
the respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date, Change in Control Repurchase
Date or Repurchase Date, as the case may be) and to convert such Security in
accordance with Article XIII and to institute suit for the enforcement of any
such payment and right to convert, and such rights shall not be impaired without
the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or
-----------------------------------
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise
-------------------------------
provided with respect to the replacement
<PAGE>
58
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.06, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of
-----------------------------
the Trustee or of any Holder of any Securities to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
-------------------
Principal Amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee;
provided that
- --------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The Holders of not less than
------------------------
a majority in Principal Amount of the Outstanding Securities may on behalf of
the Holders of all the Securities waive any past default hereunder and its
consequences, except
(1) an Event of Default described in Section 5.01(1) or 5.01(2), or
(2) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected, or
<PAGE>
59
(3) a Default under Article XIII.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. In any suit for the enforcement
----------------------
of any right or remedy under this Indenture, or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of
such suit, and may assess costs against any such party litigant, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; provided, that this Section 5.14 shall not be deemed to authorize any
--------
court to require such an under taking or to make such an assessment in any suit
instituted by the Company or in any suit for the enforcement of the right to
convert any Security in accordance with Article XIII.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws. The Company
----------------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
The Trustee
-----------
SECTION 6.01. Certain Duties and Responsibili ties. (a) Except
-------------------------------------
during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
<PAGE>
60
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
------
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in Principal Amount of the Outstanding
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
<PAGE>
61
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.02. Notice of Defaults. Within 90 days after the
-------------------
occurrence of any default hereunder, the Trustee shall give the Holders, in the
manner provided in Section 1.06, notice of any default hereunder; provided,
--------
however, that in the case of any default of the character specified in Section
- -------
5.01(3), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default.
SECTION 6.03. Certain Rights of Trustee. Subject to the provisions
--------------------------
of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by
<PAGE>
62
this Indenture at the request or direction of any of the Holders pursuant
to this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any Authenticating
--------------------
Agent, any Paying Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Section 6.08 and Section 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 6.06. Money Held in Trust. Money held by the Trustee in
--------------------
trust hereunder need not be segregated from
<PAGE>
63
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 6.07. Compensation and Reimbursement. The Company agrees:
-------------------------------
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence, willful misconduct
or bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The Trustee shall notify the Company of any claim asserted against it for
which it may seek indemnity. The indemnity set forth in this Section 6.07
shall survive the resignation or removal of the Trustee and the termination
of this Indenture.
SECTION 6.08. Disqualification; Conflicting Interests. If the
----------------------------------------
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There shall
----------------------------------------
at all times be a Trustee
<PAGE>
64
hereunder which shall be a corporation organized and doing business under the
laws of the United States, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $25,000,000,
subject to supervision or examination by federal or state authority, in good
standing and having an established place of business in the Borough of
Manhattan, The City of New York. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
---------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in Principal Amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
<PAGE>
65
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolu tion may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapa bility, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in Principal Amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.11, become the successor Trustee
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee shall have been so appointed by the Company or the Holders
and accepted appointment in the manner required by Section 6.11, any Holder who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resig nation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. Every
---------------------------------------
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor
<PAGE>
66
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder. Upon request of any
such successor Trustee, the Company shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business. Any corporation into which the Trustee may be merged or converted or
- ---------
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenti cating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against Company. If
--------------------------------------------------
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent. The Trustee may
------------------------------------
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon original issue and
upon exchange, registration of transfer, partial conversion, partial redemption,
or partial repurchase or pursuant to Section 3.06, and Securities so
authenticated shall be entitled to the benefits of this Indenture and
<PAGE>
67
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$25,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examin
ing authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so pub lished.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be con solidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenti cating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a suc cessor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Security Register. Any
<PAGE>
68
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.07.
If an appointment is made pursuant to this Sec tion, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
------------------------------------------,
As Trustee
by
------------------------------------------,
As Authenticating Agent
by
------------------------------------------,
Authorized Signatory
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
SECTION 7.01. Company To Furnish Trustee Names and Addresses of
-------------------------------------------------
Holders. The Company will furnish or cause to be furnished to the Trustee
- --------
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and ad-
<PAGE>
69
dresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
- ---------
capacity as Security Registrar.
SECTION 7.02. Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 7.03. Reports by Trustee. (a) The Trustee shall transmit to
-------------------
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission, if applicable, and with
the Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
SECTION 7.04. Reports by Company. (a) The Company shall file with
-------------------
the Trustee and the Commission, if applicable, and transmit to Holders, such
information, docu-
<PAGE>
70
ments and other reports, and such summaries thereof, to the extent required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act. Notwithstanding anything to the contrary contained herein,
the Trustee shall have no duty to review such documents for the purpose of
determining compliance with this Indenture.
(b) The Company shall provide the Trustee with at least 30 days prior
notice of any change in location of its principal executive offices or other
principal place of business.
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
----------------------------------------------------
SECTION 8.01. Company May Consolidate, Etc., Only on Certain Terms.
-----------------------------------------------------
So long as any Securities shall be Outstanding, the Company shall not, directly
or indirectly, consolidate with or merge with or into any other individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization or limited liability company or other person or sell, lease, convey
or transfer all or substantially all of its properties and assets (computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another person or group of affiliated persons (such successor
corporation or person, as the case may be, shall in this Article V be referred
to as the "Successor Company"), unless
-----------------
(1) either (x) in the case of a merger or consolidation, the Company
shall be the continuing corporation or (y) the Successor Company (if other
than the Company) shall be organized and existing under the laws of the
United States of America or any State or the District of Columbia, and
shall expressly assume by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and premium, if any, and interest on
all the Securities and the performance of every covenant of this Indenture
and in the Securities on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
<PAGE>
71
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental indenture comply with
this Article VIII and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 8.02. Successor Substituted. Upon any consolidation with or
----------------------
merger into any other corporation or other person, or any conveyance, transfer
or lease of the properties and assets of the Company substantially as an
entirety in accordance with Section 8.01, the Successor Company or person formed
by such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such Successor Company or person had been named as the
Company herein, and thereafter, except in the case of a conveyance, transfer or
lease of the properties and assets of the Company substantially as an entirety,
and obligations the Company may have under a supplemental indenture pursuant to
Section 13.14, the predecessor corporation shall be relieved of all obligations
and covenants under this Indenture and the Securities. Subject to Section 9.06,
the Company, the Trustee and the successor person shall enter into a
supplemental indenture to evidence the succession and substitution of such
successor person and such discharge and release of the Company.
ARTICLE IX
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company and the
---------------------------
Trustee may amend this Indenture or the Securities without the consent of any
Holder of Securities:
(1) to cure any ambiguity, omission, defect or inconsistency or to
make any other provision with respect to matters or questions arising under
the Indenture or the Securities; provided, however, that such amendment
-------- -------
does not materially adversely affect the rights of any Holder;
(2) to comply with Article VIII or Section 13.14;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities
<PAGE>
72
so long as such uncertificated Securities are in registered form for
purposes of the Internal Revenue Code of 1986, as amended;
(4) to make any change that does not adversely affect the rights of
any Holder;
(5) to add to the covenants or obligations of the Company hereunder,
for the benefit of the Holders, or to surrender any right, power or option
herein conferred upon the Company; or
(6) to make any change to comply with the TIA or any amendment of the
TIA, or any requirement by the Commission in connection with the
qualification of this Indenture under the TIA or any amendment thereof.
SECTION 9.02. With Consent of Holders. With the written consent of
------------------------
the Holders of at least a majority in aggregate Principal Amount of the
Securities at the time outstanding, the Company and the Trustee may amend this
Indenture or the Securities. However, without the consent of each Holder
affected, an amendment or supplement to this Indenture or the Securities may
not:
(1) make any change to the Principal Amount of Securities whose
Holders must consent to an amendment;
(2) make any change to the rate of accrual in connection with Original
Issue Discount, reduce the rate of cash interest referred to in paragraph 1
of the Securities, reduce the rate of interest referred to in Section 17.01
upon the occurrence of a Tax Event or extend the time for payment of
accrued Original Issue Discount or cash interest on any Security;
(3) reduce the Principal Amount or the Issue Price of or extend the
Stated Maturity of any Security;
(4) reduce the amount of cash payable in respect of conversion upon
the Company's election to pay cash with respect thereto, the Redemption
Price, Purchase Price or Change in Control Purchase Price of any Security
or extend the date on which the Purchase Price or Change in Control
Purchase Price of any Security is payable;
(5) make any Security payable in money or securities other than that
stated in the Security;
<PAGE>
73
(6) make any change in Article XII that adversely affects the rights
of any Holder;
(7) make any change in Section 5.13 or this Section 9.02, except to
increase any percentage referred to therein, or make any change in Section
5.08;
(8) make any change that adversely affects the right to convert any
Security (including the right to receive cash in lieu of Common Stock
except as set forth in Section 9.01(4));
(9) make any change that adversely affects the right to require the
Company to purchase the Securities in accordance with the terms thereof and
this Indenture (including the right to receive cash if the Company has
elected to pay cash upon such purchase);
(10) make any change to the provisions of this Indenture relating to
the purchase of Securities at the option of the Holder pursuant to Section
14.01 or 14.02 which change would result in a violation of applicable
federal or state securities laws (including positions of the SEC under
applicable no-action letters), whether as a result of the exercise or
performance of any rights or obligations under such provisions or
otherwise; or
(11) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the Securities.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 or Section 9.01 may not make any
change that adversely affects the rights under Article XII of any holder of
Senior Indebtedness then outstanding unless the requisite holders of such Senior
Indebtedness consent to such change pursuant to the terms of such Senior
Indebtedness.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment.
<PAGE>
74
SECTION 9.03. Compliance with Trust Indenture Act. Every
------------------------------------
supplemental indenture executed pursuant to this Article IX shall comply with
the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents, Waivers and Actions.
------------------------------------------------------
Until an amendment or waiver becomes effective, a consent to it or any other
action by a Holder of a Security hereunder is a continuing consent by the Holder
and every subsequent Holder of that Security or portion of the Security that
evidences the same obligation as the consenting Holder's Security, even if
notation of the consent, waiver or action is not made on the Security. However,
any such Holder or subsequent Holder may revoke the consent, waiver or action as
to such Holder's Security or portion of the Security if the Trustee receives the
notice of revocation before the date the amendment, waiver or action becomes
effective. After an amendment, waiver or action becomes effective, it shall
bind every Holder, except as provided in Section 9.02.
SECTION 9.05. Notation on or Exchange of Securities. Securities
--------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
SECTION 9.06. Trustee to Sign Supplemental Indentures. The Trustee
----------------------------------------
shall sign any supplemental indenture authorized pursuant to this Article IX if
the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing such amendment the Trustee shall be entitled to receive, and (subject
to the provisions of Section 6.03) shall be fully protected in relying upon, an
Officer's Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture.
SECTION 9.07. Effect of Supplemental Indentures. Upon the execution
----------------------------------
of any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
<PAGE>
75
ARTICLE X
Covenants
---------
SECTION 10.01. Payment of Securities. The Company shall promptly
----------------------
make all payments in respect of the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture. Principal Amount,
Issue Price, accrued Original Issue Discount, Redemption Price, Purchase Price,
Change in Control Purchase Price and cash interest shall be considered paid on
the applicable date due if on such date the Trustee or the Paying Agent holds,
in accordance with this Indenture, cash or securities, if expressly permitted
hereunder, sufficient to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay cash interest
on overdue amounts at the per annum rate of interest set forth in paragraph 1 of
the Securities, compounded semiannually, which interest on overdue amounts (to
the extent payment of such interest shall be legally enforceable) shall accrue
from the date such overdue amounts were originally due and payable.
SECTION 10.02. Maintenance of Office or Agency. The Company will
--------------------------------
maintain in the Borough of Manhattan, The City of New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange, where Securities
may be surrendered for conversion and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York) where the Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
-------- -------
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of
<PAGE>
76
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 10.03. Money for Security Payments To Be Held in Trust. If
------------------------------------------------
the Company shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal of (and premium, if any) or interest on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held in trust for the benefit of the Persons entitled to such
principal, premium, if any, or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 10.03,
that such Paying Agent will
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct
<PAGE>
77
any Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent; and,
upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of Principal Amount, Issue Price,
accrued Original Issue Discount Redemption Price, Purchase Price, Change in
Control Purchase Price or cash interest on the Securities and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
-------- -------
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date speci fied
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 10.04. Statement by Officers as to Default. The Company will
------------------------------------
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company ending after the date hereof, an Officers' Certificate, stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
The Company shall file with the Trustee written notice of the occurrence of any
Default or Event of Default within five Business Days of its becoming aware of
such Default or Event of Default.
SECTION 10.05. Existence. Subject to Article VIII, the Company will
----------
do or cause to be done all
<PAGE>
78
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
-------- -------
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 10.06. Calculation of Original Issue Discount. The Company
---------------------------------------
shall file with the Trustee promptly following the end of each calendar year a
written notice specifying the amount of Original Issue Discount (including daily
rates and accrual periods) accrued on Outstanding Securities as of the end of
such year.
SECTION 10.07. Delivery of Certain Information. At any time when the
--------------------------------
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a Holder or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder or such holder of shares
of Common Stock issued upon conversion of Securities, or to a prospective
purchaser of any such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by such Holder or
holder with Rule 144A under the Securities Act in connection with the resale of
any such security. "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act.
ARTICLE XI
Redemption of Securities
------------------------
SECTION 11.01. Right to Redeem; Notices to Trustee. On or after
------------------------------------
April 21, 2003, the Company, at its option, may redeem the Securities as a whole
at any time, or from time to time in part, for cash in accordance with the
provisions set forth in paragraphs 6 and 7 of the Securities. If the Company
elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall
notify the Trustee in writing of the Redemption Date, the Principal Amount of
Securities to be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 11.01 at least 30 days but not more than 60 days before the Redemption
Date (unless a
<PAGE>
79
shorter notice shall be satisfactory to the Trustee). If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee.
SECTION 11.02. Selection of Securities to Be Redeemed. If less than
---------------------------------------
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed by lot, pro rata or by any other method the Trustee considers
fair and appropriate. The Trustee shall make the selection at least 30 but not
more than 60 days before the Redemption Date from Outstanding Securities not
previously called for redemption. Securities and portions of them the Trustee
selects shall be in Principal Amounts of $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
If any Security selected for partial redemption is thereafter
surrendered for conversion in part before termination of the conversion right
with respect to the portion of the Security so selected, the converted portion
of such Security shall be deemed (so far as may be), solely for purposes of
determining the aggregate Principal Amount of Securities to be redeemed by the
Company, to be the portion selected for redemption. Securities that have been
converted during a selection of Securities to be redeemed may be treated by the
Trustee as Outstanding for the purpose of such selection. Nothing in this
Section 11.02 shall affect the right of any Holder to convert any Security
pursuant to Article XIII before the termination of the conversion right with
respect thereto.
SECTION 11.03. Notice of Redemption. At least 30 days but not more
---------------------
than 60 days before a Redemption Date, the Trustee, in the name and at the
expense of the Company, shall cause notice of redemption to be mailed, first-
class postage prepaid, to each Holder of Securities to be redeemed at such
Holder's address as it appears on the list of Holders maintained pursuant to
Section 7.01. At the Company's written request, the Trustee shall, in the name
and at the expense of the Company, cause a similar notice to be published at
least once in a newspaper of national circulation designated by the Company.
<PAGE>
80
The notice shall identify the Securities to be redeemed and shall
state:
(a) the Redemption Date (upon which the Redemption Price shall be
paid);
(b) the Redemption Price;
(c) the Conversion Rate;
(d) the name and address of the Paying Agent and Conversion Agent and
of the office or agency referred to in Section 10.02;
(e) that Securities called for redemption may be converted at any time
before the close of business on the Redemption Date;
(f) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
(g) that Securities called for redemption must be surrendered to the
Paying Agent or at the office or agency referred to in Section 10.02 to
collect the Redemption Price;
(h) the CUSIP number of the Securities called for redemption;
(i) the Company has the right to pay the Redemption Price in Common
Stock or cash and the procedure for notifying the Holders of such election;
(j) if fewer than all the Outstanding Securities are to be redeemed,
the certificate numbers and Principal Amounts of the particular Securities
to be redeemed; and
(k) that, unless the Company defaults in payment of the Redemption
Price, Original Issue Discount and cash interest on Securities called for
redemption will cease to accrue on and after the Redemption Date.
SECTION 11.04. Effect of Notice of Redemption. Once notice of
-------------------------------
redemption is given, Securities called for redemption become due and payable on
the Redemption Date stated in the notice and at the Redemption Price therefor
except for Securities that are converted in accordance with the terms of this
Indenture. Upon the later of the Redemption Date and the date such Securities
are surrendered
<PAGE>
81
to the Paying Agent or at the office or agency referred to in Section 10.02,
such Securities called for redemption shall be paid at the Redemption Price
therefor.
SECTION 11.05. Deposit of Redemption Price. Prior to 11:00 a.m., New
----------------------------
York City time on the Redemption Date, the Company shall deposit with the Paying
Agent (or if the Company or a Subsidiary or an Affiliate of either of them is
the Paying Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price of, and accrued cash interest on, all Securities to be redeemed
on that date other than Securities or portions of Securities called for
redemption which prior thereto have been delivered by the Company to the Trustee
for cancelation. The Paying Agent shall as promptly as practicable return to
the Company any money, with interest, if any, thereon not required for that
purpose because of conversion of Securities pursuant to Article XIII. If such
money is then held by the Company or a Subsidiary or an Affiliate of the Company
in trust and is not required for such purpose it shall be discharged from such
trust.
