<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 20, 1998
REGISTRATION NO.333-45141
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SONY KABUSHIKI KAISHA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SONY CORPORATION
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
<TABLE>
<S> <C>
JAPAN NONE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7-35, KITASHINAGAWA 6-CHOME SONY CORPORATION OF AMERICA
SHINAGAWA-KU, TOKYO 141-0001, JAPAN 550 MADISON AVENUE, 33RD FLOOR
(813) 5448-2111 NEW YORK, NEW YORK 10022-3211
(ADDRESS AND TELEPHONE NUMBER OF (212) 833-6849
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS AND TELEPHONE
NUMBER OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPY OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
STEPHEN A. GRANT, ESQ. THEODORE A. PARADISE, ESQ.
SULLIVAN & CROMWELL DAVIS POLK & WARDWELL
125 BROAD STREET AKASAKA TWIN TOWER EAST
NEW YORK, NEW YORK 10004 17-22, AKASAKA 2-CHOME
(212) 558-4000 MINATO-KU, TOKYO 107-0052, JAPAN
(813) 5561-4421
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be 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, 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 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
<TABLE>
<CAPTION>
========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes...................... $1,000,000,000(2) 100%(3) $1,000,000,000(3) $295,000
========================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The securities are not being registered for the purpose of sales outside the
United States.
(3) Exclusive of accrued interest, if any.
------------------------
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.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
UNITED STATES 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 SUCH STATE.
GLOBAL PROSPECTUS
SUBJECT TO COMPLETION,
DATED FEBRUARY 20, 1998
LOGO
SONY CORPORATION
(SONY KABUSHIKI KAISHA)
$1,500,000,000
% Notes due , 2003
Interest payable and
Interest on the % Notes due , 2003 (the "Notes") will be
payable semiannually in arrears on and of each
year, commencing , 1998. The Notes are not redeemable prior to
maturity, except in the event of certain changes in tax law. See "Description of
Notes -- Optional Tax Redemption". Except as described herein, Notes in
definitive form will not be issued. The Notes will be issued only in registered
form in denominations of $1,000 and integral multiples thereof. See "Description
of Notes".
Application has been made to the London Stock Exchange Limited for the Notes to
be admitted to the Official List.
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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note % % %
- ------------------------------------------------------------------------------------------------------------
Total $ $ $
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting estimated expenses of $1,135,000 payable by the Company.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters. It is expected
that delivery of the Notes will be made through the facilities of The Depository
Trust Company ("DTC"), Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System ("Euroclear"), or Cedel Bank,
societe anonyme ("Cedel Bank") on or about , 1998, against
payment therefor in immediately available funds.
JOINT BOOK-RUNNERS
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO. J.P. MORGAN & CO.
, 1998
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Enforcement of Civil Liabilities.......... 3
Available Information..................... 3
Incorporation of Certain Documents by
Reference............................... 3
Forward Looking Statements................ 4
Prospectus Summary........................ 5
Use of Proceeds........................... 8
Consolidated Ratios of Earnings to Fixed
Charges................................. 8
Capitalization............................ 9
Selected Consolidated Financial Data...... 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 12
<CAPTION>
PAGE
<S> <C>
Business.................................. 19
Directors and Statutory Auditors.......... 24
Description of Notes...................... 25
Global Clearance and Settlement........... 30
Taxation.................................. 33
Japanese Foreign Exchange Controls........ 34
Underwriting.............................. 35
Ratings................................... 36
Experts................................... 36
Validity of Notes......................... 36
General Information....................... 37
</TABLE>
------------------------
This Prospectus comprises listing particulars (the "Listing Particulars") with
respect to the issue of the Notes in accordance with listing rules of the London
Stock Exchange Limited (the "London Stock Exchange") made under Part IV of the
Financial Services Act 1986 (the "FSA") and for the purpose of giving
information with regard to the Company, the Company and its subsidiaries (taken
as a whole) and the Notes. Copies of this Prospectus have been delivered to the
Registrar of Companies in England and Wales for registration in accordance with
Section 149 of the FSA. The Company accepts responsibility for the information
contained in this document. To the best of the knowledge and belief of the
Company (which has taken all reasonable care to ensure that such is the case),
the information contained in this document is in accordance with the facts and
does not omit anything likely to affect the import of such information.
In this Prospectus, Sony Corporation is referred to as the "Company" and the
Company and its consolidated subsidiaries are together referred to as "Sony".
In this Prospectus, amounts are expressed in Japanese yen ("yen" or "Y") or in
United States dollars ("dollars" or "$"). Except as otherwise indicated, for the
convenience of the reader yen amounts as of and for the year ended March 31,
1997 have been translated into dollars at the rate of 124 yen to the dollar, the
approximate rate of exchange on March 31, 1997, and yen amounts as of and for
the nine months ended December 31, 1997 have been translated into dollars at the
rate of 130 yen to the dollar, the approximate rate of exchange on December 31,
1997. Such rates are not materially different from the noon buying rates in New
York City for cable transfers in foreign currencies as announced for customs
purposes by the Federal Reserve Bank of New York on such dates (Y123.72=$1 on
March 31, 1997 and Y130.45=$1 on December 31, 1997). See "Selected Consolidated
Financial Data" for information regarding rates of exchange for the yen and the
dollar from April 1, 1992 to December 31, 1997. On February 11, 1998, such noon
buying rate was Y123.53 = $1. No representation is made that the yen amounts
have been, could have been or could be converted into dollars at that or any
other rate.
No dealer, salesman or any other person has been authorized to give any
information or make any representations other than those contained in this
Prospectus in connection with the offer made hereby and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any of the Underwriters. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to anyone to whom it is unlawful to make such
solicitation.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING OVER-
ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH NOTES, AND THE
IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING." IN CONNECTION WITH THIS OFFERING,
J.P.MORGAN SECURITIES INC. MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE LONDON STOCK EXCHANGE, ON THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 4
ENFORCEMENT OF CIVIL LIABILITIES
The Company is incorporated in Japan with limited liability and virtually all
its directors and executive officers (and certain experts named herein) reside
in Japan. All or a substantial portion of the assets of these persons and of the
Company are located outside the United States. As a result, it may not be
possible for investors to effect service of process upon such persons outside
Japan or to enforce against such persons or the Company judgments obtained in
United States courts predicated upon the civil liability provisions of the
Federal securities laws of the United States or judgments obtained in other
courts outside Japan. The Company has been advised by its Japanese counsel,
Tsunematsu Yanase & Sekine, that there is doubt as to the enforceability in
Japanese courts, in original actions or in actions for enforcement of judgments
of United States courts, of civil liabilities predicated solely upon the Federal
securities laws of the United States.
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 and other information with the Securities and Exchange
Commission (the "Commission"). Certain such filings are available via electronic
means through the Commission's web site on the Internet (http://www.sec.gov).
Reports and other information filed by the Company with the Commission may also
be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
be obtained by mail from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's
American Depositary Shares ("ADSs") are listed on the New York Stock Exchange,
the Pacific Stock Exchange and the Midwest (Chicago) Stock Exchange and such
reports and other information concerning the Company may be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, the Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco, CA
94104, and the Midwest Stock Exchange, 440 S. LaSalle Street, Chicago, IL 60605.
The Company has filed with the Commission a registration statement on Form F-3
(herein, together with any amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 20-F for the fiscal year ended March 31,
1997 (File No. 1-6439) (the "1997 20-F") and the Company's reports on Form 6-K,
dated September 25, 1997, October 1, 1997, October 30, 1997, November 10, 1997,
January 29, 1998 and February 9, 1998, respectively, have been filed with the
Commission pursuant to the Exchange Act and (other than (i) the sections
captioned "Forecast for the Fiscal Year Ending March 31, 1998" in the reports on
Form 6-K, dated October 30, 1997 and January 29, 1998, respectively, and (ii)
the section captioned "Extra Dividend for the Fiscal Year Ending March 31, 1998"
in the report on Form 6-K dated January 29, 1998) are incorporated herein by
reference, provided, however, that such incorporated documents and any
information so incorporated do not form part of the Listing Particulars. This
Prospectus (but not the Listing Particulars) is qualified in its entirety by the
more detailed information contained in such reports and incorporated herein by
reference.
In addition, all reports on Form 20-F (and all amendments thereto) filed by the
Company pursuant to the Exchange Act and, to the extent, if at all, designated
therein, certain reports on Form 6-K furnished by the Company after the date of
this Prospectus and prior to the termination of the offering of the Notes shall
be deemed to be incorporated by reference in, and to be a part of, this
Prospectus (but not the Listing Particulars) from the date of the filing or
furnishing of such documents or reports, to the extent not superseded by
documents or reports subsequently filed or furnished.
Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus (but not the
Listing Particulars) to the extent that a statement contained herein or in any
other subsequently filed document which also is incorporated by reference herein
modifies or replaces such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
3
<PAGE> 5
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated
herein by reference (not including the exhibits to such documents, unless such
exhibits are specifically incorporated by reference in such documents). Requests
should be directed to the Company at 7-35, Kitashinagawa 6-chome, Shinagawa-ku,
Tokyo 141-0001, Japan, Attention: Investor Relations.
FORWARD LOOKING STATEMENTS
Statements made in this Prospectus and certain of the documents incorporated
herein by reference with respect to Sony's plans, strategies and beliefs and
other statements that are not historical facts are forward-looking statements
about the future performance of Sony which are based on management's assumptions
and belief in light of the information currently available to it and involve
risks and uncertainties. Potential risks and uncertainties include, without
limitation, general economic conditions in Sony's markets, particularly levels
of consumer spending; exchange rates, particularly between the yen and the U.S.
dollar and other currencies in which Sony makes significant sales or in which
Sony's assets and liabilities are denominated; and Sony's ability to continue to
win acceptance of its products, which are offered in highly competitive markets
characterized by continual new product introductions, rapid developments in
technology (particularly in the Electronic Business), and subjective and
changing consumer preferences (particularly in the Entertainment Business).
4
<PAGE> 6
PROSPECTUS SUMMARY
This summary is qualified in its entirety by, and is subject to, the detailed
information contained elsewhere in this Prospectus. See "Incorporation of
Certain Documents by Reference".
THE COMPANY
Sony is one of the world's leading designers, developers, manufacturers and
distributors of electronic and entertainment products. Sony's products are sold
under the trademark "Sony", which has been registered in 193 countries and
territories. The Company believes the "Sony" name is among the most recognized
in the world, and intends to continue to enhance brand recognition through the
development of high-quality, innovative products. Sony's principal manufacturing
facilities are located in Japan, the United States, Europe and Asia, and its
products are marketed by sales subsidiaries and unaffiliated local distributors
throughout the world. The Company was the first Japanese company to be listed on
the New York Stock Exchange.
Sony has experienced compound annual growth in sales and operating revenue of
19.1% during the last three fiscal years. For the fiscal year ended March 31,
1997, which marked the Company's fiftieth anniversary, Sony reported sales and
operating revenue of Y5,663.1 billion ($45,670.4 million), operating income of
Y370.3 billion ($2,986.5 million) and net income of Y139.5 billion ($1,124.7
million), generated by its three business segments: Electronics, Entertainment,
and Insurance and Financing.
Electronics. Sony's Electronics Business is engaged in the development,
manufacture, and sales of various kinds of electronic equipment, instruments and
devices. Sony aims to be at the forefront of the latest technology in all of its
electronics product lines, including camcorders and other video-related
equipment such as DVD-Video players and digital still cameras, audio-related
equipment such as MiniDisc (MD) systems and compact disc (CD) systems,
televisions, personal computers, telecommunication equipment, semiconductors,
electronic components and PlayStation game consoles and software. Sony believes
that it has positioned itself as a producer of quality products using advanced
technology and creative design. Sony intends to continue to capitalize on its
reputation as a world leader in innovative ideas and products by focusing on
digital and network technologies, including developing satellite broadcast
reception systems for home use.
Entertainment. Sony's Entertainment Business is engaged in the development,
production, manufacture and distribution of recorded music in all commercial
formats and musical genres, and image-based software including film, video,
television and new entertainment technologies, primarily through Sony Music
Entertainment Inc. (SMEI), Sony Music Entertainment (Japan) Inc. (SMEJ) and Sony
Pictures Entertainment (SPE). SPE set a new industry record in global box office
revenues during calendar year 1997, with hit movies such as Jerry Maguire, Men
in Black and My Best Friend's Wedding. SMEI's recent albums include successful
releases from popular music artists such as Celine Dion, Barbra Streisand and
Mariah Carey.
Insurance and Financing. Sony provides life insurance primarily for individuals
in Japan through Sony Life Insurance Co., Ltd. (Sony Life Insurance), which has
adopted an innovative marketing approach and experienced significant growth in
revenue in recent years. Sony Life Insurance recently received an "AA-" credit
rating from Standard & Poor's Corporation.
The Company was established in Japan in May 1946 as Tokyo Tsushin Kogyo
Kabushiki Kaisha. In January 1958, it changed its name to Sony Kabushiki Kaisha
(Sony Corporation). The Company's principal executive offices are located at
7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo 141-0001, Japan and its
telephone number at that address is (813) 5448-2111.
5
<PAGE> 7
THE OFFERING
ISSUER................................ Sony Corporation
SECURITIES OFFERED.................... $1,500,000,000 principal amount of %
Notes due , 2003.
MATURITY DATE......................... , 2003.
ISSUE PRICE........................... % of the principal amount, plus
accrued interest, if any, from
, 1998.
INTEREST PAYMENTS DATES............... , and , commencing
, 1998.
MARKETS............................... United States, Europe and Asia other than
Japan.
STATUS OF SECURITIES.................. The Notes will be direct, unconditional,
unsubordinated obligations of the Company
and will rank pari passu and ratably
without any preference among themselves
and (with the exception of obligations in
respect of national and local taxes and
certain other statutory preferences)
equally with all other present and future
unsecured and unsubordinated obligations
of the Company from time to time
outstanding.
NEGATIVE PLEDGE....................... The Company has agreed to limitations on
the creation of certain liens to secure
payment obligations on any External
Indebtedness (as defined herein). See
"Description of Notes -- Negative Pledge
on External Indebtedness".
WITHHOLDING TAX....................... Principal of and interest on the Notes
are payable by the Company without
withholding or deduction for Japanese
withholding taxes to the extent set forth
herein. Subject to certain limitations,
the Company will pay to holders of the
Notes such additional amounts as may be
necessary in order that every net payment
of the principal and interest on the
Notes, after deduction or withholding for
any Japanese taxes imposed on such
payment, will not be less than the amount
provided for in the Notes to be due and
payable. See "Description of
Notes -- Payment of Additional Amounts"
and "Taxation -- Japanese Taxation".
OPTIONAL TAX REDEMPTION............... The Notes are redeemable, at the
Company's option, as a whole but not in
part, if the Company determines that, as
a result of any change in Japanese tax
laws, the Company would be required to
pay Additional Amounts (as defined
herein) with respect to the Notes. See
"Description of Notes -- Optional Tax
Redemption".
FORM, DENOMINATION
AND REGISTRATION...................... The Notes will be issued in the form of
one or more fully registered global
securities (collectively, the "Global
Note") registered in the name of Cede &
Co., as the nominee of DTC. Except as
described in this Prospectus, beneficial
interests in the Global Note will be
represented through accounts of financial
institutions acting on behalf of
beneficial owners as direct and indirect
participants in DTC. Investors may elect
to hold interests in the Global Note
through DTC in the United States or
through Cedel Bank or Euroclear if they
are participants of such systems, or
indirectly through organizations which
are participants in such systems. Cedel
Bank and Euroclear will hold interests on
6
<PAGE> 8
behalf of their participants through
their respective depositaries, The Chase
Manhattan Bank ("Chase") and Morgan
Guaranty Trust Company of New York
("Morgan"), which in turn will hold such
interests in accounts as participants of
DTC. Except as described in this
Prospectus, owners of beneficial
interests in the Global Note will not be
entitled to have Notes registered in
their names, will not receive or be
entitled to receive Notes in definitive
form and will not be considered holders
thereof under the Indenture. The Notes
will only be sold in minimum aggregate
principal amounts of $1,000 and integral
multiples thereof. See "Description of
Notes -- Form, Denomination and
Registration".
GLOBAL CLEARANCE AND
SETTLEMENT............................ Initial settlement for the Notes will be
made in same day funds. Secondary market
trading of the Notes represented by the
Global Note will occur through
participants of DTC, Cedel Bank and
Euroclear and will settle in same day
funds. See "Global Clearance and
Settlement".
GOVERNING LAW......................... The Notes and the Indenture shall all be
governed by and construed in accordance
with the laws of the State of New York.
RATINGS............................... The Notes are expected to receive a
rating of "Aa3" from Moody's Investors
Service Inc. and "A" from Standard &
Poor's Corporation. See "Ratings".
USE OF PROCEEDS....................... The aggregate net proceeds to the Company
from the Offering are estimated to be
approximately $ billion (after
deduction of underwriting commissions and
estimated offering expenses). The Company
plans to use such proceeds to increase
the capital of Sony Corporation of
America and ultimately to repay
commercial paper and other indebtedness
of Sony Capital Corporation, and for
general corporate purposes.
LISTING............................... Application has been made to the London
Stock Exchange for the Notes to be
admitted to the Official List.
7
<PAGE> 9
USE OF PROCEEDS
The aggregate net proceeds to the Company from the Offering are estimated to be
approximately $ billion (after deduction of underwriting commissions
and estimated offering expenses). The Company plans to use such proceeds to
increase the capital of Sony Corporation of America, a wholly owned subsidiary
of the Company, and ultimately to repay commercial paper and other indebtedness
of Sony Capital Corporation, a wholly owned subsidiary of Sony Corporation of
America, and for general corporate purposes. Such commercial paper and other
indebtedness was incurred by Sony Capital Corporation primarily to provide
working capital. As of December 31, 1997, Sony Capital Corporation had $1.7
billion principal amount of commercial paper outstanding, all of which was
scheduled to mature before March 31, 1998. The average interest rate payable on
such commercial paper was approximately 5.9%.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for Sony
for the periods indicated:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
NINE MONTHS
YEARS ENDED MARCH 31, ENDED
1993 1994 1995 1996 1997 DECEMBER 31,
---------- ---------- ---------- ---------- ---------- 1997
------------
unaudited
<S> <C> <C> <C> <C> <C> <C>
Consolidated Ratio of Earnings
to Fixed Charges 1.6 1.7 (1)(2) 1.8 3.2 5.3
========== ========== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) As a result of a net loss incurred in the year ended March 31, 1995, Sony
was unable to fully cover fixed charges.
(2) Earnings for the year ended March 31, 1995 reflected the write-off of
goodwill of Y265 billion in the Pictures Group and losses in the Pictures
Group of approximately Y50 billion arising from a combination of unusual
items, including abandoning a large number of projects in development, and
providing for settlement of outstanding lawsuits and claims. If such
write-off and losses had not occurred, the ratio of earnings to fixed
charges would have been 1.5.
8
<PAGE> 10
CAPITALIZATION
The following table, which should be read in conjunction with Sony's
consolidated financial statements included in the 1997 20-F (the "Consolidated
Financial Statements") and the unaudited interim consolidated financial
statements (the "Interim Consolidated Financial Statements") included in the
Company's Report on Form 6-K, dated January 29, 1998 (the "1998 6-K"), sets
forth the consolidated short-term debt and capitalization of Sony: (i) as of
December 31, 1997, and (ii) as adjusted to reflect the issuance of the Notes and
the application of the proceeds therefrom (assuming all the proceeds are applied
to repay outstanding commercial paper of Sony Capital Corporation).
<TABLE>
<CAPTION>
---------------------------------------------------
AS OF DECEMBER 31, 1997
ACTUAL AS ADJUSTED
(MILLIONS (THOUSANDS (MILLIONS (THOUSANDS
OF OF OF OF
YEN) DOLLARS)(1) YEN) DOLLARS)(1)
---------- ----------- ---------- -----------
unaudited
<S> <C> <C> <C> <C>
SHORT-TERM DEBT
Total short-term debt (including current portion of
long-term debt) Y 622,872 $ 4,791,323 Y 427,872 $ 3,291,323
========== =========== ========== ===========
LONG-TERM DEBT
Long-term debt 924,412 $ 7,110,862 Y 924,412 $ 7,110,862
The Notes -- -- 195,000 1,500,000
---------- ----------- ---------- -----------
Total Long-term Debt 924,412 $ 7,110,862 Y1,119,412 $ 8,610,862
========== =========== ========== ===========
STOCKHOLDERS' EQUITY
Common stock, Y50 par value, 1,350,000,000 shares
authorized, 402,412,289 shares issued and
outstanding Y 390,717 $ 3,005,515 Y 390,717 $ 3,005,515
Additional paid-in capital 533,032 4,100,246 533,032 4,100,246
Legal reserve 37,389 287,608 37,389 287,608
Unrealized gain on securities 39,101 300,777 39,101 300,777
Retained earnings 921,186 7,086,046 921,186 7,086,046
Cumulative translation adjustment (165,242) (1,271,092) (165,242) (1,271,092)
---------- ----------- ---------- -----------
Total stockholders' equity 1,756,183 13,509,100 1,756,183 13,509,100
---------- ----------- ---------- -----------
Total capitalization(2) Y3,303,467 $25,411,285 Y3,303,467 $25,411,285
========== =========== ========== ===========
</TABLE>
- ---------------
(1) For convenience only, yen amounts have been translated into dollars at the
rate of Y130 = $1, the approximate rate of exchange on December 31, 1997.
(2) Since December 31, 1997 there has been no material change in the
consolidated capitalization of Sony. As of December 31, 1997, Sony had no
material contingent liabilities or guarantees outstanding.
9
<PAGE> 11
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated financial data for
Sony. The data (other than exchange rates) have been extracted or derived,
without material adjustments, from consolidated financial statements which have
been prepared in conformity with accounting principles generally accepted in the
United States. The selected consolidated financial data as of March 31, 1996 and
1997 and for the fiscal years ended March 31, 1995, 1996 and 1997 have been
derived from the audited Consolidated Financial Statements included in the 1997
20-F. The selected financial data as of and for the nine months ended December
31, 1996 and 1997 include, in the opinion of the Company, all adjustments
(consisting of only normally recurring adjustments) necessary for a fair
presentation of such information and have been derived from the unaudited
Interim Consolidated Financial Statements included in the 1998 6-K. The results
of operations for the nine months ended December 31,1997 are not necessarily
indicative of the operating results to be expected for the entire year ending
March 31, 1998 or for any other period. This information should also be read in
conjunction with, and is qualified in its entirety by reference to,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
<TABLE>
<CAPTION>
--------------------------------------------------------
(Millions of yen or thousands of dollars, except per YEAR ENDED MARCH 31
share amounts and yen exchange rates) 1993 1994 1995 1996 1997 1997(1)
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales and operating revenue Y4,001,270 Y3,744,285 Y3,990,583 Y4,592,565 Y5,663,134 $45,670,435
Costs and expenses 3,870,630 3,637,323 4,157,223 4,357,241 5,292,804 42,683,903
Operating income (loss) 130,640 106,962 (166,640) 235,324 370,330 2,986,532
Income (loss) before income taxes 92,561 102,162 (220,948) 138,159 312,429 2,519,589
Income taxes 49,794 78,612 65,173 77,158 163,570 1,319,113
Net income (loss) 36,260 15,298 (293,356) 54,252 139,460 1,124,677
Net income (loss) per share(2):
Basic 97.2 41.0 (784.7) 145.1 367.7 2.97
Diluted 92.2 41.0 (784.7) 134.0 309.2 2.49
Depreciation and amortization(3) 275,671 242,458 226,984(4) 227,316 266,532 2,149,452
Capital expenditures (additions to fixed assets) 251,117 195,937 250,678 251,197 298,078 2,403,855
Research and development expenses 232,150 229,877 239,164 257,326 282,569 2,278,782
BALANCE SHEET DATA (END OF PERIOD):
Assets:
Cash and time deposits Y 555,166 Y 529,326 Y 491,728 Y 491,944 Y 481,036 $ 3,879,323
Property, plant and
equipment 1,138,350 1,049,422 1,029,301 1,120,759 1,238,911 9,991,218
Total assets 4,529,830 4,269,885 4,223,920 5,045,725 5,680,342 45,809,210
Liabilities and stockholders' equity:
Short-term debt(5) 660,427 366,244 464,147 426,259 328,116 2,646,097
Long-term debt 880,395 983,712 906,486 1,203,592 1,099,765 8,869,073
Total liabilities(6) 3,015,825 2,844,200 3,116,972 3,769,098 4,106,047 33,113,282
Stockholders' equity 1,428,219 1,329,565 1,007,808 1,169,173 1,459,428 11,769,581
YEN EXCHANGE RATES PER U.S. DOLLAR(7):
At period-end Y 114.90 Y 102.40 Y 86.85 Y 107.00 Y 123.72
Average 123.98 107.87 99.30 96.43 112.52
High 114.90 101.10 86.85 81.12 104.49
Low 134.53 114.20 105.38 107.29 124.54
<CAPTION>
----------------------------
(Millions of yen or thousands of dollars, except per DECEMBER 31
share amounts and yen exchange rates) 1996 1997 1997(1)
---------- ---------- -----------
unaudited
<S> <<C> <C> <C>
INCOME STATEMENT DATA:
Sales and operating revenue Y4,197,439 Y5,081,523 $39,088,638
Costs and expenses 3,897,022 4,620,212 35,540,092
Operating income (loss) 300,417 461,311 3,548,546
Income (loss) before income taxes 256,825 416,353 3,202,715
Income taxes 121,747 200,110 1,539,307
Net income (loss) 127,117 201,309 1,548,531
Net income (loss) per share(2):
Basic 339.6 509.2 3.92
Diluted 278.1 437.4 3.36
Depreciation and amortization(3) 188,366 216,896 1,668,431
Capital expenditures (additions to fixed assets) 201,334 251,044 1,931,108
Research and development expenses 204,558 229,844 1,768,031
BALANCE SHEET DATA (END OF PERIOD):
Assets:
Cash and time deposits Y 555,290 Y 525,219 $ 4,040,146
Property, plant and
equipment 1,188,763 1,278,495 9,834,577
Total assets 5,753,974 6,556,864 50,437,415
Liabilities and stockholders' equity:
Short-term debt(5) 548,333 622,872 4,791,323
Long-term debt 1,200,550 924,412 7,110,862
Total liabilities(6) 4,293,638 4,671,910 35,937,769
Stockholders' equity 1,346,041 1,756,183 13,509,100
YEN EXCHANGE RATES PER U.S. DOLLAR(7):
At period-end Y 115.77 Y 130.45
Average 109.74 121.03
High 104.49 111.42
Low 116.13 131.08
</TABLE>
- ---------------
(1) For convenience only, yen amounts as of and for the year ended March 31,
1997 have been translated into dollars at the rate of Y124 = $1, the
approximate rate of exchange on March 31, 1997, and yen amounts as of and
for the nine months ended December 31, 1997 have been translated into
dollars at the rate of Y130 = $1, the approximate rate of exchange on
December 31, 1997.
