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As filed with the Securities and Exchange Commission on February 23, 1996
Registration No.33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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TELXON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1666060
(State of Incorporation) ------------------
(I.R.S. Employer
Identification No.)
3330 West Market Street
Akron, Ohio 44333
(216) 867-3700
(Address and telephone number of principal executive offices)
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Copies to:
Robert F. Meyerson Robert A. Goodman, Esq.
Chairman and Chief Executive Officer Ronald I. Weiss, Esq.
3330 West Market Street Goodman Weiss Miller Goldfarb
Akron, Ohio 44333 100 Erieview Plaza, 27th Floor
(216) 867-3700 Cleveland, Ohio 44114
(216) 696-3366
(Agents to receive comments and
other communications)
(Name, address and telephone number of agents for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, check the
following box. / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following box. / /
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CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed Maximum Proposed Amount of
Title of each class of Offering Price Maximum Aggregate Registration
Securities to be Registered Amount to be Registered per Security (1) Offering Price (1) Fee
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<S> <C> <C> <C> <C>
5 3/4% Convertible $82,500,000 100% $82,500,000 $28,448.48
Subordinated Notes due
2003.
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Common Stock, $.01 par 3,000,000 shares (2) Not applicable (2) Not applicable (2) NONE (2)
value per share
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<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 475(i) of the Securities Act of 1933, as
amended.
(2) There are being registered hereunder the number of shares of Common Stock required at the initial conversion price for
conversion of the Notes being registered hereunder, together with such additional indeterminate number of shares as may become
issuable upon conversion by reason of adjustments in the conversion price. Under the terms of the Rights Agreement, dated as of
August 27, 1987, between the registrant and Ameritrust Company National Association, as Rights Agent, until the Distribution
Date (as defined therein), each share of Common Stock issued upon conversion will also evidence one Common Stock purchase right
created under such Agreement. No registration fee is required for Common Stock reserved for conversion or the associated
purchase rights, because such shares and purchase rights will be issued for no additional consideration.
============================================================================================================================
</TABLE>
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> 3
SUBJECT TO COMPLETION, DATED FEBRUARY 23, 1996
$82,500,000
3,000,000 Shares
TELXON CORPORATION
5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2003
(Interest payable January 1 and July 1)
Common Stock, par value $.01 per share
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This Prospectus relates to the resale of $82,500,000 aggregate principal
amount of 5 3/4% Convertible Subordinated Notes due 2003 (the "Notes") of Telxon
Corporation, a Delaware corporation ("Telxon" or the "Company"), issued in a
private placement on December 12, 1995 (the "Debt Offering"), and the resale of
up to 3,000,000 shares of the Common Stock, par value $.01 per share (the
"Common Stock"), of the Company which are initially issuable upon conversion of
Notes by any holders of Notes that did not purchase the Notes under the
Registration Statement (of which this Prospectus is a part). The Registration
Statement (of which this Prospectus is a part) does not cover the issuance of
shares of Common Stock upon conversion of the Notes into shares of Common
Stock. The Notes and such shares of Common Stock issued upon conversion of the
Notes may be offered from time to time for the accounts of holders of Notes
named herein (the "Selling Securityholders"). See "Plan of Distribution."
Information concerning the Selling Securityholders may change from time to time
and will be set forth in Supplements to this Prospectus. The Company will not
receive any proceeds from the offering of the Notes or the shares of Common
Stock issuable upon conversion thereof.
The aggregate principal amount of Notes that may be offered by the
Selling Securityholders pursuant to this Prospectus is $82,500,000. As of the
date of this Prospectus, the aggregate principal amount of Notes outstanding is
$82,500,000.
The Notes are convertible at any time prior to maturity, unless
previously redeemed or repurchased, into shares of Common Stock at an initial
conversion price of $27.50 per share (equivalent to an initial conversion rate
of approximately 36.36 shares per $1,000 principal amount of Notes), subject to
adjustment under certain circumstances. The outstanding Common Stock is traded
on the Nasdaq National Market (Symbol: "TLXN"). On February 16, 1996, the last
reported sale price of the Common Stock on the Nasdaq National Market was
$19.75 per share.