SECTION 11.06. Securities Redeemed in Part. Upon surrender of a
----------------------------
Security that is redeemed in part, the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder, a new Security of the same tenor
in an authorized denomination equal in Principal Amount to the unredeemed
portion of the Security surrendered.
SECTION 11.07. Conversion Arrangement on Call for Redemption. In
----------------------------------------------
connection with any redemption of Securities, the Company may arrange, in lieu
of redemption, for the purchase and conversion of any Securities called for
redemption by an agreement with one or more investment bankers or other
purchasers to purchase all or a portion of such Securities by paying to the
Trustee in trust for the Holders whose Securities are to be so purchased, on or
before the close of business on the Redemption Date, an amount that, together
with any amounts deposited with the Trustee by the Company for redemption of
such Securities, is not less than the Redemption Price, together with interest,
if any, accrued to the Redemption Date, of such Securities. Notwithstanding
anything to the contrary contained in this Article XI, the obligation of the
Company to pay the Redemption Price of such Securities, including all accrued
interest, if any, shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such purchasers, but no such agreement shall relieve
the Company of its obligation to pay such Redemption Price and such accrued
interest, if any. If such an agreement is entered into, any Securities not duly
surrendered for conversion by
<PAGE>
82
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article XIII) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date, subject to payment of the above amount as
aforesaid. The Trustee shall hold and pay to the Holders whose Securities are
selected for redemption any such amount paid to it for purchase and conversion
in the same manner as it would moneys deposited with it by the Company for the
redemption of Securities. Without the Trustee's prior written consent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
ARTICLE XII
Subordination of Securities
---------------------------
SECTION 12.01. Securities Subordinate to Senior Indebtedness. The
----------------------------------------------
Company covenants and agrees, and each Holder of a Security, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article XII, the indebtedness represented by the
Securities and the payment of the Principal Amount, Issue Price, accrued
Original Issue Discount, Redemption Price, cash in respect of Purchase Price,
cash in respect of a conversion, Change in Control Purchase Price and cash
interest on each and all of the Securities and all obligations of the Company
under this Indenture are hereby expressly made subordinate and junior in right
of payment to the prior payment in full of all Senior Indebtedness and that said
subordination is for the benefit of the holders of Senior Indebtedness and they
and or each of them severally may enforce such subordination.
SECTION 12.02. Payment Over of Proceeds upon Dissolution, Etc. In
-----------------------------------------------
the event of (a) any insolvency or
<PAGE>
83
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relative to the
Company or to its creditors, as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshaling of assets and liabilities of
the Company, then and in any such event the holders of Senior Indebtedness shall
be entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the Holders of the Securities are
entitled to receive any payment on account of principal of (or premium, if any)
or interest on the Securities, and to that end the holders of Senior
Indebtedness shall be entitled to receive, for application to the payment
thereof, any payment or distribution of any kind or character, whether in cash,
property or securities, which may be payable or deliverable in respect of the
Securities in any such case, proceeding, dissolution, liquidation or other
winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, before all Senior Indebtedness is paid
in full or payment thereof provided for, and if such fact shall, at or prior to
the time of such payment or distribution, have been made known to the Trustee
or, as the case may be, such Holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article XII only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorgan ized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment which
in either case are subordinated in right of payment to all Senior Indebtedness
which may at the time be outstanding to substantially the same extent as, or to
a greater extent than, the Securities are so subordinated
<PAGE>
84
as provided in this Article XII. The consolidation of the Company with, or the
merger of the Company into, another Person or the liquidation or dissolution of
the Company following the conveyance or transfer of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article VIII shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Section 12.02 if the Person formed by such consolidation or into which the
Company is merged or which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Article VIII.
SECTION 12.03. No Payment When Senior Indebted ness in Default. (a)
------------------------------------------------
The Company may not make any payment of the Principal Amount, Issue Price,
accrued Original Issue Discount, Redemption Price, Change in Control Purchase
Price or cash interest in respect of the Securities nor may the Company pay cash
with respect to the Purchase Price or acquire any Securities for cash or
property (except as otherwise provided in Article 11 and other than for Capital
Stock of the Company) if (a) a payment default on any Senior Indebtedness has
occurred and is continuing beyond any applicable grace period with respect
thereto; or (b) a default (other than a default referred to in the preceding
clause (a)) on any Senior Indebtedness occurs and is continuing that permits
holders of such Senior Indebtedness to accelerate the Stated Maturity thereof
and the default is the subject of judicial proceedings or the Company receives a
notice of default thereof from any person who may give such notice pursuant to
the instrument evidencing or document governing such Senior Indebtedness. If
the Company receives any such notice, then a similar notice received within nine
months thereafter relating to the same default on the same issue of Senior
Indebtedness shall not be effective for purposes of the Section 12.03.
The Company may resume payment on the Securities and may acquire
Securities if and when (i) the default referred to above is cured or waived; or
(ii) in the case of a default referred to in clause (b) of the preceding
paragraph, 179 or more days pass after the receipt by the Company of the notice
described in clause (b) above; and this Article XII otherwise permits the
payment or acquisition at that time.
<PAGE>
85
Nothing contained in this Article XII or elsewhere in this Indenture
or in any of the Securities shall prevent the conversion by a Holder of any
Securities into Common Stock in accordance with the provisions for conversion of
such Securities set forth in this Indenture, including the payment of cash in
lieu of fractional shares of Common Stock in accordance with Article XIII, or in
any of such Securities in the event of an occurrence of the events described in
this Section 12.03.
(b) In the event that any Securities are declared due and payable
before their Stated Maturity pursuant to Section 5.02, then and in such event
the Company shall promptly notify holders of Senior Indebtedness of such
acceleration. The Company may not pay the Securities until the earlier of (i)
the passage of 120 or more days have passed after such acceleration occurs or
(ii) the payment in full of all Senior Indebtedness, and may thereafter pay the
Securities if this Article 10 permits the payment at that time.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provi sions of this Section 12.03, and if such fact shall, at or
prior to the time of such payment, have been made known to the Trustee or, as
the case may be, such Holder, then and in such event such payment shall be paid
over and delivered forthwith to the Company.
The provisions of this Section 12.03 shall not apply to any payment
with respect to which Section 12.02 would be applicable.
SECTION 12.04. Payment Permitted If No Default. Nothing contained in
--------------------------------
this Article XII or elsewhere in this Indenture or in any of the Securities
shall prevent (a) the Company, at any time except during the pendency of any
case, proceeding, dissolution, liquidation or other winding up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 12.02 or under the conditions described in
Section 12.03, from making payments at any time of Principal Amount, Issue
Price, accrued Original Issue Discount, Redemption Price or cash interest, as
the case may be, on the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
Principal Amount, Issue Price, accrued Original Issue Discount, Redemption Price
or cash interest, as the case may be, on the Securities or the retention of such
payment by the Holders, if, at the time of such
<PAGE>
86
application by the Trustee, it did not have knowledge that such payment would
have been prohibited by the provisions of this Article XII.
SECTION 12.05. Subrogation to Rights of Holders of Senior
------------------------------------------
Indebtedness. Subject to the payment in full of all Senior Indebtedness, and
- -------------
until the Securities are paid in full, the Holders of the Securities shall be
subrogated (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to indebtedness of the
Company to substantially the same extent as the Securities are subordinated and
is entitled to like rights of subrogation) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness to the extent that payments and
distributions otherwise payable to Holders of Securities have been applied to
the payment of Senior Indebtedness as provided by this Article XII. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled, except for the provisions of
this Article XII, and no payments over pursuant to the provisions of this
Article XII to the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, be deemed to be a payment
or distribution by the Company to or on account of the Senior Indebtedness.
SECTION 12.06. Provisions Solely To Define Relative Rights. The
--------------------------------------------
provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article XII or elsewhere in this Indenture or in the Securities is intended
to or shall (a) impair, as among the Company, its creditors other than holders
of Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article XII of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company), to pay to the
Holders of the Securities the Principal Amount, Issue Price, accrued Original
Issue Discount, Redemption Price, Purchase Price, Conversion Payment, Change in
Capital Purchase Price or cash interest, as the case may be, on the Securities
as and when the same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against the Company of the Holders of
the Securities and creditors of the Company other
<PAGE>
87
than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article XII of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder.
SECTION 12.07. Trustee To Effectuate Subordina tion. Each Holder of
-------------------------------------
a Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XII and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 12.08. No Waiver of Subordination Provisions. No right of
--------------------------------------
any present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordina tion provided in this Article
XII or the obligations hereunder of the Holders of the Securities to the holders
of Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstand ing; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; (iv) exercise or refrain from exercising any rights
against the Company and any other Person; (v) apply any and all sums received
from time to time to the Senior Indebtedness.
SECTION 12.09. Notice to Trustee. The Company shall give prompt
------------------
written notice to the Trustee of any fact
<PAGE>
88
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article XII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 6.01, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have received
-------- -------
the notice provided for in this Section 12.09 at least two Business Days prior
to the date upon which by the terms hereof any money may become payable for any
purpose, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within two
Business Days prior to such date.
Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article XII, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 12.10. Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent. Upon any payment or distribution of assets of the Company
- ------------------
referred to in this Article XII, the Trustee, subject to the provisions of
Section 6.01, and the Holders of the Securities shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which such
insolvency,
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89
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or distribu
tion, the holders of the Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XII.
SECTION 12.11. Trustee Not Fiduciary for Holders of Senior
-------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- -------------
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
XII or otherwise.
SECTION 12.12. Rights of Trustee as Holder of Senior Indebtedness;
---------------------------------------------------
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
- ---------------------------------
be entitled to all the rights set forth in this Article XII with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.07.
SECTION 12.13. Article Applicable to Paying Agents. In case at any
------------------------------------
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this Article
XII shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all
intents and purposes as if such Paying Agent were named in this Article XII in
addition to or in place of the Trustee; provided, however, that Section 12.12
-------- -------
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
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90
SECTION 12.14. Certain Conversions Deemed Payment. For the purposes
-----------------------------------
of this Article XII only, (1) the issuance and delivery of junior securities
upon conversion of Securities in accordance with Article XIII shall not be
deemed to constitute a payment or distribution on account of the principal of or
premium (if any) or cash interest on Securities or on account of the purchase or
other acquisition of Securities, and (2) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon conversion of a
Security shall be deemed to constitute payment on account of the principal of
such Security. For the purposes of this Section 12.14, the term "junior
securities" means (a) shares of any stock of any class of the Company and (b)
securities of the Company which are subordinated in right of payment to the
prior payment in full of all Senior Indebtedness which may be outstanding at the
time of issuance or delivery of such securities to substantially the same extent
as, or to a greater extent than, the Securities are so subordinated as provided
in this Article XII. Nothing contained in this Article XII or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Securities, the right, which is absolute and unconditional, of the Holder
of any Security to convert such Security in accordance with Article XIII.
ARTICLE XIII
Conversion of Securities
------------------------
SECTION 13.01. Conversion Privilege. A Holder of a Security may
---------------------
convert such Security into shares of Common Stock at any time (subject to the
limitation described in Section 11.03(e)) during the period stated in paragraph
9 of the Securities. The number of shares of Common Stock issuable upon
conversion of a Security per $1,000 of Principal Amount thereof (the "Conversion
Rate") shall be that set forth in paragraph 9 in the Securities, subject to
adjustment as herein set forth.
The Holders' right to convert Securities into shares of Common Stock
is subject to the Company's right to elect to instead pay such Holder the amount
of cash set forth in the next succeeding sentence, in lieu of delivering such
shares of Common Stock; provided, however, that if such payment of cash is not
-------- -------
permitted pursuant to the provisions of this Indenture or the provisions of any
other agreement or instrument to which the Company is a party or by which it is
bound or otherwise, the Company shall deliver shares of
<PAGE>
91
Common Stock (and cash in lieu of fractional shares of Common Stock) in
accordance with this Article XIII, whether or not the Company has delivered a
notice pursuant to Section 13.02 to the effect that the Securities would be paid
in cash. The amount of cash to be paid pursuant to Section 13.02 for each per
$1,000 Principal Amount of a Security upon conversion shall be equal to the Sale
Price of a share of Common Stock on the Trading Day immediately prior to the
related Conversion Date multiplied by the Conversion Rate in effect on such
Trading Day.
In the event the Company exercises its option pursuant to Section
15.01 to have interest in lieu of Original Issue Discount accrue on the Security
following a Tax Event, the Holder will be entitled on conversion to receive the
same number of shares of Common Stock such Holder would have received if the
Company had not exercised such option. If the Company exercises such option,
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment date to
the opening of business of such Interest Payment Date (except Securities to be
redeemed on a date within such period) must be accompanied by payment of an
amount equal to the interest thereon that the registered Holder is to receive.
Except where Securities surrendered for conversion must be accompanied by
payment as described above, no interest on converted Securities will be payable
by the Company on any Interest Payment Date subsequent to the date of
conversion.
The Company shall not pay cash in lieu of delivering shares of Common
Stock upon the conversion of any Security pursuant to the terms of this Article
XIII (other than cash in lieu of fractional shares pursuant to Section 13.03)
(i) if there has occurred (prior to, on or after, as the case may be, the
Conversion Date or the date on which the Company delivers its notice of whether
such Security shall be converted into shares of Common Stock or cash pursuant to
Section 13.02) and is continuing an Event of Default (other than a default in
such payment on such Securities); provided, however, that this sentence shall
-------- -------
not apply in the event that an Event of Default occurs after such cash is paid.
"Average Sale Price" means the average of the Sale Prices of the
Common Stock for the shorter of:
(i) 30 consecutive Trading Days ending on the last full Trading Day
prior to the Time of Determination with respect to the rights, options,
warrants or
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92
distribution in respect of which the Average Sale Price is being
calculated, or
(ii) the period (x) commencing on the date next succeeding the first
public announcement of (a) the issuance of rights, options or warrants or
(b) the distribution, in each case, in respect of which the Average Sale
Price is being calculated and (y) pro ceeding through the last full
Trading Day prior to the Time of Determination with respect to the rights,
warrants or distribution in respect of which the Average Sale Price is
being calculated, or
(iii) the period, if any, (x) commencing on the date next succeeding
the Ex-Dividend Time with respect to the next preceding (a) issuance of
rights, warrants, or options or (b) distribution, in each case, for which
an adjustment is required by the provisions of Section 13.06(4), 13.07 or
13.08 and (y) proceeding through the last full Trading Day prior to the
Time of Determination with respect to the rights, warrants, or options or
distribution in respect of which the Average Sale Price is being
calculated.
If the Ex-Dividend Time (or in the case of a subdivision, combination
or reclassification, the effective date with respect thereto) with respect to a
dividend, subdivision, combination or reclassification to which Section
13.06(l), (2), (3) or (5) applies occurs during the period applicable for
calculating "Average Sale Price" pursuant to the definition in the preceding
sentence, "Average Sale Price" shall be calculated for such period in a manner
determined in good faith by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the Sale Price of the
Common Stock during such period.
"Time of Determination" means the time and date of the earlier of (i)
the determination of stockholders entitled to receive rights, warrants, or
options or a distribution, in each case, to which Sections 13.07 and 13.08 apply
and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for such rights, options, warrants or distribution on the
New York Stock Exchange or such other national or regional exchange or market on
which the shares of the Common Stock are then listed or quoted.
SECTION 13.02. Conversion Procedure. To convert a Security a Holder
---------------------
must satisfy the requirements in para graph 9 of the Securities. The date on
which the Holder
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93
satisfies all those requirements is the conversion date (the "Conversion Date").
Within two Business Days following the Conversion Date, the Company shall
deliver to the Holder, through the Conversion Agent, written notice of whether
such Security shall be converted into shares of Common Stock or paid in cash.
If the Company shall have notified the Holder that such Security shall be
converted into shares Common Stock, the Company shall deliver to the Holder no
later than the seventh Business Day following the Conversion Date a certificate
for the number of full shares of Common Stock issuable upon the conversion and
cash in lieu of any fractional share determined pursuant to Section 13.03.
Except as provided in Section 13.01, if the Company shall have notified the
Holder that such Security shall be paid in cash, the Company shall deliver to
the Holder surrendering such Security the amount of cash payable with respect to
such Security on the fifth Business Day following such Conversion Date. Except
as provided in Section 13.01, the Company may not change its election with
respect to the consideration to be delivered upon conversion of a Security once
the Company has notified the Holder in accordance with this paragraph.
The person in whose name the certificate is registered shall be
treated as a stockholder of record on and after the Conversion Date; provided,
--------
however, that no surrender of a Security on any date when the stork transfer
- -------
books of the Company shall be closed shall be effective to constitute the person
or persons entitled to receive the shares of Common Stock upon such conversion
as the record holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the person or persons entitled
to receive such shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding day on which
such stock transfer books are open; provided further that such conversion shall
----------------
be at the Conversion Rate in effect on the date that such Security shall have
been surrendered for conversion, as if the stock transfer books of the Company
had not been closed. Upon conversion of a Security, such person shall no longer
be a Holder of such Security.
Holders may surrender a Security for conversion by means of book entry
delivery in accordance with paragraph 9 of the Securities and the regulations of
the applicable book entry facility.