(2) Net income (loss) per share amounts were computed based on Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128),
which is effective for both interim and annual periods ended after December
15, 1997. All prior-period net income (loss) per share amounts have been
restated from the amounts shown in the 1997 20-F to conform with FAS 128.
(3) Including amortization of deferred insurance acquisition costs.
(4) Excluding write-off of goodwill.
(5) Including current portion of long-term debt.
(6) Total liabilities is the sum of current liabilities and long-term
liabilities.
(7) Based on the noon buying rate in New York City for cable transfers in
foreign currencies as announced for customs purposes by the Federal Reserve
Bank of New York.
10
<PAGE> 12
<TABLE>
<CAPTION>
-------------------------------------------------------------------
AS OF AND FOR
THE NINE
MONTHS ENDED
AS OF AND FOR THE YEAR ENDED MARCH 31 DECEMBER 31
1993 1994 1995 1996 1997 1996 1997
------ ------ ------- ------ ------ ------ ------
unaudited
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Operating margin(1) 3.3% 2.9% (4.2)% 5.1% 6.5% 7.2% 9.1%
Total debt/net worth(2) 1.1x 1.0x 1.4x 1.4x 1.0x 1.3x 0.9x
Total debt/total capital(3) 51.9% 50.4% 57.6% 58.2% 49.5% 56.5% 46.8%
Net debt/net total capital(4) 40.8% 38.2% 46.6% 49.3% 39.3% 47.0% 36.8%
Operating cash flow/total debt(5) 27.0% 25.0% 13.3% 14.4% 50.6% N/A N/A
EBIT interest coverage(6) 2.1x 2.6x (2.4)x 3.1x 5.4x 5.8x 9.8x
Pretax interest coverage(7) 1.1x 1.6x (3.4)x 2.1x 4.4x 4.8x 8.8x
</TABLE>
- ---------------
N/A: not available
(1) Operating margin is operating income (loss) divided by sales and operating
revenue.
(2) Total debt is the sum of short-term borrowings, current portion of long-term
debt and long-term debt. Net worth is stockholders' equity.
(3) See note 2 for definition of total debt. Total capital is the sum of total
debt and stockholders' equity.
(4) Net debt is total debt (see note 2) less cash and cash equivalents and time
deposits. Net total capital is the sum of total debt and stockholders'
equity less cash and cash equivalents and time deposits.
(5) Operating cash flow is cash flow from operating activities. See note 2 for
definition of total debt.
(6) EBIT interest coverage is EBIT divided by gross interest expense. EBIT is
income (loss) before interest expense and income taxes.
(7) Pretax interest coverage is income (loss) before income taxes divided by
gross interest expense.
NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA:
(1) During the fiscal year ended March 31, 1996, the Company changed its method
of accounting for assessing the carrying values of intercompany foreign
currency commitments to comply with the Emerging Issues Task Force Issue No.
95-2. This did not have a material impact on results of operations for the
years ended March 31, 1996 and 1997.
(2) The consolidated results for the fiscal year ended March 31, 1995 reflect
the write-off of goodwill of Y265 billion in the Pictures Group (see Note 3
of the Notes to the Consolidated Financial Statements) and losses in the
Pictures Group of approximately Y50 billion arising from a combination of
unusual items, such as abandoning a large number of projects in development
and providing for settlement of outstanding lawsuits and contract claims.
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements included in the 1997 20-F and the unaudited Interim
Financial Statements included in the 1998 6-K.
LIQUIDITY AND CAPITAL RESOURCES
Sony's management aims to maintain a solid financial position with ample
liquidity to provide operational flexibility. Total assets increased from
Y5,045.7 billion at March 31, 1996 to Y5,680.3 billion at March 31, 1997 and
Y6,556.9 billion at December 31, 1997. One reason for this increase was the
significantly lower value of the yen in relation to foreign currencies at March
31, 1997 and December 31, 1997 compared with March 31, 1996. An increase in
operating assets of Sony Life Insurance, which recorded higher insurance
premiums, also contributed to the rise in total assets.
Total short- and long-term borrowings and debt decreased from Y1,629.9 billion
at March 31, 1996 to Y1,427.9 billion at March 31, 1997. This was primarily the
result of an improvement in Sony's cash flows and the conversion of convertible
bonds, partially offset by an increase in foreign currency denominated
liabilities caused by the yen's depreciation. Total debt was Y1,547.3 billion at
December 31, 1997.
Stockholders' equity increased from Y1,169.2 billion at March 31, 1996 to
Y1,459.4 billion at March 31, 1997 and Y1,756.2 billion at December 31, 1997.
The ratio of stockholders' equity to total assets increased from 23.2% at March
31, 1996 to 25.7% at March 31, 1997 and 26.8% at December 31, 1997.
Net cash provided by operating activities was Y723.1 billion in the fiscal year
ended March 31, 1997, compared to Y234.2 billion in the fiscal year ended March
31, 1996. This increase was primarily due to an increase in net income and a
decrease in inventories. Depreciation and amortization increased by 17.3% to
Y266.5 billion in the fiscal year ended March 31, 1997 from Y227.3 billion in
the fiscal year ended March 31, 1996. This figure includes the amortization of
goodwill and intangibles as well as the amortization of deferred insurance
acquisition costs.
Net cash used in investing activities was Y518.0 billion in the fiscal year
ended March 31, 1997, compared to Y371.0 billion in the fiscal year ended March
31, 1996. This increase was mainly attributable to growth in payments for
purchases of fixed assets and marketable securities.
Net cash used in financing activities was Y247.5 billion in the fiscal year
ended March 31, 1997, compared to net cash provided by financing activities of
Y130.5 billion in the fiscal year ended March 31, 1996. This was mainly due to a
significant decrease in short-term borrowings.
Due to the above factors, and including the effect of exchange rate changes,
there was a net decrease in cash and cash equivalents of Y30.8 billion,
resulting in a balance of Y428.5 billion at March 31, 1997. Cash and cash
equivalents were Y467.8 billion at December 31, 1997.
Capital expenditures during the fiscal year ended March 31, 1997 increased 18.7%
to Y298.1 billion from Y251.2 billion in March 31, 1996. Major components
included semiconductor-related expenditures of approximately Y50 billion and
capital expenditures in the field of displays. During the current fiscal year,
Sony has increased semiconductor-related capital expenditures for
next-generation products and other requirements and expanded manufacturing
facilities for lithium-ion batteries and other products. As a result, capital
expenditures for the fiscal year ending March 31, 1998 are expected to exceed
the level of the fiscal year ended March 31, 1997. Capital expenditures for the
nine months ended December 31, 1997 were Y251.0 billion, a 24.7% increase from
Y201.3 billion in the nine months ended December 31, 1996.
NINE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO NINE MONTHS ENDED DECEMBER 31,
1996
Sales and Operating Revenue
Consolidated sales and operating revenue increased 21.1% to Y5,081.5 billion in
the nine months ended December 31, 1997 from Y4,197.4 billion in the nine months
ended December 31, 1996.
In Electronics, sales in Video Equipment rose 9.4% from the nine months ended
December 31, 1996, mainly due to the increase in unit sales of home-use
camcorders. Sales in Audio Equipment increased 11.8%, due in part to increased
12
<PAGE> 14
sales of MD systems and car stereos. Sales in Televisions increased 4.4%,
reflecting the growth in sales of color TVs in Japan, including a new series
incorporating flat cathode ray tubes. Sales in Other Products rose 41.8%. The
PlayStation game console and software, cellular phones, and personal computers
contributed to the sales increase in Other Products.
In Entertainment, sales in the Music Group increased 11.5% from the nine months
ended December 31, 1996, primarily due to sales growth outside Japan. Sales in
the Pictures Group rose 47.4%, mainly benefitting from strong box office results
for the 1997 summer season, sell-through video sales and television syndication.
Movies released by the Picture Group during the nine months ended December 31,
1997 included Men in Black, My Best Friend's Wedding and As Good As It Gets.
In Insurance and Financing, revenues increased 23.4% from the nine months ended
December 31, 1996, reflecting the expansion of Sony's life insurance business in
Japan.
By geographic area, sales in Japan rose 16.5%, primarily due to sales increases
in each major category of the Electronics Business, as well as from the
expansion of the life insurance business. Sony's overseas sales were higher in
both the Electronics Business and the Entertainment Business. As a result, sales
increased by 30.4% in the United States, 21.0% in Europe, and 13.9% in Other
Areas. Sales in Japan accounted for 26.8% and overseas sales accounted for 73.2%
of consolidated sales in the nine months ended December 31, 1997, compared to
27.8% and 72.2%, respectively, in the nine months ended December 31, 1996.
Impact of Foreign Exchange Trends
During the nine months ended December 31, 1997, sales denominated in U.S.
dollars, Deutsche marks, and British pounds accounted for approximately 70%, 4%,
and 5%, respectively, of Sony's overseas sales. Approximately 71% of overseas
sales were denominated in foreign currencies. During the nine months ended
December 31, 1997, the yen depreciated approximately 9% against the U.S. dollar
and 13% against the British pound, and appreciated approximately 6% against the
Deutsche mark, each in terms of average rate, compared with the nine months
ended December 31, 1996. The Company estimates that sales would have been
approximately Y253 billion lower than the reported figure in the nine months
ended December 31, 1997 if the value of the yen had remained the same as in the
nine months ended December 31, 1996.
To reduce the impact of foreign exchange fluctuations on its earnings, Sony
promotes the localization of material and parts procurement, design, and
manufacturing operations outside Japan. Sony estimates that during the nine
months ended December 31, 1997, overseas activities represented approximately
52% of total manufacturing output in Sony's Electronics Business. Sony employs
foreign exchange forward contracts and foreign currency option contracts to
hedge against foreign exchange risks that arise from export and import
transactions of the Company and its subsidiaries. In addition, interest rate
currency swap agreements are used in connection with certain foreign currency
denominated borrowings and debt.
Cost of Sales, Selling, General and Administrative Expenses, and Operating
Income
The revenue and expenses of Insurance and Financing are not included in the
following two paragraphs.
Cost of sales increased 18.1% to Y3,428.3 billion in the nine months ended
December 31, 1997 from Y2,903.7 billion in the nine months ended December 31,
1996. Cost of sales as a percentage of consolidated sales (sales and operating
revenue less insurance and financing revenue) decreased by 1.8% to 70.7%.
Research and development expenses increased 12.4% to Y229.8 billion in the nine
months ended December 31, 1997 from Y204.6 billion in the nine months ended
December 31, 1996, but as a percentage of consolidated sales declined 0.4% to
4.7%.
Selling, general and administrative expenses increased 18.3% to Y971.4 billion
in the nine months ended December 31, 1997 from Y821.0 billion in the nine
months ended December 31, 1996. Selling, general and administrative expenses as
a percentage of consolidated sales decreased 0.5% to 20.0%.
Insurance and financing expenses increased 28.0% to Y220.5 billion in the nine
months ended December 31, 1997 from Y172.3 billion in the nine months ended
December 31, 1996. This was mainly attributable to higher future insurance
policy benefits due to growth in Sony's life insurance business. As a percentage
of insurance and financing revenue, these expenses increased 3.4% to 93.8%.
13
<PAGE> 15
Operating income increased 53.6% to Y461.3 billion in the nine months ended
December 31, 1997 from Y300.4 billion in the nine months ended December 31,
1996. Operating income as a percentage of consolidated sales and operating
revenue increased 1.9% to 9.1%.
Other Income and Expenses
Other income decreased 13.1% to Y54.2 billion in the nine months ended December
31, 1997 from Y62.4 billion in the nine months ended December 31, 1996, while
other expenses decreased 6.4% to Y99.1 billion from Y105.9 billion. The decrease
in other income was primarily attributable to a decrease in net foreign exchange
gain, while the decrease in other expenses was primarily attributable to a
decrease in interest expenses.
Among other income and expenses, the balance of interest and dividend income
less interest expenses resulted in net interest payments of Y32.0 billion in the
nine months ended December 31, 1997. This represented a decrease of Y8.0 billion
from the nine months ended December 31, 1996, mainly due to a decrease in total
debt outstanding.
Income before Income Taxes and Net Income
Income before income taxes increased 62.1% to Y416.4 billion in the nine months
ended December 31, 1997 from Y256.8 billion in the nine months ended December
31, 1996. Income taxes as a percentage of income before income taxes increased
0.7% to 48.1%.
Net income increased 58.4% to Y201.3 billion in the nine months ended December
31, 1997 from Y127.1 billion in the nine months ended December 31, 1996. Net
income represented 4.0% of consolidated sales and operating revenue in the nine
months ended December 31, 1997, an increase of 1.0% from the nine months ended
December 31, 1996.
Segment Information
The following discussion is based on segment information (see Note 18 of the
Notes to the Consolidated Financial Statements) and differs from the sales
classification described under "Business -- Business Segments" and "-- Sales and
Distribution".
By industry segment, sales in the Electronics Business grew 19.7%. Backed by the
rise in sales and the yen's depreciation, operating income in the Electronics
Business increased 65.9%. Operating income as a percentage of sales in the
Electronics Business improved by 2.8% to 10.0%. Sales in the Entertainment
Business were up 27.3%, and operating income increased by 16.7%. As a percentage
of sales in the Entertainment Business, operating income declined by 0.7% to
7.3%. Strong results outside Japan were behind higher operating income in the
Music Group. The Pictures Group also posted an increase in operating income,
primarily due to strong box office results for the 1997 summer season,
sell-through video sales and television syndication. In Insurance and Financing,
the strong performance of the life insurance business was mainly responsible for
a 22.3% rise in revenue. However, operating income in Insurance and Financing
decreased by 15.7%, primarily as a result of a revaluation of deferred insurance
acquisition costs and higher expenses, including benefit payments.
FISCAL YEAR ENDED MARCH 31, 1997 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1996
Sales and Operating Revenue
Consolidated sales and operating revenue increased 23.3% to Y5,663.1 billion in
the fiscal year ended March 31, 1997 from Y4,592.6 billion in the fiscal year
ended March 31, 1996.
In Electronics, sales in Video Equipment rose 11.7% from the previous year,
mainly due to the increase in unit sales of home-use camcorders. Sales in Audio
Equipment increased 14.3%. In this category, sales of MD systems were brisk and
car stereos recorded sales growth. Sales in Televisions increased 30.4%,
reflecting the growth in sales of color TVs and strong sales of computer
displays worldwide. Sales in Other Products rose 36.5%. The PlayStation game
console and software, cellular phones, and lithium-ion batteries contributed to
the sales increase in this category. However, sales of personal computer-related
semiconductors, optical pickups, and CD-ROM drives declined.
In Entertainment, sales in the Music Group increased 14.0% from the previous
year despite the weak retail environment in the United States, primarily due to
favorable sales growth outside Japan. Sales in the Pictures Group rose 37.8%,
mainly benefitting from continued strength in the television operations,
including U.S. network prime-time, daytime, and game show programming, the
success of sell-through videos, and licensing agreements of SPE's filmed
entertainment library.
14
<PAGE> 16
In Insurance and Financing, revenues increased 9.0% from the previous year,
reflecting the expansion of Sony's life insurance business in Japan.
By geographic area, sales in Japan rose 15.3%. Televisions and Other Products,
which includes the home video game business, were the most important
contributors. Sony's overseas sales were higher in both the Electronics Business
and the Entertainment Business. As a result, sales increased by 30.1% in the
United States, 23.8% in Europe, and 25.6% in Other Areas. Sales in Japan
accounted for 28.1% and overseas sales accounting for 71.9% of consolidated
sales in the fiscal year ended March 31, 1997, compared to 30.0% and 70.0%,
respectively, in the fiscal year ended March 31, 1996.
Impact of Foreign Exchange Trends
During the fiscal year ended March 31, 1997, sales denominated in U.S. dollars,
Deutsche marks, and British pounds accounted for approximately 67%, 5%, and 5%,
respectively, of Sony's overseas sales. Approximately 97% of overseas sales were
denominated in foreign currencies. During the year, the yen depreciated
approximately 15% against the U.S. dollar, 7% against the Deutsche mark, and 16%
against the British pound, each in terms of average rate, compared with the
fiscal year ended March 31, 1996. The Company estimates that sales would have
been approximately Y520 billion lower than the reported figure in the fiscal
year ended March 31, 1997 if the value of the yen had remained the same as in
the fiscal year ended March 31, 1996.
Cost of Sales, Selling, General and Administrative Expenses, and Operating
Income
The revenue and expenses of Insurance and Financing are not included in the
following two paragraphs.
Cost of sales increased 22.2% to Y3,930.1 billion in the fiscal year ended March
31, 1997 from Y3,216.8 billion in the fiscal year ended March 31, 1996. Cost of
sales as a percentage of consolidated sales decreased by 1.2% to 72.6%. Research
and development expenses increased 9.8% to Y282.6 billion in the fiscal year
ended March 31, 1997 from Y257.3 billion in the fiscal year ended March 31,
1996, but as a percentage of consolidated sales declined 0.7% to 5.2%.
Selling, general and administrative expenses increased 23.4% to Y1,132.2 billion
in the fiscal year ended March 31, 1997 from Y917.9 billion in the fiscal year
ended March 31, 1996. Selling, general and administrative expenses as a
percentage of consolidated sales decreased 0.1% to 20.9%.
Insurance and financing expenses increased 3.6% to Y230.5 billion in the fiscal
year ended March 31, 1997 from Y222.5 billion in the fiscal year ended March 31,
1996. This was mainly attributable to higher future insurance policy benefits
due to growth in Sony's life insurance business. As a percentage of insurance
and financing revenue, these expenses decreased 4.8% to 91.5%.
Operating income increased 57.4% to Y370.3 billion in the fiscal year ended
March 31, 1997 from Y235.3 billion in the fiscal year ended March 31, 1996.
Operating income as a percentage of consolidated sales and operating revenue
increased 1.4% to 6.5%.
Other Income and Expenses
Other income increased 40.9% to Y92.6 billion in the fiscal year ended March 31,
1997 from Y65.8 billion in the fiscal year ended March 31, 1996, while other
expenses decreased 7.6% to Y150.5 billion from Y162.9 billion. These changes are
primarily attributable to the net foreign exchange gain posted during the fiscal
year ended March 31, 1997, compared with a substantial net foreign exchange loss
in the fiscal year ended March 31, 1996. During the fiscal year ended March 31,
1997, the exchange rates of the yen at settlement of foreign currency
denominated sales were about the same as prevailing exchange rates. However, yen
exchange rates for settlement of imports were higher than prevailing rates,
resulting in a foreign exchange gain.
Among other income and expenses, the balance of interest and dividend income
less interest expenses resulted in net interest payments of Y51.5 billion in the
fiscal year ended March 31, 1997. This represented an increase of Y2.4 billion
from the fiscal year ended March 31, 1996, mainly because of the yen's
depreciation against other currencies.
15
<PAGE> 17
Income before Income Taxes and Net Income
Income before income taxes increased 126.1% to Y312.4 billion in the fiscal year
ended March 31, 1997 from Y138.2 billion in the fiscal year ended March 31,
1996. Income taxes as a percentage of income before income taxes declined 3.4%
to 52.4%.
Net income increased 157.1% to Y139.5 billion in the fiscal year ended March 31,
1997 from Y54.3 billion in the fiscal year ended March 31, 1996. Net income
represented 2.5% of consolidated sales and operating revenue in the fiscal year
ended March 31, 1997, an increase of 1.3% from the previous year.
Segment Information
The following discussion is based on segment information (see Note 18 of the
Notes to the Consolidated Financial Statements) and differs from the sales
classification described under "Business -- Business Segments" and "-- Sales and
Distribution".
By industry segment, sales in the Electronics Business grew 23.6%. Backed by the
rise in sales and the yen's depreciation, operating income in the Electronics
Business increased 59.2%. Operating income as a percentage of sales in the
Electronics Business improved by 1.6% to 6.9%. Sales in the Entertainment
Business were up 24.0%, and operating income increased by 20.8%. As a percentage
of sales in the Entertainment Business, operating income declined by 0.2% to
6.3%. Strong results outside Japan were behind higher operating income in the
Music Group. The Pictures Group also posted an increase in operating income,
primarily due to strength in the home video and television businesses, and to
licensing agreements involving SPE's filmed entertainment library. In Insurance
and Financing, the strong performance of the life insurance business was mainly
responsible for a 9.0% rise in revenue and a 153.6% increase in operating
income.
By geographic area, Sony generated higher sales in all areas. In Japan, sales
rose 12.9%. Operating income in Japan increased by 75.8%, mainly as the result
of a strong performance in the Electronics Business, including higher
profitability of exports as the yen weakened. As a percentage of sales in Japan,
operating income rose 2.8% to 7.6%. In the United States, sales increased 31.9%,
but operating income declined 4.5% and fell 0.7% as a percentage of sales. This
decline was primarily due to substantial losses incurred at a semiconductor
manufacturing equipment subsidiary. In Europe, sales increased 24.7% and
operating income advanced 45.2%, representing 6.2% of sales, 0.9% more than in
the fiscal year ended March 31, 1996. In Other Areas, sales increased 20.8% and
operating income increased 25.3%, representing 4.8% of sales, 0.1% more than in
the fiscal year ended March 31, 1996.
FISCAL YEAR ENDED MARCH 31, 1996 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1995
Sales and Operating Revenue
Sony's consolidated sales and operating revenue increased 15.1% to Y4,592.6
billion in the fiscal year ended March 31, 1996 from Y3,990.6 billion during the
fiscal year ended March 31, 1995.
In Electronics, sales in Video Equipment rose 5.8% from the previous year, due
to the increase in unit sales of home-use camcorders and favorable sales
performances of broadcast- and industrial-use video products including Digital
Betacam VTRs. Sales in Audio Equipment increased 0.8%. In this category, MD
system unit sales showed significant growth, particularly in Japan. Sales in
Televisions increased 12.2%, reflecting the growth in unit sales of color TVs
and strong sales of computer displays worldwide. Sales in Other Products rose
41.4%, due to the strong sales of semiconductors, electronic components, CD-ROM
drives, and cellular phones. In addition, the PlayStation game console and
software gained popularity in Japan, the United States, and Europe, contributing
substantially to the sales increase in Other Products.
In Entertainment, sales in the Music Group increased 3.6% over the previous
year. Strong sales gains in international markets more than offset a sales
decline in the United States that resulted from the weak retail environment.
Sales in the Pictures Group rose 13.0%, reflecting strong box office revenues
from several hit films as well as the successful off-network syndication of a
hit comedy.
In Insurance and Financing, revenues increased 66.6% from the previous year,
reflecting the expanded business operations of Sony Life Insurance.
By geographic area, sales in Japan increased 24.9%, supported by overall sales
advances in electronics products and higher sales of the PlayStation game
console and software, as well as revenue growth in the life insurance business.
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<PAGE> 18
Sales in the United States rose 9.4%, reflecting gains in computer-related
products. In Europe, sales rose 16.4%, due to overall sales growth of the
Electronics Business as well as favorable results of the Entertainment Business.
In addition, the successful launch of the PlayStation in the United States and
Europe in the fiscal year contributed to sales in both areas. Sales in Other
Areas advanced 8.6%, led by expansion in Asian countries. Sales in Japan
accounted for 30.0% and overseas sales accounted for 70.0% of consolidated sales
in the fiscal year ended March 31, 1996, compared with 27.7% and 72.3%,
respectively, in the fiscal year ended March 31, 1995.
Impact of Foreign Exchange Trends
During the fiscal year ended March 31, 1996, overseas sales were denominated
approximately 63% in U.S. dollars, 8% in Deutsche mark, 5% in British pound, and
4% in Hong Kong dollars. In total, approximately 97% of overseas sales were
denominated in foreign currencies. In terms of average rate, the yen rose
approximately 3% against both the U.S. dollar and British pound, while it fell
approximately 6% against the Deutsche mark. It is estimated that consolidated
sales would have been approximately Y20 billion higher than the reported figure
in the fiscal year ended March 31, 1996 if the value of the yen had remained the
same as in the fiscal year ended March 31, 1995. During the fiscal year ended
March 31, 1996, approximately 47% of total manufacturing in Sony's Electronics
Business was conducted outside Japan.