Interest on the Notes is payable semi-annually on January 1 and July 1 of
each year commencing on July 1, 1996. The Notes are not redeemable by the
Company
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prior to January 5, 1999. On or after January 5, 1999, the Notes are
redeemable, in whole or in part, at the option of the Company at the redemption
prices set forth herein, plus accrued interest. The Notes are redeemable at the
option of the holder upon the occurrence of a Repurchase Event (as defined) at
the principal amount thereof, plus accrued interest.
The Notes are unsecured obligations of the Company and are subordinated
in the right of payment to all existing and future Senior Indebtedness (as
defined). As of December 31, 1995, the total amount of Senior Indebtedness
outstanding was approximately $24.4 million. See "Description of the Notes."
Because a significant portion of the Company's operations are conducted through
its subsidiaries, claims of creditors and holders of indebtedness of such
subsidiaries have priority with respect to the assets and earnings of such
subsidiaries over the claims of creditors of the Company, including holders of
the Notes.
All of the Notes were initially issued pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) thereof and were transferred to the
Selling Securityholders pursuant to Rule 144A(d)(4) under the Securities Act,
Regulation S under the Securities Act and institutional accredited investors
pursuant to Rule 501(a)(1), (2), (3) or (7) under the Securities Act. Prior to
the registration of the Notes under the Registration Statement (of which this
Prospectus is a part), the Notes have been eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market.
The Company has been advised by the Selling Securityholders that the
Selling Securityholders, acting as principals for their own account, directly,
through agents designated from time to time, or through brokers, dealers, agents
or underwriters also to be designated, may sell all or a portion of the Notes or
shares of Common Stock which may be offered hereby by them from time to time on
terms to be determined at the time of sale. The aggregate proceeds to the
Selling Securityholders from the sale of Notes and Common Stock which may be
offered hereby by the Selling Securityholders will be the purchase price of such
Notes or Common Stock less commissions, if any. For information concerning
indemnification arrangements between the Company and the Selling
Securityholders, see "Plan of Distribution."
The Selling Securityholders and any brokers, dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Notes or shares of Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by such broker-dealers, agents or underwriters and any
profit on the resale of the Notes or shares of Common Stock purchased by them
may be deemed to be underwriting commission or discounts under the Securities
Act.
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The Company will not receive any of the proceeds from the sale of the
Notes or Common Stock. The Company has agreed to bear certain expenses in
connection with the registration and sale of the Common Stock being offered by
the Selling Securityholders.
The Company intends that the Registration Statement of which this
Prospectus is a part will remain effective until three years after the date
of the Debt Offering or such earlier date as of which such Registration
Statement is no longer required for the transfer of the subject securities.
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SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES
OFFERED HEREBY.
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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.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by any other person. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities covered by this Prospectus, nor does
it constitute an offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation may not lawfully be made.
Itronix(R) is a registered trademark of the Company's Itronix
Corporation subsidiary. Aironet is a trademark of the Company's Aironet
Wireless Communications, Inc. subsidiary. All rights are fully reserved.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
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AVAILABLE INFORMATION ...................................... 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ............ 6
PROSPECTUS SUMMARY ......................................... 7
RISK FACTORS ............................................... 11
USE OF PROCEEDS ............................................ 20
SELLING SECURITYHOLDERS .................................... 20
DESCRIPTION OF NOTES ....................................... 23
DESCRIPTION OF CAPITAL STOCK ............................... 36
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS .................. 40
ERISA CONSIDERATIONS ....................................... 42
PLAN OF DISTRIBUTION ....................................... 43
LEGAL MATTERS .............................................. 45
EXPERTS .................................................... 45
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the following regional offices of the
Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Such reports, proxy statements and other information
concerning the Company may be inspected at the office of the
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National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (the "Registration Statement") of which this
Prospectus is a part, including exhibits relating thereto, which has been filed
with the Commission under the Securities Act in Washington, D.C. Statements made
in this Prospectus as to the contents of any referenced contract, agreement or
other document are not necessarily complete, and each such statement shall be
deemed qualified in its entirety by reference thereto. Copies of the
Registration Statement and the exhibits and schedules thereto may be obtained,
upon payment of the fee prescribed by the Commission, or may be examined without
charge, at the office of the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the
Commission (File No. 0-11402) and are incorporated by reference in this
Prospectus:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995, including the portions of the
Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders incorporated by reference therein;
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995;
(c) The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995;
(d) The Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995;
(e) The Company's Registration Statement on Form 8-A
filed on December 19, 1983, with respect to the Company's
Common Stock, and Amendment No. 1 thereto filed May 21, 1992,
containing information relating to the Company's Restated
Certificate of Incorporation and Common Stock purchase rights;
(f) The Company's Current Report on Form 8-K dated
November 27, 1995;
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(g) The Company's Current Report on Form 8-K dated
December 7, 1995; and
(h) The Company's Reports of Changes in Number of Shares
Outstanding on Form 10-C through October 25, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Notes and Common Stock pursuant hereto shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes 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.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such documents should be directed
to Investor Relations, Telxon Corporation, 3330 West Market Street, Akron, Ohio
44333.