No payment or adjustment will be made for dividends on any Common
Stock except as provided in this Article XIII. On conversion of a Security,
that portion of
<PAGE>
94
accrued Original Issue Discount or (except as provided below) accrued cash
interest attributable to the period from the Issue Date (or, the date on which
interest was last paid) to the Conversion Date with respect to the converted
Security shall not be canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through delivery of the Common
Stock in exchange for the Security being converted pursuant to the terms hereof,
and the fair market value of such Common Stock (together with any cash payment
in lieu of fractional shares of Common Stock) shall be treated as issued, to the
extent thereof, first in exchange for the Original Issue Discount and cash
interest accrued through the Conversion Date, and the balance, if any, of such
fair market value of such shares of Common Stock (and any such cash payment)
shall be treated as issued in exchange for the Issue Price of the Security being
converted pursuant to the provisions hereof. Notwith standing the foregoing
accrued but unpaid interest will be payable upon conversion of Securities made
concurrently with or after acceleration of the Securities following an Event of
Default.
If the Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be computed
based on the total Principal Amount of the Securities converted.
Upon surrender of a Security that is convened in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security in an authorized denomination equal in Principal Amount to the
unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal
Holiday in a place where the Conversion Agent is located, the Security may be
surrendered to such Conversion Agent on the next succeeding day that is not a
Legal Holiday.
SECTION 13.03. Fractional Shares. The Company will not issue a
------------------
fractional share of Common Stock upon conversion of a Security. Instead, the
Company will deliver cash for the current market value of the fractional share.
The current market value of a fractional share shall be determined to the
nearest 1/1,000th of a share by multiplying the Sale Price, on the last Trading
Day prior to the Conversion Date, of a full share by the fractional amount and
rounding the product to the nearest whole cent.
SECTION 13.04. Taxes on Conversion. If a Holder converts a Security,
--------------------
the Company shall pay any documentary,
<PAGE>
95
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon such conversion. The Holder, however, shall pay any such tax that is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by
law or regulations.
SECTION 13.05. Company To Provide Stock. The Company shall, prior to
-------------------------
issuance of any Securities hereunder, and from time to time as may be necessary,
reserve out of its authorized but unissued Common Stock a sufficient number of
shares of Common Stock to permit the conversion of the Securities for shares of
Common Stock.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all Federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then listed or quoted.
SECTION 13.06. Adjustment for Change in Capital Stock. If, after
---------------------------------------
the Issue Date, the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) pays a dividend or makes a distribution on its Common Stock in
shares of its Capital Stock (other than Common Stock or rights, warrants or
options for its Capital Stock); or
<PAGE>
96
(5) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than rights, warrants or options for its Capital
Stock),
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares or other units of Capital
Stock of the Company which such Holder would have owned immediately following
such action if such Holder had converted the Security immediately prior to such
action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares or other units of two or more classes or series of
Capital Stock of the Company, the Conversion Rate shall thereafter be subject to
adjustment upon the occurrence of an action taken with respect to any such class
or series of Capital Stock as is contemplated by this Article XIII with respect
to the Common Stock, on terms comparable to those applicable to Common Stock in
this Article XIII.
SECTION 13.07. Adjustment for Rights Issue. If, after the Issue
----------------------------
Date, the Company distributes any rights, warrants or options to all holders of
its Common Stock entitling them, for a period expiring within 60 days after the
record date for such distribution, to purchase shares of Common Stock or
securities convertible into Common Stock at a price per share less than the Sale
Price as of the Time of Determination, the Conversion Rate shall be adjusted in
accordance with the formula:
(0 + N)
-----------
R' = R x 0 + (N x P)
-------
M
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
10 = the number of shares of Common Stock outstanding on the record date for the
distribution to which this Section 13.07 is being applied.
<PAGE>
97
N = the number of additional shares of Common Stock offered pursuant to the
distribution.
P = the offering price per share of such additional shares.
M = the Average Sale Price, minus, in the case of (i) a distribution to which
-----
Section 13.06(4) applies or (ii) a distribution to which Section 13.08
applies, for which, in each case, (x) the record date shall occur on or
before the record date for the distribution to which this Section 13.07
applies and (y) the Ex-Dividend Time shall occur on or after the date of
the Time of Determination for the distribution to which this Section 13.07
applies, the fair market value (on the record date for the distribution to
which this Section 13.07 applies) of:
(1) the Capital Stock of the Company distributed in respect of each
share of Common Stock in such Section 13.06(4) distribution, and
(2) the assets of the Company or debt securities or any rights,
warrants or options to purchase securities of the Company distributed in
respect of each share of Common Stock in such Section 13.08 distribution.
The Board of Directors shall determine fair market values in good faith for the
purposes of this Section 13.07.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the rights,
warrants or options to which this Section 13.07 applies.
No adjustment shall be made under this Section 13.07 if the
application of the formula stated above in this Section 13.07 would result in
value of R' that is equal to or less than the value of R.
SECTION 13.08. Adjustment for Other Distribu tions. If, after the
------------------------------------
Issue Date, the Company distributes to all holders of its Common Stock any of
its assets or debt securities or any rights, warrants or options to purchase
securities of the Company (including securities or cash, but excluding (x)
distributions of Capital Stock referred to in Section 13.06 and distributions of
rights, warrants or options referred to in Section 13.07 and (y) cash dividends
or other cash distributions that are paid out of consoli dated current net
earnings or earned surplus as shown on the books of the Company, unless such
cash dividends or other
<PAGE>
98
cash distributions are Extraordinary Cash Dividends), the Conversion Rate shall
be adjusted, subject to the provisions of the last paragraph of Section 13.08,
in accordance with the formula:
M
---
R' = R x M-F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Sale Price, minus, in the case of a distribution to which
-----
Section 13.06(4) applies for which (i) the record date shall occur on or
before the record date for the distribution to which this Section 13.08
applies and (ii) the Ex-Dividend Time shall occur on or after the date of
the Time of Determination for the distribution to which this Section 13.08
applies, the fair market value (on the record date for the distribution to
which this Section 13.08 applies) of any Capital Stock of the Company
distributed in respect of each share of Common Stock in such Section
13.06(4) distribution.
F = the fair market value (on the record date for the distribution to
which this Section 13.08 applies) of the assets, securities, rights,
warrants or options to be distributed in respect of each share of Common
Stock in the distribution to which this Section 13.08 is being applied
(including, in the case of cash dividends or other cash distributions
giving rise to an adjustment, all such cash distributed concurrently).
The Board of Directors shall determine fair market values for the purpose of
this Section 13.08.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution
to which this Section 13.08 applies.
For purposes of this Section 13.08, the term "Extraordinary Cash
Dividend" shall mean any cash dividend with respect to the Common Stock the
amount of which, together with the aggregate amount of cash dividends on the
<PAGE>
99
Common Stork to be aggregated with such cash dividend in accordance with the
provisions of this paragraph, equals or exceeds the threshold percentages set
forth in items (i) or (ii) below:
(i) If, upon the date prior to the Ex-Dividend Time with respect to a
cash dividend on the Common Stock, the aggregate amount of such cash
dividend together with the amounts of all cash dividends on the Common
Stock with Ex-Dividend Times occurring in the 85 consecutive day period
ending on the date prior to the Ex-Dividend Time with respect to the cash
dividend to which this provision is being applied equals or exceeds 12.5%
of the average of the Sale Prices during the period beginning on the date
after the first such Ex-Dividend Time in such period and ending on the date
prior to the Ex-Dividend Time with respect to the cash dividend to which
this provision is being applied (except that if no other cash dividend has
had an Ex-Dividend Time occurring in such period, the period for
calculating the average of the Sale Prices shall be the period commencing
85 days prior to the date prior to the Ex-Dividend Time with respect to the
cash dividend to which this provision is being applied), such cash dividend
together with each other cash dividend with an Ex-Dividend Time occurring
in such 85-day period shall be deemed to be an Extraordinary Cash Dividend
and for purposes of applying the formula set forth above in this Section
13.08, the value of "F" shall be equal to (w) the aggregate amount of such
cash dividend together with the amounts of the other cash dividends with
Ex-Dividend Times occurring in such period minus (x) the aggregate amount
-----
of such other cash dividends with Ex-Dividend Times occurring in such
period for which a prior adjustment in the Conversion Rate was previously
made under this Section 13.08.
(ii) If upon the date prior to the Ex-Dividend Time with respect to a
cash dividend on the Common Stock, the aggregate amount of such cash
dividend, together with the amounts of all cash dividends on the Common
Stock with Ex-Dividend Times occurring in the 365-consecutive-day period
ending on the date prior to the Ex-Dividend Time with respect to the cash
dividend to which this provision is being applied equals or exceeds 25% of
the average of the Sale Prices during the period beginning on the date
after the first such Ex-Dividend Time in such period and ending on the date
prior to the Ex-Dividend Time with respect to the cash dividend to which
this provision is being applied (except that if no other cash dividend has
had an Ex-
<PAGE>
100
Dividend Time occurring in such period, the period for calculating the
average of the Sale Prices shall be the period commencing 365 days prior to
the date prior to the Ex-Dividend Time with respect to the cash dividend to
which this provision is being applied), such cash dividend together with
each other cash dividend with an Ex-Dividend Time occurring in such 365-day
period shall be deemed to be an Extraordinary Cash Dividend and for
purposes of applying the formula set forth above in this Section 13.08, the
value of "F" shall be equal to (y) the aggregate amount of such cash
dividend together with amounts of the other cash dividends with Ex-Dividend
Times occurring in such period minus (z) the aggregate amount of such
-----
other cash dividends with Ex-Dividend Times occurring in such period for
which a prior adjustment in the Conversion Rate was previously made under
this Section 13.08.
In the event that, with respect to any distribution to which this
Section 13.08 would otherwise apply, the difference "M-F" as defined in the
above formula is less than $1.00 or "F" is greater than "M", then the adjustment
provided by this Section 13.08 shall not be made and in lieu thereof the
provisions of Section 13.14 shall apply to such distribution.
SECTION 13.09. When Adjustment May Be Deferred. No adjustment in the
--------------------------------
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% (e.g., if the Conversion Rate is 4, an increase or
----
decrease of .04 (1% of 4)) in the Conversion Rate. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article X shall be made to the nearest
cent or to the nearest 1/1,000th of a share, as the case may be, with one-half
of a cent and 5/10,000ths of a share being rounded upwards.
SECTION 13.10. When No Adjustment Required. No adjustment need be
----------------------------
made for a transaction referred to in Section 13.06, 13.07, 13.08 or 13.14 if
Holders may participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the basis
and notice on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
<PAGE>
101
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Securities become convertible into cash pursuant to
the terms of Section 13.06, 13.07, 13.08 or 13.14, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash.
In cases where the fair market value of the portion of assets, debt
securities or rights, warrants or options to purchase securities of the Company
applicable to one share of Common Stock distributed to shareholders exceeds the
Average Sale Price per share of Common Stock, or such Average Sale Price exceeds
such fair market value of such portion of assets, debt securities or rights,
warrants or options so distributed by less than $1.00, rather than being
entitled to an adjustment in the Conversion Rate, the Holder of a Security upon
conversion thereof will be entitled to receive, in addition to the shares of
Common Stock into which such Security is convertible, the kind and amounts of
assets, debt securities or rights, options or warrants comprising the
distribution that such Holder would have received if such Holder had converted
such Security immediately prior to the record date for determining the
shareholders entitled to receive the distribution.
SECTION 13.11. Notice of Adjustment. Whenever the Conversion Rate is
---------------------
adjusted, the Company shall file with the Trustee and the Conversion Agent a
notice of such adjustment and a certificate from the Company's independent
public accountants briefly stating the facts requiring the adjustment and the
manner of computing it. The Conversion Agent will promptly mail such notice to
Holders at the Company's expense. The certificate shall be conclusive evidence
that the adjustment is correct. Neither the Trustee nor any Conversion Agent
shall be under any duty or responsibility with respect to any such certificate
except to exhibit the same to any Holder desiring inspection thereof.
SECTION 13.12. Voluntary Increase. The Company from time to time may
-------------------
increase the Conversion Rate by any amount and for any period of time (provided
--------
that such period is not less than 20 Business Days). Whenever the Conversion
Rate is increased, the Company shall mail to Holders and file with the Trustee
and the Conversion Agent a notice of the increase. The Company shall mail the
notice at least 15 days before the date the increased Conversion Rate takes
effect. The notice shall state the increased Conversion Rate and the period it
will be in effect.
<PAGE>
102
A voluntary increase of the Conversion Rate does not change or adjust
the Conversion Rate otherwise in effect for purposes of Sections 13.06, 13.07 or
13.08.
SECTION 13.13. Notice of Certain Transactions. If:
-------------------------------
(1) the Company takes any action that would require an adjustment in
the Conversion Rate pursuant to Section 13.06, 13.07 or 13.08 (unless no
adjustment is to occur pursuant to Section 13.10); or
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 13.14; or
(3) there is a liquidation or dissolution of the Company;
then the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution of the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in
it shall not affect the validity of the transaction.
SECTION 13.14. Reorganization of Company Special Distributions. If
------------------------------------------------
the Company is a parry to a transaction subject to Section 8.01 (other than a
sale of all or substantially all of the assets of the Company in a transaction
in which the holders of Common Stock immediately prior to such transaction do
not receive securities, cash or other assets of the Company or any other person)
or a merger or binding share exchange which reclassifies or changes its
outstanding Common Stock, the person obligated to deliver securities, cash or
other assets upon conversion of Securities shall enter into a supplemental
indenture. If the issuer of securities deliverable upon conversion of
Securities is an Affiliate of the successor Company, that issuer shall join in
the supplemental indenture.
The supplemental indenture shall provide that the Holder of a Security
may convert it into the kind and amount of securities, cash or other assets
which such Holder would have received immediately after the consolidation,
merger, binding share exchange or transfer if such Holder had converted the
Security immediately before the effective date of the transaction, assuming (to
the extent applicable) that
<PAGE>
103
such Holder (i) was not a constituent person or an Affiliate of a constituent
person to such transaction; (ii) made no election with respect thereto; and
(iii) was treated alike with the plurality of nonelecting Holders. The
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Article
XIII. The successor Company shall mail to Holders a notice briefly describing
the supplemental indenture.
If this Section 13.14 applies, neither Section 13.06 nor 13.07 shall
apply.
If the Company makes a distribution to all holders of its Common Stock
of any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Company that, but for the provisions of the last
paragraph of Section 13.08, would otherwise result in an adjustment in the
Conversion Rate pursuant to the provisions of Section 13.08, then, from and
after the record date for determining the holders of Common Stock entitled to
receive the distribution, a Holder of a Security that converts such Security in
accordance with the provisions of this Indenture shall upon such conversion be
entitled to receive, in addition to the shares of Common Stock into which the
Security is convertible, the kind and amount of securities, cash or other assets
comprising the distribution that such Holder would have received if such Holder
had converted the Security immediately prior to the record date for determining
the holders of Common Stock entitled to receive the distribution.
SECTION 13.15. Company Determination Final. Any determination that
----------------------------
the Company or the Board of Directors must make pursuant to this Article XIII is
conclusive.
SECTION 13.16. Trustee's Adjustment Disclaimer. The Trustee has no
--------------------------------
duty to determine when an adjustment under this Article XIII should be made, bow
it should be made or what it should be. The Trustee has no duty to determine
whether a supplemental indenture under Section 13.14 need be entered into or
whether any provisions of any supplemental indenture are correct. The Trustee
shall not be accountable for and makes no representation as to the validity or
value of any securities or assets issued upon conversion of Securities. The
Trustee shall not be responsible for the Company's failure to comply with this
Article XIII. Each Conversion Agent (other than the Company or an Affiliate of
the Company) shall have the same protection under this Section 13.16 as the
Trustee.
<PAGE>
104
SECTION 13.17. Simultaneous Adjustments. If this Article XIII
-------------------------
requires adjustments to the Conversion Rate under more than one of Sections
13.06(4), 13.07 or 13.08, and the record dates for the distributions giving rise
to such adjustments shall occur on the same date, then such adjustments shall be
made by applying, first, the provisions of Section 13.06, second, the provisions
of Section 13.08 and, third, the provisions of Section 13.07.
SECTION 13.18. Successive Adjustments. After an adjustment to the
-----------------------
Conversion Rate under this Article XIII, any subsequent event requiring an
adjustment under this Article XIII shall cause an adjustment to the Conversion
Rate as so adjusted.
ARTICLE XIV
Right to Require Repurchase
---------------------------
SECTION 14.01. Purchase of Securities at Option of the Holder upon
---------------------------------------------------
Change in Control. (a) If on or prior to April 21, 2003, there shall have
- ------------------
occurred a Change in Control, Securities in aggregate Principal Amount of $1,000
or an integral multiple thereof shall be purchased, at the option of the Holder
thereof, by the Company at the purchase price specified in paragraph 8 of the
Securities (the "Change in Control Purchase Price"), on the date that is 35
Business Days after the occurrence of the Change in Control (the "Change in
Control Purchase Date"), subject to satisfaction by or on behalf of the Holder
of the requirements set forth in Section 14.01(c).
A "Change in Control" shall be deemed to have occurred at such time
after the original issuance of the Securities as either of the following events
shall occur:
(i) There shall be consummated any consolidation or merger of the
Company pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case, other than a consolidation or
merger of the Company in which the holders of Common Stock immediately
prior to the consolidation or merger have, directly or indirectly, at least
a majority of the total voting power in the aggregate of all classes of
Capital Stock of the continuing or surviving corporation immediately after
such consolidation or merger; or
(ii) There is a report filed by any person, including its Affiliates
and Associates (other than the
<PAGE>
105
Company, any Subsidiary of the Company, or any employee benefit plan of
either the Company or any Subsidiary of the Company), on Schedule 13D or
14D-1 (or any successor schedule, form or report) pursuant to the Exchange
Act, disclosing that such person (for the purposes of this Section 14.01
only, the term "person" shall include a "person" within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing) has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act) of 50% or more of
the total voting power in the aggregate of all classes of Capital Stock of
the Company then outstanding normally entitled to vote in elections of
directors; provided, however, that a person shall not be deemed beneficial
-------- -------
owner of, or to own beneficially, (A) any securities tendered pursuant to a
tender or exchange offer made by or on behalf of such person or any of such
person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange thereunder, or (B) any securities if such
beneficial ownership (1) arises solely as a result of a revocable proxy
delivered in response to a proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the
Exchange Act, and (2) is not also then reportable on Schedule 13D (or any
successor schedule, form or report) under the Exchange Act.