Cost of Sales, Selling, General and Administrative Expenses, and Operating
Income
The revenue and expenses of Insurance and Financing were reported separately for
the first time in the fiscal year ended March 31, 1996. Such revenue and
expenses are not included in the following two paragraphs.
Cost of sales increased 10.3% to Y3,216.8 billion in the fiscal year ended March
31, 1996 from Y2,916.5 billion in the fiscal year ended March 31, 1995. Cost of
sales as a percentage of consolidated sales decreased 1.9% to 73.8%. This
improvement reflects higher sales and Company-wide efforts to reduce costs.
Research and development expenses increased 7.6% to Y257.3 billion in the fiscal
year ended March 31, 1996 from Y239.2 billion in the fiscal year ended March 31,
1995, but as a percentage of consolidated sales declined 0.3% to 5.9%.
Selling, general and administrative expenses increased 8.9% to Y917.9 billion in
the fiscal year ended March 31, 1996 from Y842.8 billion in the fiscal year
ended March 31, 1995. Selling, general and administrative expenses as a
percentage of consolidated sales decreased 0.9% to 21.0%.
Insurance and financing expenses, which were reported separately from cost of
sales, increased 67.6% to Y222.5 billion in the fiscal year ended March 31, 1996
from Y132.8 billion in the fiscal year ended March 31, 1995, primarily due to an
increase in future insurance policy benefits reflecting the expanded operations
of Sony's life insurance business. Insurance and financing expenses as a
percentage of insurance and financing revenue increased 0.6% to 96.3%.
Operating income was Y235.3 billion in the fiscal year ended March 31, 1996,
compared to an operating loss of Y166.6 billion in the fiscal year ended March
31, 1995. Operating income as a percentage of consolidated sales and operating
revenue was 5.1% in the fiscal year ended March 31, 1996. The operating loss in
the fiscal year ended March 31, 1995 was primarily due to the write-off of
goodwill and additional losses in the Pictures Group.
Other Income and Expenses
Other income decreased 10.1% to Y65.8 billion in the fiscal year ended March 31,
1996 from Y73.1 billion in the fiscal year ended March 31, 1995, while other
expenses increased 27.8% to Y162.9 billion in the fiscal year ended March 31,
1996 from Y127.5 billion in the fiscal year ended March 31, 1995. These changes
were mainly due to a large net foreign exchange loss in the fiscal year ended
March 31, 1996, as opposed to a net foreign exchange gain in the fiscal year
ended March 31, 1995. During the fiscal year ended March 31, 1996, the exchange
rates of the yen at settlement of foreign exchange forward contracts were higher
than prevailing exchange rates, resulting in a foreign exchange loss.
Among other income and expenses, the balance of interest and dividend income
less interest expenses resulted in net interest payments of Y49.0 billion in the
fiscal year ended March 31, 1996, a decrease of Y6.1 billion from the fiscal
year ended March 31, 1995, due primarily to an increase in total borrowings and
debt.
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<PAGE> 19
Income before Income Taxes and Net Income
Income before income taxes was Y138.2 billion in the fiscal year ended March 31,
1996, compared with a loss before income taxes of Y220.9 billion in the fiscal
year ended March 31, 1995. Income taxes as a percentage of income before income
taxes was 55.8% in the fiscal year ended March 31, 1996.
Net income was Y54.3 billion in the fiscal year ended March 31, 1996, compared
with a net loss of Y293.4 billion in the fiscal year ended March 31, 1995. Net
income represented 1.2% of consolidated sales and operating revenue in the
fiscal year ended March 31, 1996.
Segment Information
The following discussion is based on segment information (see Note 18 of the
Notes to the Consolidated Financial Statements) and differs from the sales
classification described in "Business -- Business Segments" and "Business --
Sales and Distribution".
By industry segment, sales in the Electronics Business rose 15.6% and operating
income increased 56.7%, reflecting the increase in sales and Company-wide
efforts to cut costs and expenses. Operating income as a percentage of sales in
the Electronics Business improved from 3.9% to 5.3%. In the Entertainment
Business, sales rose 7.7%. Operating income of the Entertainment Business was
Y54.9 billion in the fiscal year ended March 31, 1996, compared with an
operating loss of Y273.3 billion in the fiscal year ended March 31, 1995, which
was primarily the result of the write-off of goodwill and additional losses in
the Pictures Group. Operating income as a percentage of sales in the
Entertainment Business was 6.5% in the fiscal year ended March 31, 1996. The
Pictures Group posted operating income in the fiscal year ended March 31, 1996
as the result of several hit films, successful television syndication in the
United States, management efforts to control costs, and lower amortization
charges following the previous year's write-off of goodwill. The operating
income of the Music Group declined from the previous year due to the weak U.S.
retail environment, which was not entirely offset by a strong international
performance.
In Insurance and Financing, revenues increased 61.7% and operating income
increased 40.6% from the fiscal year ended March 31, 1995. These gains were
primarily the result of a strong performance by Sony Life Insurance. Operating
income as a percentage of revenues in Insurance and Financing declined from 3.9%
to 3.4%.
By geographic area, Sony's sales increased significantly in all areas. In Japan,
sales advanced 14.6%, mainly as the result of an increase in sales in the
Electronics Business, and operating income increased 94.5%. Consequently,
operating income as a percentage of sales was 4.8%, compared to 2.9% in the
fiscal year ended March 31, 1995. In the United States, due to a 13.2% increase
in overall sales as well as improved profit from Pictures Group operations,
operating income was recorded in the fiscal year ended March 31, 1996. In the
fiscal year ended March 31, 1995, a large operating loss was posted due to the
write-off of goodwill and additional losses in the Pictures Group. In Europe,
while sales climbed 16.0% in the fiscal year ended March 31, 1996, operating
income rose only 3.5% and operating income as a percentage of sales worsened
from 5.9% in the fiscal year ended March 31, 1995 to 5.3%. In Other Areas, sales
rose 15.7%, operating income increased 16.5%, and operating income as a
percentage of sales improved marginally, to 4.7%.
18
<PAGE> 20
BUSINESS
Sony is one of the world's leading designers, developers, manufacturers and
distributors of electronic and entertainment products. Sony's products are sold
under the trademark "Sony", which has been registered in 193 countries and
territories. The Company believes the "Sony" name is among the most recognized
in the world, and intends to continue to enhance brand recognition through the
development of high-quality, innovative products. Sony's principal manufacturing
facilities are located in Japan, the United States, Europe and Asia, and its
products are marketed by sales subsidiaries and unaffiliated local distributors
throughout the world. The Company was the first Japanese company to be listed on
the New York Stock Exchange.
Sony has experienced compound annual growth in sales and operating revenue of
19.1% during the last three fiscal years. For the fiscal year ended March 31,
1997, which marked the Company's fiftieth anniversary, Sony reported sales and
operating revenue of Y5,663.1 billion ($45,670.4 million), operating income of
Y370.3 billion ($2,986.5 million) and net income of Y139.5 billion ($1,124.7
million), generated by its three business segments: Electronics, Entertainment,
and Insurance and Financing.
BUSINESS SEGMENTS
The following table sets forth Sony's sales and operating revenue by business
group for the periods indicated. The Electronics Business includes Video
Equipment, Audio Equipment, Televisions, and Other Products. The Entertainment
Business includes the Music Group and the Pictures Group.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
YEAR ENDED MARCH 31,
1995 1996 1997
------------------ ------------------ -------------------------------
(THOUSANDS
(MILLIONS (MILLIONS (MILLIONS OF
OF YEN) OF YEN) OF YEN) DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Video Equipment 691,116 17.3% 731,097 15.9% 816,582 6,585,339 14.4%
Audio Equipment 898,507 22.5 905,441 19.7 1,034,769 8,344,911 18.3
Televisions 708,574 17.8 794,767 17.3 1,036,010 8,354,919 18.3
Other Products 777,031 19.5 1,098,849 24.0 1,500,378 12,099,823 26.5
--------- ----- --------- ---- - --------- ---------- ---- -
Total Electronics
Business 3,075,228 77.1 3,530,154 76.9 4,387,739 35,384,992 77.5
--------- ----- --------- ---- - --------- ---------- ---- -
Music Group 494,931 12.4 512,908 11.2 584,960 4,717,419 10.3
Pictures Group 281,677 7.0 318,305 6.9 438,505 3,536,331 7.8
--------- ----- --------- ---- - --------- ---------- ---- -
Total Entertainment
Business 776,608 19.4 831,213 18.1 1,023,465 8,253,750 18.1
--------- ----- --------- ---- - --------- ---------- ---- -
Insurance and Financing 138,747 3.5 231,198 5.0 251,930 2,031,693 4.4
--------- ----- --------- ---- - --------- ---------- ---- -
Sales and Operating Revenue 3,990,583 100.0% 4,592,565 100.0% 5,663,134 45,670,435 100.0%
========= ===== ========= ===== ========= ========== =====
</TABLE>
Electronics Business
Sony's Electronics Business is engaged in the development, manufacture and sales
of various kinds of electronic equipment, instruments and devices. Sony aims to
be at the forefront of the latest technology in all of its electronics product
lines. Sony believes that it has positioned itself as a producer of quality
products using advanced technology and creative design. Sony intends to continue
to capitalize on its reputation as a world leader in innovative ideas and
products by focusing on digital and network technologies, including developing
satellite broadcast reception systems for home use.
Video Equipment. Sony offers a wide range of video equipment, including 8mm,
VHS, and Consumer-Use Digital VCR Specifications (DV format) videotape recorders
(VTRs), DVD-Video players, video CD players, digital still cameras, broadcast-
and industrial-use video equipment, and videotapes. In the spring of 1997, Sony
launched its first DVD-Video player in Japan and the United States.
Audio Equipment. Sony offers a variety of audio equipment, including MiniDisc
systems, CD players, headphone stereos, personal component stereos, hi-fi
components, radio-cassette tape recorders, tape recorders, digital audio tape
(DAT) recorders/players, IC recorders, radios, headphones, car stereos, car
navigation systems, professional-use audio equipment, audiotapes, and blank MDs.
Sony is working to expand the new MD system lineup, which includes MD Walkman
models, MD decks, and compact stereo systems that incorporate MD decks.
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<PAGE> 21
Televisions. Sony offers a range of televisions and similar products, including
color TVs, Hi-Vision (Japanese high-definition TV standard) TVs, projection TVs,
flat display panels, personal liquid crystal display (LCD) monitors, satellite
broadcasting reception systems, computer displays, professional-use
monitors/projectors, and large color video display systems. In June 1997, Sony
introduced in Japan a new series of wide-screen TVs incorporating newly
developed FD Trinitron cathode ray tubes (CRTs), which is the first television
for the home with a CRT that is flat in both the horizontal and vertical axes.
Other Products. Sony offers a variety of other products, including
semiconductors, LCDs, electronic components, CRTs, personal computers (PCs),
computer peripherals, telecommunications equipment, PlayStation game consoles
and software, batteries, and factory automation (FA) systems. Sony began
marketing a new series of home-use PCs in the United States in September 1996,
and in Japan in July 1997.
Entertainment Business
Sony's Entertainment Business is engaged in the development, production,
manufacture and distribution of recorded music in all commercial formats and
musical genres, and image-based software including film, video, television and
new entertainment technologies, primarily through SMEI, SMEJ and SPE.
Music Group. SMEI and SMEJ produce, manufacture, market, and distribute CDs,
MDs, DVDs, laserdiscs (LDs), records, and pre-recorded audio and video
cassettes, and produce and manufacture CD-ROMs. Major SMEI recording artists
include Celine Dion, Barbra Streisand and Mariah Carey. Sony has a leading CD
production capacity, with plants in the United States, Austria, Japan, Brazil,
Australia, Canada, Hong Kong, and Mexico.
Pictures Group. Pictures Group's global operations encompass motion picture
production and distribution, television programming and syndication, theatrical
exhibition, home video distribution, development and implementation of new
entertainment technologies, operation of studio facilities, and distribution of
filmed entertainment worldwide.
SPE's motion picture arm, the Columbia TriStar Motion Pictures Group, includes
Columbia Pictures, TriStar Pictures, Sony Pictures Classics, Sony Pictures
Releasing, and Columbia TriStar Film Distributors International, SPE's
international theatrical business. SPE set a new industry record in global box
office revenues during calendar year 1997, with hit movies such as Jerry
Maguire, Men in Black and My Best Friend's Wedding. SPE's Columbia TriStar
Television Group is comprised of Columbia TriStar Television, Columbia TriStar
Television Distribution, and Columbia TriStar International Television, SPE's
international television business. SPE's home video operations are conducted
through Columbia TriStar Home Video. SPE also manages two studio facilities,
Sony Pictures Studios and The Culver Studios, both of which are located at SPE's
world headquarters in Culver City, California.
As of December 31, 1997, Sony operated 1,020 motion picture screens in 141
locations in the United States through Sony Retail Entertainment's Loews
Theatres division. In September 1997, Sony entered into an agreement to merge
its Loews Theatres division with the Cineplex Odeon chain of movie theaters. The
merger is expected to bring the number of movie theaters operated by Sony to
over 2,600 screens in approximately 460 locations in North America.
Insurance and Financing
Sony provides life insurance primarily for individuals in Japan through Sony
Life Insurance, which has adopted an innovative marketing approach and
experienced significant growth in revenue in recent years. Sony Life Insurance
recently received an "AA-" credit rating from Standard & Poor's Corporation.
Sony also engages in equipment financing and consumer financing in Japan for
Sony products through Sony Finance International, Inc.
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<PAGE> 22
SALES AND DISTRIBUTION
The following table shows Sony's sales and operating revenue in each of its
major geographical markets for the periods indicated:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
YEAR ENDED MARCH 31,
1995 1996 1997
------------------ ------------------ -------------------------------
(THOUSANDS
(MILLIONS (MILLIONS (MILLIONS OF
OF YEN) OF YEN) OF YEN) DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Japan 1,105,152 27.7% 1,379,804 30.0% 1,590,820 12,829,193 28.1%
United States 1,152,081 28.9 1,259,926 27.4 1,639,334 13,220,435 29.0
Europe 905,416 22.7 1,054,010 23.0 1,304,491 10,520,089 23.0
Other Areas 827,934 20.7 898,825 19.6 1,128,489 9,100,718 19.9
--------- ------ --------- ------ --------- ---------- ------
Sales and Operating Revenue 3,990,583 100.0% 4,592,565 100.0% 5,663,134 45,670,435 100.0%
========= ====== ========= ====== ========= ========== ======
</TABLE>
Electronics Business
Sony's electronic products are sold throughout the world under the trademark
"Sony", which has been registered in 193 countries and territories. In most
cases, sales of Sony's electronic products are made to subsidiaries of the
Company located in diverse geographical areas, and these subsidiaries sell to
local distributors and dealers. In some locations, the Company sells directly to
local distributors.
Japan. In April 1997, the Company established Sony Marketing (Japan) Inc., by
consolidating its consumer products marketing divisions, seven domestic sales
subsidiaries and a sales administrative subsidiary. Sony Marketing (Japan) Inc.
currently operates marketing and sales of primarily Sony's consumer electronic
products in Japan. For non-consumer electronic products, the Company has a sales
company in Tokyo and sales offices throughout the country which sell products to
wholesalers, manufacturers, and industrial and professional users. In addition,
the Company plans to transfer most of its non-consumer products marketing and
sales divisions in Japan to Sony Marketing (Japan) Inc. in April 1998.
North America. Sony Electronics Inc. markets Sony's electronic products for
both consumer and non-consumer use in the United States. This subsidiary has 21
sales and distribution branches and offices throughout the United States. In
Canada, Sony markets its electronic products through Sony of Canada Ltd.
Europe. In Europe, Sony's electronic products for both consumer and
non-consumer use are marketed through 12 sales subsidiaries, including Sony
United Kingdom Limited, Sony Deutschland G.m.b.H. and Sony France S.A.
Other Areas. In overseas areas other than North America and Europe, Sony's
electronic products are marketed through 10 sales subsidiaries, including Sony
Corporation of Hong Kong Limited, Sony Gulf FZE in United Arab Emirates, and
Sony Comercio e Industria Ltda. in Brazil. In areas where the Company has no
subsidiary, it markets its products through local distributors.
Entertainment Business
Music Group. SMEI and SMEJ market and distribute CDs, MDs, DVDs, LDs, records,
and pre-recorded audio and video cassettes. SMEI conducts this business in the
United States under the "Columbia", "Epic", "Sony Classical", and other labels.
The Columbia House Company, a 50:50 partnership between SMEI and a subsidiary of
Time Warner Inc., is engaged in direct marketing of music and home-video
products in the United States and Canada. SMEI's affiliates located outside the
United States conduct the aforesaid business in countries other than the United
States and Japan.
Pictures Group. SPE generally secures all rights relating to the worldwide
distribution of its internally produced motion pictures, including rights for
theatrical exhibition, home videocassette, DVD, and LD distribution, pay and
free television exhibition and other markets. SPE may also acquire distribution
rights to motion pictures produced by other companies, and these rights may be
limited to particular geographic regions or specific forms of media. SPE uses
its own distribution services business for the U.S. theatrical release of its
films and those acquired from and produced by others. Outside the United States,
SPE generally distributes and markets the films through one of its Columbia
Tristar Film Distributors International subsidiaries. However, in certain
countries, SPE has joint distribution facilities with other studios or
arrangements with independent local distributors. The worldwide home video
distribution of motion pictures, television programs, and other video products
of SPE (and those acquired or licensed from others) is handled through Columbia
TriStar Home Video.
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<PAGE> 23
SPE produces television programming and licenses it to network television for
prime-time or daytime broadcast and, in certain instances, for first-run
syndication or directly to cable services. SPE also licenses rights to its
library of television programming and motion pictures to network affiliates and
independent stations in the United States and to international television
stations and other broadcasters throughout the world.
The Pictures Group, through Sony Retail Entertainment's Loews Theatres division,
exhibits its own and other motion picture companies' films. SPE also distributes
its films for theatrical exhibition in theaters operated by others.
OVERSEAS OPERATIONS
Sony has actively expanded its overseas production capabilities following a
basic policy that products should be manufactured in the markets in which they
are sold. During the fiscal year ended March 31, 1997, Sony set up additional
manufacturing facilities in such countries as Hungary, Slovakia, Mexico, and
China. As of March 31, 1997, it operated 15 manufacturing facilities in the
United States, 12 in Europe, and 31 in other overseas areas. Sony intends to
further expand its overseas production to build a corporate structure less
susceptible to the negative impact of foreign exchange rate fluctuations. In
addition to internationalizing its manufacturing operations overseas, Sony
continued to promote the localization of research and development, design,
materials and parts procurement, and management functions to bring its overseas
operations in even closer contact with local communities.
AFTER-SALES SERVICE
Sony maintains a policy of providing repair and servicing functions in the
countries where its electronic products are sold. In large markets such as
Japan, the United States, and Europe, Sony provides these services through its
own service stations, authorized independent service stations and authorized
servicing dealers; other markets are mainly serviced by authorized servicing
dealers.
In line with industry practice, almost all of Sony's electronic products sold in
Japan carry a warranty for a period of generally one year from the date of
purchase for repairs, free of charge, for malfunctions occurring in the course
of ordinary use. Overseas warranties are generally provided for various periods
of time depending on the product and the country where it is marketed. To
further ensure customer satisfaction, Sony maintains customer information
centers in each market.
COMPETITION
In each of its principal product lines, Sony encounters intense competition
throughout the world. Sony believes, however, that in the aggregate it competes
successfully and has a major position in all of the principal product lines in
which it is engaged, although the strength of its position varies with different
products and markets. In the Electronics Business, Sony competes primarily on
the basis of product innovation, quality and price. Sony believes that the high
quality of its products, its record of innovative product introductions and
product improvements, and its extensive marketing and servicing efforts are
important factors in maintaining its competitive position.
Sony's success in the music entertainment business is dependent to a large
extent upon the artistic and creative abilities of its employees and outside
talent and is subject to the vagaries of public taste. SPE faces intense
competition from other major motion picture studios and, to a lesser extent,
from independent production companies for the attention of the movie-going
public. Competition in television production, distribution, and syndication is
also intense because available broadcast time is limited and the audience is
increasingly fragmented among broadcast, cable, and other networks.
RESEARCH AND DEVELOPMENT
The Company restructured its research and development operations as part of an
overall corporate reorganization on April 1, 1997. To meet the diverse
product-related needs of its various businesses, the Company actively carries
out R&D at each of its independent companies. Strategic research and development
relating to the entire Sony Group, particularly the development of new key
technologies, is delegated to six corporate laboratories, the Research Center,
the Advanced Production Laboratory, the Architecture Laboratory, the Advanced
Development Laboratory, the Media Processing Laboratory, and the Information
Technology Laboratory, as well as the D21 Laboratory. These facilities are
located in Tokyo and Kanagawa prefecture in Japan and directly controlled by
corporate headquarters. The Company's research and development operations are
focusing on such fields as electronic materials technologies, basic devices,
semiconductor technologies, software and hardware architectures for information
and network products,
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<PAGE> 24
optical discs and magnetic recording technologies, signal processing
technologies, computer technologies, as well as long-term research and
development themes based on visions of the 21st century.
In the United States, Sony operates Research Laboratories, which specialize in
fields such as digital signal processing, DTV, telecommunications, broadcasting
systems, semiconductors, and display technology. There are additional
development centers in the United Kingdom, Germany, Belgium, and Singapore.
Research and development expenses, principally for the Electronics Business,
were Y239.2 billion in the fiscal year ended March 31, 1995, Y257.3 billion in
the fiscal year ended March 31, 1996 and Y282.6 billion in the fiscal year ended
March 31, 1997.
Sony believes research and development activities are vital to its long-term
growth in electronics. Through its research and development activities, Sony has
recently developed:
- - A high-capacity optical disc which offers a single-sided storage capacity of
12 Gigabytes (GB) on a 12 cm-diameter disc. This technology allows the
recording and playback of high-bit-rate video signals with a high access rate;
- - Digital Reality Creation technology which creates a super-real four times
picture resolution from a standard television signal. This technology allows
very high resolution picture quality from conventional TV broadcasts and other
video sources; and
- - A real-time MPEG2 video encoder LSI which features the industry's widest
motion search area and integrates MPEG2 encoding system controller and motion
estimation circuitry onto a single chip. This technology allows high quality
encoding of even the most rapidly moving scenes and video taken with fast
camera movements.
PATENTS AND LICENSES
Sony has a number of patents in Japan and other countries, and licenses granted
from other firms. Sony considers a number of its license agreements to be
important to its business. Sony has license agreements with RCA Thomson
Licensing Corporation covering a wide range of its products, such as color
televisions, VTRs, and other related equipment. Sony has license agreements with
Lucent Technologies Inc. covering semiconductors and has cross license
agreements with Philips Electronics N.V. covering optical disc players and VTRs.
Sony also has license agreements with Matsushita Electric Industrial Co., Ltd.
and Victor Company of Japan Limited covering magnetic and optical recorder
products, Ampex Corporation covering video tape recorder related products, and
International Business Machines Corporation covering a wide range of information
processing products.
SOURCES OF SUPPLY
Sony has been pursuing optimum procurement of raw materials, parts, and
components to be used in the production of its products on a global basis. These
items are purchased from various suppliers around the world, and Sony maintains
multiple suppliers for every category of parts and components.
EMPLOYEE RELATIONS
As of March 31, 1997, Sony had approximately 163,000 employees, of which
approximately 15% were members of labor unions. Approximately 68,000 employees
were located in Japan and 95,000 overseas. Sony considers its labor relations to
be very good.
Basic wage rates of the Company are reviewed annually in April. In addition, in
accordance with Japanese custom, the Company grants its full-time employees
semi-annual bonuses. The Company provides its employees with a wide variety of
fringe benefits.
Basic wage rates, bonus policies, fringe benefits, retirement ages and
retirement benefits may vary for Sony employees outside Japan because of diverse
employment practices in the countries where Sony does business throughout the
world.
LEGAL PROCEEDINGS
The Company and certain of its subsidiaries are defendants in several pending
lawsuits. However, based upon the information currently available to both the
Company and its legal counsel, management of the Company does not expect such
lawsuits to have a material effect on Sony's financial condition or results of
operations.
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<PAGE> 25
DIRECTORS AND STATUTORY AUDITORS
Set forth below are the names of the Company's Directors and Statutory Auditors
as of the date hereof:
<TABLE>
<CAPTION>
DIRECTOR OR
STATUTORY
DIRECTORS AND STATUTORY AUDITORS AUDITOR SINCE
- --------------------------------------------------------------------------------------- -------------
<S> <C>
Chairman and Representative Director Norio Ohga 1964
Vice Chairman and Representative Director Tsunao Hashimoto 1980
President and Representative Director Nobuyuki Idei 1989
Executive Deputy Presidents and Representative Directors Minoru Morio 1988
Kozo Ohsone 1987
Yoshiyuki Kaneda 1986
Tamotsu Iba 1992
Directors Peter G. Peterson 1991
Kenichi Suematsu 1997
Hideo Ishihara 1997
Standing Statutory Auditors Nobuo Kanoi 1996
Akihisa Ohnishi 1993
Yoshisuke Mohri 1994
Statutory Auditor Kazuaki Morita 1995
</TABLE>
Except as noted below, the business address of all the above persons is c/o Sony
Corporation, 7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo 141-0001, Japan.
The business address of Mr. Kozo Ohsone is c/o Sony Corporation, 7-4, Kounan
1-chome, Minato-ku, Tokyo 108-0075, Japan, the business address of Mr. Yoshiyuki
Kaneda is c/o Sony Corporation, 10-18, Takanawa 4-chome, Minato-ku, Tokyo
108-0074, Japan, and the business address of Mr. Peter G. Peterson is c/o The
Blackstone Group, 345 Park Avenue, New York, NY 10154, U.S.A.