Notwithstanding the foregoing provisions of this Section 14.01, a
Change in Control shall not be deemed to have occurred if at any time the
Company, any Subsidiary, any employee stock ownership plan or any other employee
benefit plan of the Company or any Subsidiary, or any person holding Common
Stock for or pursuant to the terms of any such employee benefit plan files or
becomes obligated to file a report under or in response to Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report) under the Exchange
Act disclosing beneficial ownership by it of shares of Common Stock, whether in
excess of 50% or otherwise.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
(b) Within 15 Business Days after the Change in Control, the Company
shall mail a written notice of such Change in Control by first-class mail to the
Trustee and to
<PAGE>
106
each Holder (and to beneficial owners if required by appli cable law). The
Company will cause a copy of the notice to be published in The Wall Street
---------------
Journal or another daily newspaper of national circulation. The notice shall
- -------
include a form of Change in Control Purchase Notice to be completed by the
Holder and shall state:
(1) the events causing a Change in Control and the date such Change in
Control is deemed to have occurred for purposes of this Section 14.01;
(2) the date by which the Change in Control Purchase Notice pursuant
to this Section 14.01 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent and the Conversion Agent
and the office or agency referred to Section 10.02;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Change in Control Purchase Notice
has been given may be converted into Common Stock (or, in lieu thereof,
cash, if the Company shall so elect) at any time prior to the close of
business on the Change in Control Purchase Date only if the Change in
Control Purchase Notice has been with drawn by the Holder in accordance
with the terms of this Indenture;
(8) that Securities must be surrendered to the Paying Agent or the
office or agency referred to in Section 10.02 to collect payment;
(9) that the Change in Control Purchase Price for any Security as to
which a Purchase Notice has been duly given and not withdrawn will be paid
promptly following the later of the Change in Control Purchase Date and the
time of surrender of such Security as described in clause (8) above;
(10) the procedures the Holder must follow to exercise rights under
this Section 14.01 and a brief description of those rights;
<PAGE>
107
(11) briefly, the conversion rights of the Securities; and
(12) the procedures for withdrawing a Change in Control Purchase
Notice.
(c) A Holder may exercise its rights specified in Section 14.01(a)
upon delivery of a written notice of purchase (a "Change in Control Purchase
Notice") to the Paying Agent or to the office or agency referred to in Section
10.02 at any time prior to the close of business on the Change in Control
Purchase Date, stating:
(1) the certificate number of the Security which the Holder will
deliver to be purchased;
(2) the portion of the Principal Amount of the Security which the
Holder will deliver to be purchased, which portion must be $1,000 or an
integral multiple thereof; and
(3) that such Security shall be purchased on the Change in Control
Purchase Date, pursuant to the terms and conditions specified in paragraph
8 of the Securities.
Receipt of the Security by the Paying Agent prior to, on or after the
Change in Control Purchase Date (together with all necessary endorsements), at
the offices of the Paying Agent or to the office or agency referred to in
Section 10.02 shall be a condition to the receipt by the Holder of the Change in
Control Purchase Price therefor; provided, however, that such Change in Control
-------- -------
Purchase Price shall be so paid pursuant to this Section 14.01 only if the
Security so delivered to the Paying Agent or such office or agency shall conform
in all respects to the description thereof set forth in the related Change in
Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 14.01, a portion of a Security if the Principal Amount of such portion
is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of
this Section 14.01 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Change in Control
Purchase Date and the date such Securities are surrendered
<PAGE>
108
to the Paying Agent or at the office or agency referred to in Section 10.02.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent or to the office or agency referred to in Section 10.02 the
Change in Control Purchase Notice contemplated by this Section 14.01(c) shall
have the right to withdraw such Change in Control Purchase Notice at any time
prior to or on the Change in Control Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent or to such office or agency in accor
dance with Section 14.03.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
SECTION 14.02. Purchase of Securities at the Option of the Holder.
---------------------------------------------------
(a) General. Securities shall be purchased by the Company pursuant to
--------
paragraph 8 of the Securities as of April 21, 2003 (the "Purchase Date"), at the
purchase price specified therein (the "Purchase Price"), at the option of the
Holder thereof, upon:
(1) delivery to the Paying Agent or to the office or agency referred
to in Section 10.02 by the Holder of a written notice of purchase (a
"Purchase Notice") at any time from the opening of business on the date
that is 20 Business Days prior to the Purchase Date until the close of
business on such Purchase Date stating:
(A) the certificate number of the Security that the Holder will
deliver to be purchased;
(B) the portion of the Principal Amount of the Security which the
Holder will deliver to be purchased, which portion must be $1,000 or an
integral multiple thereof;
(C) that such Security shall be purchased on the Purchase Date
pursuant to the terms and conditions specified in this Indenture and in
paragraph 6 of the Securities; and
(D) if the Company elects pursuant to Section 14.02(b) to pay the
Purchase Price on such Purchase Date, in whole or in part, in shares of
Common Stock, but such portion of the Purchase Price to be paid in Common
Stock is ultimately to be paid in cash because any condition in Section
14.02(d) is not satisfied, such Holder
<PAGE>
109
elects (i) to withdraw such Purchase Notice as to some or all of the
Securities to which it relates (stating the Principal Amount and
certificate numbers of the Securities as to which such withdrawal shall
relate), or (ii) to receive cash in respect of the Purchase Price for all
Securities subject to such Purchase Notice; and
(2) delivery of such Security prior to, on or after the Purchase Date
(together with all necessary endorsements) to the Paying Agent at the
offices of the Paying Agent or to the office or agency referred to in
Section 10.02, such delivery being a condition to receipt by the Holder of
the Purchase Price therefor; provided, however, that such Purchase Price
-------- -------
shall be so paid pursuant to this Section 14.02 only if the Security so
delivered conforms in all respects to the description thereof in the
related Purchase Notice.
If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of Section
14.03, fails to indicate such Holder's choice with respect to the election set
forth in clause (D) of Section 14.02(a)(1) above, such Holder shall be deemed to
have elected to receive cash in respect of the Purchase Price otherwise payable
in Common Stock.
The Company shall purchase from the Holder thereof, pursuant to this
Section 14.02, a portion of a Security if the Principal Amount of such portion
is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all or a Security also apply to the purchase of such
portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions
hereof shall be consummated by the delivery of the consideration to be received
by the Holder promptly following the later of the Purchase Date and the time of
delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent or the office or agency referred to in Section 10.02 the
Purchase Notice contemplated by this Section 14.02(a) shall have the right to
withdraw at any time prior to the close of business on the Purchase Date such
Purchase Notice by delivery of a written notice of withdrawal to the Paying
Agent or such office or agency in accordance with Section 14.03.
<PAGE>
110
The Paying Agent shall promptly notify the Company of the receipt by
it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price.
-------------------------------------------------------------
The Securities to be purchased pursuant to Section 14.02(a) may be paid for, at
the election of the Company, in cash or Common Stock, or in any combination of
cash and Common Stock, subject to the conditions set forth in this Section
14.02. The Company shall designate, in the notice from the Company delivered
pursuant to Section 14.02(e), whether the Company will purchase the Securities
for cash or Common Stock, and, if a combination thereof, the percentages of the
Purchase Price of Securities in respect of which it will pay in cash or Common
Stock; provided that the Company will pay cash for fractional interests in
--------
Common Stock. For purposes of determining the existence of potential fractional
interests, all Securities subject to purchase by the Company held by a Holder
shall be considered together (no matter how many separate certificates are to be
presented). Each Holder whose Securities are purchased pursuant to this Section
14.02 shall receive the same percentage of cash or Common Stock in payment of
the Purchase Price for such Securities, except (i) as provided in Section
14.02(d) with regard to the payment of cash in lieu of fractional shares of
Common Stock and (ii) in the event that the Company is unable to purchase the
Securities of a Holder or Holders for Common Stock because any necessary
qualifications or registrations of the Common Stock under applicable state
securities laws cannot be obtained, the Company may purchase the Securities of
such Holder or Holders for cash. The Company may not change its election with
respect to the consideration (or components or percentages of components
thereof) to be paid once the Company has given notice thereof to Holders except
pursuant to this Section 14.02(b) or Section 14.02(d).
At least five Business Days before the Company Notice Date (as defined
below), the Company shall deliver an Officers' Certificate to the Trustee
specifying:
(i) the manner of payment selected by the Company;
(ii) the information required by Section 14.02(e);
(iii) that the conditions to such manner of payment set forth in
Section 14.02(d) have or will be complied with; and
(iv) whether the Company desires the Trustee to give the notice
required by Section 14.02(e).
<PAGE>
111
(c) Purchase with Cash. On each Purchase Date, at the option of the
-------------------
Company, the Principal Amount of the Securities in respect of which a Purchase
Notice pursuant to Section 14.02(a) has been given, or a specified percentage
thereof, may be purchased by the Company with cash equal to the aggregate
Purchase Price of such Securities.
(d) Payment by Common Stock. On each Purchase Date, at the option of
------------------------
the Company, the Principal Amount of the Securities in respect of which a
Purchase Notice pursuant to Section 14.02(a) has been given, or a specified
percentage thereof, may be purchased by the Company by the issuance of a number
of shares of Common Stock equal to the quotient obtained by dividing (i) the
amount of cash to which the Holders would have been entitled had the Company
elected to pay all or such specified percentage, as the case may be, of the
Purchase Price of such Securities in cash by (ii) the Market Price (as defined
below) of a share of Common Stock, subject to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in
payment of the Purchase Price. Instead the Company will pay cash for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined by multiplying the Market Price by such
fraction and rounding the product to the nearest whole cent, with one-half cent
being rounded upward. It is understood that if a Holder elects to have more
than one Security purchased, the number of shares of Common Stock shall be based
on the aggregate amount of Securities to be purchased.
The Company's right to exercise its election to purchase the
Securities pursuant to this Section through the issuance of shares of Common
Stock shall be conditioned upon:
(i) the Company's not having given notice of an election to pay
entirely in cash and its giving of timely notice of election to purchase
all or a specified percentage of the Securities with Common Stock as
provided herein;
(ii) the registration of the shares of Common Stock to be issued in
respect of the payment of the Purchase Price under the Securities Act and
the Exchange Act, in each case if required unless there exists an
applicable exemption to registration thereunder;
(iii) the listing of the Common Stock on the relevant Purchase Date on
the New York Stock Exchange
<PAGE>
112
or other national securities exchange or the quotation thereof on NASDAQ;
and
(iv) the receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel each stating that (A) the terms of the issuance of the
Common Stock are in conformity with this Indenture and (B) the shares of
Common Stock to be issued by the Company in payment of the Purchase Price
in respect of Securities have been duly authorized and, when issued and
delivered pursuant to the terms of this Indenture in payment of the
Purchase Price in respect of the Securities, will be validly issued, fully
paid and nonassessable and shall be free of any preemptive rights and any
lien or adverse claim (provided that such Opinion of Counsel may state
that, insofar as it relates to the absence of such preemptive rights, liens
and adverse claims, it is given upon the best knowledge of such counsel),
and, in the case of such Officers' Certificate, that condi tions (i), (ii)
and (iii) above have been satisfied and, in the case of such Opinion of
Counsel, that conditions (ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares of Common
Stock to be issued for each $1,000 Principal Amount of Securities and the Sale
Price of a share of Common Stock on each of the seven Business Days prior to the
Purchase Date. The Company may elect to pay in Common Stock only if the
information necessary to calculate the Market Price is reported in The Wall
--------
Street Journal or another daily newspaper of national circulation. If such
- --------------
conditions are not satisfied prior to or on the Purchase Date and the Company
elected to purchase the Securities pursuant to this Section 14.02 through the
issuance of shares of Common Stock, the Company shall pay the Purchase Price in
cash.
The "Market Price" means the average of the Sale Price of the Common
Stock for the five Trading Day period ending on the third Trading Day prior to
the related Purchase Date, appropriately adjusted to take into account the
actual occurrence, during the seven Trading Days preceding such Purchase Date,
of any event described in Section 13.06, 13.07 or 13.08; subject, however, to
------- -------
the conditions set forth in Sections 13.09 and 13.10.
(e) Notice of Election. The Company shall send notices of its
-------------------
election (the "Company Notice") to purchase with cash or Common Stock or any
combination thereof to the Holders (and to beneficial owners as required by
applicable law) in the manner provided in Section 15.02. The Company
<PAGE>
113
Notice shall be sent to Holders (and to beneficial owners as required by
applicable law) on a date not less than 20 Busi ness Days prior to the Purchase
Date (such date not less than 20 Business Days prior to the Purchase Date being
herein referred to as the "Company Notice Date"). Such notices shall state the
manner of payment elected and shall contain the following information:
In the event the Company has elected to pay the Purchase Price (or any
specified percentage thereof) with Common Stock, the notice shall:
(1) state that each Holder will receive Common Stock with a Market
Price determined as of a specified date prior to the Purchase Date equal to
such specified percentage of the Purchase Price of the Securities held by
such Holder (except for any cash amount to be paid in lieu of fractional
shares); and
(2) state that because the Market Price of Common Stock will be
determined prior to the Purchase Date, Holders will bear the market risk
with respect to the value of the Common Stock to be received from the date
such Market Price is determined to the Purchase Date.
In any case, each notice shall include a form of Purchase Notice to be
completed by the Holder and shall state:
(i) the Purchase Price and Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion Agent
and of the office or agency referred to in Section 10.02;
(iii) that Securities as to which a Purchase Notice has been given may
be converted into Common Stock at any time prior to the close of business
on the applicable Purchase Date only if the applicable Purchase Notice has
been withdrawn in accordance with the terms of this Indenture;
(iv) that Securities must be surrendered to the Paying Agent or to the
office or agency referred to in Section 10.02 to collect payment;
(v) that the Purchase Price for any security as to which a Purchase
Notice has been given and not with drawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Security
as described in (iv);
<PAGE>
114
(vi) the procedures the Holder must follow to exercise rights under
Section 14.02 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities and that
Holders who want to convert Securities must satisfy the requirements set
forth in paragraph 9 of the Securities; and
(viii) the procedures for withdrawing a Purchase Notice (including,
without limitation, for a conditional withdrawal pursuant to the terms of
Section 14.02(a)(1)(D) or Section 14.03).
At the Company's written request, the Trustee shall give such notice
in the Company's name and at the Company's expense; provided, however, that, in
-------- -------
all cases, the text of such notice shall be prepared by the Company.
Upon determination of the actual number of shares of Common Stock to
be issued for each $1,000 Principal Amount of Securities, the Company will
publish such determination in The Wall Street Journal or another daily newspaper
-----------------------
of national circulation and furnish the Trustee with an affidavit of
publication.
(f) Covenants of the Company. All shares of Common Stock delivered
-------------------------
upon purchase of the Securities shall be newly issued shares or treasury shares,
shall be duly authorized, validly issued, fully paid and nonassessable and shall
be free from preemptive rights and free of any lien or adverse claim.
The Company shall use its best efforts to list or cause to have quoted
any shares of Common Stock to be issued to purchase Securities on the principal
national securities exchange or over-the-counter or other domestic market on
which any other shares of the Common Stock are then listed or quoted. The
Company will promptly inform the Trustee in writing of any such listing.
(g) Procedure Upon Purchase. The Company shall deposit cash (in
------------------------
respect of a cash purchase under Section 14.02(c) or for fractional interests,
as applicable) or shares of Common Stock, or any combination thereof, as
applicable, at the time and in the manner as provided in Section 14.04,
sufficient to pay the aggregate Purchase Price of all Securities to be purchased
pursuant to this Section 14.02. As soon as practicable after the later of the
Purchase Date and the date such Securities are surrendered to the Paying Agent
or at the office or agency
<PAGE>
115
referred to in Section 10.02, the Company shall deliver to each Holder entitled
to receive Common Stock through the Paying Agent a certificate for the number of
full shares of Common Stock issuable in payment of the Purchase Price and cash
in lieu of any fractional interests. The person in whose name the certificate
for Common Stock is registered shall be treated as a holder of record of such
Common Stock on the Business Day following the related Purchase Date. Subject to
Section 14.02(d), no payment or adjustment will be made for dividends on the
Common Stock the record date for which occurred prior to the Purchase Date.
(h) Taxes. If a Holder of a Security is paid in Common Stock, the
------
Company shall pay any documentary, stamp or similar issue or transfer tax due on
such issue of shares of Common Stock. However, the Holder shall pay any such
tax which is due because the Holder requests the shares of Common Stock to be
issued in a name other than the Holder's name. The Paying Agent may refuse to
deliver the certif icates representing the Common Stock being issued in a name
other than the Holder's name until the Paying Agent receives a sum sufficient to
pay any tax which will be due because the shares of Common Stock are to be
issued in a name other than the Holder's name. Nothing herein shall preclude
any income tax withholding required by law or regulations.
SECTION 14.03. Effect of Purchase Notice or Change in Control
----------------------------------------------
Purchase Notice. Upon receipt by the Paying Agent of the Change in Control
- ----------------
Purchase Notice or Purchase Notice specified in Section 14.01(c) or Section
14.02(a), as applicable, the Holder of the Security in respect of which such
Purchase Notice or Change in Control Purchase Notice, as the case may be, was
given shall (unless such Purchase Notice or Change in Control Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Change in Control Purchase Price, as the
case may be, with respect to such Security. Such Purchase Price or Change in
Control Purchase Price shall be paid to such Holder promptly following the later
of (x) the Business Day following the Purchase Date or the change in Control
Purchase Date, as the case may be, with respect to such Security (provided the
conditions in Section 14.01(c) or Section 14.02(a), as applicable, have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent or
to the office or agency referred to in Section 10.02 by the Holder thereof in
the manner required by Section 14.02(a) and (g) or Section 14.01(c), as
applicable. Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice, as the case may be, has been given by the Holder
thereof may not be
<PAGE>
116
converted into shares of Common Stock on or after the date of the delivery of
such Purchase Notice or Change in Control Purchase Notice, unless such Purchase
Notice of Change in Control Purchase Notice, as the case may be, has first been
validly withdrawn as specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case
may be, may be withdrawn by means of a written notice of withdrawal delivered to
the office of the Paying Agent or to the office or agency referred to in Section
10.02 at any time on or prior to the close of business on the Purchase Date or
the Change in Control Purchase Date, as the case may be, specifying:
(1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted;
(2) the Principal Amount of the Security with respect to which such
notice of withdrawal is being submitted; and
(3) the Principal Amount, if any, of such Security which remains
subject to the original Purchase Notice or Change in Control Purchase
Notice, as the case may be, and which has been or will be delivered for
purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the form
set forth in the preceding paragraph or may be in the form of (i) a conditional
withdrawal contained in a Purchase Notice pursuant to the terms of Section
14.02(a)(1)(D) or (ii) a conditional withdrawal containing the information set
forth in Section 14.02(a)(1)(D) and the preceding paragraph and contained in a
written notice of withdrawal delivered to the Paying Agent as set forth in the
preceding paragraph.
There shall be no purchase of any Securities pursuant to Section 14.02
(other than through the issuance of Common Stock in payment of the Purchase
Price, including cash in lieu of fractional shares of Common Stock) or Section
14.01 if there has occurred (prior to, or on or after, as the case may be, the
giving, by the Holders of such Securities, of the required Purchase Notice or
Change in Control Purchase Notice, as the case may be) and is continuing an
Event of Default (other than a default in the payment of the Purchase Price or
Change in Control Purchase Price, as the case may be, with respect to such
Securities). The Paying Agent will promptly return to the respective
<PAGE>
117
Holders thereof any Securities (x) with respect to which a Purchase Notice or
Change in Control Purchase Notice, as the case may be, has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a default in the payment of the Purchase Price or
Change in Control Purchase Price, as the case may be, with respect to such
Securities) in which case, upon such return, the Purchase Notice or Change in
Control Purchase Notice with respect thereto shall be deemed to have been
withdrawn.
SECTION 14.04. Deposit of Purchase Price or Change in Control
----------------------------------------------
Purchase Price. Prior to 11:00 a.m., New York City time, on the Business Day
- ---------------
following the Purchase Date or the Change in Control Purchase Date, as the case
may be, the Company shall deposit with the Trustee or with the Paying Agent (or,
if the Company or a Subsidiary or an Affiliate of either of them is acting as
Paying Agent, shall segregate and hold in trust an amount of cash in immediately
available funds or securities, if expressly permitted hereunder), sufficient to
pay the aggregate Purchase Price or Change in Control Purchase Price, as the
case may be, of all the Securities or portions thereof which are to be purchased
as of the Purchase Date or Change in Control Purchase Date, as the case may be.
SECTION 14.05. Securities Purchased in Part. Any Security which is
-----------------------------
to be purchased only in part shall be surrendered at the office of the Paying
Agent or the office or agency referred to in Section 10.02 (with, if the Company
or the Trustee so requires, due endorsement, or a written instrument of transfer
in form satisfactory to the Company and the Trustee executed by the Holder or
such Holder's attorney duly authorized in writing) and the Company shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security,
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate Principal Amount equal to,
and in exchange for, the portion of the Principal Amount of the Security so
surrendered which is not purchased.
SECTION 14.06. Covenant to Comply with Securities Laws upon Purchase
-----------------------------------------------------
of Securities. In connection with any offer to purchase or purchase of
- --------------
Securities under Section 14.01 or 14.02, the Company shall (i) comply with Rule
13e-4 and Rule 14e-1 under the Exchange Act, if applicable, (ii) file the
related Schedule 13E-4 (or any successor schedule, form or report) under the
Exchange Act, if applicable, and (iii) otherwise comply with all Federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon purchase of the Securities
<PAGE>
118
(including positions of the SEC under applicable no-action letters) so as to
permit the rights and obligations under Sections 14.01 and 14.02 to be exercised
in the time and in the manner specified in Sections 14.01 and 14.02.
SECTION 14.07. Repayment to the Company. The Trustee and the Paying
-------------------------
Agent shall return to the Company, upon written request, any cash or shares of
Common Stock, together with interest on such cash as hereinafter provided and
dividends on such shares of Common Stock, if any, held by them for the payment
of a Purchase Price or Change in Control Purchase Price, as the case may be, of
the Securities that remain unclaimed as provided in paragraph 14 of the
Securities; provided, however, that to the extent that the aggregate amount of
-------- -------
cash or shares of Common Stock deposited by the Company pursuant to Section
14.04 exceeds the aggregate Purchase Price or Change in Control Purchase Price,
as the case may be, of the Securities or portions thereof to be purchased, then
promptly after the Business Day following the Purchase Date or Change in Control
Purchase Date, as the case may be, the Trustee shall return any such excess to
the Company together with interest as hereinafter provided or dividends, if any,
thereon.
ARTICLE XV
Special Tax Event Conversion
----------------------------
SECTION 15.01. Optional Conversion to Semiannual Coupon Debenture
--------------------------------------------------
Upon Tax Event. From and after the date (the "Tax Event Date") of the
- --------------- --------------
occurrence of a Tax Event, at the option of the Company, interest in lieu of
future Original Issue Discount and regular cash interest shall accrue at 3.625%
per annum on a principal amount per Security (the "Restated Principal Amount")
equal to the Issue Price plus Original Issue Discount and cash interest accrued
to the date immediately prior to the Tax Event Date or the date on which the
Company exercises the option described herein, whichever is later (such date,
the "Option Exercise Date"). Such interest shall accrue from the Option
<PAGE>
119
Exercise Date and shall be payable semiannually on each Interest Payment Date to
holders of record at the close of business on the Regular Record Date
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date on which interest has been paid or, if no interest has
been paid, from the Option Exercise Date. Within 15 days of the occurrence of a
Tax Event, the Company shall mail a written notice of such Tax Event by first-
class mail to the Trustee.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to
<PAGE>
120
be an original, but all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
XEROX CORPORATION,
by
---------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT (4)(b)
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT OF THIS SECURITY, THE
AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $431.93, THE ISSUE PRICE IS $568.07, THE
ISSUE DATE IS APRIL 21, 1998, AND THE YIELD TO STATED MATURITY IS 3.625% PER
ANNUM (COMPUTED ON A SEMIANNUAL BOND EQUIVALENT BASIS).
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY AND THE COMMON STOCK ISSUABLE UPON THE
CONVERSION THEREOF, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE"), WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OR SUCCESSOR OF SUCH SECURITY) ONLY (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR
<PAGE>
2
OTHER INFORMATION SATISFACTORY TO THE COMPANY, AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO., OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE THREE OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
Xerox Corporation
Convertible Subordinated Debentures Due April 21, 2018
No. Principal Amount at
Stated Maturity:
Cusip No. $
Issue Price: $568.07
Issue Date: April 21, 1998 (for each $1,000
Principal Amount at
Stated Maturity)
Original Issue Discount:
$431.93 (for each $1,000
Principal Amount at
Stated Maturity)
<PAGE>
3
Xerox Corporation, a corporation duly organized and existing under the
laws of New York (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
Dollars on April 21, 2018, and to pay cash interest thereon as specified on the
other side of this Security.
Original Issue Discount will accrue as specified on the other side of
this Security. This Security is convertible as specified on the other side of
this Security. All capitalized terms used herein without definition shall have
the respective meanings assigned thereto in the Indenture referred to on the
other side of this Security.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be
<PAGE>
4
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: April 21, 1998
XEROX CORPORATION,
by
_______________________
Name:
Title:
Attest:
____________________________
Name:
Title:
<PAGE>
5
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: April 21, 1998 The First National Bank of
Chicago, as Trustee
by
_________________________
Authorized Signatory
<PAGE>
6
Xerox Corporation
Convertible Subordinated Debentures Due 2018
1. Cash Interest; Original Issue Discount
--------------------------------------
The Company promises to pay interest in cash on the Principal Amount
of this Security at the rate per annum of 0.57%. The Company will pay cash
interest semiannually on April 21 and October 21 of each year (each an "Interest
Payment Date") to holders of record at the close of business on each April 7 or
October 7 (whether or not a business day) (each a "Regular Record Date")
immediately preceding such Interest Payment Date. Cash interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the Issue Date. Cash interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay cash interest on overdue principal, or if shares of Common Stock (or
cash in lieu of fractional shares) in respect of a conversion of this Security
in accordance with the terms of Article XIII of the Indenture are not delivered
when due, at the rate borne by the Securities plus 1% per annum, and it shall
pay interest in cash on overdue installments of cash interest at the same rate
to the extent lawful. All such overdue cash interest shall be payable on
demand.
Original Issue Discount shall accrue on this Security as set forth
below so long as this Security remains outstanding, calculated on a semiannual
bond equivalent basis using a 360-day year composed of twelve 30-day months,
from the Issue Date of this Security. As of any date (the "Specified Date"),
the amount of Original Issue Discount accrued on this Security per $1,000
Principal Amount shall be:
(i) If the Specified Date occurs on one of the Interest Payment Dates
set forth below, the amount of accumulated Original Issue Discount will
equal the amount set forth below for such Interest Payment Date:
<PAGE>
7
Accretion of Accreted Amount
Original Issue (per $1,000
Discount (per $1,000 Principal
Date Principal Amount) Amount)
- -------------------- -------------------- ----------------
$ 568.07
October 21, 1998 $ 7.44 575.51
April 21, 1999 7.59 583.10
October 21, 1999 7.71 590.81
April 21, 2000 7.86 598.67
October 21, 2000 8.00 606.67
April 21, 2001 8.15 614.82
October 21, 2001 8.29 623.11
April 21, 2002 8.45 631.56
October 21, 2002 8.59 640.15
April 21, 2003 8.76 648.91
October 21, 2003 8.91 657.82
April 21, 2004 9.07 666.89
October 21, 2004 9.24 676.13
April 21, 2005 9.40 685.53
October 21, 2005 9.58 695.11
April 21, 2006 9.75 704.86
October 21, 2006 9.92 714.78
April 21, 2007 10.11 724.89
October 21, 2007 10.29 735.18
April 21, 2008 10.47 745.65
October 21, 2008 10.67 756.32
April 21, 2009 10.86 767.18
October 21, 2009 11.05 778.23
April 21, 2010 11.26 789.49
October 21, 2010 11.46 800.95
April 21, 2011 11.66 812.61
October 21, 2011 11.88 824.49
April 21, 2012 12.10 836.59
October 21, 2012 12.31 848.90
April 21, 2013 12.54 861.44
October 21, 2013 12.76 874.20
April 21, 2014 12.99 887.19
October 21, 2014 13.23 900.42
April 21, 2015 13.47 913.89
October 21, 2015 13.72 927.61
April 21, 2016 13.96 941.57
October 21, 2016 14.22 955.79
April 21, 2017 14.47 970.26
October 21, 2017 14.74 985.00
At Stated Maturity 15.00 1,000.00
<PAGE>
8
(ii) if the Specified Date occurs before the first Interest Payment
Date, the amount of accrued Original Issue Discount will equal the sum of
(A) the Issue Price of this Security and (B) an amount equal to the amount
of accrued Original Issue Discount for the first Interest Payment Date
multiplied by a fraction, the numerator of which is the number of days
elapsed from the Issue Date to the Specified Date, using a 360-day year of
twelve 30-day months, and the denominator of which is the number of days
from the Issue Date to the first Interest Payment Date, using a 360-day
year of twelve 30-day months;
(iii) if the Specified Date occurs between two Interest Payment
Dates, the amount of accrued Original Issue Discount will equal the sum of
(A) the amount of accrued Original Issue Discount set forth in paragraph
(i) for the Interest Payment Date immediately preceding such Specified Date
and (B) an amount equal to the product of (1) the amount of accrued
Original Issue Discount for the immediately following Interest Payment Date
less the amount of accrued Original Issue Discount for the immediately
preceding Interest Payment Date multiplied by (2) a fraction, the numerator
of which is the number of days elapsed from the immediately preceding
Interest Payment Date to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is 180; or
(iv) if the Specified Date occurs after the Stated Maturity of this
Security, the amount of accrued Original Issue Discount will equal the
amount of accrued Original Issue Discount as of such Stated Maturity.
2. Special Tax Event Conversion.
-----------------------------
From and after the date (the "Tax Event Date") of the occurrence of a
Tax Event, at the option of the Company, interest in lieu of future Original
Issue Discount and regular cash interest shall accrue at 3.625% per annum on a
principal amount per Security (the "Restated Principal Amount") equal to the
Issue Price plus Original Issue Discount accrued to the date immediately prior
to the Tax Event Date or the date on which the Company exercises the option
described in this paragraph, whichever is later (such date hereunder referred to
as the "Option Exercise Date"), and shall be payable semiannually on each
Interest Payment
<PAGE>
9
Date to holders of record at the close of business on the Regular Record Date
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the Option Exercise Date.
3. Method of Payment.
------------------
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of the principal of, premium, if any, and cash interest
on this Security, and in respect of Redemption Prices to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. The Company will pay cash amounts in money of the United States of
America that at the time of payment is legal tender for payment of public and
private debts. However, the Company may make such cash payments by check
payable in such money.
4. Paying Agent; Registrar; Exchange Agent.
----------------------------------------
Initially, The First National Bank of Chicago(the "Trustee"), will act
as Paying Agent, Registrar and Exchange Agent. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice, other than
notice to the Trustee, except that the Company will maintain at least one Paying
Agent in the State of New York, City of New York, Borough of Manhattan. The
Company or any of its Subsidiaries or Affiliates incorporated in the United
States may act as Paying Agent, Registrar or co-registrar.
5. Indenture.
----------
The Company issued the Securities under an Indenture dated as of April
21, 1998 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as in effect from time to time
(the "TIA"). Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
such terms, and Holders are referred to the Indenture and the TIA for a
statement of those terms.
<PAGE>
10
The Securities are unsecured subordinated obliga tions of the Company
limited to the aggregate Principal Amount specified in Section 3.01 of the
Indenture.
6. Redemption at the Option of the Company.
----------------------------------------
No sinking fund is provided for this Security. On and after April 21,
2003, this Security is redeemable for cash as a whole, or from time to time in
part, at any time at the option of the Company at the prices set forth below
(each a "Redemption Price") (equal to its Issue Price plus accrued Original
Issue Discount, together with accrued cash interest, to the Redemption Date).
The table below shows Redemption Prices of a Security per $1,000
Principal Amount at maturity on April 21, 2003, at each April 21 thereafter
prior to maturity, and at maturity on April 21, 2018, which prices reflect the
accrued Original Issue Discount calculated to each such date. The Redemption
Price of a Security redeemed between such dates would include an additional
amount reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to, but excluding, the Redemption Date, calculated
as set forth under paragraph 1(iii).
<PAGE>
11
(2)
Accrued (3)
Original Redemption
(1) Issue Price
Redemption Date Issue Price Discount (1)+(2)
- --------------- ----------- -------- ----------
April 21, 2003 $568.07 $ 80.84 $ 648.91
April 21, 2004 568.07 98.82 666.89
April 21, 2005 568.07 117.46 685.53
April 21, 2006 568.07 136.79 704.86
April 21, 2007 568.07 156.82 724.89
April 21, 2008 568.07 177.58 745.65
April 21, 2009 568.07 199.11 767.18
April 21, 2010 568.07 221.42 789.49
April 21, 2011 568.07 244.54 812.61
April 21, 2012 568.07 268.52 836.59
April 21, 2013 568.07 293.37 861.44
April 21, 2014 568.07 319.12 887.19
April 21, 2015 568.07 345.82 913.89
April 21, 2016 568.07 373.50 941.57
April 21, 2017 568.07 402.19 970.26
At Stated Maturity 568.07 431.93 1,000.00
If converted to a semiannual coupon security following the occurrence
of a Tax Event, this Security will be redeemable at the Restated Principal
Amount plus accrued and unpaid interest from the date of such conversion to, but
excluding, the Redemption Date; provided, however, that in no event may this
-------- -------
Security be redeemed prior to April 21, 2003.
7. Notice of Redemption.
---------------------
Notice of Redemption will be mailed at least 30 days but not more than 60 days
before the Redemption Date to each Holder of Securities to be redeemed at the
Holder's registered address. If money sufficient to pay the Redemption Price of
all Securities (or portions thereof which are in an integral multiple of $1,000
in Principal Amount) to be redeemed on the Redemption Date is deposited
<PAGE>
12
with the Paying Agent prior to or on the Redemption Date, immediately after such
Redemption Date cash interest and Original Issue Discount shall cease to accrue
on such Securities or portions thereof.