All of the above listed Directors and Statutory Auditors are engaged in the
business of the Company on a full-time basis with the exception of the
following, whose principal outside activities are set forth below:
<TABLE>
<S> <C>
Peter G. Peterson Chairman, The Blackstone Group
Kenichi Suematsu Advisor, The Sakura Bank, Limited
Hideo Ishihara Chairman, Goldman Sachs (Japan) Ltd.
Kazuaki Morita Chairman, Morita and Co.
</TABLE>
All Directors and Statutory Auditors shall be elected by the general meeting of
shareholders. In general, the term of office of Directors shall expire at the
conclusion of the ordinary general meeting of shareholders held with respect to
the last closing of accounts within one year after their assumption of office,
and the term of office of Statutory Auditors shall expire at the conclusion of
the ordinary general meeting of shareholders held with respect to the last
closing of accounts within three years after their assumption of office;
however, they may serve any number of consecutive terms.
The Board of Directors may elect from among its members a Chairman and Director,
a Vice Chairman and Director, a President and Director, and one or more
Executive Deputy Presidents and Directors. From among the Directors the Board of
Directors shall elect one or more Representative Directors. Each of the
Representative Directors has the authority individually to represent the Company
in the conduct of its affairs.
The Statutory Auditors of the Company are not required to be and are not
certified public accountants. However, at least one of the Statutory Auditors
should be a person who has not been a Director, general manager or employee of
the Company or any of its subsidiaries during the five-year period prior to his
election as a Statutory Auditor. The Statutory Auditors may not at the same time
be Directors, managers or employees of the Company. Each Statutory
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Auditor has the statutory duty to examine the financial statement and business
reports to be submitted by the Board of Directors at the general meeting of
shareholders and also to supervise the administration by the Directors of the
Company's affairs. They are entitled to participate in meetings of the Board of
Directors but are not entitled to vote.
Under the Commercial Code and the Law concerning Special Measures to the
Commercial Code with respect to Audit of Corporations, the Board of Statutory
Auditors has a statutory duty to prepare and submit its audit report to the
Board of Directors each year. A Statutory Auditor may note his opinion in the
audit report if his opinion is different from the opinion expressed in the audit
report. The Board of Statutory Auditors is empowered to establish audit
principles, the method of examination by Statutory Auditors of the Company's
affairs and financial position and other matters concerning the performance of
the Statutory Auditors' duties.
There is not any arrangement or understanding between a Director or a Statutory
Auditor and any other person pursuant to which he was selected as a Director or
a Statutory Auditor.
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture, to be dated as of ,
1998 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Indenture, including
the definitions therein of certain terms. Wherever particular Sections or
defined terms of the Indenture are referred to, such Sections or defined terms
are incorporated herein by reference.
GENERAL
The Notes will be direct, unconditional, unsubordinated and unsecured
obligations of the Company and will rank pari passu and ratably without any
preference among themselves and (with the exception of obligations in respect of
national and local taxes and certain other statutory preferences) equally with
all other present and future unsecured and unsubordinated obligations of the
Company from time to time outstanding.
The Notes will be limited to $1,500,000,000 aggregate principal amount and will
mature at 100% of their principal amount on , 2003. The Notes will
bear interest at the rate per annum shown on the front cover of this Prospectus
from , 1998 or from the most recent Interest Payment Date to which
interest has been paid or provided for, payable semi-annually on
and of each year, commencing , 1998 to the Person in
whose name the Note (or any predecessor Note) is registered at the close of
business on the preceding or , as the case may be.
(sec.sec. 301 and 307)
The Indenture does not provide for any debt covenants that would afford the
Holders of Notes any protection in the event of a highly leveraged transaction.
NEGATIVE PLEDGE ON EXTERNAL INDEBTEDNESS
The Company will not, so long as any of the Notes remains outstanding, create or
permit to subsist any mortgage, charge, pledge or other security interest upon
the whole or any part of its property, assets or revenues, present or future, to
secure for the benefit of the holders of any External Indebtedness (i) payment
of any sum due in respect of such External Indebtedness or (ii) any payment
under any guarantee of such External Indebtedness or (iii) any payment under any
indemnity or other like obligation relating to such External Indebtedness
without at the same time according to the Notes either the same security as is
granted to or is outstanding in respect of such External Indebtedness,
guarantee, indemnity or other like obligation or such other security or
guarantee not materially less beneficial to the Holders or as shall be approved
by at least a majority in principal amount of the Notes. (sec.1009)
"External Indebtedness" means any indebtedness of the Company or any other
person in the form of or represented by bonds, notes, debentures or other
securities which (1) either (a) are denominated or payable in, or by reference
to, or may at the option of the person entitled thereto be or become payable in,
or by reference to, a currency or currencies other than yen, or (b) are
denominated or payable in yen and more than 50% of the aggregate principal or
face amount of which is initially distributed by or with the authorization of
the Company or, if not the Company, the issuer thereof outside Japan, (2) are
not repayable (otherwise than at the option, or due to the default, of the
obligor) within one year from the date of their issue, and (3) are, or are
capable of being, quoted, listed or ordinarily traded on any stock exchange or
on any over-the-counter securities market outside Japan. (sec.101)
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The foregoing negative pledge does not apply to yen-denominated securities
issued by the Company in Japan, and would not preclude the Company from issuing
secured yen-denominated indebtedness in Japan ranking senior to the Notes.
FORM, DENOMINATION AND REGISTRATION
The statements set forth herein under "-- Form, Denomination and Registration"
and "-- Definitive Notes" include summaries of certain rules and operating
procedures of DTC, Euroclear and Cedel Bank which affect transfers of interests
in the Global Note.
The Notes will be issued in the form of the Global Note registered in the name
of Cede & Co., as nominee of DTC. The Global Note will be held by the The Chase
Manhattan Bank, as custodian for DTC. The Notes will be issued only in fully
registered form, without coupons, in denominations of $1,000 and any integral
multiple thereof. (sec.302)
Except as set forth below, the Global Note may be transferred, in whole and not
in part, only to DTC, another nominee of DTC or to a successor DTC or its
nominee.
Beneficial interests in the Global Note will be represented through accounts of
financial institutions acting on behalf of beneficial owners as direct and
indirect participants in DTC. Investors may hold Notes directly through DTC,
Cedel Bank or Euroclear, if they are participants in such systems, or indirectly
through organizations which are participants in such systems. Cedel Bank and
Euroclear will hold securities on behalf of their participants through
customers' securities accounts in their respective names on the books of their
respective depositaries, which in turn will hold such securities in customers'
securities accounts in the depositaries' names on the books of DTC. Chase will
initially act as depositary for Cedel Bank and Morgan will act as depositary for
Euroclear.
DTC may grant proxies or otherwise authorize DTC participants (or persons
holding beneficial interests in the Notes through such DTC participants) to
exercise any rights of a Holder or take any other actions which a Holder is
entitled to take under the Indenture. Under its usual procedures, DTC mails an
omnibus proxy to the Company assigning Cede & Co.'s consenting or voting rights
to those DTC participants to whose accounts the Notes are credited on a record
date as soon as possible after such record date. Cedel Bank or Euroclear, as the
case may be, will take any action permitted to be taken by a Holder under the
Indenture on behalf of a Cedel Bank participant or Euroclear participant only in
accordance with its relevant rules and procedures and subject to its
depositary's ability to effect such actions on its behalf through DTC.
Persons who are not DTC participants may beneficially own Notes held by DTC only
through direct or indirect participants in DTC (including Euroclear and Cedel
Bank). So long as Cede & Co., as the nominee of DTC, is the registered owner of
the Global Note, Cede & Co. for all purposes will be considered the sole Holder
of the Notes under the Indenture. Except as provided below, Holders of
beneficial interests in the Global Note will not be entitled to have Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form, and will not be considered the Holders
thereof under the Indenture.
PAYMENT
Payment of principal of and interest on the Global Notes will be made to Cede &
Co., the nominee for DTC, as the registered owner. The principal of and interest
on the Notes will be payable in U.S. dollars or in such other coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts.
Upon receipt of any payment of principal of or interest on the Global Note, DTC
shall immediately credit DTC participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amounts
of the Global Note as shown on the records of DTC. Payments by DTC participants
to owners of beneficial interests in the Global Note held through such
participants will be the responsibility of such participants, as is now the case
with securities held for the accounts of customers registered in "street name."
Distributions with respect to Notes held through Cedel Bank or Euroclear will be
credited to the cash accounts of Cedel Bank participants or Euroclear
participants in accordance with the relevant system's rules and procedures, to
the extent received by its depositary. Neither the Company nor the Trustee 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 Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
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DEFINITIVE NOTES
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the Company
will issue Notes in definitive form in exchange for the Global Note. (sec.305)
The Company will also issue Notes in definitive form upon 90 days' written
request of a holder of a beneficial interest in the Global Note. Such written
request shall be made through the DTC participant in which such holder owns his
beneficial interest in the Notes. Such DTC participant shall promptly forward
such written request to The Chase Manhattan Bank, as Security Registrar. Notes
so issued in definitive form will be issued only in fully registered form
without coupons, in denominations of $1,000 or any integral multiple thereof.
(sec.305)
PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay to Holders of the Notes who are not Japanese corporations
or residents of Japan for Japanese tax purposes such additional amounts
("Additional Amounts") as may be necessary in order that every net payment of
the principal and interest on the Notes, after deduction or withholding for or
on account of any present or future tax, assessment or other governmental charge
imposed upon or as a result of such payment by Japan or any political division
or taxing authority thereof or therein, will not be less than the amount
provided for in the Notes to be due and payable; provided, however, that the
foregoing obligation to pay Additional Amounts will not apply to any one or more
of the following:
(a) Any tax, assessment or other governmental charge which would not
have been so imposed but for the existence of any present or former
connection between such Holder (or between a fiduciary, settler,
beneficiary, member or shareholder of such Holder, if such Holder is an
estate, a trust, a partnership, or a corporation) and Japan;
(b) any estate, inheritance, gift, sales, transfer, personal property or
any similar tax, assessment or government charge;
(c) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of or
interest on the Notes; or
(d) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the Holder of the Notes
for payment on a date more than 30 days after the date on which such
payment became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
nor will Additional Amounts be paid with respect to any payment of principal of
or interest on the Notes to any Holder who is a fiduciary or partnership or
other than the sole beneficial owner of any such payment to the extent of a
beneficiary or settler with respect to such fiduciary, a member of such a
partnership or the beneficial owner would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the Holder of the Notes. (sec.1008)
Whenever there is mentioned in the Indenture or the Notes, in any context, any
payment of, or in respect of, the principal of, or interest on, any Notes, such
mention shall be deemed to include mention of the payment of Additional Amounts
to the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof, and any express mention of the payment of Additional
Amounts in any provisions of the Indenture or the Notes shall not be construed
as excluding Additional Amounts in those provisions where such express mention
is not made.
OPTIONAL TAX REDEMPTION
The Notes are to be redeemable, at the Company's option, as a whole but not in
part, upon not less than 30 nor more than 60 days' notice mailed to each Holder
at his address appearing on the Security Register, at any time, at a Redemption
Price equal to 100% of the principal amount, together with accrued interest
(including Additional Amounts, if any) to the Redemption Date if the Company
determines that, as a result of any change in, amendment to, non-renewal of, or
judicial decision relating to the laws (including regulations, rulings and
treaties) of Japan or any political subdivision or taxing authority thereof or
therein, or any change in the official interpretation or application of such
law, which change, amendment, non-renewal or decision becomes effective on or
after the date of this Prospectus, the Company would be required to pay
Additional Amounts with respect to the Notes on the next succeeding Interest
Payment Date as described under "-- Payment of Additional Amounts," provided
that (i) no such notice of redemption may be given earlier than 60 days prior to
the earliest date on which the Company would be obligated to
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<PAGE> 29
pay any such Additional Amounts were a payment in respect of the Notes then due
and (ii) at the time such notice is given, such obligation to pay such
Additional Amounts remains in effect. Prior to the giving of any such notice of
redemption, the Company will deliver to the Trustee (a) a certificate stating
that the Company is entitled to effect such redemption and setting forth a
statement of facts showing that the conditions precedent to the right to the
Company so to redeem have occurred and (b) an opinion of independent counsel or
a certificate of an independent accountant of recognized standing selected by
the Company and reasonably satisfactory to the Trustee to the effect that the
Company has or will become obligated to pay such Additional Amounts as a result
of such change or amendment. The Company's right to redeem the Notes shall
continue, as long as the Company is obligated to pay such Additional Amounts,
notwithstanding that the Company shall have made payments of Additional Amounts.
(sec.1101, 1103)
LIMITATIONS ON MERGERS AND CONSOLIDATIONS
The Indenture will provide that the Company shall not consolidate with or merge
into any other person or convey, transfer or lease its properties and assets
substantially as an entirety to any person, unless (a) any successor person
shall be organized and validly existing under the laws of Japan and shall
expressly assume all the Company's obligations with respect to all the Notes
outstanding, including every covenant of the Indenture to be performed or
observed by the Company and certain other conditions (including payment of
Additional Amounts, if any, resulting from any person succeeding the Company),
and (b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing. (sec.801)
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to pay
principal of any Note when due; (b) failure to pay any interest on any Note when
due, continued for 30 days; (c) failure to perform any other covenant of the
Company in the Indenture, continued for 90 days after written notice as provided
in the Indenture; (d) default in respect of any bonds, debentures, notes or
other instruments of indebtedness or any other similar evidences of indebtedness
("Indebtedness") having an aggregate outstanding principal amount of at least
$25,000,000 or its equivalent in any other currency or currencies of the Company
(other than the Notes) which results in repayment of such Indebtedness being
accelerated by reason of such default, provided, however, that if any such
default shall be cured by the Company or waived by the holders of such
Indebtedness, or of a specified percentage thereof entitled so to waive, then
the default under the Indenture by reason thereof shall be deemed likewise to
have been cured and waived; and (e) certain events in bankruptcy, insolvency or
reorganization. (sec.501) Subject to the provisions of the Indenture relating to
the duties of the Trustee in case an Event of Default (as defined) shall occur
and be continuing, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. (sec.603) Subject to such provisions for the indemnification of the
Trustee, the Holders of a majority in aggregate principal amount of the
Outstanding Notes will 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. (sec.512)
If an Event of Default (as defined) shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes may accelerate the maturity of all Notes; provided, however,
that after such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount of
Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture. (sec.502) For
information as to waiver of defaults, see "-- Modification and Waiver".
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default (as defined) and unless also the Holders of at least 25% in aggregate
principal amount of the Outstanding Notes shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. (sec.507) However, such limitations do not apply to a suit instituted by a
Holder of a Note for enforcement of payment of the principal of or interest on
such Note on or after the respective due dates expressed in such Note. (sec.508)
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The Company will be required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (sec.1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Outstanding Notes; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Note
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, (b) reduce the principal amount of, or
interest on, any Note, or change the obligation to pay Additional Amounts, (c)
change the currency of payment of principal of, or interest on, any Note or
remove the place of such payment from the Borough of Manhattan, The City of New
York, or (so long as the Notes are listed on the London Stock Exchange and such
exchange shall so require) London, (d) impair the right to institute suit for
the enforcement of any payment on or with respect to any Note, (e) reduce the
above-stated percentage of Outstanding Notes necessary to modify or amend the
Indenture or (f) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults. (sec.902)
The Holders of a majority in aggregate principal amount of the Outstanding Notes
may waive compliance by the Company with certain restrictive provisions of the
Indenture. (sec.1010) The Holders of a majority in aggregate principal amount of
the Outstanding Notes may waive any past default under the Indenture, except a
default in the payment of principal or interest. (sec.513)
DEFEASANCE
Under the terms of the Indenture and the Notes, the Company will be discharged
from any and all obligations in respect of the Notes and the Indenture (except
in each case for certain obligations to register the transfer or exchange of
Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and
hold moneys for payment in trust) if the Company irrevocably deposits with the
Trustee, as trust funds in trust for the purpose, an amount of money in the
currency in which such Notes are payable sufficient to pay and discharge all the
principal of and interest on the Notes on the dates such payments are due in
accordance with the terms of the Notes and if the Company satisfies certain
other conditions under the Indenture, including delivery of an officer's
certificate and an opinion of counsel to the Trustee relating to the
satisfaction and discharge of the Indenture. The Trustee shall execute
instruments acknowledging the discharging of the Indenture upon the Company's
delivery to the Trustee of such officer's certificate and opinion of counsel.
(sec.401)
GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS
The Notes and the Indenture shall all be governed by and construed in accordance
with the laws of the State of New York. (sec.112)
The Company has irrevocably appointed Sony Corporation of America, currently
located at 550 Madison Avenue, 33rd Floor, New York, New York 10022-3211, as its
agent upon which process may be served in any legal action or proceeding which
may be instituted by any Holder or the Trustee in any Federal or State court in
the Borough of Manhattan, The City of New York, arising out of or relating to
the Notes or the Indenture. The Company has also irrevocably submitted to the
non-exclusive jurisdiction of any such courts with respect to any such legal
action or proceeding. (sec.114)
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GLOBAL CLEARANCE AND SETTLEMENT
Although DTC, Cedel Bank and Euroclear have agreed to the procedures provided
below in order to facilitate transfers of Notes among participants of DTC, Cedel
Bank and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
Neither the Company nor the Trustee will have any responsibility for the
performance by DTC, Cedel Bank or Euroclear or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
THE CLEARING SYSTEMS
DTC
DTC is a limited purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code and a "Clearing Agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. DTC participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations such as the Underwriters. Indirect access to the DTC system also
is available to indirect DTC participants such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
DTC participant, either directly or indirectly.
Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants and certain banks, the ability of a holder
of a beneficial interest in the Global Note to pledge such interest to persons
or entities that do not participate in the DTC system, or otherwise take actions
in respect of such interest, may be limited by the lack of a physical
certificate for such interest.
Euroclear and Cedel Bank
Euroclear and Cedel Bank hold securities for participating organizations and
facilitate the clearance and settlement of securities transactions between their
respective participants through electronic book-entry changes in accounts of
such participants. Euroclear and Cedel Bank provide to their participants, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
Euroclear and Cedel Bank interface with domestic securities markets. Euroclear
and Cedel Bank participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies and certain other organizations and include certain of the
Underwriters. Indirect access to Euroclear or Cedel Bank is also available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Euroclear or Cedel Bank participant
either directly or indirectly.
Initial Settlement
Investors electing to hold their Notes through DTC will follow the settlement
practices applicable to U.S. corporate debt obligations. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their Notes through Cedel Bank or Euroclear accounts
will follow the settlement procedures applicable to conventional eurobonds in
registered form. Notes will be credited to the holders of securities custody
accounts at Cedel Bank and Euroclear on the business day following the
settlement date against payment for value on the settlement date.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
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Trading between Cedel Bank and/or Euroclear participants. Secondary market
trading between Cedel Bank participants and/or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedel Bank or Euroclear purchaser. When Notes
are to be transferred from the account of a DTC participant to the account of a
Cedel Bank participant or a Euroclear participant, the purchaser will send
instructions to Cedel Bank or Euroclear through a participant at least one
business day prior to settlement. Cedel Bank or Euroclear will instruct Chase or
Morgan, respectively, as the case may be, to receive the Notes against payment.
Payment will include interest accrued on the Notes from and including the last
payment date to and excluding the settlement date on the basis of a calendar
year consisting of twelve 30-day calendar months. For transactions settling on
the 31st day of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by
Chase or Morgan to the DTC participant's account against delivery of the Notes.
After settlement has been completed, the Notes will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Bank participant's or Euroclear participant's
account. The Notes credit will appear the next day (European time) and the cash
debit will be back-valued to, and the interest on the Notes will accrue from,
the value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedel Bank or Euroclear cash debit will be valued instead as
of the actual settlement date.
Cedel Bank participants and Euroclear participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel Bank or Euroclear. Under this
approach, they may take on credit exposure to Cedel Bank or Euroclear until the
Notes are credited to their accounts one day later.
As an alternative, if Cedel Bank or Euroclear has extended a line of credit to
them, participants can elect not to preposition funds and allow that credit line
to be drawn upon to finance settlement. Under this procedure, Cedel Bank
participants or Euroclear participants purchasing Notes would incur overdraft
charges for one day, assuming they cleared the overdraft when the Notes were
credited to their accounts. However, interest on the Notes would accrue from the
value date. Therefore, in many cases the investment income on the Notes earned
during that one-day period may substantially reduce or offset the amount of such
overdraft charges, although this result will depend on each participant's
particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Notes to Chase or
Morgan for the benefit of Cedel Bank participants or Euroclear participants. The
sale proceeds will be available to the DTC seller on the settlement date. Thus,
to the DTC participant a cross-market transaction will settle no differently
than a trade between two DTC participants.
Trading between Cedel Bank or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Bank or Euroclear participants may employ
their customary procedures for transactions in which Notes are to be transferred
by the respective clearing system, through Chase or Morgan, to a DTC
participant. The seller will send instructions to Cedel Bank or Euroclear
through a participant at least one business day prior to settlement. In these
cases Cedel Bank or Euroclear will instruct Chase or Morgan, as appropriate, to
credit the Notes to the DTC participant's account against payment. Payment will
include interest accrued on the Notes from and including the last payment date
to and excluding the settlement date on the basis of a calendar year consisting
of twelve 30-day calendar months. For transactions settling on the 31st day of
the month, payment will include interest accrued to and excluding the first day
of the following month. The payment will then be reflected in the account of the
Cedel Bank participant or Euroclear participant the following day, and receipt
of the cash proceeds in the Cedel Bank or Euroclear participant's account would
be back-valued to the value date (which would be the preceding day, when
settlement occurred in New York). Should the Cedel Bank or Euroclear participant
have a line of credit with its respective clearing system and elect to be in
debit in anticipation of receipt of the sale proceeds in its account, the
back-valuation may substantially reduce or offset any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended value
date (i.e., the trade fails), receipt of the cash proceeds in the Cedel Bank or
Euroclear participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Cedel Bank or Euroclear and that purchase Notes
from DTC participants for credit to Cedel Bank participants or Euroclear
participants should note that these trades would automatically fail on the sale
31
<PAGE> 33
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(1) borrowing through Cedel Bank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel Bank or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
(2) borrowing the Notes in the United States from a DTC participant no
later than one day prior to settlement which would give the Notes
sufficient time to be reflected in their Cedel Bank or Euroclear account in
order to settle the sale side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade
so that the value for the purchase from the DTC participant is at least one
day prior to the value date for the sale to the Cedel Bank participant or
Euroclear participant.
32
<PAGE> 34
TAXATION
JAPANESE TAXATION
The following summary of Japanese taxes is based on the advice of Tsunematsu
Yanase & Sekine with respect to Japanese tax laws in force on the date of this
Prospectus. It is not intended to constitute a complete analysis of the
consequences under Japanese law of the purchase, ownership and sale of the Notes
by non-residents of Japan or non-Japanese corporations. The payment of interest
in respect of the Notes to a non-resident of Japan or a non-Japanese corporation
will not be subject to any Japanese income or corporation tax payable by way of
withholding. Furthermore, such payment will not be subject to any other Japanese
income or corporation tax, unless such non-resident or non-Japanese corporation
has a permanent establishment in Japan and the payment is attributable to the
business of such non-resident or non-Japanese corporation carried on in Japan
through such permanent establishment.
Gains derived from the sale outside Japan of Notes by a non-resident of Japan or
a non-Japanese corporation are in general not subject to Japanese income or
corporation taxes. Gains derived from the sale in Japan of Notes by a non-
resident of Japan or a non-Japanese corporation not having a permanent
establishment in Japan are in general not subject to Japanese income or
corporation taxes. Japanese inheritance and gift taxes at progressive rates may
be payable by an individual, wherever resident, who has acquired Notes as
legatee, heir or donee. No stamp, issue, registration or similar taxes or duties
will, under present Japanese law, be payable by Holders in connection with the
issue of the Notes.
If the Notes are sold or transferred within Japan, a securities transaction tax
will be imposed on the seller or transferor. If Notes are sold or transferred in
a transaction conducted and settled wholly outside of Japan, a securities
transaction tax will generally not be imposed.
Certain amendments to the Japanese Special Taxation Measures Law relating to
taxation on interest payments on debt securities issued by Japanese corporations
outside Japan will become effective on April 1, 1998. However, such amendments
will not be applicable to the Notes.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of the ownership of Notes is based upon the opinion of Sullivan &
Cromwell, counsel to the Company. It deals only with Notes held as capital
assets by investors who purchase the Notes in the offering at the offering
price, and not with special classes of holders, such as dealers in securities or
currencies, traders in securities that elect to mark to market, banks,
tax-exempt organizations, life insurance companies, persons that hold Notes as a
hedge (or hedged against) currency or interest rate risks or that are part of a
straddle or conversion transaction, or persons whose functional currency is not
the U.S. dollar. Investors who purchase the Notes at a price other than the
offering price should consult their tax advisor as to the possible applicability
to them of the amortizable bond premium or market discount rules. This summary
is based on the Internal Revenue Code of 1986, as amended (the "Code"), its
legislative history, existing and proposed regulations thereunder, published
rulings and court decisions, all as currently in effect and all subject to
change at any time, perhaps with retroactive effect.
PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING
THE CONSEQUENCES, IN THEIR PARTICULAR CIRCUMSTANCES, UNDER THE CODE AND THE LAWS
OF ANY OTHER TAXING JURISDICTION, OF THE OWNERSHIP OF NOTES.