8. Purchase by the Company at the Option of the Holder.
----------------------------------------------------
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, this Security
on April 21, 2003 at a Purchase Price per $1,000 in Principal Amount of $648.91
(equal to the Issue Price plus accrued Original Issue Discount to such Purchase
Date), plus accrued cash interest to the Purchase Date, upon delivery by the
Holder of a Purchase Notice containing the information set forth in the
Indenture, at any time from the opening of business on the date that is 20
Business Days prior to such Purchase Date until the close of business on such
Purchase Date and upon delivery of this Security to the Paying Agent by the
Holders as set forth in the Indenture. Such Purchase Price may be paid, at the
option of the Company, in cash or by the delivery of Common Stock, or in any
combination thereof.
Notwithstanding anything herein to the contrary, if prior to the
Purchase Date this Security has been converted to a semiannual coupon security
following the occurrence of a Tax Event, the Purchase Price will be equal to the
Restated Principal Amount plus accrued cash interest from the date of conversion
to, but excluding, the Purchase Date.
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase this Security held
by such Holder 35 Business Days after the occurrence of a Change in Control for
a Change in Control Purchase Price equal to the Issue Price plus accrued
Original Issue Discount and cash interest to the Change in Control Purchase
Date, which shall be paid in cash.
The Holder has the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent
prior to the close of business on the Purchase Date a written notice of
withdrawal in accordance with the provisions of the Indenture.
If cash sufficient to pay the Purchase Price or Change in Control
Purchase Price, as the case may be, of all
<PAGE>
13
Securities (or any portion thereof which is in an integral multiple of $1,000 in
Principal Amount) to be purchased prior to or on the Purchase Date or the Change
in Control Purchase Date, as the case may be, is deposited with the Paying Agent
on the Purchase Date or the Change in Control Purchase Date, as the case may be,
this Security shall cease to be outstanding and cash interest and Original Issue
Discount shall cease to accrue on this Security (or such portions thereof) and
will be deemed paid, whether or not this Security is delivered to the Paying
Agent, immediately after such Purchase Date or Change in Control Purchase Date,
as the case may be, and the Holder shall have no other rights as such (other
than the right to receive the Purchase Price or Change in Control Purchase
Price, as the case may be, upon surrender of this Security or portion hereof).
9. Conversion Rights.
------------------
At the option of the Holder and subject to the terms and conditions of
the Indenture, this Security (or any portion hereof which is an integral
multiple of $1,000 in Principal Amount) may be surrendered for conversion into
shares of Common Stock at an initial conversion rate (the "Conversion Rate") of
3.904 shares of Common Stock per $1,000 Principal Amount of this Security. The
Conversion Rate is subject to adjustment as set forth in the Indenture. The
Holder's right to convert this Security for Common Stock is subject to the
Company's right to elect to pay the Holder surrendering this Security pursuant
to Article XIII of the Indenture an amount of cash as set forth in the
succeeding sentence, in lieu, in whole or in part, of delivering such Common
Stock. The amount of cash to be paid in lieu of shares pursuant to such
election by the Company upon conversion of this Security shall be equal to the
Sale Price of a share of Common Stock on the Trading Day immediately preceding
the Conversion Date multiplied by the Conversion Rate in effect on such Trading
Day. The right to surrender this Security for conversion pursuant to Article
XIII of the Indenture shall terminate on the close of business on April 21,
2018, or, if this Security or any portion hereof shall be called for redemption
pursuant to the terms hereof, then in respect of any portion so called for
redemption, at the close of business on the Redemption Date (unless in the case
of any such redemption the Company shall default in the payment due upon the
redemption hereof).
Except as otherwise expressly provided in the Indenture, no payment or
adjustment shall be made on account
<PAGE>
14
of any dividends or distributions on Common Stock delivered upon such
conversion. The Conversion Rate will not be adjusted at any time during the
term of this Security for accrued Original Issue Discount or cash interest.
Upon conversion of this Security, that portion of accrued Original Issue
Discount or (except as provided below) accrued cash interest thereon
attributable to the period from the Issue Date through the Conversion Date with
respect to this Security shall not be canceled, extinguished or forfeited, but
rather shall be deemed to be paid in full to the Holder thereof through the
delivery of the Common Stock (together with the cash payment(s), if any, in lieu
thereof, in whole or in part, or in lieu of fractional interests therein) in
exchange for this Security; and the fair market value of such Common Stock
(together with any such cash payment(s)), if any, shall be treated as delivered
or paid, to the extent thereof, first in exchange for accrued Original Issue
Discount and accrued cash interest through the Conversion Date, and the balance,
if any, of such fair market value of such Common Stock (and any such cash
payment(s)) shall be treated as delivered or paid in exchange for the Issue
Price of this Security, to the extent of such Issue Price. Notwithstanding the
foregoing, accrued but unpaid cash interest will be payable upon conversion of
this Security if such conversion is made concurrently with or after acceleration
of the indebtedness represented by this Security following an Event of Default.
No fractional shares of Common Stock shall be delivered upon exchanges
but the Conversion Agent on behalf of the Company shall make a cash payment in
lieu thereof equal to the product of such fractional share and the Sale Price on
the Trading Day immediately preceding the Conversion Date.
To convert this Security the Holder must (1) complete and manually
sign the conversion notice hereon (or complete and manually sign a facsimile of
such notice) and deliver such notice to the Conversion Agent (initially the
Trustee) or, if applicable, complete and deliver to the Depository Trust Company
("DTC") the appropriate instruction form for conversion pursuant to DTC's book
entry conversion program, (2) surrender (or arrange for book-entry delivery of)
this Security to the Conversion Agent (which is not necessary in the case of
conversion pursuant to DTC's book entry conversion program), (3) furnish
appropriate endorse ments and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer
<PAGE>
15
or similar tax if required. Book entry delivery of a Security to the Conversion
Agent may be made by any financial institution that is a participant in DTC;
conversion through DTC's book entry conversion program is available for any
security that is held in an account maintained at DTC by any such Participant.
A conversion shall be deemed to have been effected at the close of business on
the date all such requirements have been satisfied (the "Conversion Date"). A
Holder may convert a portion of this Security only if the portion if $1,000
Principal Amount or an integral multiple of $1,000.
In the event the Company exercises its option pursuant to Section
15.01 of the Indenture to have interest in lieu of Original Issue Discount
accrue on this Security following a Tax Event, the Holder will be entitled on
conversion to receive the same number of shares of Common Stock such Holder
would have received if the Company had not exercised such option. If the
Company exercises such option, Securities surrendered for conversion during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
(except Securities to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment as described above, no interest on
converted Securities will be payable by the Company on any Interest Payment Date
subsequent to the date of conversion.
The Conversion Rate shall be adjusted as provided in Article XIII of
the Indenture.
10. Conversion Arrangement on Call for Redemption.
----------------------------------------------
Any Securities called for redemption, unless surrendered for exchange
before the close of business on the Redemption Date, may be deemed to be
purchased from the Holders of such Securities at an amount not less than the
Redemption Price plus accrued cash interest to the Redemption Date, by one or
more third parties who may agree with the Company to purchase such Securities
from the Holders, to exchange them for Common Stock and to make payment for such
Securities to the Trustee in trust for such Holders.
<PAGE>
16
11. Subordination.
--------------
The Securities are subordinated to Senior Indebtedness of the Company.
To the extent provided in the Indenture, Senior Indebtedness of the Company must
be paid before the Securities may be paid. The Company and each Holder of
Securities, by accepting a Security, agrees to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
12. Denominations; Transfer; Exchange.
----------------------------------
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount and integral multiples of $1,000.
The Holder may transfer or exchange this Security in accordance with the
Indenture. The Registrar may require the Holder, among other things, to furnish
appropriate endorsements and transfer documents. The Registrar need not
transfer or exchange any Securities selected for redemption (except, in the case
of a Security to be redeemed in part, the portion of the Security not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn (except, in the case of
a Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
13. Persons Deemed Owners.
----------------------
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
14. Unclaimed Money for Securities.
-------------------------------
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to this Security that remain unclaimed for two years. After
return to the Company, the Holder must look to the Company for payment.
15. Amendment; Waiver.
------------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be
<PAGE>
17
amended with the written consent of the Holders of at least a majority in
aggregate Principal Amount of the Securities at the time Outstanding and (ii)
certain Defaults may be waived with the written consent of the Holders of a
majority in the aggregate Principal Amount of the Securities at the time
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Holder, the Company and the Trustee may amend the Indenture
or the Securities to cure any ambiguity, omission, defect, or inconsistency, or
to comply with Article VIII or Section 13.14 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to make any change that does not adversely affect the rights of any Holder, to
comply with any requirement of the Commission in connection with the
qualification of the Indenture under the TIA or to add to the covenants or
obligations of the Company under the Indenture or surrender any right, power or
option conferred by the Indenture on the Company.
16. Defaults and Remedies.
----------------------
Under the Indenture, Events of Default include, among other things (i)
default by the Company in (A) payment of the Principal Amount, Issue Price,
accrued Original Issue Discount, the Redemption Price, the Purchase Price or the
Change in Control Purchase Price, as the case may be, in respect of the
Securities when the same becomes due and payable, (B) cash interest or interest
upon conversion to a semiannual coupon security following a Tax Event, when due
(if such default in payment of any such interest shall continue for 31 days) or
(C) the delivery of shares of Common Stock (including cash in lieu of fractional
shares of Common Stock), or cash in lieu thereof in accordance with the terms of
the Indenture when such are required to be delivered upon conversion of a
Security (if such default shall continue for 10 days); (ii) failure by the
Company to comply with any other agreements in the Indenture or the Securities
upon the receipt by the Company of notice of such default from the Trustee or
Holders of not less than 25% in aggregate Principal Amount of the Securities
then Outstanding and the Company's failure to cure such default within 90 days
after receipt by the Company of such notice; and (iii) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount at Stated
Maturity of the Securities at the time outstanding, may by notice to the Company
declare the Issue Price of,
<PAGE>
18
plus accrued Original Issue Discount and accrued cash interest through the date
of such declaration on, all the Securities to be immediately due and payable.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Issue Price plus accrued Original Issue Discount and accrued cash
interest through the occurrence of such Event of Default on the Securities
becoming due and payable immediately upon the occurrence of such Event of
Default.
Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount at
Stated Maturity of the Securities at the time outstanding may direct the Trustee
in its exercise of any trust or power. The Trustee may withheld from Holders
notice of any continuing Default (except a Default in payment of amounts
specified in clause (i) above) if it in good faith determines that withholding
notice is in their interests.
17. Trustee Dealings with the Company.
----------------------------------
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates with the same rights it would have if it
were not Trustee.
18. No Recourse Against Others.
---------------------------
A director, officer, employee, agent or stock holder, as such, of the
Company shall not have any liability for any obligations of the Company under
this Security or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
19. Authentication.
---------------
This Security shall not be valid until an authorized officer of the
Trustee manually signs the
<PAGE>
19
Trustee's Certificate of Authentication on the other side of this Security.
20. Abbreviations.
--------------
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (-tenants in common), TEN ENT (-tenants by the
entireties), JT TEN (-joint tenants with right of survivorship and not as
tenants in common), CUST (-custodian), and U/G/M/A (-Uniform Gift to Minors
Act).
21. GOVERNING LAW.
--------------
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
20
CONVERSION NOTICE
To: Xerox Corporation
The undersigned registered owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion hereof (which is
$1,000 Principal Amount or an integral multiple thereof), below designated into
shares of Common Stock (in the form of a Share Certificate) in accordance with
the terms of the Indenture referred to in this Security, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for a fractional share and any Security representing any unconverted
Principal Amount hereof, be issued and delivered to the registered owner hereof
unless a different name has been provided below. If shares or any portion of
this Security not converted are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied with.
Any amount required to be paid by the undersigned on account of interest
accompanies this Security.
DATE: _______________
__________________________________
Signature(s)
(If a corporation, partnership or
fiduciary, the title of the Person
signing must be stated.)
Signature(s) must be Medallion
Guaranteed by a national bank or
trust company or a member firm
of a national stock exchange or
a member of the National
Association of Securities
Dealers, Inc. if shares of
Common Stock are to be
delivered, or unconverted
Securities are to be issued,
other than to and in the name of
the registered owner.
<PAGE>
21
______________________________
Signature Guarantee
Fill in for registration of
shares if they are to be
delivered, or unconverted
Securities if they are to be
issued, other than to and in the
name of the registered owner:
______________________________
(Name)
______________________________
(Street Address)
______________________________
(City, State and zip code)
(Please print name and address)
Register: __ Common Stock
__ Securities
(Check appropriate line(s)
Principal Amount to be converted
(if less than all):
$_____,000
__________________________________
Social Security or other Taxpayer
Identification Number of owner
<PAGE>
22
TRANSFER CERTIFICATE
The undersigned registered owner of this Security hereby certifies
with respect to $________ Principal Amount of the above-captioned securities
presented or surrendered on the date hereof (the "Surrendered Securities") for
registration of transfer, or for exchange or conversion where the securities
issuable upon such exchange or conversion are to be registered in a name other
than that of the undersigned registered owner (each such transaction being a
"transfer"), that such transfer complies with the restrictive legend set forth
on the face of the Surrendered Securities for the reason checked below:
___________ The transfer of the Surrendered Securities complies with
Rule 144 under the U.S. Securities Act of 1933, as amended
(the "Securities Act"); or
___________ The transfer of the Surrendered Securities complies with
Rule 144A under the Securities Act; or
___________ The transfer of the Surrendered Securities is to an
institutional accredited investor, as defined under Rule 501
of Regulation D under the Securities Act; or
___________ The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act.
DATE: ___________________
___________________
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of such
registered owner must be stated.)
<PAGE>
EXHIBIT 5(a)
Xerox Corporation
P.O. Box 1600
Stamford, Connecticut 06904-1600
203-968-3000
Office of General Counsel
Martin S. Wagner
Associate General Counsel,
Corporate, Finance and Ventures
July 17, 1998
Re: $1,012,198,000 Aggregate Principal Amount at Maturity of
Convertible Subordinated Debentures due 2018
Gentlemen:
As Associate General Counsel, Corporate, Finance and Ventures of Xerox
Corporation (the "Company"), I am familiar with (i) the issuance and sale by the
Company of $1,012,198,000 aggregate principal amount at maturity of Convertible
Subordinated Debentures due 2018 (the "Convertible Debentures") in transactions
exempt from the registration requirements of the Securities Act of 1933, as
amended, and (ii) the preparation and filing of the Company's Form S-3
Registration Statement to which this opinion is an exhibit (the "Registration
Statement") with respect to the offer and sale of the Convertible Debentures by
the several holders thereof. In rendering the opinions set forth herein, either
I or other attorneys in the Office of General Counsel of the Company who report
either directly or indirectly to me have examined the Indenture dated as of
April 21, 1998, between the Company and The First National Bank of Chicago, as
trustee (the "Indenture"), under which the Convertible Debentures were issued,
the Company's Restated Certificate of Incorporation and By-Laws, each as amended
to date, certain minutes of meetings of the Board of Directors of the Company
and the Executive Committee thereof, and such other documents and matters of law
as have been considered necessary or desirable for rendering the opinions set
forth herein.
Based upon the foregoing, it is my opinion that:
1. The Company has been duly incorporated and is validly existing and in good
standing under the laws of the State of New York.
2. The Convertible Debentures are legally issued, fully paid and
non-assessable, and are valid and binding obligations of the company entitled to
the benefits of the Indenture.
<PAGE>
3. The shares of Common Stock, par value $1.00 per share, of the Company
issuable upon conversion of the Convertible Debentures, when issued in
accordance with the terms of the Indenture, will be validly issued, fully paid
and non-assessable.
I am qualified to practice law in the State of New York. The opinions expressed
herein are limited to the law of the State of New York and the Federal law of
the United States.
I hereby consent to the reference to my name under the caption "Legal Matters"
in the Prospectus contained in the Registration Statement and to the filing of
this letter as an exhibit to the Registration Statement.
Very truly yours,
MARTIN S. WAGNER
Associate General Counsel,
Corporate, Finance and Ventures
<PAGE>
EXHIBIT 5(b)
Xerox Corporation
P.O. Box 1600
Stamford, Connecticut 06904-1600
203-968-3000
July 17, 1998
Re: $1,012,198,000 Aggregate Principal Amount at Maturity of
Convertible Subordinated Debentures due 2018
Gentlemen:
We have acted as special tax counsel to Xerox Corporation (the "Company"), in
connection with (i) the issuance and sale by the Company of $1,012,198,000
aggregate principal amount at maturity of Convertible Subordinated Debentures
due 2018 (the "Convertible Debentures") and (ii) the preparation and filing of
the Company's Form S-3 Registration Statement to which this opinion is an
exhibit (the "Registration Statement") with respect to the offer and sale of the
Convertible Debentures by the several holders thereof. In rendering the opinions
set forth herein, we have examined the Registration Statement and such other
documents and matters of law as have been considered necessary or desirable for
rendering the opinions set forth herein.
Based upon the foregoing, it is our opinion that if the offer and sale of the
Convertible Debentures is conducted in the manner described in the Prospectus
contained in the Registration Statement (the "Prospectus"), the statements under
the caption "Certain United States Fedeal Income Tax Considerations" in the
Prospectus correctly describe certain United States Federal income tax
consequences resulting from the purchase, ownership, disposition and conversion
of Convertible Debentures by an initial holder thereof subject to United States
federal income taxation.
We do not purport to be experts in, or to express any opinion concerning, the
laws of any jurisdiction other than the Federal laws of the United States.
We hereby consent to the reference to us and to the use of our name under the
caption "Legal Matters" in the Prospectus and to the filing of a copy of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
IVINS, PHILLIPS & BARKER, CHARTERED
<PAGE>
EXHIBIT 10
EXECUTION COPY
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made and entered into as of April 21, 1998, by and among XEROX
CORPORATION, a New York corporation (the "Company"), MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED and J.P. MORGAN
SECURITIES INC. (each an "Initial Purchaser" and together the
"Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated April
16, 1998, among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $880,173,000 principal amount at maturity of the
Company's Convertible Subordinated Debentures due 2018 (the "Debentures") and
the grant by the Company to the Initial Purchasers of the option to purchase all
or any part of an additional $132,025,000 aggregate principal amount at maturity
of Debentures. The Debentures will be convertible into shares of common stock,
par value $1.00 per share, of the Company (the "Common Stock") at the conversion
price set forth in the Pricing Agreement between the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth in
this Agreement. The execution of this Agreement is a condition to the closing
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition
------------
shall have their respective meanings set forth in the Purchase Agreement or
Indenture. As used in this Agreement, the following terms shall have the
following meanings:
"Closing Date" means the Closing Time as defined in the Purchase
------------
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the SEC promulgated thereunder.
"Indenture" means the Indenture relating to the Debentures, dated as
---------
of April 21, 1998 between the Company and The First National Bank of Chicago, as
trustee, as the same may be amended, supplemented, waived or otherwise
<PAGE>
2
modified from time to time in accordance with the terms thereof.
"Notice and Questionnaire" means a Notice of Registration Statement
------------------------
and Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
"Prospectus" means the prospectus included in any Registration
----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including post-
effective amendments and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Registrable Securities" means all Debentures and shares of Common
----------------------
Stock that are Restricted Securities.
"Registration Expenses": See Section 5 hereof.
---------------------
"Registration Statement" means any registration statement of the
----------------------
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
"Restricted Securities" means any and all Debentures upon original
---------------------
issuance thereof (and any shares of Common Stock issued from time to time upon
conversion thereof other than pursuant to an effective registration statement
under the Securities Act) and at all times subsequent thereto until, as to any
Restricted Security, (i) the sale of such Restricted Security has been
effectively registered under the Securities Act and such Restricted Security has
been disposed of in accordance with the Registration Statement relating thereto
or (ii) it is distributed to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
---
<PAGE>
3
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the SEC thereunder.
"Shelf Registration": See Section 3 hereof.
------------------
"Special Counsel" means Cravath, Swaine & Moore, special counsel to
---------------
the Initial Purchasers or such other special counsel as may be designated by the
holders of a majority in aggregate principal amount at maturity of Registrable
Securities outstanding (provided that holders of Common Stock issued upon the
conversion of the Debentures shall be deemed for this purpose to be holders of
the aggregate principal amount at maturity of Debentures from which such Common
Stock was converted).
"TIA" means the Trust Indenture Act of 1939, as amended.
---
2. Securities Subject to this Agreement. (a) Securities. The
------------------------------------- -----------
securities entitled to the benefits of this Agreement are the Registrable
Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a
----------------------------------
holder of Registrable Securities whenever such Person beneficially owns
Registrable Securities; provided that only Registrable Securities of holders who
--------
are registered holders of Registrable Securities shall be counted for purposes
of calculating any proportion of holders of Registrable Securities entitled to
take action or give notice pursuant to this Agreement.
3. Shelf Registrations. (a) Shelf Registrations. As promptly as
-------------------- --------------------
practicable and in no event later than 90 days after the Closing Date, the
Company shall prepare and file with the SEC a Registration Statement under the
Securities Act for an offering to be made on a continuous basis pursuant to Rule
415 (or any similar rule that may be adopted by the SEC) under the Securities
Act covering all the Registrable Securities then outstanding and all Registrable
Securities that may be issued upon the conversion of Debentures into shares of
Common Stock (the "Shelf Registration").
(b) The Shelf Registration shall be on Form S-3 or another
appropriate form permitting registration of such Registrable Securities for
resale by holders of Registrable Securities in the manner or manners designated
by them.
(c) (1) Not less than 30 calendar days prior to the effectiveness of
the Shelf Registration, the Company
<PAGE>
4
shall mail the Notice and Questionnaire to the holders of Registrable
Securities. No holder shall be entitled to be named as a selling securityholder
in the Shelf Registration, and no holder shall be entitled to use the Prospectus
forming a part thereof for resales of Registrable Securities at any time, unless
such holder has returned a completed and signed Notice and Questionnaire to the
Company by the deadline for response set forth therein; provided, however, that
-------- -------
holders of Registrable Securities shall have at least 28 calendar days from the
date on which the Notice and Questionnaire is first mailed to such holders to
return a completed and signed Notice and Questionnaire to the Company.
(2) After the Shelf Registration has become effective, the Company
shall, upon the request of any holder of Registrable Securities that has not
returned a completed Notice and Questionnaire, promptly send a Notice and
Questionnaire to such holder. The Company shall not be required to take any
action to name such holder as a selling securityholder in the Shelf Registration
or to enable such holder to use the Prospectus forming a part thereof for
resales of Registrable Securities until such holder has returned a completed and
signed Notice and Questionnaire to the Company.
(d) The Company shall use its reasonable efforts to cause the Shelf
Registration to become effective under the Securities Act in accordance with
Section 3(a) hereof and shall keep the Shelf Registration continuously effective
for a period of two years from the Closing Date or such shorter period, which
will terminate when all Registrable Securities are no longer Restricted
Securities. The Company shall as expeditiously as possible supplement or make
amendments to any Shelf Registration (i) if required by the rules, regulations
or instructions applicable to the registration form used by the Company, (ii) if
required by the Securities Act and (iii) in order to ensure that all the
Registrable Securities then outstanding and all Registrable Securities that may
be issued upon the conversion of Debentures into shares of Common Stock are
covered by such Shelf Registration, including taking any action reasonably
necessary to identify as a selling securityholder in the Shelf Registration any
holder of Registerable Securities that delivers an executed Notice and
Questionnaire after the Shelf Registration becomes effective, within 30 days
after receipt of such Notice and Questionnaire.
4. Registration Procedures. In connection with the registration
------------------------
obligations pursuant to Section 3 hereof, the Company shall use its reasonable
efforts to effect such
<PAGE>
5
registrations to permit the sale of all Registrable Securities in accordance
with the then intended method or methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC, within the time period specified in
Section 3, a Registration Statement or Registration Statements on any
appropriate form under the Securities Act, which form shall be available
for the sale of all Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
use its reasonable efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided,
--------
however, that before filing a Registration Statement or Prospectus or any
-------
amendments or supplements thereto, the Company shall furnish to the Special
Counsel, copies of the Registration Statement or Prospectus and all such
documents in the form proposed to be filed at least two business days prior
thereto which documents will be subject to the review of the Special
Counsel and the Company shall not file any such Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which the
Special Counsel shall reasonably object on a timely basis, unless the
Company is advised by their counsel that such Registration Statement or
amendment thereto or any Prospectus or supplement thereto is required to be
filed by applicable law;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act;
(c) promptly notify Special Counsel to the holders of Registerable
Securities and, with respect to any event contemplated by clauses (i),
(iv), (v), (vi) or (vii) hereof, notify each holder that has returned a
completed and signed Notice and Questionnaire to the Company (and in each
case, if requested, confirm any oral or telephonic notice in writing), (i)
when a Prospectus or any Prospectus supplement or post-effective amendment
related to such Registrable Securities (A) has been filed, and (B) with
respect to
<PAGE>
6
a Registration Statement or any post-effective amendment related to such
Registrable Securities, when the same has become effective, (ii) of the
receipt of any comments from the SEC, (iii) of any request by the SEC for
amendments or supplements to a Registration Statement or related Prospectus
or for additional information, (iv) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (v) if at any time the
representations and warranties of the Company contained in any agreement
entered pursuant to paragraph (l) below in connection with the sale of
Restricted Securities by selling holders thereof cease to be true and
correct, (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale or exchange in
any jurisdiction of the United States of America or the initiation of any
proceeding for such purpose, (vii) of the happening of any event that makes
any statement of a material fact made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue or that requires the making of any
changes in a Registration Statement or related Prospectus so that such
documents will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading (provided that the timely filing of a report
under the Securities Exchange Act of 1934 which is incorporated by
reference in the Registration Statement and related Prospectus shall
constitute effective notice under this subsection (vii)), and (viii) of the
determination of the Company that a post-effective amendment to a
Registration Statement would be appropriate;
(d) use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale or exchange in any jurisdiction
of the United States of America, as promptly as practicable;
(e) if reasonably requested by any holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information
<PAGE>
7
as such holder reasonably requests to be included therein as is required by
applicable law; provided that the Company may, to the extent it reasonably
--------
objects to the inclusion of any such information, require such holder to
obtain an opinion of counsel to the effect that such information is so
required, (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or such post-effective amendment, and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by any
holder of Registrable Securities covered by such Registration Statement as
is required by applicable law;
(f) furnish to each selling holder of Registrable Securities upon
request, and the Special Counsel, without charge, at least one conformed
copy of the Registration Statement or Statements and any post-effective
amendment thereto, including financial statements and schedules, without
charge, as well as all documents incorporated therein by reference or
deemed incorporated therein by reference and all exhibits (including those
previously furnished or incorporated by reference), at the earliest
practicable time under the circumstances after the filing of such documents
with the SEC;
(g) deliver to each selling holder of Registrable Securities and the
Special Counsel, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Company
consents to the use of such Prospectus or any amendment or supplement
thereto in accordance with applicable law by each of the selling holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or
supplement thereto in accordance with applicable law;
(h) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling holders
of Registrable Securities and Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale, as the
case may be, under the securities or Blue Sky laws of such state or
<PAGE>
8
local jurisdictions in the United States as any seller reasonably requests
in writing; keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration
Statement; provided, however, that the Company will not be required to (A)
-------- -------
qualify generally to do business in any jurisdiction where it is not then
so qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or (C)
register or qualify securities prior to the effective date of any
Registration Statement under Section 3 hereof;
(i) cooperate with the selling holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities, which certificates shall not bear any restrictive
legends; and enable such Registrable Securities to be in such denominations
and registered in such names, in all cases consistent with the requirements
set forth in the Indenture, as the holders may request;
(j) subject to the exceptions contained in (A), (B) and (C) of
subsection (h) hereof, use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other Federal, state and local
governmental regulatory agencies or authorities in the United States as may
be necessary, by virtue of the business and operations of the Company, to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities and cooperate with each seller of Registrable
Securities in connection with any filings required to be made with the
National Association of Securities Dealers; Inc.;
(k) upon the occurrence of any event contemplated by paragraph
4(c)(vii) or 4(c)(viii) above, as promptly as practicable thereafter,
prepare and file with the SEC a supplement or post-effective amendment to
the applicable Registration Statement or a supplement to the related
Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder, such Prospectus will
not contain an untrue
<PAGE>
9
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(l) enter into such customary agreements and take all such other
reasonable actions in connection therewith (including those reasonably
requested by the holders of a majority in aggregate principal amount at
maturity of the Registrable Securities being sold (provided that holders of
Common Stock issued upon the conversion of the Debentures shall be deemed
for this purpose to be holders of the aggregate principal amount at
maturity of Debentures from which such Common Stock was converted) in order
to expedite or facilitate the disposition of such Registrable Securities;
provided, however, that the Company shall not be required to enter into an
-------- -------
underwriting agreement in connection with any such disposition;
(m) cause the Indenture to be qualified under the TIA not later than
the effective date of any registration; and in connection therewith,
cooperate with the Trustee to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the
terms of the TIA and execute, and use their reasonable efforts to cause the
Trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the
SEC to enable the Indenture to be so qualified in a timely manner; and
(n) comply with all applicable rules and regulations of the SEC and
make generally available to the Company's securityholders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder no later than the date required for the filing of
the applicable forms referred to in Rule 158 under the Securities Act,
commencing on the first day of the first fiscal quarter of the Company
commencing after the effective date of a Registration Statement, which
statement shall cover said 12-month period.
The Company may require each seller of Registrable Securities under a
Shelf Registration to furnish to the Company such information regarding the
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing and each holder in acquiring
<PAGE>
10
such Registrable Securities agrees to supply such information to the Company
promptly upon such request.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(c)(iii), 4(c)(iv),
4(c)(vi), 4(c)(vii) or 4(c)(viii) hereof, such holder will forthwith discontinue
disposition of such Registrable Securities covered by such Registration
Statement or Prospectus and will not resume disposition of such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(k) hereof, or until it is advised
in writing by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of the Registration Statement and Prospectus
and any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. Notwithstanding the foregoing, the
Company shall not allow such Registration Statement or Prospectus to fail to be
effective for more than 30 days during any 360 day period.
5. Registration Expenses. The Company shall pay all fees and
----------------------
expenses incident to the performance of or compliance with this Agreement by the
Company including, without limitation, (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or Blue Sky laws (including reasonable fees and disbursements of counsel for any
underwriters or holders in connection with Blue Sky qualification of any of the
Registrable Securities), (iii) all expenses of any persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements thereto,
other documents relating to the Company's performance of and compliance with
this Agreement, and (iv) all rating agency fees but excluding fees of any
special accountants retained by the selling holders, counsel to the underwriters
and underwriting discounts and commissions and transfer taxes, if any, relating
to the sale or disposition of Registrable Securities by a holder of Registrable
Securities.
6. Indemnification. The Company agrees to indemnify and hold
----------------
harmless each Initial Purchaser and each holder of Registrable Securities and
each person, if any, who controls any Initial Purchaser or any holder of
Registrable Securities within the meaning of either Section 15 of the Securities
Act or Section 20 of the
<PAGE>
11
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended and supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to the Initial Purchasers or any holder of Registrable
Securities furnished to the Company in writing by any Initial Purchaser or such
holder of Registrable Securities (which also expressly acknowledges the
indemnity provisions herein) expressly for use therein.
In connection with any Shelf Registration in which a holder of
Registrable Securities is participating, in furnishing information relating to
such holder of Registrable Securities to the Company in writing expressly for
use in such Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto, the holders of such Registrable
Securities agree, severally and not jointly, to indemnify and hold harmless the
Initial Purchasers and each person, if any, who controls any Initial Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act and the Company, its directors and officers who sign a
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to such information relating to
such holder of Registrable Securities furnished in writing by or on behalf of
such holder of Registrable Securities expressly for use
<PAGE>
12
in the Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to any of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing, but failure to so
notify an indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. The indemnifying
party, upon request of the indemnified party, shall retain counsel satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. The indemnifying party
will be entitled to participate in any such proceeding, and to the extent that
it may elect by written notice delivered to the indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
--------
however, that if the defendants in any such action include both the indemnified
- -------
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence, (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability
<PAGE>
13
shall be only in respect of the counsel referred to in such clause (i) or (iii).
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses of
more than one separate firm (in addition to any local counsel) for an Initial
Purchaser and all persons, if any, who control such Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, (b) the fees and expenses of more than one separate firm (in addition to
any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section and (c) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all holders of
Registrable Securities and all persons, if any, who control any holders of
Registrable Securities within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In such case
involving any Initial Purchaser and control persons of such Initial Purchaser,
such firm shall be designated in writing the Initial Purchaser. In such case
involving the holders of Registrable Securities and such controlling persons of
holders of Registrable Securities, such firm shall be designated in writing by
holders of a majority in aggregate principal amount at maturity of Registrable
Securities (provided that holders of Common Stock issued upon the conversion of
the Debentures shall be deemed for this purpose to be holders of the aggregate
principal amount at maturity of Debentures from which such Common Stock was
converted). In all other cases, such firm shall be designated by the Company.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investiga tion or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (x)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (y) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
If the indemnification provided for in the first or second paragraph
of this Section 6 is unavailable to an indemnified party or insufficient in
respect of any losses,
<PAGE>
14
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
--- ----
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, no holder of Registrable Securities shall be
required to indemnify or contribute any amount in excess of the amount by which
the total price at which the Registrable Securities sold by such holder of
Registrable Securities and distributed to the public exceeds the amount of any
damages that such holder of Registrable Securities has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies that may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser, any holder of Registrable Securities or any
person controlling the holder of Registrable Securities, or the Company, its
officers or directors or any person controlling the Company.
<PAGE>
15
7. Miscellaneous. (a) Remedies. In the event of a breach by the
-------------- ---------
Company of any of its obligations under this Agreement, each holder of
Registrable Securities, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not, on or after
---------------------------
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
-----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented (other than to cure any ambiguity or correct or supplement any
provision herein), and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written consent of
holders of a majority of the then outstanding aggregate principal amount at
maturity of Registrable Securities (provided that holders of Common Stock issued
upon the conversion of the Debentures shall be deemed for this purpose to be
holders of the aggregate principal amount at maturity of Debentures from which
such Common Stock was converted), except in the case of the Initial Purchasers
prior to distribution of the Debentures, then the consent of the Initial
Purchasers. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other holders of Registrable Securities may be given by
holders of at least a majority in aggregate principal amount at maturity of the
Registrable Securities being sold by such holders (provided that holders of
Common Stock issued upon the conversion of the Debentures shall be deemed for
this purpose to be holders of the aggregate principal amount at maturity of
Debentures from which such Common Stock was converted).
(d) Notices. All notices and other communications provided for or
--------
permitted hereunder shall be
<PAGE>
16
made in writing by hand-delivery, registered first-class mail, telex, or
telecopier:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company in accordance with the
provisions of this Section 7(d);
(ii) if to the Company, at P.O. Box 1600, Stamford, Connecticut
06904, attention of E.M. Filter, Vice President, Treasurer and Secretary,
and thereafter by such other address, notice of which is given in
accordance with the provision of this Section 8(d); and
(iii) if to the Initial Purchasers, at North Tower, World Financial
Center, New York, New York 10281, attention of Vice President, Treasurer
and Secretary.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being sent by next-day solvent air courier; when answered back, if
telexed; and when receipt acknowledged, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
-------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
---------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.