United States Holders
Payments of Interest. Interest on a Note will be taxable to a United States
Holder, as defined below, as ordinary income at the time it is received or
accrued, depending on the United States Holder's method of accounting for tax
purposes. A United States Holder is a beneficial owner that is (i) a citizen or
resident of the United States, (ii) a domestic corporation, (iii) an estate the
income of which is subject to United States federal income tax without regard to
its source or (iv) a trust if a United States court is able to exercise primary
supervision over administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trust.
Interest paid by the Company on the Notes constitutes income from sources
outside the United States, but, with certain exceptions, will be "passive" or
"financial services" income, which is treated separately from other types of
income for purposes of computing the foreign tax credit allowable to a United
States Holder.
33
<PAGE> 35
Purchase, Sale, Retirement and Other Disposition of the Notes. A United States
Holder's tax basis in the Note generally will be its cost. Upon the sale,
exchange or retirement of a Note, a United States Holder will generally
recognize capital gain or loss equal to the difference between the amount
realized (not including any amounts attributable to accrued and unpaid interest)
and the Holder's tax basis in the Note. Long-term capital gain of a non-
corporate United States Holder is generally subject to a maximum tax rate of 28%
in respect of property held for more than one year and to a maximum rate of 20%
in respect of property held for more than 18 months.
Backup Withholding and Information Reporting
Payments of Principal and Interest. In general, information reporting
requirements will apply to payments of principal and interest on a Note within
the United States (including payments made by wire transfer from outside the
United States to an account maintained by the holder with a fiscal or paying
agent in the United States) to non-corporate holders, and "backup withholding"
at a rate of 31% will apply to such payments if the holder fails to provide an
accurate taxpayer identification number or is notified by the Internal Revenue
Service that it has failed to report all interest and dividends required to be
shown on its federal income tax returns.
Proceeds from the Sale of a Note. Payment of the proceeds from the sale of a
Note to or through the United States office of a broker may be subject to
information reporting and backup withholding. Payment of the proceeds from the
sale of a Note made to or through a foreign office of a broker generally will
not be subject to information reporting or backup withholding. If, however, the
broker is a United States person, a controlled foreign corporation for United
States tax purposes or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period, information reporting (but not backup withholding) may apply
to such payments.
JAPANESE FOREIGN EXCHANGE CONTROLS
The Foreign Exchange and Foreign Trade Control Law of Japan and the cabinet
orders and ministerial ordinances thereunder (the "Foreign Exchange
Regulations") and the amendments thereto which will be applicable from April 1,
1998 govern certain aspects relating to the issue of the Notes by the Company.
The Company has obtained a designation, dated January 26, 1998, by the Minister
of Finance of Japan declaring that the issue and offering by the Company of any
securities outside Japan will be exempted from prior notification requirements
under the Foreign Exchange Regulations currently in effect. Accordingly, the
Company can issue and offer the Notes outside Japan as contemplated herein.
Under the Foreign Exchange Regulations as currently in effect and the amendments
referred to above, payment of principal of (premium, if any) and interest on the
Notes, and any additional amounts payable pursuant to the terms of the Notes,
may be made without any restriction.
34
<PAGE> 36
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and J.P. Morgan Securities Inc. are acting as
representatives, has severally agreed to purchase, the principal amount of the
Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
- ------------------------------------------------------------------------------------ --------------
<S> <C>
Goldman, Sachs & Co. $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
J.P. Morgan Securities Inc.
--------------
Total $1,500,000,000
==============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the Underwriters
are committed to take and pay for all of the Notes, if any are taken.
The Underwriters propose to offer the Notes in part directly to the public at
the initial public offering price set forth on the cover page of this Prospectus
and in part to certain securities dealers at such prices less a concession of
% of the principal amount of the Notes. The Underwriters may allow, and
such dealers may reallow, a concession not to exceed % of the principal
amount of the Notes to certain brokers and dealers. After the Notes are released
for sale to the public, the offering price and other selling terms may from time
to time be varied by the representatives.
The Notes are a new issue of securities with no established trading market. The
Company has been advised by the representatives of the Underwriters that the
representatives intend to make a market in the Notes but are not obligated to do
so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Notes.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
In connection with the offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Notes; and syndicate short positions involve the sale
by the Underwriters of a greater number of Notes than they are required to
purchase from the Company in the offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the securities sold in the offering for their
account may be reclaimed by the syndicate if such Notes are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Notes, which may
be higher than the price that might otherwise prevail in the open market; and
these activities, if commenced, may be discontinued at any time. These
transactions may be effected on the London Stock Exchange, in the
over-the-counter market or otherwise.
Certain of the Underwriters have from time to time performed various investment
banking services for the Company and its subsidiaries, for which customary
compensation has been received.
The Notes are being offered for sale in those jurisdictions in the United
States, Europe and Asia other than Japan where it is legal to make such offers.
The Notes have not been and will not be registered under the Securities and
Exchange Law of Japan and each Underwriter has represented and agreed that it
has not offered or sold, and it will not offer or sell, directly or indirectly,
any of the Notes in or to or for the benefit of any resident of Japan or to any
persons for reoffering or resale, directly or indirectly, in Japan or to or for
the benefit of any resident of Japan except pursuant to an exemption from the
registration requirements of the Securities and Exchange Law available
thereunder and in compliance with the other relevant laws and regulations of
Japan.
Each Underwriter has represented and agreed that (1) it has not offered or sold
and will not offer or sell any Notes to persons in the United Kingdom prior to
admission of the Notes to listing in accordance with Part IV of the FSA
35
<PAGE> 37
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 or the FSA, (2) it has complied
and will comply with all applicable provisions of the FSA with respect to
anything done by it in relation to the Notes in, from or otherwise involving the
United Kingdom and (3) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection with the
issue of the Notes, other than any document which consists of or any part of
listing particulars, supplementary listing particulars or any other document
required or permitted to be published by the listing rules under Part IV of the
FSA, to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as
amended) or is a person to whom such document may otherwise lawfully be issued
or passed on.
Neither the Company nor any of the Underwriters represents that the Notes may at
any time be lawfully sold in compliance with any applicable registration or
other requirements in any jurisdiction, or pursuant to an exemption available
thereunder, or assumes any responsibility for facilitating such sales.
RATINGS
The Notes are expected to receive a rating of "Aa3" from Moody's Investors
Service Inc. and "A" from Standard & Poor's Corporation. The ratings reflect the
timely payment of principal of and interest on the Notes. The ratings do not
address the payment of Additional Amounts. The credit ratings accorded the Notes
are not a recommendation to purchase, hold or sell the Notes inasmuch as such
ratings do not comment as to market price or suitability for a particular
investor. There can be no assurance that the ratings will remain in effect for
any given period or that the ratings will not be revised by the rating agencies
in the future if in their judgment circumstances so warrant.
EXPERTS
The financial statements and financial statement schedule of Sony as of March
31, 1997 and 1996 and for each of the three years in the three year period ended
March 31, 1997, included in the 1997 20-F and incorporated by reference in this
Prospectus, have been audited by Price Waterhouse, independent accountants, as
indicated in their report with respect thereto, and have been so incorporated in
reliance upon such report, given on the authority of said firm as experts in
auditing and accounting.
VALIDITY OF NOTES
The validity of the Notes will be passed upon by Tsunematsu Yanase & Sekine,
Japanese counsel for the Company, and Sullivan & Cromwell, United States counsel
for the Company, and by Davis Polk & Wardwell, United States counsel for the
Underwriters. Tsunematsu Yanase & Sekine will rely on Sullivan & Cromwell with
respect to all matters of New York law, and Sullivan & Cromwell and Davis Polk &
Wardwell will rely on Tsunematsu Yanase & Sekine with respect to all matters of
Japanese law. All statements in the Prospectus with respect to or involving
matters of Japanese law have been passed upon by Tsunematsu Yanase & Sekine, and
are stated herein on their authority. Statements as to United States taxation in
this Prospectus under the caption "United States Taxation" have been passed upon
by Sullivan & Cromwell and are stated herein on their authority.
36
<PAGE> 38
GENERAL INFORMATION
1. The listing of the Notes on the London Stock Exchange will be in U.S.
dollars expressed as a percentage of their principal amount. Transactions
will normally be effected for settlement in U.S. dollars and for delivery on
the fifth working day after the date of the transaction. It is expected that
listing on the London Stock Exchange will be granted for the Notes on
, 1998, subject only to the issue of the Global Note. Prior to
the official listing, however, dealings in the Notes will be permitted by
the London Stock Exchange in accordance with its rules.
2. The Notes have been accepted for clearance through Euroclear and Cedel Bank.
The common code for the Notes is .
3. The Company has obtained all necessary consents, approvals and
authorizations in connection with the issue and performance of the Notes.
The issue of the Notes was authorized by a resolution of the Board of
Directors of the Company passed on January 29, 1998.
4. Except as disclosed herein, there has been no significant change in the
financial or trading position, nor any material adverse change in the
financial position or prospects, of the Company or the Company and its
subsidiaries, taken as a whole, since March 31, 1997, being the date of the
latest published audited consolidated financial statements of Sony.
5. Copies of the latest annual report containing audited annual consolidated
financial statements in English and of the unaudited quarterly consolidated
financial statements in English of Sony may be obtained, and copy of the
Indenture will be available for inspection, at the specified office of the
Trustee during normal business hours, so long as any of the Notes is
outstanding.
6. Neither the Company nor any of its subsidiaries is involved in any legal or
arbitration proceedings which may have or have had during the 12 months
preceding the date of this document, a significant effect on the financial
position of the Company or the Company and its subsidiaries, taken as a
whole, nor, as far as the Company is aware, are any such proceedings pending
or threatened.
7. The reports by Price Waterhouse, Certified Public Accountants (who have been
independent auditors of the Company for the three financial years ended
March 31, 1997) were not qualified.
8. Copies of the following documents may be inspected on any weekday (Saturdays
and public holidays excepted) during usual business hours at the offices of
The Chase Manhattan Bank, Trinity Tower, 9 Thomas More Street, London E1
9YT, for a period of 14 days from the date of this Prospectus: (a) the
Articles of Incorporation and the Regulations of the Board of Directors of
the Company (together with English transactions); (b) the audited
consolidated financial statements of Sony including the auditor's report
appertaining thereto for the two financial years ended March 31, 1997; (c)
the Underwriting Agreement; (d) the Indenture (including the form of the
Global Note); and (e) the legal opinion of Tsunematsu Yanase & Sekine.
9. Tsunematsu Yanase & Sekine, Sullivan & Cromwell and Price Waterhouse have
given and have not withdrawn their consent to the inclusion herein of
statements and opinions attributed to them in the form and context in which
they appear and have authorized the contents of that part of the Listing
Particulars for the purpose of Section 152(1) of the FSA.
10. The Company may at any time purchase Notes in the open market or otherwise
at any price. Any purchase by tender shall be made available to all Holders
alike.
11. Under New York law claims arising from non-payment of principal of and
interest on the Notes will be barred after six years from the relevant due
date for payment in respect thereof, which, in respect of the principal, is
, 2003.
12. The paying agent in the United Kingdom is The Chase Manhattan Bank, Trinity
Tower, 9 Thomas More Street, London E1 9YT.
13. As long as the Notes are listed on the London Stock Exchange, the Company
will maintain a paying agent having a specified office in London.
37
<PAGE> 39
REGISTERED HEAD OFFICE OF THE COMPANY
7-35, Kitashinagawa 6-chome
Shinagawa-ku, Tokyo 141-0001
Japan
INDEPENDENT ACCOUNTANTS TO THE COMPANY
Price Waterhouse
Yebisu Garden Place Tower
20-3, Ebisu 4-chome
Shibuya-ku, Tokyo 150-6013
Japan
TRUSTEE FOR THE HOLDERS
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
PRINCIPAL PAYING AGENT
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
LEGAL ADVISORS
To the Company
<TABLE>
<S> <C>
as to Japanese law: as to U.S. law:
Tsunematsu Yanase & Sekine Sullivan & Cromwell
Sumitomo Sarugakucho Building Tokio Kaijo Building Shinkan
8-8, Sarugakucho 2-chome 2-1, Marunouchi 1-chome
Chiyoda-ku, Tokyo 101-0064 Chiyoda-ku, Tokyo 100-0005
Japan Japan
</TABLE>
To the Underwriters
Davis Polk & Wardwell
Akasaka Twin Tower East
17-22, Akasaka 2-chome
Minato-ku, Tokyo 107-0052
Japan
LISTING AGENT
J.P. Morgan Securities Ltd.
60 Victoria Embankment
London EC4Y OJP
<PAGE> 40
SONY LOGO
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses, other than underwriting discounts and
commissions, expected to be incurred by the Company in connection with the
issuance and distribution of the securities registered under this Registration
Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................. $ 295,000
Accountants' fees and expenses.................................................. 45,000
Legal fees and expenses......................................................... 350,000
Printing and engraving expenses................................................. 80,000
Trustee's fees and expenses..................................................... 25,000
Rating agency fees.............................................................. 100,000
London Stock Exchange listing fee............................................... 15,000
Miscellaneous................................................................... 225,000
------------
Total................................................................. $1,135,000
============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Articles 254 and 280 of the Commercial Code of Japan make the provisions of
Section 10, Chapter 2, Book III of the Civil Code applicable to the relationship
between the Company and its directors and statutory auditors, respectively.
Section 10, among other things, provides in effect that:
(1) If a director or a statutory auditor of a company has defrayed any
expenses which are considered necessary for the management of the affairs
of such company entrusted to him, he may demand reimbursement therefor from
the company;
(2) If a director or a statutory auditor has assumed an obligation
necessary for the management of the affairs entrusted to him, he may
require the company to perform it in his place or, if it is not due, to
furnish adequate security; and
(3) If a director or statutory auditor, without any fault on his part,
sustains damage through the management of the affairs entrusted to him, he
may demand compensation therefor from the company.
ITEM 16. EXHIBITS.
See Exhibit Index on Page II-5.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) 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 a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
II-1
<PAGE> 42
(3) 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 (a)(1) and (a)(2) 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 registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(b) That, for the purpose of determining any liability under the Securities Act
of 1933, 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.
(c) 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.
(d) For purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to 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.
(e) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in Item 15, 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
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(f) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(g) For the purpose of determining any liability under the Securities Act of
1933, 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.
II-2
<PAGE> 43
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 F-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Tokyo, Japan, on February 20, 1998.
SONY CORPORATION
By: /s/ TAMOTSU IBA
--------------------------------------
Tamotsu Iba
Executive Deputy President,
Representative Director and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
* Chairman, Representative Director and
- ------------------------------------------ Chief Executive Officer
Norio Ohga (Principal Executive Officer)
* Vice Chairman and Representative
- ------------------------------------------ Director
Tsunao Hashimoto
President, Representative Director and
- ------------------------------------------ Chief Operating Officer
Nobuyuki Idei
* Executive Deputy President and
- ------------------------------------------ Representative Director
Minoru Morio
* Executive Deputy President and
- ------------------------------------------ Representative Director
Kozo Ohsone
* Executive Deputy President and
- ------------------------------------------ Representative Director
Yoshiyuki Kaneda
* Executive Deputy President,
- ------------------------------------------ Representative Director and Chief
Tamotsu Iba Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
Director
- ------------------------------------------
Peter G. Peterson
* Director
- ------------------------------------------
Kenichi Suematsu
</TABLE>
II-3
<PAGE> 44
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
* Director
- ------------------------------------------
Hideo Ishihara
* Authorized U.S. Representative
- ------------------------------------------
J. Michael Suffredini
* By: /s/ TAMOTSU IBA February 20, 1998
- ------------------------------------------
Tamotsu Iba
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of the Company, as amended, and English translation thereof
(incorporated by reference to Exhibit 1 to the Company's Annual Report on Form 20-F
for the fiscal year ended March 31, 1997)
3.2 Regulations of the Board of Directors of the Company, as amended, and English
translation thereof (incorporated by reference to Exhibit 2 to the Company's Annual
Report on Form 20-F for the fiscal year ended March 31, 1997)
4.1 Form of Indenture between the Company and The Chase Manhattan Bank, N.A., as Trustee
4.2 Form of Global Note (included in Exhibit 4.1)
5.1 Opinion of Tsunematsu Yanase & Sekine, as to the validity of the Notes*
5.2 Opinion of Sullivan & Cromwell, as to the validity of the Notes*
23.1 Consent of Price Waterhouse*
23.2 Consent of Tsunematsu Yanase & Sekine (included in Exhibit 5.1)
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5.2)
24.1 Powers of Attorney (included in Signature Page of Form F-3)
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of
1939 of The Chase Manhattan Bank, as Trustee
</TABLE>
- ---------------
* Previously filed
II-5
<PAGE> 1
Exhibit 1.1
UNDERWRITING AGREEMENT
$1,500,000,000
SONY CORPORATION
% Notes due ___, 2003
Underwriting Agreement
________ __, 1998
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
J.P. Morgan Securities Inc.
As Representatives of the
Several Underwriters Listed
in Schedule I
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
Sony Corporation, a Japanese corporation (the "Company"), proposes to
issue and sell to the several Underwriters listed in Schedule I hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), $1,500,000,000 principal amount of its _____% Notes due ___,
2003 (the "Securities"). The Securities will be issued pursuant to the
provisions of an Indenture to be dated as of _________ __, 1998 between the
Company and The Chase Manhattan Bank, as Trustee (the "Trustee").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form F-3 (File No. 333-45141), including a prospectus, relating to
the Securities. The registration statement as amended at the time when it became
effective, or, if a post-effective amendment is filed with respect thereto, as
amended by such post-effective amendment at the time of its effectiveness,
including in each case information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act, is referred to in this Agreement as the "Registration
Statement", and the prospectus in the form first used to confirm sales of
Securities is referred to in this Agreement as the "Prospectus". If the Company
has filed an abbreviated registration statement pursuant to
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Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement. Any reference in this Agreement
to the Registration Statement, any preliminary prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form F-3 under the Securities Act, as of the
effective date of the Registration Statement or the date of such preliminary
prospectus or the Prospectus, as the case may be, and any reference to "amend",
"amendment" or "supplement" with respect to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") that are deemed to be incorporated by
reference therein.
Each Underwriter severally represents and agrees that it has not
offered or sold, and it will not offer or sell, directly or indirectly any of
the Securities in or to or for the benefit of any resident of Japan or to any
persons for reoffering or resale, directly or indirectly, in Japan or to or for
the benefit of any resident of Japan except pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of Japan available
thereunder and in compliance with the other relevant laws and regulations of
Japan.
Each Underwriter severally represents and agrees that (1) it has not
offered or sold and will not offer or sell any Securities in the United Kingdom
prior to admission of the Securities to listing in accordance with Part IV of
the Financial Services Act 1986 (the "Act") except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the Act, (2) it has complied and will
comply with all applicable provisions of the Act with respect to anything done
by it in relation to the Securities in, from or otherwise involving the United
Kingdom and (3) it has only issued or passed on and will issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Securities, other than any document which consists of or any part of listing
particulars, supplementary listing particulars or any other document required or
permitted to be published by the listing rules under Part IV of the Act, to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a
person to whom such document may otherwise lawfully be issued or passed on.
Each Underwriter severally agrees that it will not offer, sell or
deliver, directly or indirectly, any Securities or distribute the Prospectus or
any other offering material relating to the Securities, in or from any
jurisdiction except under circumstances that will result in compliance with
applicable laws and regulations thereof.
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The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Securities to the several
Underwriters as hereinafter provided, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective principal amount of Securities set forth
opposite such Underwriter's name in Schedule I hereto at a price equal to
______% of their principal amount plus accrued interest, if any, from
______________, 1998 to the date of payment and delivery.
2. The Company understands that the Underwriters intend (i) to make a
public offering of their respective portions of the Securities as soon after the
parties hereto have executed and delivered this Agreement, as in the judgment of
the Representatives is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Prospectus.
3. Payment for the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives at [10:00 AM New York City Time] on ________ __, 1998, or at
such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing. The time and date of such payment is referred to herein as the
"Closing Date". As used herein, the term "Business Day" means any day other than
a day on which banks are permitted or required to be closed in New York City.
Payment for the Securities shall be made against delivery to the
nominee of The Depository Trust Company for the respective accounts of the
several Underwriters of the Securities of one or more global notes
(collectively, the "Global Note") representing the Securities, with any transfer
taxes payable in connection with the transfer to the Underwriters of the
Securities duly paid by the Company. The Global Note will be made available for
inspection by the Representatives at the office of the Trustee, 450 W. 33rd St.,
15th Floor, New York, NY 10001-2697, not later than 1:00 P.M., New York City
time, on the Business Day prior to the Closing Date.
As compensation to the Underwriters for their commitments hereunder,
the Company will pay, or cause to be paid, to J.P. Morgan Securities Inc., for
the accounts of the several Underwriters, an amount equal to % of the principal
amount of the Securities to be delivered by the Company hereunder on the Closing
Date. On ________ __, 1998, or on such other date, no later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing, the Company will pay or cause to be paid, by wire transfer, in
immediately available funds, such commission to the account specified by J.P.
Morgan Securities Inc.
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4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the
use of any preliminary prospectus has been issued by
the Commission, and each preliminary prospectus filed
as part of the Registration Statement as originally
filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with
the Securities Act, and did not contain an untrue
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 the
light of the circumstances under which they were
made, not misleading; provided that this
representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information relating to any
Underwriter furnished to the Company in writing by
such Underwriter through the Representatives
expressly for use therein;
(b) the Registration Statement has been
declared effective by the Commission; no stop order
suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of
the Company, threatened by the Commission; and the
Registration Statement and the Prospectus (as amended
or supplemented if the Company shall have furnished
any amendments or supplements thereto) comply, or
will comply, as the case may be, in all material
respects with the Securities Act and the Trust
Indenture Act of 1939, as amended, and the rules and
regulations of the Commission thereunder
(collectively, the "Trust Indenture Act") and do not
and will not, as of the applicable effective date as
to the Registration Statement and any amendment
thereto and as of the date of the Prospectus and any
amendment or supplement thereto, 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 not
misleading, and the Prospectus, as amended or
supplemented, if applicable, at the Closing Date will
not contain any untrue statement of a material fact
or omit to state a material fact necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading; except that the foregoing representations
and warranties shall not apply to (i) that part of
the Registration Statement which constitutes the
Statement of Eligibility and Qualification (Form T-1)
of the Trustee under the Trust Indenture Act, and
(ii) statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and
in conformity with information relating to any
Underwriter furnished to the Company in writing by
such Underwriter through the Representatives
expressly for use therein;
(c) the documents incorporated by reference
in the Prospectus, when they
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were filed with the Commission, conformed in all
material respects to the requirements of the Exchange
Act and none of such documents contained an untrue
statement of a material fact or omitted to state a
material fact necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading; and any further
documents so filed and incorporated by reference in
the Prospectus, when such documents are filed with
the Commission, will conform in all material
respects to the requirements of the Exchange Act, and
will not contain an untrue statement of a material
fact or omit to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they are made, not
misleading;
(d) the financial statements, and the
related notes thereto, incorporated by reference in
the Registration Statement and the Prospectus present
fairly the consolidated financial position of the
Company and its consolidated subsidiaries as of the
dates indicated and the results of their operations
and the changes in their consolidated cash flows for
the periods specified; and said financial statements
have been prepared in conformity with generally
accepted accounting principles applied on a
consistent basis, and the supporting schedules
incorporated by reference in the Registration
Statement present fairly the information required to
be stated therein;
(e) since the respective dates as of which
information is given in the Registration Statement
and the Prospectus, there has not been any material
change in the capital stock or any material increase
in long-term debt of the Company or any of its
subsidiaries, or any material adverse change, or any
development involving a prospective material adverse
change, in or affecting the general affairs,
business, prospects, management, financial position,
stockholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the
Prospectus; and except as set forth or contemplated
in the Prospectus neither the Company nor any of its
subsidiaries has entered into any transaction or
agreement (whether or not in the ordinary course of
business) material to the Company and its
subsidiaries taken as a whole;
(f) the Company has been duly incorporated
and is validly existing as a Kabushiki Kaisha under
the laws of Japan, with power and authority
(corporate and other) to own its properties and
conduct its business as described in the Prospectus,
and has been duly qualified as a foreign corporation
for the transaction of business and is in good
standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any
business, so as to require such qualification, other
than where the failure to be so qualified or in
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good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as
a whole;
(g) each of the Company's significant
subsidiaries (as such term is defined under Rule 102
of Regulation S-X of the Securities Act) has been
duly incorporated and is validly existing as a
corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate
and other) to own its properties and conduct its
business as described in the Prospectus, and has been
duly qualified as a foreign corporation for the
transaction of business and is in good standing under
the laws of each jurisdiction in which it owns or
leases properties, or conducts any business, so as to
require such qualification, other than where the
failure to be so qualified or in good standing would
not have a material adverse effect on the Company and
its subsidiaries taken as a whole; and all the
outstanding shares of capital stock of each
significant subsidiary (as such term is defined under
Rule 102 of Regulation S-X of the Securities Act) of
the Company have been duly authorized and validly
issued, are fully-paid and non-assessable, and
(except in the case of non-Japanese subsidiaries, for
directors' qualifying shares) are owned by the
Company, directly or indirectly, free and clear of
all liens, encumbrances, security interests and
claims;
(h) this Agreement has been duly authorized,
executed and delivered by the Company;
(i) the Securities have been duly
authorized, and, when issued and delivered pursuant
to this Agreement, will have been duly executed,
authenticated, issued and delivered, will constitute
valid and binding obligations of the Company
enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws of
general applicability relating to or affecting
creditors' rights and to general equity principles,
and will be entitled to the benefits provided by the
Indenture; the Indenture has been duly authorized and
has been duly qualified under the Trust Indenture Act
and, when executed and delivered by the Company and
the Trustee, will constitute a valid and binding
agreement of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and
other similar laws of general applicability relating
to or affecting creditors' rights and to general
equity principles; and the Securities and the
Indenture will conform to the descriptions thereof in
the Prospectus;
(j) neither the Company nor any of its
subsidiaries is, or with the giving of notice or
lapse of time or both would be, in violation of or in
default under, its
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Articles of Incorporation or Regulations of the Board
of Directors or any indenture, mortgage, deed of
trust, loan agreement or other agreement or
instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them
or any of their respective properties is bound,
except for violations and defaults which individually
and in the aggregate are not material to the Company
and its subsidiaries taken as a whole or to the
holders of the Securities; the issue and sale of the
Securities as contemplated herein and the performance
by the Company of all of its obligations under the
Securities, the Indenture and this Agreement and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its
subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its
subsidiaries is subject, nor will any such action
result in any violation of the provisions of the
Articles of Incorporation or the Regulations of the
Board of Directors of the Company or any applicable
law or statute or any order, rule or regulation of
any court or governmental agency or body having
jurisdiction over the Company, its subsidiaries or
any of their respective properties; and no consent,
approval, authorization, order, license, registration
or qualification of or with any such court or
governmental agency or body is required for the issue
and sale of the Securities or the consummation by the
Company of the transactions contemplated by this
Agreement or the Indenture, except (i) for such
consents, approvals, authorizations, registrations or
qualifications as have been obtained under Japanese
law, (ii) for such consents, approvals,
authorizations, orders, licenses, registrations or
qualifications as have been obtained under the
Securities Act and the Trust Indenture Act and (iii)
such as have been obtained and are in full force and
effect under the Financial Services Act 1986.