<PAGE>
17
(i) Severability. If any term, provision, covenant or restriction of
-------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the parties as a
-----------------
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company with
respect to the securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
(k) Securities Held by the Company or its Affiliates. Whenever the
-------------------------------------------------
consent or approval of holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
any of its affiliates shall not be counted in determining whether such consent
or approval was given by the holders of
<PAGE>
18
such required percentage or amount.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XEROX CORPORATION,
by
__________________________
Name:
Title:
Confirmed and accepted
as of the date first
above written:
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,
J.P. MORGAN SECURITIES INC.,
by MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,
by
____________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
Xerox Corporation
Notice of Registration Statement
--------------------------------
and
---
Selling Securityholder Questionnaire
------------------------------------
(Date)
Reference is hereby made to the Registration Rights Agreement (the
"Registration Rights Agreement") between Xerox Corporation (the "Company") and
the Initial Purchasers named therein. Pursuant to the Registration Rights
Agreement, the Company has filed with the United States Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (the "Shelf
Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Company's
Convertible Subordinated Debentures due April 21, 2018 (the "Securities"), and
the shares of Common Stock, par value $1.00 per share (the "Common Stock"),
issuable upon conversion thereof. A copy of the Registration Rights Agreement
is attached hereto. All capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Registrable Securities is entitled to have the
Registrable Securities beneficially owned by it included in the Shelf
Registration Statement. In order to have Registrable Securities included in the
Shelf Registration Statement, this Notice of Registration Statement and Selling
Securityholder Questionnaire ("Notice and Questionnaire") must be completed,
executed and delivered to the Company's counsel at the address set forth herein
for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. Beneficial owners of
---------------------
Registrable Securities who do not complete, execute and return this Notice and
Questionnaire by such date (i) will not be named as selling securityholders in
the Shelf Registration Statement and (ii) may not use the Prospectus forming a
part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
<PAGE>
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby elects to include in the Shelf Registration Statement the
Registrable Securities beneficially owned by it and listed below in Item (3).
The undersigned, by signing and returning this Notice and Questionnaire, agrees
to be bound with respect to such Registrable Securities by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement, including, without limitation, the indemnification set forth in
Section 6 of the Registration Rights Agreement, as if the undersigned Selling
Securityholder were an original party thereto.
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in (3) below:
(c) Full Legal Name of DTC Participant (if applicable and if not the same
as (b) above) Through Which Registrable Securities Listed in (3) below
are Held:
(2) Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
<PAGE>
(3) Beneficial Ownership of Securities and shares of Common Stock issued upon
conversion of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities or shares of Common Stock issued upon conversion
of any Securities.
(a) Principal amount of Registrable Securities (as defined in the
Registration Rights Agreement) beneficially owned:
CUSIP No(s). of such Registrable Securities:
Number of shares of Common Stock (if any) issued upon conversion of
such Registrable Securities:
(b) Principal amount of Securities other than Registrable Securities
beneficially owned:
CUSIP No(s). of such other Securities:
Number of shares of Common Stock (if any) issued upon conversion of
such other Securities:
(c) Principal amount of Registrable Securities which the undersigned
wishes to be included in the Shelf Registration Statement:
CUSIP No(s). of such Registrable Securities to be included in the
Shelf Registration Statement:
Number of shares of Common Stock (if any) issued upon conversion of
Registrable Securities which are to be included in the Shelf
Registration Statement:
<PAGE>
(4) Beneficial ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any shares of Common
Stock or any other securities of the Company, other than the Securities and
shares of Common Stock listed above in Item (3).
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5% or more) has
held any position or office or has had any other material relationship with the
Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
<PAGE>
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder intends
to distribute the Registrable Securities listed above in Item (3) only as
follows (if at all): Such Registrable Securities may be sold from time to time
directly by the undersigned Selling Securityholder or, alternatively, through
underwriters, broker-dealers or agents. Such Registrable Securities may be sold
in one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve crosses
or block transactions) (i) on any national securities exchange or quotation
service on which the Registered Securities may be listed or quoted at the time
of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise
than on such exchanges or services or in the over-the-counter market, or (iv)
through the writing of options. In connection with sales of the Registrable
Securities or otherwise, the Selling Securityholder may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of the
Registrable Securities in the course of hedging the positions they assume. The
Selling Securityholder may also sell Registrable Securities short and deliver
Registrable Securities to close out such short positions, or loan or pledge
Registrable Securities to broker-dealers that in turn may sell such securities.
State any exceptions here:
Note: In no event may such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M.
In the event that the Selling Securityholder transfers all or any portion
of the Registrable Securities listed in Item (3) above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferees at the time of the transfer of its
<PAGE>
rights and obligations under this Notice and Questionnaire and the Registration
Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6) above
and the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation of the Shelf Registration Statement and related Prospectus.
The Selling Securityholder agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Shelf Registration Statement
remains in effect. All notices hereunder and pursuant to the Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
Xerox Corporation
800 Long Ridge Road
P.O. Box 1600
Stamford, Connecticut 06904
Attention: E.M. Filter, Vice President,
Treasurer and Secretary
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Registrable
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above. This Agreement shall be governed in all respects by the laws of the
State of New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated:
Selling Securityholder
(Print/type full legal name of
beneficial owner of
Registrable Securities)
By:
Name:
Title:
<PAGE>
EXHIBIT 12
XEROX CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three months ended Year ended
March 31, December 31,
(In millions) 1998 1997 1997 1996 1995 1994 1993*
--------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense $ 156 $ 135 $ 617 $ 592 $ 603 $ 520 $ 540
Rental expense 28 34 140 140 142 170 180
Total fixed charges -------------------------------------------------------------------------
before capitalized
interest and preferred
stock dividends of
subsidiaries 184 169 757 732 745 690 720
Preferred stock dividends
of subsidiaries 14 6 50 - - - -
Capitalized interest - - - - - 2 5
-------------------------------------------------------------------------
Total fixed charges $ 198 $ 175 $ 807 $ 732 $ 745 $ 692 $ 725
=========================================================================
Earnings available for
fixed charges:
Earnings** $ 459 $ 450 $ 2,268 $ 2,067 $ 1,980 $ 1,602 $ (193)
Less undistributed
income in minority
owned companies (9) (23) (84) (84) (90) (54) (51)
Add fixed charges before
capitalized interest
and preferred stock
dividends of
subsidiaries 184 169 757 732 745 690 720
Total earnings -------------------------------------------------------------------------
available for
fixed charges $ 634 $ 596 $ 2,941 $ 2,715 $ 2,635 $ 2,238 $ 476
=========================================================================
Ratio of earnings to
fixed charges (1) (2) 3.20 3.41 3.64 3.71 3.54 3.23 0.66
=========================================================================
</TABLE>
(1) The ratio of earnings to fixed charges has been computed based on the
Company's continuing operations by dividing total earnings available for
fixed charges, excluding capitalized interest and preferred stock dividends
of subsidiaries, by total fixed charges. Fixed charges consist of interest,
including capitalized interest and preferred stock dividends of
subsidiaries, and one-third of rent expense as representative of the
interest portion of rentals. Debt has been assigned to discontinued
operations based on historical levels assigned to the businesses when they
were continuing operations, adjusted for subsequent paydowns.
Discontinued operations consist of the Company's Insurance, Other Financial
Services, and Third Party Financing and Real Estate businesses.
(2) The Company's ratio of earnings to fixed charges includes the effect of the
Company's finance subsidiaries, which primarily finance Xerox equipment.
Financing businesses are more highly leveraged and, therefore, tend to
operate at lower earnings to fixed charges ratio levels than do non-
financial businesses.
* 1993 earnings were inadequate to cover fixed charges. The coverage
deficiency was $249 million.
** Sum of "Income before Income Taxes, Equity Income and Minorities'
Interests" and "Equity in Net Income of Unconsolidated Affiliates."
<PAGE>
EXHIBIT 24(a)
CERTIFICATE
I, Martin S. Wagner, Assistant Secretary of Xerox Corporation, a New
York corporation (the "Company"), DO HEREBY CERTIFY that Exhibit A is a true and
correct copy of a resolution duly adopted at a meeting of the Board of Directors
of the Company duly held and convened on December 8, 1997, at which meeting a
duly constituted quorum of the Board of Directors was present and acting
throughout and that such resolution has not been modified, rescinded or revoked
and is at present in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Certificate and
affixed the corporate seal of the Company hereto this 17th day of July, 1998.
MARTIN S. WAGNER
---------------------
MARTIN S. WAGNER
ASSISTANT SECRETARY
----------------
EXHIBIT A
RESOLVED: that each officer and director of the Company who may be
required to execute the Registration Statement or any amendment thereto be and
hereby is authorized to execute a power of attorney appointing E. M. Filter,
G.R. Roth and M. S. Wagner, and each of them, as true and lawful attorneys and
agents to execute in his or her name, place and stead (in any such capacity) the
Registration Statement and any and all amendments thereto, and any and all
documents in connection therewith, and to file the same, in electronic or paper
form, with the Commission, each of said attorneys and agents to have power to
act with or without the other and to have the full power and authority to do and
perform in the name and on behalf of each of said officers and directors, or
both, as the case may be, every act whatsoever necessary or advisable to be done
in the premises as fully and to all intents and purposes as any such officer or
director might or could do in person.
<PAGE>
EXHIBIT (24)(b)
POWER OF ATTORNEY
Xerox Corporation (the "Company") and each person whose signature
appears below hereby authorize each of E. M. Filter, M.S. Wagner and G.R. Roth
(each an "appointee") to file, either in paper or electronic form, one or
more registration statements and amendments thereto (including post-effective
amendments), under the Securities Act of 1993, as amended, for the purpose of
registering the offering and sale for cash proceeds not to exceed $500,000,000
of zero-coupon debt securities of the Company, convertible into or exchangeable
for shares of Common Stock, par value $1.00 per share, of the Company and the
shares of such Common Stock issuable upon exchange or conversion thereof, which
registration statements and amendments shall contain such information and
exhibits as any such appointee deems appropriate. Each such person hereby
appoints each appointee as attorney-in-fact, with full power to act alone, to
execute any such registration statements and any and all amendments thereto and
any and all other documents in connection therewith, in the name of and on
behalf of the Company and each such person, individually and in each capacity
state below, to enter electronically such company identification numbers,
passwords and other information as may be required to effect such filing as
prescribed under the rules and regulations of the Securities and Exchange
Commission (the "SEC"), and to file, either in paper or electronic form, with
the SEC a form of this Power of Attorney. Each such person individually and in
such capacities stated below hereby grants to said attorneys-in-fact, and each
of them, full power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned could do
personally or in the capacities as aforesaid.
XEROX CORPORATION
Dated as of December 8, 1998 By: /s/ PAUL A. ALLAIRE
----------------------------
Paul A. Allaire
Chairman of the Board and
Chief Executive Officer
Chairman of the Board, Chief Executive Officer and Director
/s/PAUL A. ALLAIRE (Principal Executive Officer)
- -------------------
(Paul A. Allaire)
Executive Vice President and Chief Financial Officer
/s/BARRY D. ROMERIL (Principal Financial Officer)
- -------------------
(Barry D. Romeril)
Vice President and Controller
/s/PHILIP D. FISHBACH (Principal Accounting Officer)
- ---------------------
(Philip D. Fishbach)
<PAGE>
2
/s/ B.R. INMAN Director /s/ N.J. NICHOLAS, JR. Director
- ------------------- ------------------------
(B.R. Inman) (N.J. Nicholas, Jr.)
/s/ ANTONIA AX:SON JOHNSON Director /s/ JOHN E. PEPPER Director
- -------------------------- ------------------------
(Antonia Ax:son Johnson) (John E. Pepper)
/s/ VERNON E. JORDAN, JR. Director /s/ PATRICIA F. RUSSO Director
- -------------------------- ------------------------
(Vernon E. Jordan, Jr.) (Patricia F. Russo)
/s/ YOTARO KOBAYASHI Director /s/ MARTHA R. SEGER Director
- -------------------------- ------------------------
(Yotaro Kobayashi) (Martha R. Seger)
/s/ HILMAR KOPPER Director /s/ THOMAS C. THEOBALD Director
- -------------------------- ------------------------
(Hilmar Kopper) (Thomas C. Theobald)
/s/ RALPH S. LARSEN Director /s/ G. RICHARD THOMAN Director
- -------------------------- ------------------------
(Ralph S. Larsen) (G. Richard Thoman)
/s/ JOHN D. MACOMBER Director
- --------------------------
(John D. Macomber)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------------------------
XEROX CORPORATION
(EXACT NAME OF OBLIGORS AS SPECIFIED IN THEIR TRUST AGREEMENTS)
NEW YORK 16-0468020
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
P. O. BOX 1600
STAMFORD, CONNECTICUT 06904-1600
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
CONVERTIBLE DEBENTURES DUE 2018
(TITLE OF INDENTURE SECURITIES)
<PAGE>
Item 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
--------------------
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C.;
Federal Deposit Insurance Corporation,
Washington, D.C.; The Board of Governors of
the Federal Reserve System, Washington D.C..
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate
trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
------------------------------
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
-----------------
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois, on the 2nd day of July, 1998.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /s/ Steven M. Wagner
___________________________________________
STEVEN M. WAGNER
FIRST VICE PRESIDENT
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25 TO THE REGISTRATION STATEMENT ON FORM S-3 OF U S
WEST CAPITAL FUNDING, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MAY 6, 1998 (REGISTRATION NO. 333-51907-01).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
July 2, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture of Xerox Corporation to The
First National Bank of Chicago, as Trustee, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /s/ Steven M. Wagner
______________________________________
STEVEN M. WAGNER
FIRST VICE PRESIDENT
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of
the quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS C400
------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin(1)......... 0081 4,141,168 1.a
b. Interest-bearing balances(2).................................. 0071 5,142,787 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)..... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).. 1773 7,819,811 2.b
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,619,157 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RCFD
----
RC-C)........................................................... 2122 26,140,376 4.a
b. LESS: Allowance for loan and lease losses.................... 3123 417,371 4.b
c. LESS: Allocated transfer risk reserve........................ 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and RCFD
----
reserve (item 4.a minus 4.b and 4.c)............................ 2125 25,723,005 4.d
5. Trading assets (from Schedule RD-D) 3545 5,795,159 5.
6. Premises and fixed assets (including capitalized leases) 2145 757,033 6.
7. Other real estate owned (from Schedule RC-M)..................... 2150 6,547 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................................... 2130 135,327 8.
9. Customers' liability to this bank on acceptances outstanding..... 2155 512,763 9.
10. Intangible assets (from Schedule RC-M)........................... 2143 261,456 10.
11. Other assets (from Schedule RC-F)................................ 2160 2,223,495 11.
12. Total assets (sum of items 1 through 11)......................... 2170 58,137,708 12.
</TABLE>
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(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
SCHEDULE RC-CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DOLLAR AMOUNTS IN
THOUSANDS
-----------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
----
from Schedule RC-E, part 1)..................................... 2200 21,551,932 13.a
(1) Noninterest-bearing(1)...................................... 6631 9,361,049 13.a1
(2) Interest-bearing............................................ 6636 12,190,883 13.a2
b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
----
IBFs (from Schedule RC-E, part II).............................. 2200 14,511,110 13.b
(1) Noninterest bearing......................................... 6631 604,859 13.b1
(2) Interest-bearing............................................ 6636 13,906,251 13.b2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3.887,022 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,092 15.a
b. Trading Liabilities(from Sechedule RC-D)..................... RCFD 3548 5,918,194 15.b
16. Other borrowed money: RCFD
----
a. With original maturity of one year or less................... 2332 3,134,696 16.a
b. With original maturity of more than one year................ A547 381,681 16.b
c. With original maturity of more than three years ............ A548 326,551 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding......... 2920 512,763 18.
19. Subordinated notes and debentures............................... 3200 2,000,000 19.
20. Other liabilities (from Schedule RC-G).......................... 2930 1,163,747 20.
21. Total liabilities (sum of items 13 through 20).................. 2948 53,450,788 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................... 3838 0 23.
24. Common stock.................................................... 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)........ 3839 3,107,585 25.
26. a. Undivided profits and capital reserves....................... 3632 1,359,598 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 8434 18,975 26.b
27. Cumulative foreign currency translation adjustments............. 3284 (96) 27.
28. Total equity capital (sum of items 23 through 27)............... 3210 4,686,920 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)........................... 3300 58,137,708 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the
bank by independent external Number auditors as of any date
during 1996 . . . . . . . . . . . . . . . . . . . . . . . ....RCFD 6724 M.1.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 = Independent audit of the bank conducted in 4 = Directors' examination of the bank
accordance with generally accepted auditing performed by other external auditors (may be required by
standards by a certified public accounting firm state chartering authority)
which submits a report on the bank 5 = Review of the bank's financial statements
2= Independent audit of the bank's parent by external auditors
holding company conducted in accordance with 6 = Compilation of the bank's financial
generally accepted auditing standards by a statements by external auditors
certified public accounting firm which 7 = Other audit procedures (excluding tax preparation work)
submits a report on the consolidated holding 8 = No external audit work
company (but not on the bank separately)
3 = Directors' examination of the bank conducted
in accordance with generally accepted auditing
standards by a certified public accounting firm
(may be required by state chartering authority)
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
6