(k) other than as set forth or contemplated
in the Prospectus, there are no legal or governmental
investigations, actions, suits or proceedings pending
or, to the knowledge of the Company, threatened
against or affecting the Company or any of its
subsidiaries or any of their respective properties or
to which the Company or any of its subsidiaries is or
may be a party or to which any property of the
Company or any of its subsidiaries is or may be the
subject which, if determined adversely to the Company
or any of its subsidiaries, could individually or in
the aggregate have, or reasonably be expected to
have, a material adverse effect on the general
affairs, business, prospects, management, financial
position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken
as a whole, and, to the best of the Company's
knowledge, no such proceedings are threatened or
contemplated by governmental
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authorities or threatened by others; and there are no
statutes, regulations, contracts or other documents
that are required to be filed as an exhibit to the
Registration Statement or required to be described in
the Registration Statement or the Prospectus which
are not filed or described as required;
(l) Price Waterhouse, who have certified certain
financial statements of the Company and its subsidiaries
incorporated by reference in the Registration Statement and
the Prospectus, are independent public accountants as required
by the Securities Act;
(m) the Company and its subsidiaries have good and
marketable title to all material items of real, personal and
intellectual property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as
are described or referred to in the Prospectus or such as do
not materially affect the value of such property and do not
materially interfere with the use made or proposed to be made
of such property by the Company and its subsidiaries; and any
real property and buildings held under lease by the Company
and its subsidiaries are held by them under valid, existing
and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made or
proposed to be made of such property and buildings by the
Company or its subsidiaries;
(n) no relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries on the
one hand, and the directors, officers, stockholders, customers
or suppliers of the Company or any of its subsidiaries on the
other hand, which is required by the Securities Act to be
described in the Registration Statement and the Prospectus
which is not so described;
(o) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment
Company Act");
(p) the Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida) relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba;
(q) each of the Company and its subsidiaries owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and
has made all declarations and filings with, all federal,
state, local and other governmental authorities (including
foreign regulatory agencies), all self-regulatory
organizations and all courts and other tribunals, domestic or
foreign, necessary to own or lease, as the case may be, and to
operate its properties and to carry on its business as
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conducted as of the date hereof, other than where the failure
to obtain such license, permit, certificate, consent, order,
approval or other authorization would not have a material
adverse effect on the Company and its subsidiaries taken as a
whole and neither the Company nor any such subsidiary has
received any actual notice of any proceeding relating to
revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization,
except as described in the Registration Statement and the
Prospectus; and each of the Company and its subsidiaries is in
compliance in all material respects with all laws and
regulations relating to the conduct of its business as
conducted as of the date hereof;
(r) the Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any
such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries,
taken as a whole; and
(s) under current Japanese laws and regulations, no
stock exchange, stamp or other issuance or transfer taxes or
duties and no capital gains, income, withholding or other
taxes are payable by or on behalf of the Underwriters to Japan
or to any political subdivision or taxing authority thereof or
therein in connection with, and the Underwriters will not be
deemed to be doing business in Japan solely by virtue of, (i)
the sale of the Securities as contemplated herein or (ii) the
execution and performance of this Agreement.
5. The Company covenants and agrees with each of the
several Underwriters as follows:
(a) if required, to file the final
Prospectus with the Commission within the time
periods specified by Rule 424(b) and Rule 430A under
the Securities Act; and to file promptly all reports
required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), or 15(d)
of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a
prospectus is required in connection with the
offering or sale of the Securities and to furnish
copies of the Prospectus to the Underwriters in New
York City prior to 10:00 a.m., New York City time, on
the Business Day next succeeding the date of this
Agreement in such quantities as the Representatives
may reasonably request;
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(b) to deliver, at the expense of the Company, to the
Representatives, four signed copies of the Registration
Statement (as originally filed) and each amendment thereto, in
each case including exhibits and documents incorporated by
reference therein, and to each other Underwriter a conformed
copy of the Registration Statement (as originally filed) and
each amendment thereto, in each case without exhibits but
including the documents incorporated by reference therein and,
during the period mentioned in paragraph (e) below, to each of
the Underwriters as many copies of the Prospectus (including
all amendments and supplements thereto) as the Representatives
may reasonably request;
(c) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or
after the time the Registration Statement becomes effective,
to furnish to the Representatives a copy of the proposed
amendment or supplement for review and not to file any such
proposed amendment or supplement to which the Representatives
reasonably object;
(d) to advise the Representatives promptly,
and to confirm such advice in writing, (i) when any
amendment to the Registration Statement has been
filed or becomes effective, (ii) when any supplement
to the Prospectus or any amendment to the Prospectus
has been filed and to furnish the Representatives
with copies thereof, (iii) of any request by the
Commission for any amendment to the Registration
Statement or any amendment or supplement to the
Prospectus or for any additional information, (iv) of
the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of any order preventing or suspending
the use of any preliminary prospectus or the
Prospectus or the initiation or threatening of any
proceeding for that purpose, (v) of the occurrence of
any event, within the period referenced in paragraph
(e) below, as a result of which the Prospectus as
then amended or supplemented would include an untrue
statement of a material fact or omit to state any
material fact necessary in order to make the
statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not
misleading, and (vi) of the receipt by the Company of
any notification with respect to any suspension of
the qualification of the Securities for offer and
sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
to use its best efforts to prevent the issuance of
any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or
the Prospectus, or of any order suspending any such
qualification of the Securities, or notification of
any such order thereof and, if issued, to obtain as
soon as possible the withdrawal thereof;
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(e) if, during such period of time after the
first date of the public offering of the Securities
as in the opinion of counsel for the Underwriters a
prospectus relating to the Securities is required by
law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur as a
result of which it is necessary to amend or
supplement the Prospectus in order to make the
statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law,
forthwith to prepare and furnish, at the expense of
the Company, to the Representatives for transmittal
to the Underwriters and to the dealers (whose names
and addresses the Representatives will furnish to the
Company) to which Securities may have been sold by
the Representatives on behalf of the Underwriters and
to any other dealers upon request, such amendments
or supplements to the Prospectus as may be necessary
so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus
will comply with law;
(f) to make generally available to its
security holders and to the Representatives as soon
as practicable an earnings statement which will
satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least
twelve months beginning with the first fiscal quarter
of the Company occurring after the "effective date"
(as defined in Rule 158) of the Registration
Statement;
(g) so long as the Securities are
outstanding, to furnish to the Representatives copies
of all reports or other communications (financial or
other) furnished to holders of the Securities, and
copies of any reports and financial statements
furnished to or filed with the Commission or any
national securities exchange;
(h) during the period beginning on the date
hereof and continuing to and including the Business
Day immediately following the Closing Date, not to
offer, sell, contract to sell, or otherwise dispose
of any debt securities of or guaranteed by the
Company which are substantially similar to the
Securities;
(i) to use the net proceeds received by the
Company from the sale of the Securities pursuant to
this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(j) to use its best efforts to list, subject
to notice of issuance, the Securities on the London
Stock Exchange Limited (the "Exchange") and to supply
to the
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Representatives for delivery to the Exchange copies
of the Prospectus and other such documents,
information and undertakings as may be required for
the purpose of obtaining such listing; and
(k) whether or not the transactions
contemplated in this Agreement are consummated or
this Agreement is terminated, to pay or cause to be
paid all costs and expenses incident to the
performance of its obligations hereunder, including
without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of
the Securities, including any fees and expenses of
the Trustee, (ii) incident to the preparation,
printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any
preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii)
in connection with the listing of the Securities on
the Exchange, (iv) in connection with the printing
(including word processing and duplication costs) and
delivery of this Agreement and the Indenture, and the
furnishing to Underwriters and dealers of copies of
the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided,
(v) payable to rating agencies in connection with the
rating of the Securities, (vi) incident to the
preparation of notes evidencing the Securities, (vii)
all roadshow expenses and (viii) all reasonable and
documented other out-of-pocket expenses (including
the fees and disbursements of special U.S. counsel
for the Underwriters) incurred by the Underwriters in
connection with the transactions contemplated hereby.
6. The several obligations of the Underwriters hereunder to
purchase the Securities on the Closing Date are subject to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) if a post-effective amendment to the
Registration Statement is required to be filed under
the Securities Act, such post-effective amendment
shall have become effective not later than 5:00 P.M.,
New York City time, on the date hereof; and no stop
order suspending the effectiveness of the
Registration Statement or any post-effective
amendment shall be in effect, and no proceedings for
such purpose shall be pending before or threatened by
the Commission; the Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) within
the applicable time period prescribed for such filing
by the rules and regulations under the Securities Act
and in accordance with Section 5(a) hereof; and all
requests for additional information on the part of
the Commission shall have been complied with to the
satisfaction of the Representatives;
(b) the representations and warranties of
the Company contained herein
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shall be true and correct on and as of the Closing
Date as if made on and as of the Closing Date and the
Company shall have complied with all agreements and
all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(c) subsequent to the execution and delivery
of this Agreement and prior to the Closing Date,
there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any
downgrading, (ii) any intended or potential
downgrading or (iii) any review or possible change
that does not indicate an improvement, in the rating
accorded any securities of or guaranteed by the
Company by any "nationally recognized statistical
rating organization", as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act;
(d) since the respective dates as of which
information is given in the Prospectus there shall
not have been any material change in the capital
stock or any material increase in the long-term debt
of the Company or any of its subsidiaries or any
material adverse change, or any development involving
a prospective material adverse change, in or
affecting the general affairs, business, prospects,
management, financial position, stockholders' equity
or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set
forth or contemplated in the Prospectus, the effect
of which in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on
the Closing Date on the terms and in the manner
contemplated in the Prospectus; and neither the
Company nor any of its subsidiaries shall have
sustained since the date of the latest audited
financial statements included in the Prospectus any
material loss or interference with its business from
fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute
or court or governmental action, order to decree,
otherwise than as set forth or contemplated in the
Prospectus;
(e) the Representatives shall have received
on and as of the Closing Date a certificate of an
executive officer of the Company, with specific
knowledge about the Company's financial matters,
satisfactory to the Representatives to the effect set
forth in subsections (b) through (d) (with respect to
the respective representations, warranties,
agreements and conditions of the Company) of this
Section and to the further effect that there has not
occurred any material adverse change, or any
development involving a prospective material adverse
change, in or affecting the general affairs,
business, prospects, management, financial position,
stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole from
that set forth or contemplated in the Registration
Statement;
13
<PAGE> 14
(f) Each of Standard & Poor's Corporation
("S&P") and Moody's Investors Service, Inc.
("Moody's") shall have rated the Securities not lower
than A (in the case of S&P) and not lower than Aa3
(in the case of Moody's), neither of such ratings
shall have been lowered and neither S&P nor Moody's
shall have publicly announced that it has under
surveillance or review, with negative implications,
its rating of the Securities.
(g) Tsunematsu Yanase & Sekine, Japanese
counsel for the Company, shall have furnished to the
Representatives their written opinion, dated the
Closing Date, in form and substance satisfactory to
the Representatives, to the effect that:
(i) the Company has been duly
incorporated and is validly existing as a
corporation under the laws of Japan, with
power and authority (corporate and other) to
own its properties and conduct its business
as described in the Prospectus;
(ii) The Company has an authorized
capital as set forth in the Prospectus;
(iii) other than as set forth or
contemplated in the Prospectus, to the best
of such counsel's knowledge, there are no
legal or governmental investigations,
actions, suits or proceedings pending or
threatened against or affecting the Company
or any of its subsidiaries or any of their
respective properties or to which the
Company or any of its subsidiaries is or may
be a party or to which any property of the
Company or its subsidiaries is or may be the
subject which, if determined adversely to
the Company or any of its subsidiaries,
could individually or in the aggregate have,
or reasonably be expected to have, a
material adverse effect on the general
affairs, business, prospects, management,
financial position, stockholders' equity or
results of operations of the Company and its
subsidiaries taken as a whole; and such
counsel does not know of any statutes,
regulations, contracts or other documents
required to be described in the Registration
Statement or Prospectus or to be filed as
exhibits to the Registration Statement that
are not described or filed as required;
(iv) The Securities will be direct,
unconditional, unsubordinated and unsecured
obligations of the Company, and will rank
pari passu among themselves and equally with
all other unsecured, unsubordinated
obligations of the Company (other than those
preferred by law);
14
<PAGE> 15
(v) The Securities have been duly
authorized and executed by the Company and,
assuming that the same being authenticated
by the Trustee and delivered as contemplated
by the Indenture and that the Securities are
valid and legally binding obligations of the
Company enforceable in accordance with their
terms under the laws of the State of New
York, are valid and legally binding
obligations of the Company enforceable in
accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws
of general applicability relating to or
affecting creditors' rights;
(vi) The Indenture has been duly
authorized and executed by the Company and,
assuming that the Indenture is a valid and
legally binding obligation of the Company
enforceable in accordance with its terms
under the laws of the State of New York,
constitutes a valid and legally binding
obligation of the Company enforceable in
accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws
of general applicability relating to or
affecting creditors' rights;
(vii) the issue and sale of the
Securities and the performance by the
Company of its obligations under the
Securities, the Indenture and this Agreement
and the consummation of the transactions
herein and therein contemplated will not
conflict with or result in a breach of any
of the terms or provisions of, or constitute
a default under, any indenture, mortgage,
deed of trust, loan agreement or other
agreement or instrument known to such
counsel to which the Company or any of its
subsidiaries is a party or by which the
Company or any of its subsidiaries is bound,
nor will any such action result in any
violation of the provisions of the Articles
of Incorporation or the Regulations of the
Board of Directors of the Company [or any of
its subsidiaries incorporated in Japan] or
any applicable Japanese law or statute or
any order, rule or regulation of any court
or governmental agency or body having
jurisdiction over the Company, [its
subsidiaries incorporated in Japan or any of
their respective properties];
(viii) Except for such consents,
approvals, authorizations, registrations,
qualifications, notifications, reporting or
exemption therefrom as may be required under
the Japanese Foreign Exchange and Foreign
Trade Control Law and the regulations
thereunder as have been obtained or made and
are in full force and effect, no consent,
approval, authorization or order of, or
filing or registration with, or notification
or
15
<PAGE> 16
prior reporting to, any court or
governmental agency or body having
jurisdiction over the Company is required
under Japanese law for the execution,
delivery and performance of this Agreement
and the Indenture by the Company and the
consummation of the transactions
contemplated hereby and thereby including
the issuance, authentication, sale and
delivery of the Securities, and compliance
with the terms thereof;
(ix) The statements with respect to
or involving Japanese law set forth in the
Registration Statement and the Prospectus
are true and correct;
(x) The statements in the Prospectus
under "Enforcement of Civil Liabilities",
and "Japanese Foreign Exchange Controls",
insofar as they describe Japanese statutes,
rules and regulations, constitute a accurate
summary thereof;
(xi) The statements in the
Prospectus under "Japanese Taxation" in so
far as they describe Japanese tax law,
constitute an accurate summary of the
material Japanese tax consequences of the
ownership and disposition of the Securities;
(xii) No stock exchange, stamp or
other issuance or transfer taxes or duties
and no capital gains, income, withholding or
other taxes are payable in Japan with
respect to the authorization, issuance, sale
and delivery of the Securities by the
Company to the Underwriters and (assuming
that the Underwriters have no permanent
establishment within Japan and, further, the
Securities are not located within Japan
immediately prior to the sale or delivery)
the resale and delivery of the Securities by
the Underwriters to holders in the manner
contemplated by this Agreement;
(xiii) The Company has the power to
submit, and has taken all necessary
corporate action to submit, to the
jurisdiction of any Federal or State court
in the City of New York, and to appoint Sony
Corporation of America as the authorized
agent of the Company for the purposes and to
the extent described in Section 14 of this
Agreement and as the authorized agent of the
Company for the purposes and to the extent
described in Section 114 of the Indenture;
and neither the Company nor any of its
property in Japan, is immune from any
attachment in aid of execution of, or from
execution based upon, any judgment of any
such court; the Company has the legal
capacity to sue and be sued in its own name
under the laws of Japan; the irrevocable
submission of the Company to the
non-exclusive jurisdiction of such court in
the City of New York and the
16
<PAGE> 17
waiver by the Company of any objection to
the venue of the proceeding in any such
court in the City of New York are legal,
valid and binding under the laws of Japan
and the courts of Japan will give effect to
such submission and waivers;
(xiv) Under current practice of
Japanese courts, the Underwriters would be
permitted to commence proceedings in
Japanese courts of competent jurisdiction
based on this Agreement and the holders of
the Securities (or the Trustee acting on
their behalf) would be permitted to commence
proceedings in Japanese courts of competent
jurisdiction based on the Indenture and the
Securities, and such Japanese courts would
accept jurisdiction over any such action or
proceeding and would give effect to the
choice of New York law as the governing law
of this Agreement, the Indenture and the
Securities; under present Japanese law,
Japanese courts should recognize and enforce
as a valid judgment any final and conclusive
civil judgment for monetary claims (which
for this purpose are limited to those of a
purely civil nature and do not include
monetary claims of the nature of criminal or
administrative sanction, such as treble
damages or punitive damages, even though
they take the form of civil claims) obtained
in a court of competent jurisdiction located
in the State of New York against the Company
by a holder of any Security, in his capacity
as such holder, in an action based on the
Security and instituted by a service of
process on the Company in the manner set
forth in Section 14 of this Agreement,
provided that (a) both the procedures
leading to, and the substance of, such
judgment is not repugnant to public policy
as applied in Japan, (b) a court located in
the State of New York will recognize and
treat as a valid judgement without retrial
or re-examination of the merits any final
and conclusive civil judgement for monetary
claims obtained in a Japanese court against
an issuer located in the State of New York
by a holder of a security based on such
security (such security being comparable to
the Securities), in his capacity as such
holder and instituted by service of process
(otherwise than by a public notice or a
method comparable thereto) on such issuer,
if such judgment obtained in Japan is not
repugnant to public policy as applied in the
State of New York (which for this purpose
may require an absence of a conflicting
judgment issued by a court located in the
State of New York in the subject matter) and
(c) there is no conflicting Japanese court
judgment in the subject matter. (Since such
counsel is not an expert in the laws of the
State of New York or the United States, such
counsel is unable to determine the precise
scope of and the limitation by the New York
State law and, accordingly, are unable to
express an opinion as to whether or not a
Japanese court would
17
<PAGE> 18
regard a judgment of a court located in the
State of New York as satisfying the
requirements mentioned above); and
(xv) Under Japanese law as in effect
on the date of such opinion, payments of
principal and interest in respect to the
Securities by the Company to non-residents
of Japan or non-Japanese corporations,
without permanent establishments in Japan
will not be subject to Japanese income or
corporation tax by way of withholding or
otherwise, and no stamp, duty or other issue
or documentary taxes are payable in Japan in
connection with the execution or delivery of
this Agreement or the Indenture. In the
event that in the future the Company may
become liable to withhold or deduct any such
taxes or duties with respect to the interest
payments on the Securities, the Company may
perform its obligations pursuant to the
terms and conditions of the Securities to
pay the holders of the Securities any
additional amounts.
In rendering such opinions, such counsel may rely (A)
as to matters involving the application of laws other than the
laws of Japan to the extent such counsel deems proper and to
the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel
reasonably acceptable to the Underwriters' counsel, familiar
with the applicable laws, including (without limitation) the
opinion of Sullivan & Cromwell referred to in subsection (h)
below; (B) as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible officers of the
Company and certificates or other written statements of
officials of jurisdictions having custody of documents
respecting the corporate existence of the Company. The opinion
of such counsel for the Company shall state that the opinion
of any such other counsel upon which they relied is in form
satisfactory to such counsel. The opinion of such counsel
described above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(h) Sullivan & Cromwell, U.S. counsel to the Company,
shall have furnished to the Representatives their written
opinion (as to items (i) through (v) below) and a letter (as
to item (vi) below), dated the Closing Date, in form and
substance satisfactory to the representations to the effect
that:
(i) assuming that this Agreement has been
duly authorized, executed and delivered by the
Company under Japanese law, this Agreement has been
duly executed and delivered by the Company;
(ii) assuming that the Securities have been
duly authorized and executed by the Company, duly
authenticated by the Trustee and delivered as
contemplated
18
<PAGE> 19
by the Indenture and assuming, insofar as Japanese
law is concerned, that the Securities are valid and
legally binding obligations of the Company
enforceable in accordance with their terms, the
Securities constitute valid and legally binding
obligations of the Company enforceable in accordance
with their terms and entitled to the benefits
provided under the Indenture, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to
general equity principles;
(iii) assuming that the Indenture has been
duly authorized, executed and delivered by the
Company and constitutes a valid and legally binding
obligation of the Company under Japanese law
enforceable in accordance with its terms, the
Indenture constitutes a valid and legally binding
obligation of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or
affecting creditors' rights and to general equity
principles; the Indenture has been duly qualified
under the Trust Indenture Act;
(iv) all regulatory consents,
authorizations, approvals and filings required to be
obtained or made by the Company under the Federal
laws of the United States or the laws of the State of
New York for the issuance of the Securities and the
sale and delivery of the Securities by the Company to
the Underwriters have been obtained or made;
(v) the Company is not an "investment
company", as such term is defined in the Investment
Company Act; and
(vi) the Registration Statement, as of its
effective date, and the Prospectus, as of its date,
appeared on their face to be appropriately responsive
in all material respects with the requirements of the
Securities Act, the Trust Indenture Act and the
applicable rules and regulations of the Commission
thereunder; nothing that came to such counsel's
attention in the course of their review has caused
such counsel to believe that the Registration
Statement, as of its effective date, contained any
untrue statement of a material fact or omitted to
state any material fact required to be stated therein
or necessary to make the statements therein not
misleading or that the Prospectus, as of its date,
contained any untrue statement of a material fact or
omitted to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading; and nothing that has come to
such counsel's attention in the course of the limited
procedures described in such letter has caused such
counsel to believe that the Prospectus, as of the
date and time of delivery of such letter, contained
19
<PAGE> 20
any untrue statement of a material fact or omitted to
state any material fact necessary in order to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading. Such counsel may state that they do not
assume any responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement or the Prospectus,
except for those made under the sections entitled
"Description of Notes", insofar as they relate to
provisions of the Securities and the Indenture,
"Taxation -- United States Taxation", insofar as they
relate to provisions of Federal tax laws of the
United States therein described, and "Underwriting",
insofar as they relate to the provisions of this
Agreement. Such counsel may also state that they do
not express any opinion or belief as to financial
statements and schedules or other financial data
contained or incorporated by reference in the
Registration Statement and the Prospectus or as to
the statement of the eligibility and qualification of
the Trustee under the Indenture.
In rendering such opinions, such counsel may rely (A)
as to matters involving the application of laws other than the
Federal laws of the United States and the laws of the State of
New York, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable
to the Underwriters' counsel, familiar with the applicable
laws, including (without limitation) the opinion of Tsunematsu
Yanase & Sekine referred to in subsection (g) above; and (B)
as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Company
and certificates or other written statements of officials of
jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company. With
respect to the matters to be covered in subparagraph (vi)
above counsel may state their opinion and belief is based upon
their participation in the preparation of the Registration
Statement and the Prospectus and any amendment or supplement
thereto (other than the documents incorporated by reference
therein) and review and discussion of the contents thereof
(including the documents incorporated by reference therein)
but is without independent check or verification except as
specified. The opinion of such counsel described above shall
be rendered to the Underwriters at the request of the Company
and shall so state therein.
(i) on the date hereof and also on the Closing Date,
Price Waterhouse shall have furnished to the Representatives
letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to the Representatives,
containing statements and information of the type customarily
included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained or incorporated by reference in the
Registration Statement and the Prospectus;
20
<PAGE> 21
(j) the Representatives shall have received on and as
of the Closing Date an opinion of Davis Polk & Wardwell,
counsel to the Underwriters, with respect to the validity of
the Indenture and the Securities, the Registration Statement,
the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall
have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(k) the Securities to be delivered on the Closing
Date shall have been approved for listing on the Exchange,
subject to official notice of issuance; and
(l) on or prior to the Closing Date the Company shall
have furnished to the Representatives such further
certificates and documents as the Representatives may
reasonably request.
7. The Company undertakes with the Underwriters that it will
bear and pay any stamp or other duties or taxes (or, in respect of any
duty or tax for which the Underwriters are initially liable, will
promptly reimburse the same to the Underwriters) on or in connection
with the issue, distribution and delivery of the Securities and the
execution, delivery and performance of this Agreement and any value
added tax payable in connection with the commissions and other amounts
payable or allowable by the Company and otherwise in connection with
the transactions envisaged by this Agreement.
8. The Company agrees to indemnify and hold harmless each
Underwriter, each affiliate of any Underwriter which assists such
Underwriter in the distribution of the Securities and each person, if
any, who controls any Underwriter within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including,
without limitation, the legal fees and other expenses reasonably
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary
prospectus, 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 untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use therein; provided that
the foregoing indemnity with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter or affiliate thereof
(or to the benefit of any person controlling such Underwriter) from
whom the person asserting any such losses, claims, damages or
liabilities purchased Securities if such untrue statement or omission
or alleged untrue statement or omission made in such preliminary
prospectus is
21
<PAGE> 22
eliminated or remedied in the Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto)
and, if required by law, a copy of the Prospectus (as so amended or
supplemented) shall not have been furnished to such person at or prior
to the written confirmation of the sale of such Securities to such
person.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers
who sign the Registration Statement and each person who controls the
Company within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference
to information relating to such Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Underwriters,
each affiliate of any Underwriter which assists such Underwriter in the
distribution of the Securities and such control persons of Underwriters shall be
designated in writing by J.P. Morgan Securities Inc. and any such separate firm
for the Company, its directors, its officers who sign the Registration Statement
and such control persons of the Company shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person
22
<PAGE> 23
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for fees and expenses of counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 8 is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other 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 relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Securities. The relative fault of the Company on the one
hand and the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately
23
<PAGE> 24
preceding paragraph. The amount paid or payable by an Indemnified Person 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 Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter 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 Underwriters'
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective principal amount of Securities set forth opposite their names
in Schedule I hereto, and not joint.
The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law of in equity.
The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any other person controlling
the Company and (iii) acceptance of and payment for any of the Securities.
9. Notwithstanding anything herein contained, this Agreement
may be terminated in the absolute discretion of the Representatives, by notice
given to the Company, if after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade, the Tokyo Stock Exchange or the Exchange;
(ii) trading of any securities of or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York, England or Japan shall
have been declared by either Federal or New York State, English or Japanese
authorities, respectively, or (iv) there shall have occurred any change in the
U.S. or international financial markets, any outbreak or escalation of
hostilities, any change in political or economic conditions or currency exchange
rates or exchange controls or any calamity or crisis that, in the judgment of
the Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus.
24
<PAGE> 25
10. This Agreement shall become effective upon the later of
(x) execution and delivery hereof by the parties hereto and (y) if applicable,
release of notification of the effectiveness of any post-effective amendment by
the Commission.
If on the Closing Date any one or more of the Underwriters
shall fail or refuse to purchase Securities which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the principal amount of
Securities set forth opposite their respective names in Schedule I bears to the
aggregate principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as the
Representatives may specify, to purchase the Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the principal amount of Securities that
any Underwriter has agreed to purchase pursuant to Section 1 be increased
pursuant to this Section 10 by an amount in excess of one-tenth of such
principal amount of Securities without the written consent of such Underwriter.
If on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date, and the aggregate principal amount of Securities with respect to which
such default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Securities are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
11. If this Agreement shall be terminated by the Underwriters,
or any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement or any condition of the Underwriters' obligations cannot be
fulfilled, the Company agrees to reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. This Agreement shall inure to the benefit of and be binding upon
the Company, the Underwriters, each affiliate of any Underwriter which assists
such Underwriter in the distribution
25
<PAGE> 26
of the Securities, any controlling persons referred to herein and their
respective directors, officers, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
13. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
J.P. Morgan Securities Inc. alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260-0060 (telefax:______); Attention: Syndicate Department. Notices to
the Company shall be given to it at Sony Corporation, 7-35, Kitashinagawa
6-chome, Shinagawa-ku, Tokyo, 141-0001, Japan (telefax: 81-3-5448-5610);
Attention: Capital Market Department, Finance Division.
14. Each of the parties hereto irrevocably agrees that any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in any Federal or State court
located in the Borough of Manhattan, The City of New York (each a "New York
Court"), and irrevocably waives, to the fullest extent it may effectively do so,
any objection which it may now or thereafter have to the laying of venue of any
such proceeding brought in any such court and irrevocably submits to the
non-exclusive jurisdiction of such courts in any such suit, action or
proceeding. To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process with respect
to itself or its property, the Company hereby waives such immunity in respect of
its obligations under this Agreement. The Company acknowledges that, to the
extent permitted under applicable laws, a final judgment in any such suit,
action or proceeding brought in such a court may be conclusive and binding on
the Company and an action may be brought in any court in a jurisdiction to which
the Company is subject to a suit in order to enforce such judgement. The Company
has irrevocably appointed, Sony Corporation of America, 550 Madison Avenue, 33rd
Floor, New York, New York 10022-3211, its authorized agent (the "Authorized
Agent") upon whom process may be served in any such action arising out of or
based upon this Agreement or the transactions contemplated hereby which may be
instituted in any New York Court by any Underwriter or by any person who
controls such Underwriter. The Company represents and warrants that the
Authorized Agent has agreed to act as said agent for service of process, and the
Company agrees to take any and all action, including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. Service of process upon the Authorized Agent
and written notice of such service to the Company shall be deemed, in every
respect, effective service of process upon the
26
<PAGE> 27
Company.
15. If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder into any currency other than United
States dollars, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Representatives could purchase
United States dollars with such other currency in New York City on the Business
Day preceding that on which final judgment is given. The obligation of the
Company in respect of any sum due from it to any Underwriter shall,
notwithstanding any judgment in currency other than United States dollars, not
be discharged until the first Business Day, following receipt by such
Underwriter of any sum adjudged to be so due in such other currency, on which
(and only to the extent that) such Underwriter may in accordance with normal
banking procedures purchase United States dollars with such other currency; if
the United States dollars so purchased are less than the sum originally due to
such Underwriter hereunder, the Company agrees, as a separate obligation and
notwithstanding any judgment, to indemnify such Underwriter against such loss.
16. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
27
<PAGE> 28
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
SONY CORPORATION
By:_______________________
Title:
Accepted: _________ __, 1998
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
J.P. Morgan Securities Inc.
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: J.P. Morgan Securities Inc.
By:___________________________
Title:
28
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
Underwriters Principal Amount
of Securities
<S> <C>
Goldman, Sachs & Co. .................................... $
Merrill Lynch, Pierce, Fenner & Smith Incorporated....
J.P. Morgan Securities Inc. .............................
Total ............. $ 1,500,000,000
---------------
</TABLE>
29
<PAGE> 1
Exhibit 4.1
SONY CORPORATION
TO
THE CHASE MANHATTAN BANK,
as Trustee
----------
INDENTURE
Dated as of .............., 1998
----------
U.S.$1,500,000,000
...% Notes due .............., 2003
<PAGE> 2
Sony Corporation
Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
Section 310(a)(1) ................................ 609
(a)(2) ................................ 609
(a)(3) ................................ Not Applicable
(a)(4) ................................ Not Applicable
(b) ................................ 608
610
Section 311(a) ................................ 613
(b) ................................ 613
Section 312(a) ................................ 701
702
(b) ................................ 702
(c) ................................ 702
Section 313(a) ................................ 703
(b) ................................ 703
(c) ................................ 703
(d) ................................ 703
Section 314(a) ................................ 704
(a)(4) ................................ 101
................................ 1004
(b) ................................ Not Applicable
(c)(1) ................................ 102
(c)(2) ................................ 102
(c)(3) ................................ Not Applicable
(d) ................................ Not Applicable
(e) ................................ 102
Section 315(a) ................................ 601
(b) ................................ 602
(c) ................................ 601
(d) ................................ 601
(e) ................................ 514
Section 316(a) ................................ 101
(a)(1)(A) ................................ 502
512
(a)(1)(B) ................................ 513
(a)(2) ................................ Not Applicable
(b) ................................ 508
(c) ................................ 104
Section 317(a)(1) ................................ 503
(a)(2) ................................ 504
(b) ................................ 1003
Section 318(a) ................................ 107
- -------------------
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
----------
Page
PARTIES..................................................................... 1
RECITALS OF THE COMPANY..................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions................................................... 1
Act........................................................... 2
Additional Amounts............................................ 2
Affiliate; control............................................ 2
Authenticating Agent.......................................... 2
Authorized Newspaper.......................................... 2
Board of Directors............................................ 3
Board Resolution.............................................. 3
Business Day.................................................. 3
Commission.................................................... 3
Company....................................................... 3
Company Request; Company Order................................ 3
Corporate Trust Office........................................ 3
corporation................................................... 3
Defaulted Interest............................................ 4
Definitive Security........................................... 4
Depositary.................................................... 4
Event of Default.............................................. 4
Exchange Act.................................................. 4
External Indebtedness......................................... 4
Global Security............................................... 4
Holder........................................................ 5
Indebtedness.................................................. 5
Indenture..................................................... 5
Interest Payment Date......................................... 5
Maturity...................................................... 5
Notice of Default............................................. 5
Officer's Certificate......................................... 5
Opinion of Counsel............................................ 5
Outstanding................................................... 5
Paying Agent.................................................. 6
Person........................................................ 6
Place of Payment.............................................. 7
Predecessor Security.......................................... 7
Redemption Date............................................... 7
Redemption Price...............................................7
Regular Record Date........................................... 7
- ----------
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
--i--
<PAGE> 4
Page
Securities........................................ 7
Security Register and Security
Registrar........................................ 7
Special Record Date............................... 7
Stated Maturity................................... 7
Subsidiary........................................ 7
Trustee........................................... 8
Trust Indenture Act............................... 8
Vice President.................................... 8
Section 102. Compliance Certificates and Opinions.............. 8
Section 103. Form of Documents Delivered to Trustee............ 9
Section 104. Acts of Holders; Record Dates......................9
Section 105. Notices, Etc., to Trustee and Company.............11
Section 106. Notice to Holders; Waiver.........................11
Section 107. Conflict with Trust Indenture Act.................12
Section 108. Effect of Headings and
Table of Contents................................12
Section 109. Successors and Assigns............................12
Section 110. Separability Clause...............................12
Section 111. Benefits of Indenture.............................12
Section 112. Governing Law.....................................13
Section 113. Legal Holidays....................................13
Section 114. Jurisdiction and Legal Process....................13
Section 115. Language of Notices, Etc..........................14
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally...................................14
Section 202. Form of Face of Security..........................14
Section 203. Form of Reverse of Security.......................18
Section 204. Global Securities.................................21
Section 205. Form of Trustee's Certificate of
Authentication...................................22
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms...................................22
Section 302. Denominations.....................................23
Section 303. Execution, Authentication, Delivery
and Dating.......................................23
Section 304. Temporary Securities..............................24
- ----------
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
--ii--
<PAGE> 5
Page
Section 305. Registration, Registration of Transfer
and Exchange.................................................25
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities...................................................27
Section 307. Payment of Interest; Interest Rights
Preserved....................................................28
Section 308. Persons Deemed Owners.........................................30
Section 309. Cancellation..................................................30
Section 310. Computation of Interest.......................................30
Section 311. CUSIP Numbers.................................................30
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of
Indenture....................................................31
Section 402. Application of Trust Money....................................32
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.............................................33
Section 502. Acceleration of Maturity; Rescission
and Annulment................................................35
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee...................................36
Section 504. Trustee May File Proofs of Claim..............................37
Section 505. Trustee May Enforce Claims Without
Possession of Securities.....................................38
Section 506. Application of Money Collected................................38
Section 507. Limitation on Suits...........................................38
Section 508. Unconditional Right of Holders to
Receive Principal and Interest...............................39
Section 509. Restoration of Rights and Remedies............................39
Section 510. Rights and Remedies Cumulative................................39
Section 511. Delay or Omission Not Waiver..................................40
Section 512. Control by Holders............................................40
Section 513. Waiver of Past Defaults.......................................40
Section 514. Undertaking for Costs.........................................41
Section 515. Waiver of Usury, Stay or
Extension Laws...............................................41
- ----------
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
--iii--
<PAGE> 6
Page
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.....................41
Section 602. Notice of Defaults......................................42
Section 603. Certain Rights of Trustee...............................42
Section 604. Not Responsible for Recitals or
Issuance of Securities.................................44
Section 605. May Hold Securities.....................................44
Section 606. Money Held in Trust.....................................44
Section 607. Compensation and Reimbursement..........................44
Section 608. Disqualification; Conflicting
Interests..............................................45
Section 609. Corporate Trustee Required;
Eligibility............................................45
Section 610. Resignation and Removal; Appointment of
Successor..............................................46
Section 611. Acceptance of Appointment by Successor..................47
Section 612. Merger, Conversion, Consolidation or
Succession to Business.................................48
Section 613. Preferential Collection of Claims
Against Company........................................48
Section 614. Appointment of Authenticating Agent.....................48
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and
Addresses of Holders...................................50
Section 702. Preservation of Information;
Communications to Holders..............................51
Section 703. Reports by Trustee......................................51
Section 704. Reports by Company......................................52
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on
Certain Terms..........................................53
Section 802. Successor Substituted...................................54
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
--iv--
<PAGE> 7
Page
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent
of Holders.......................................54
Section 902. Supplemental Indentures with Consent of
Holders..........................................55
Section 903. Execution of Supplemental Indentures..............57
Section 904. Effect of Supplemental Indentures.................57
Section 905. Conformity with Trust Indenture Act...............57
Section 906. Reference in Securities to Supplemental
Indentures.......................................57
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and Interest.................58
Section 1002. Maintenance of Office or Agency...................58
Section 1003. Money for Securities Payments to Be
Held in Trust....................................59
Section 1004. Statement by Officers as to Default...............60
Section 1005. Existence.........................................60
Section 1006. Maintenance of Properties.........................61
Section 1007. Payment of Taxes and Other Claims.................61
Section 1008. Additional Amounts................................61
Section 1009. Negative Pledge...................................62
Section 1010. Waiver of Certain Covenants.......................62
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption...............................63
Section 1102. Applicability of Article..........................63
Section 1103. Election to Redeem; Notice to Trustee.............63
Section 1104. Notice of Redemption..............................63
Section 1105. Deposit of Redemption Price.......................64
Section 1106. Securities Payable on Redemption Date.............64
TESTIMONIUM..................................................................66
SIGNATURES...................................................................66
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
--v--
<PAGE> 8
INDENTURE, dated as of ..............., 1998, between SONY
CORPORATION, a corporation duly organized and existing under the laws of Japan
(the "Company"), having its principal office at 7-35, Kitashinagawa 6-chome,
Shinagawa-ku, Tokyo 141-0001, Japan, and THE CHASE MANHATTAN BANK, a banking
corporation duly existing under the laws of the State of New York, as Trustee
(the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
its ...% Notes Due .........., 2003 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
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, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. 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> 9
(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 in the United
States at the date of such computation;
(4) the words "Article" and "Section" refer to an Article and
Section, respectively, 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.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Amounts" has the meaning specified in the form of
Security set forth in Section 202.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
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.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
"Authorized Newspaper" means a newspaper, in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays,
--2--
<PAGE> 10
and of general circulation in the place in connection with which the term is
used or in the financial community of such place.
"Board of Directors" means the board of directors of the
Company.
"Board Resolution" means a copy of a resolution certified by
the [General Manager of the General Affairs Department] of the Company, the
principal financial and accounting officer of the Company or any other
authorized officer of the Company or a person duly authorized by any of them, 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", when used with respect to any Place of Payment
or other location, means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in that Place of Payment or
other location are authorized or obligated by law or executive order to close.
"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.
"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 any of its Representative
Directors or any other authorized officer of the Company or a person duly
authorized by any of them, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the
Trustee in the Borough of Manhattan, The City of New York at which at any
particular time its corporate trust business shall be administered, which at the
date hereof is 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Global Trust Services.
"corporation" means a corporation, association, company,
joint-stock company or business trust.
--3--
<PAGE> 11
"Defaulted Interest" has the meaning specified in
Section 307.
"Definitive Security" means a Security other than a Global
Security or a temporary Security.
"Depositary" means, with respect to Securities issuable 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.
"Event of Default" has the meaning specified in
Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any statute successor thereto.
"External Indebtedness" means any indebtedness of the Company
or any other person in the form of or represented by bonds, notes, debentures or
other securities which:
(1) either
(a) are denominated or payable in, or by reference to, or
may at the option of the person entitled thereto be
or become payable in, or by reference to, a currency
or currencies other than yen; or
(b) are denominated or payable in yen and more than 50%
of the aggregate principal or face amount of which is
initially distributed by or with the authorization of
the Company or, if not the Company, the issuer
thereof outside Japan; and
(2) are not repayable (otherwise than at the option, or due to the
default, of the obligor) within one year from the date of
their issue; and
(3) are, or are capable of being, quoted, listed or ordinarily
traded on any stock exchange or on any over-the-counter
securities market outside Japan.
"Global Security" means a Security in global form that
evidences all or part of the Securities and is authenticated and delivered to,
and registered in the name of, the Depositary for such Securities or a nominee
thereof.
--4--
<PAGE> 12
"Holder" means a Person in whose name a Security
is registered in the Security Register.
"Indebtedness" means any bonds, debentures, notes or other
instruments of indebtedness or any other similar evidences of indebtedness.
"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.
"Interest Payment Date", when used with respect to any
Security, means the Stated Maturity of an instalment of interest on such
Security.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an instalment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind
specified in Section 501(3).
"Officer's Certificate" means a certificate signed by any
Representative Director of the Company or any other authorized officer of the
Company or a person duly authorized by any of them, and delivered to the
Trustee. The officer signing an Officer's Certificate given pursuant to Section
1004 shall be the principal executive, financial or accounting officer of the
Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company.
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
--5--
<PAGE> 13
(2) 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 has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(3) Securities which have been paid pursuant to Section 306 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;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, 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 or waiver, 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 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.
--6--
<PAGE> 14
"Place of Payment", means the place or places where, subject
to the provisions of Section 1002, the principal of and interest on the
Securities are payable.
"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 306 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.
"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 pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the .......... or .......... (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"Securities" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or
any instalment 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 instalment 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.
--7--
<PAGE> 15
"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.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed, except as
otherwise provided in Section 905; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended.
"Vice President", when used with respect to 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 102. 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 such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in the
form of an Officer's Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 1004) 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 investigation as is necessary to enable
him to express an informed opinion
--8--
<PAGE> 16
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 103. 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
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 104. Acts of Holders; Record Dates.
(a) 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 agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall
--9--
<PAGE> 17
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 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) 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 individual 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.
(c) The ownership of Securities shall be proved by
the Security Register.
(d) 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.
(e) Without limiting the foregoing, a Holder entitled
hereunder to give or 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 different part of such
principal amount.
(f) The Company may, in the circumstances permitted by the
Trust Indenture Act, set any day as the record date for the purpose of
determining the Holders of Outstanding Securities entitled to give or take any
request,
--10--
<PAGE> 18
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given or taken by Holders of
Securities. With regard to any record date set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take the relevant
action, whether or not such Holders remain Holders after such record date.
Section 105. 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
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Global Trust Services, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid (if international mail, by air mail), to the Company addressed
to its Tokyo office, 7-35, Kitashinagawa 6-chome, Shinagawa-ku, Tokyo
141-0001, Japan, to the attention of the Capital Market Department, or
at any other address previously furnished in writing to the Trustee by
the Company.
Section 106. 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 (if
international mail, by air mail), 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 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
--11--
<PAGE> 19
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 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that 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 that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or excluded, as the case may
be.
Section 108. 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 109. 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 110. 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 111. 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 and the
--12--
<PAGE> 20
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity, provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
Section 114. Jurisdiction and Legal Process.
By the execution and delivery of this Indenture, the Company
hereby appoints Sony Corporation of America, currently located at 550 Madison
Avenue, 33rd Floor, New York, New York 10022-3211, as its agent upon which
process may be served in any legal action or proceeding which may be instituted
by any Holder or the Trustee in any Federal or State court in the Borough of
Manhattan, The City of New York, arising out of or relating to the Securities or
this Indenture. Service of process upon such agent at its address set forth
above (or such other address in the Borough of Manhattan, The City of New York,
as such agent shall furnish in writing to the Trustee), and written notice of
said service to the Company by the Person serving the same, addressed as
provided in Section 105, shall be deemed in every respect effective service of
process upon the Company in any such legal action or proceeding. The Company
hereby submits to the non-exclusive jurisdiction of any such courts with respect
to any such legal action or proceeding so instituted in such court, and waives,
to the fullest extent permitted by law, any objection which it may have now or
hereafter based on improper venue or forum non conveniens to the conduct of such
legal action or proceeding in such court. Such appointment, submission and
waiver shall be irrevocable so long as the Holders of Securities shall have any
rights pursuant to the terms thereof or of this Indenture until the appointment
of a successor by the
--13--
<PAGE> 21
Company in the Borough of Manhattan, The City of New York to act as such agent
and such successor's acceptance of such appointment. The Company further agrees
to take any and all action, including the execution and filing of any and all
such documents and instruments, as may be necessary to continue such designation
and appointment of such agent or successor.
Section 115. Language of Notices, Etc.
Any request, demand, authorization, direction, notice,
consent, waiver or Act required or permitted under this Indenture shall be in
the English language, except that any published notice may be in an official
language of the country of publication.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities and the Trustee's certificates of
authentication shall be in substantially the forms 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 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 or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
Section 202. Form of Face of Security.
[Insert any legend required by the United States Internal
Revenue Code and the regulations thereunder.]
[If a Global Security, insert legend required by Section 204]
[if applicable, insert -- UNLESS THIS SECURITY
--14--
<PAGE> 22
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT 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.]
SONY CORPORATION
...% NOTES DUE .........., 2003
NO. ......... U.S.$ ........
SONY CORPORATION, a corporation duly organized and existing
under the laws of Japan (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 ................ .................. United States Dollars (or
such other amount as is reflected in the Security Register) on ...............,
2003, and to pay interest thereon from ............., 1998, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on ............ and ............ in each year, commencing
........., 1998 at the rate of ....% per annum, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the ....... or .......
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice of which shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the
--15--
<PAGE> 23
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in such Indenture.
The Company will pay to the Holder of this Security who is not
a Japanese corporation or a resident of Japan for Japanese tax purposes such
additional amounts ("Additional Amounts") as may be necessary in order that
every net payment of the principal of and interest on this Security, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by Japan or any political subdivision or taxing authority thereof or
therein, will not be less than the amount provided for in this Security to be
then due and payable; provided, however, that the foregoing obligation to pay
Additional Amounts will not apply to any one or more of the following:
(a) any tax, assessment or other governmental charge which
would not have been so imposed but for the existence of any present or
former connection between such Holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of such Holder, if such Holder is an
estate, a trust, a partnership, or a corporation) and Japan;
(b) any estate, inheritance, gift, sales, transfer, personal
property or any similar tax, assessment or government charge;
(c) any tax, assessment or other governmental charge which is
payable otherwise than by deduction or withholding from payments of
principal of or interest on this Security; or
(d) any tax, assessment or other governmental charge which
would not have been so imposed but for the presentation by the Holder
of this Security for payment on a date more than 30 days after the date
on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later;
nor will Additional Amounts be paid with respect to any payment of principal of
or interest on this Security to any Holder who is a fiduciary or partnership or
other than the sole beneficial owner of any such payment to the extent that a
beneficiary or settlor with respect to such fiduciary, a member of such a
partnership or the beneficial owner would not have been entitled to the
Additional Amounts had such beneficiary, settlor, member or beneficial owner
been the
--16--
<PAGE> 24
Holder of this Security. Whenever there is mentioned in this Security, in any
context, any payment of, or in respect of, the principal of, or interest on,
this Security, such mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof, and any express mention of the
payment of Additional Amounts in any provisions of this Security shall not be
construed as excluding Additional Amounts in those provisions where such express
mention is not made.
[If a Global Security, insert--Payment of the principal of and
interest on this Security will be made by transfer of immediately available
funds to a bank account in the Borough of Manhattan, The City of New York,
designated by the Holder in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.]
[If a Definitive Security, insert---Payment of the principal
of and interest on this Security will be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of New
York or (so long as the Securities are listed on the London Stock Exchange
Limited and such exchange shall so require) London, England, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.]
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
--17--
<PAGE> 25
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.
Dated: SONY CORPORATION
By................................
Name:
Title:
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities
of the Company designated as its ...% Notes due .........., 2003 (herein called
the "Securities"), limited in aggregate principal amount to U.S.$1,500,000,000,
issued under an Indenture, dated as of .........., 1998 (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Securities are subject to redemption, upon not less than
30 nor more than 60 days' notice by mail, at any time, as a whole but not in
part, at the election of the Company, at a Redemption Price equal to 100% of the
principal amount, together with accrued interest (including Additional Amounts,
if any) to the Redemption Date if the Company determines that, as a result of
any change in, amendment to, or judicial decision relating to, the laws
(including regulations, rulings and treaties) of Japan (or any political
subdivision or taxing authority thereof or therein), or any change in the
official interpretation or application of such laws, which change, amendment or
decision becomes effective on or after ............ the Company would be
required to pay Additional Amounts on the next succeeding Interest Payment Date
as set forth on the face hereof, provided that (i) no such notice of redemption
may be given earlier than 60 days prior to the earliest date
--18--
<PAGE> 26
on which the Company would be obligated to pay any such Additional Amounts were
a payment in respect of the Notes then due and (ii) at the time such notice is
given, such obligation to pay such Additional Amounts remains in effect. The
Company's right to redeem the Securities shall continue, as long as the Company
is obligated to pay such Additional Amounts, notwithstanding that the Company
shall have made payments of Additional Amounts.
If an Event of Default with respect to Securities shall occur
and be continuing, the principal of the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in principal amount of the
Securities at the time Outstanding, on behalf of the Holders of all Securities,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security
--19--
<PAGE> 27
for the enforcement of any payment of principal hereof or interest hereon on or
after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest (including Additional Amounts, as described on the face hereof) on this
Security at the times, place(s) and rate, and in the coin or currency, herein
prescribed.
[If a Global Security, insert--This Global Security or portion
hereof may not be exchanged for Definitive Securities except in the limited
circumstances provided in the Indenture. As provided in the Indenture and
subject to certain limitations therein, Definitive Securities may be exchanged,
at the option of the Holder thereof, for a portion of this Global Security of a
like aggregate principal amount upon surrender of Definitive Securities at the
office or agency of the Company in the Borough of Manhattan, The City of New
York. Upon exchange of any portion of this Global Security for Definitive
Securities or Definitive Securities for portion of this Global Security, the
Security Registrar shall adjust the Security Register to reflect the reduction
or increase, as the case may be, in the principal amount of this Global Security
by an amount equal to the aggregate principal amount of the Definitive
Securities so issued or surrendered in exchange, whereupon the principal amount
hereof shall be reduced or increased for all purposes by the amount so exchanged
and noted.]
[If a Definitive Security, insert--The transfer of this
Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of like tenor, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
At the option of the Holder, this Security may be exchanged
for a portion of a Global Security of a like aggregate principal amount upon
surrender of this Security at the office or agency of the Company in the Borough
of Manhattan, The City of New York.]
--20--
<PAGE> 28
The Securities are issuable only in registered form without
coupons in denominations of U.S.$1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this 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 this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
This Security shall be governed by and construed in accordance
with the laws of the State of New York.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
Section 204. Global Securities.
(a) The Securities shall be initially issued in the form of
one or more Global Securities. The Depositary for such Global Securities shall
be The Depository Trust Company.
(b) Every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR
REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH
TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED
UPON
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<PAGE> 29
REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS
SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN
SUCH LIMITED CIRCUMSTANCES.
(c) Notwithstanding the provisions of Section 302, any Global
Security shall represent such of the Outstanding Securities as shall be
specified therein and may provide that it shall represent the aggregate amount
of Outstanding Securities from time to time endorsed thereon and that the
aggregate amount of Outstanding Securities represented thereby may from time to
time be reduced or increased, as the case may be, to reflect exchanges. Any
endorsement of a Global Security to reflect the amount, or any reduction or
increase in the amount, of Outstanding Securities represented thereby shall be
made in such manner and upon instructions given by such Person or Persons as
shall be specified therein or in a Company Order. Subject to the provisions of
Sections 303, 304 and 305, the Trustee shall deliver and redeliver any Global
Security in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. Any instructions by the
Company with respect to endorsement or delivery or redelivery of a Global
Security shall be in a Company Order (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel).
(d) The provisions of the last sentence of Section 303 shall
apply to any Security represented by a Global Security if such Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Global Security together with a Company Order (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) with regard to
the reduction or increase, as the case may be, in the principal amount of
Securities represented thereby, together with the written statement contemplated
by the last sentence of Section 303.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in
substantially the following form:
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<PAGE> 30
This is one of the Securities referred to in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK,
As Trustee
By.....................................
Authorized Officer
ARTICLE THREE
The Securities
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to
U.S.$1,500,000,000, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Section 304, 305, 306 or 906.
The Securities shall be known and designated as the "...%
Notes due .........., 2003" of the Company. Their Stated Maturity shall be
.........., 2003, and they shall bear interest at the rate of ...% per annum,
from .........., 1998 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, payable
semi-annually on .......... and .........., commencing .........., 1998, until
the principal thereof is paid or made available for payment.
The principal and interest on the Securities shall be payable:
(1) so long as the Securities are in the form of Global
Securities, by transfer of immediately available funds to a bank
account in the Borough of Manhattan, The City of New York designated by
the Holder thereof; or
(2) if such Securities have been issued as Definitive
Securities, (a) at the office or agency of the Company in the Borough
of Manhattan, The City of New York maintained for such purpose and (b)
so long as the Securities are listed on the London Stock Exchange
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<PAGE> 31
Limited (the "London Stock Exchange") and such stock exchange shall so
require, at the office or agency of the Company in London, England
maintained for such purpose; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in
the Security Register.
The Securities shall be redeemable as provided in Article
Eleven.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of U.S.$1,000 and any integral
multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
one of its Representative Directors and need not be attested. 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, notwithstanding 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.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
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
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<PAGE> 32
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Security to the
Trustee for cancellation as provided in Section 309 for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
Section 304. 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 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
1002, 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 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at an office or agency of
the Company in the Borough of Manhattan, The City of New York a register (the
register maintained in such office being herein 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 of
Securities. The Company hereby appoints The Chase Manhattan Bank as the initial
"Security Registrar" for purpose of registering Securities and transfers of
Securities as herein provided and its Corporate Trust Office, as the initial
office or agency in the Borough of Manhattan, The City of New York where the
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<PAGE> 33
Security Register will be maintained. The Company may at any time replace such
Security Registrar, change such office or agency or act as its own Security
Registrar. The Company will give prompt written notice to the Trustee of any
change of the Security Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security at
the office or agency of the Company maintained pursuant to Section 1002 for such
purpose, 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 any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like aggregate
principal amount and tenor, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
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 304 or 906 not involving any transfer.
The Company shall not be required to issue, register the
transfer of or exchange of 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
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<PAGE> 34
Securities under Section 1103 and ending at the close of business on the day of
such mailing.
Notwithstanding any other provision in this Indenture, no
Global Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary for such Global
Security or any nominee thereof, and no such transfer may be registered, except
as provided in this paragraph. Every Security authenticated and delivered upon
registration or transfer of, or in exchange for or in lieu of, a Global Security
shall be a Global Security, except as provided in this paragraph. If (1) (A) the
Depositary for a Global Security notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Security or ceases to be a
clearing agency registered under the Exchange Act and (B) a successor Depositary
is not appointed by the Company within 90 days, (2) the Company executes and
delivers to the Trustee a Company Order that such Global Security shall be so
transferable, registrable and exchangeable, and such transfers shall be
registrable or (3) the Security Registrar shall have received a request in
writing on behalf of a Person who is a beneficial owner of an interest in such
Global Security not less than 90 days prior to the date of such transfer or
exchange, then such Global Security or portion thereof may be exchanged by such
Depositary for Definitive Securities, of any authorized denomination and of a
like aggregate principal amount, registered in the names of, and the transfer of
such Global Security or portion thereof may be registered to, such Persons as
such Depositary shall direct.
At the option of the Holder, Definitive Securities may be
exchanged for a portion of a Global Security of a like aggregate principal
amount upon surrender of the Definitive Securities to be exchanged at the office
or agency of the Company maintained pursuant to Section 1002 for such purpose.
Upon exchange of any portion of a Global Security for
Definitive Securities or Definitive Securities for a portion of a Global
Security, the Security Registrar shall adjust the Security Register to reflect
the reduction or increase, as the case may be, in the principal amount of such
Global Security by an amount equal to the aggregate principal amount of the
Definitive Securities so issued or surrendered in exchange, whereupon the
principal amount of such Global Security shall be reduced or increased, as the
case may be, for all purposes by the amount so exchanged and noted.
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<PAGE> 35
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
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 lieu of any such 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
may, instead of issuing a new Security, pay such Security.
Upon the issuance 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 pursuant to this Section in exchange
for any mutilated Security or in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation of the Company,
whether or not the mutilated, 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.
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<PAGE> 36
Section 307. Payment of Interest; Interest Rights Preserved.
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 such
interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on 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 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
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<PAGE> 37
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Securities 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 on
the Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, 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.
Section 308. 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 and (subject
to Sections 305 and 307) any 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.
Section 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be
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<PAGE> 38
delivered to the Trustee and shall be promptly canceled 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 may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly canceled by the Trustee. No Securities
shall be authenticated in lieu of or in exchange for any Securities canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall be disposed of as directed by a
Company Order; or, if no such Company Order is given within 60 days after notice
by the Trustee to the Company of cancellation of such Securities, then the
Trustee may destroy such canceled Securities and, in such case, the Trustee
shall thereafter deliver to the Company a certificate with respect to such
destruction.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
Section 311. CUSIP Numbers.
The Company in issuing Securities may use CUSIP numbers (if
then generally in use) in addition to serial numbers; if so, the Trustee shall
use such CUSIP numbers in addition to serial numbers in notices of redemption as
a convenience to holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such CUSIP number either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the serial or other identification numbers
printed on the Securities, and any such redemption shall not be affected by any
defect in or omission of such CUSIP number. The Company shall promptly notify
the Trustee of any change in CUSIP numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein
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<PAGE> 39
expressly provided for, and any right to receive Additional Amounts as provided
in Section 1008), 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 306 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 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for
the purpose an amount of money in the currency or currency units in
which such Securities are payable sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and interest to the date of
such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be;
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<PAGE> 40
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officer's
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.
Notwithstanding the satisfaction and discharge of this
Indenture, (x) the obligations of the Company to the Trustee under Section 607,
the obligations of the Trustee to any Authenticating Agent under Section 614 and
the right of the Trustee to resign under Section 610 shall survive and (y) if
money shall have been deposited with the Trustee pursuant to subclause (B) of
Clause (1) of this Section, the obligations of the Company and/or the Trustee
under Sections 402, 606, 701 and 1002 and the last paragraph of Section 1003
shall survive.
Section 402. Application of Trust Money.
Subject to provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 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 interest for
whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
Section 501. 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 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 the principal of any Security at
its Maturity; or
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<PAGE> 41
(2) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(3) default in the performance, or breach, of any covenant of
the Company in this Indenture (other than a covenant a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
90 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the Outstanding
Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(4) default in respect of any Indebtedness having an aggregate
outstanding principal amount of at least U.S.$25,000,000 or its
equivalent in any other currency or currencies of the Company (other
than the Securities) which results in repayment of such Indebtedness
being accelerated by reason of such default, provided, however, that if
any such default shall be cured by the Company or waived by the holders
of such Indebtedness, or of a specified percentage thereof entitled so
to waive, then the default under the Indenture by reason thereof shall
be deemed likewise to have been cured and waived; or
(5) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Japanese
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Japanese law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other
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<PAGE> 42
similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Japanese bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by it to the
entry of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Japanese
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Japanese law, or the
consent by it to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the stopping of payment
(within the meaning Japanese bankruptcy law) or the making by it of an
assignment or other arrangement for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company in
furtherance of any such action.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default 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 principal amount of all of 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 principal amount shall become immediately due and payable.
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<PAGE> 43
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 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) all overdue interest on all Securities,
(B) the principal of any Securities which have become
due otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in
such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) 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 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such
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<PAGE> 44
interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of any
Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and on
any overdue interest, at the rate or rates prescribed therefor in 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 the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
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 of Securities 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 agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company or
any other obligor upon the Securities, their property or their creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any
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<PAGE> 45
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 607.
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.
Section 505. 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 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 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
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 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: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for
the benefit of which such money has been collected, ratably, without
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preference or priority of any kind, according to the amounts due and
payable on such Securities for principal and interest, respectively;
and
THIRD: The balance, if any, to the Company.
Section 507. 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;
(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.
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Section 508. Unconditional Right of Holders to Receive Principal and Interest.
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 principal of and (subject to Sections
305 and 307) interest (including any Additional Amounts payable pursuant to
Section 1008) on such Security on the respective Stated Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. 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 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, 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 511. 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 or by law to the Trustee or to the
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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 512. 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, with respect to the
Securities, 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 513. 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 a default
(1) in the payment of the principal of or any interest on
any Security, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
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 514. 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, in the manner and to the extent provided
in the Trust Indenture
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Act; provided that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company.
Section 515. 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 SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, 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.
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 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities, the
Trustee shall give the Holders of Securities notice of such default as and to
the extent provided by the Trust Indenture Act; provided, however, that in the
case of any default of the character specified in Section 501(3) with respect to
Securities, 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
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"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to Securities.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) 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;
(2) any request, direction, order or demand 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;
(3) 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 Officer's
Certificate;
(4) 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;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by 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
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costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(6) 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;
(7) 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; and
(8) the Trustee may request that the Company deliver an
Officer's Certificate setting forth the names of individuals and/or
titles of officers authorized at such time to take specified actions
pursuant to this Indenture, which Officer's Certificate may be signed
by any person authorized to sign an Officer's Certificate, including
any person specified as so authorized in any such certificate
previously delivered and not superseded.
Section 604. 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. Neither the Trustee nor any Authenticating
Agent makes any 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.
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Section 605. 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
Sections 608 and 613, 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 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from 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 607. 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 or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or
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performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to
compensate the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular
Securities.
The rights and covenants set forth in this Section in favor of
the Trustee shall apply equally in favor of The Chase Manhattan Bank in its
agency capacities hereunder.
Section 608. 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 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus required by the Trust Indenture Act and its
Corporate Trust Office in the Borough of Manhattan, The City of New York. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such Person 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 610. 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 611.
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(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 611 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 with respect to the Securities.
(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 608 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 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(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, (A) the Company may remove the Trustee with respect to
all Securities, or (B) subject to Section 514, 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 with respect to all Securities and the appointment of
a successor Trustee or Trustees.
(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 shall promptly appoint a successor Trustee or Trustees.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a
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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 611, 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 611, 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 with respect to the Securities.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders of Securities in the manner provided in Section 106. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
Section 611. 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 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 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.
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Section 612. 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 authenticating 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 613. 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 614. Appointment of Authenticating Agent.
The Trustee (upon notice to the Company) 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 or partial redemption thereof or pursuant to Section
306, and Securities so authenticated shall be entitled to the benefits of this
Indenture and 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 of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
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having a combined capital and surplus of not less than $50,000,000 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 examining 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 published. 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 consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate agency or corporate trust business of such
Authenticating 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 such 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 successor 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 of
Securities with respect to which such Authenticating Agent will serve, as their
names and addresses appear in the Security Register. Any 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
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entitled to be reimbursed by the Company for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, 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 referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
As Trustee
By.........................................,
As Authenticating Agent
By.........................................,
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee
(1) 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 addresses of the Holders as of such Regular
Record Date, and
(2) 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.
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Section 702. 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 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar or Paying Agent. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges 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 the names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 703. 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 any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee in accordance with Section 105(1) when any
Securities are listed on any stock exchange.
Section 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
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be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless:
(1) the Person formed by such consolidation or into which the
Company is
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merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust, shall be
organized and validly existing under the laws of Japan 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 interest (including all
Additional Amounts, if any, payable pursuant to Section 1008) on all
the Securities and the performance or observance of every covenant of
this Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or
any Subsidiary as a result of such transaction as having been incurred
by the Company or such Subsidiary at the time of such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing;
(3) the Company has delivered to the Trustee an Opinion of
Counsel stating that the Holders of Securities will not recognize
income, gain or loss for United States federal income tax purposes as a
result of such consolidation, merger, conveyance, transfer or lease and
will be subject to tax in the same amount, in the same manner and at
the same time as if such transaction had not occurred; and
(4) 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 the
supplemental indenture required in connection with such transaction
comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
--54--
<PAGE> 62
Section 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor 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 Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to permit or facilitate the
--55--
<PAGE> 63
issuance of Securities in uncertificated form; or
(5) to secure the Securities pursuant to the requirements of
Section 1009 or otherwise; or
(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee, pursuant to the requirements of
Section 611; or
(7) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, to comply with any applicable mandatory provisions of law or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause
(7) shall not adversely affect the interests of the Holders of
Securities in any material respect.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon, or change any
obligation of the Company to pay Additional Amounts pursuant to Section
1008 (except as contemplated by Section 801(1) and permitted by Section
901), change the coin or currency in which, any Security or interest
thereon is payable, remove the place of such payment
--56--
<PAGE> 64
from the Borough of Manhattan, The City of New York, or (so long as the
Notes are listed on the London Stock Exchange and such exchange shall
so require) London, England, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) change any obligation of the Company, with respect to
Outstanding Securities, to maintain an office or agency in the places
and for the purposes specified in Section 1002, or
(4) modify any of the provisions of this Section, Section 513
or Section 1010, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in
the references to "the Trustee" and concomitant changes in this Section
and Section 1010, or the deletion of this proviso, in accordance with
the requirements of Sections 611 and 901(7).
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created
--57--
<PAGE> 65
by this Indenture, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, 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.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article 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.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
--58--
<PAGE> 66
Section 1002. 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 and where notices and demands to or upon the Company in
respect of the Securities may be served. The initial such office or agency shall
be the Corporate Trust Office of The Chase Manhattan Bank. 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 (and shall, if so required by the regulations
of any stock exchange on which the Securities are for the time being listed, in
compliance with such regulations) also from time to time designate one or more
other offices or agencies 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 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.
The Company hereby appoints The Chase Manhattan Bank, Trinity
Tower, 9 Thomas More Street, London, E1 9YT as its initial office or agency in
London, England where Securities in the form of Definitive Securities may be
presented or surrendered for payment. Notwithstanding any provision of this
Section 1002, the Company shall not be required to maintain in London, England
an office or agency where Notes may be surrendered for registration of transfer
or exchange or where notices and demands in respect of the Notes and the
Indenture may be served.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent,
it will, on or before 10:00 a.m. (New York time) on each due date of the
principal of or interest on
--59--
<PAGE> 67
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 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, on or prior to 10:00 a.m. (New York time) on each due date of the
principal of or interest on any Securities, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust
Indenture Act, 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 for any Securities
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, that such Paying Agent will (1) hold all sums held by it for
the payment of the principal of or interest, if any, 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 or interest, if any, on the
Securities; and (3) during the continuance of any such default, upon the written
request of the Trustee, forthwith pay to the Trustee all sums held in trust by
such Paying Agent for payment in respect of the Securities.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture pursuant to Section 401 or for any
other purpose, pay, or by Company Order direct 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 the principal of or
interest on any Security and remaining unclaimed for two years after such
principal 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,
--60--
<PAGE> 68
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 an Authorized
Newspaper in each Place of Payment, notice that such money remains unclaimed and
that, after a date specified 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 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 150 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officer's 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.
Section 1005. Existence.
Subject to Article Eight, the Company will do or cause to be
done all 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 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation
--61--
<PAGE> 69
or maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
Section 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 1008. Additional Amounts.
The Company will pay to the holders of the Securities
Additional Amounts as provided in the second paragraph of the forms of
Securities set forth in Section 202. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or interest on, or in
respect of, any Security, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section to the extent that,
in such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not
be construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
At least 10 days prior to the first Interest Payment Date, and
at least 10 days prior to each date of payment of principal or interest if there
has been any change with respect to the matters set forth in the below-mentioned
Officer's Certificate, the Company will furnish the Trustee and the Company's
principal Paying Agent or Paying Agents, if other than the Trustee, with an
Officer's Certificate instructing the Trustee and such Paying Agent or Paying
Agents whether such payment of principal of or interest on the Securities shall
be made to Holders of Securities without withholding for or on account of any
tax, assessment or other governmental charge described in the Securities. If any
such withholding shall be required, then
--62--
<PAGE> 70
such Officer's Certificate shall specify by country the amount, if any, required
to be withheld on such payments to such Holders of Securities and the Company
will pay to the Trustee or such Paying Agent the Additional Amounts required by
this Section. The Company covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them in reliance on any
Officer's Certificate furnished pursuant to this Section.
Section 1009. Negative Pledge.
The Company will not, so long as any of the Securities remains
outstanding, create or permit to subsist any mortgage, charge, pledge or other
security interest upon the whole or any part of its property, assets or
revenues, present or future, to secure for the benefit of the holders of any
External Indebtedness (1) payment of any sum due in respect of such External
Indebtedness or (2) any payment under any guarantee of such External
Indebtedness or (3) any payment under any indemnity or other like obligation
relating to such External Indebtedness without at the same time according to the
Securities either the same security as is granted to or is outstanding in
respect of such External Indebtedness, guarantee, indemnity or other like
obligation or such other security or guarantee not materially less beneficial to
the Holders or as shall be approved by at least a majority in principal amount
of the Outstanding Securities.
Section 1010. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Section 1005, 1006, 1007 or 1009,
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Securities, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
--63--
<PAGE> 71
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption.
The Securities may be redeemed in whole, but not in part,
subject to the conditions, at the times and at the Redemption Price specified in
the form of Security hereinbefore set forth, together with accrued interest to
the Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant
to Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and deliver to the Trustee
(i) an Officer's Certificate stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Company so to redeem have occurred and (ii) an
Opinion of Counsel or a certificate of an independent accountant of recognized
standing selected by the Company and reasonably satisfactory to the Trustee to
the effect that the Company has or will become obligated to pay Additional
Amounts as a result of such facts.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail (if
international mail, by air mail), postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Securities to
be redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
--64--
<PAGE> 72
(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date,
(4) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(5) the CUSIP number of each security.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and shall
be irrevocable.
Section 1105. Deposit of Redemption Price.
By 10:00 a.m. (New York time) on or prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; provided, however, that, installments
of interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
--65--
<PAGE> 73
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
--66--
<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
SONY CORPORATION
By..............................................
Name:
Title:
THE CHASE MANHATTAN BANK
By..............................................
Name:
Title:
--67--
<PAGE> 75
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of ............., 1998, before me personally
came ........................., to me known, who, being by me duly sworn, did
depose and say that he is ......................... of Sony Corporation, one of
the corporations described in and which executed the foregoing instrument; and
that he signed his name thereto by authority of the Board of Directors of said
corporation.
........................
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of ............., 1998, before me personally
came ........................., to me known, who, being by me duly sworn, did
depose and say that he is .................... of The Chase Manhattan Bank, one
of the corporations described in and which executed the foregoing instrument;
and that he signed his name thereto by the authority of the Board of Directors
of said corporation.
........................
--68--
<PAGE> 1
Exhibit 25.1
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 CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
SONY CORPORATION
(Translation of obligor's name into English)
(Exact name of obligor as specified in its charter)
JAPAN NONE
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
7-35, KITASHINAGAWA 6-CHOME SONY CORPORATION OF AMERICA
SHINAGAWA-KU, TOKYO 141-0001, JAPAN 550 MADISON AVENUE, 33RD FLOOR
(813) 5448-2111 NEW YORK, NEW YORK 10022-3211
(212) 833-6849
(Address of principal executive offices) (Name, address and telephone
umber of agent for service)
DEBT SECURITIES
(Title of the indenture securities)
<PAGE> 2
GENERAL
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.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, New York
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
- 2 -
<PAGE> 3
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 as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
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.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 6th day of February, 1998.
THE CHASE MANHATTAN BANK
By /s/ Annette M. Marsula
------------------------------------------
Annette M. Marsula, Assistant Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................$ 13,892
Interest-bearing balances ......................................... 4,282
Securities:
Held to maturity
securities ............................................................. 2,857
Available for sale securities........................................... 34,091
Federal funds sold and securities purchased under
agreements to resell .............................................. 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income $124,827
Less: Allowance for loan and lease losses 2,753
Less: Allocated transfer risk reserve 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ............................................ 122,061
Trading Assets.......................................................... 56,042
Premises and fixed assets (including capitalized
leases)................................................................. 2,904
Other real estate owned ................................................ 306
Investments in unconsolidated subsidiaries and
associated companies .............................................. 232
Customers' liability to this bank on acceptances
outstanding........................................................ 2,092
Intangible assets....................................................... 1,532
Other assets............................................................ 10,448
------
TOTAL ASSETS............................................................$280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Deposits
In domestic offices ....................................................... $ 91,249
Noninterest-bearing ............................................. $38,157
Interest-bearing ................................................ 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ................................................................. 70,192
Noninterest-bearing ..............................................$ 3,712
Interest-bearing ................................................. 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ............................................................ 35,185
Demand notes issued to the U.S. Treasury ....................................... 1,000
Trading liabilities ............................................................ 42,307
Otherborrowed money (includes mortgage indebtedness and obligations under
calitalized leases):
With a remaining maturity of one year or less ............................. 4,593
With a remaining maturity of more than one year .
through three years ................................................ 260
With a remaining maturity of more than three years ....................... 146
Bank's liability on acceptances executed and outstanding ....................... 2,092
Subordinated notes and debentures .............................................. 5,715
Other liabilities .............................................................. 11,373
TOTAL LIABILITIES .............................................................. 264,112
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EQUITY CAPITAL
Perpetual preferred stock and related surplus .................................. 0
Common stock ................................................................... 1,211
Surplus (exclude all surplus related to preferred stock) ...................... 10,283
Undivided profits and capital reserves ......................................... 5,280
Net unrealized holding gains (losses)
on available-for-sale securities ............................................... (193)
Cumulative foreign currency translation adjustments ............................ 16
TOTAL EQUITY CAPITAL ........................................................... 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ........................................... $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
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