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified
in its entirety by the detailed information appearing elsewhere in this
Prospectus or incorporated by reference herein. For a discussion of certain risk
factors in connection with this offering, see "Risk Factors."
THE COMPANY
Telxon designs, manufactures, integrates, markets and supports wireless
and mobile transaction solutions. The Company's portable tele-transaction
computers ("PTCs") and its wireless local area network ("LANs") Systems are
integrated with customer-specific enterprise computer systems and third party
wide area networks ("WANs"), enabling mobile workers to process data on a
real-time basis at the point-of-transaction. Telxon customers' need to reduce
cycle times, improve asset
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management and create new services drives their requirement for real-time
information throughout their organizations. Telxon products are sold world-wide
for use in vertical markets including retail, manufacturing, field service,
transportation/logistics, insurance/finance, healthcare, and route accounting.
For more than two decades, the Company has developed and marketed
portable handheld terminals to retailers and wholesalers in the grocery, drug
and hardware segments. More recently, commercial demand has increased as the use
of wireless PTC systems, including newly developed pen-based workslates and
ruggedized notebook computers, has expanded into other retail segments,
including mass merchandisers, department stores and specialty store chains. An
increasing number of new markets are also adopting mobile transaction solutions;
these include manufacturing, field service, transportation/logistics,
insurance/finance, healthcare, utilities and public safety.
The Company's core PTC and wireless data communication products
integrate microprocessors, memory, displays, keyboards, touch screens, character
recognition software, bar code readers, printers, telephone modems and local
and/or wide area radios. Through a combination of proprietary
application-specific integrated circuit ("ASIC") technology, data radio
technology and market-responsive "fashion packaging," the Company seeks to
deliver cost-effective, tailored solutions that meet the technical and ergonomic
needs of the Company's targeted markets. Telxon pioneered the commercialization
of spread spectrum radio frequency ("RF") technology in LANs for vertical market
applications. The Company's wireless data networks are designed for integration
of wireless access points, RF client-server controller boards and microcellular
software. Telxon's microcellular architecture network software allows PTCs to
roam seamlessly through large buildings or geographic areas with uninterrupted
data flow.
At the center of Telxon's marketing efforts is its Vertical Systems
Group ("VSG"). The VSG is composed of industry-specific marketing groups which
partner with the Company's own sales and technical support personnel and a
network of value-added resellers and system integrators to provide solutions for
targeted vertical markets.
The Company delivers products, systems and services to worldwide
customers through its Global Sales, Marketing and Technical Services Group,
consisting of the North American, International and Global Technical Services
Divisions. The North American and International Divisions sell through direct
sales forces and through selected value-added resellers, system integrators,
original equipment manufacturers, distributors and strategic partners. The North
American Division maintains sales offices throughout the continental United
States and Canada. International sales are supported through subsidiaries
located in Australia, Belgium, France, Germany, Italy, Japan, Spain and the
United Kingdom and distributors in Africa, Asia, Europe, Mexico,
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the Middle East and South America. Distributor support offices are located in
Belgium, Brazil and Singapore. The Global Technical Services Division is
responsible for developing and integrating PTC products, application systems,
wireless networks and systems integration services for the North American and
International Divisions.
Telxon products are assembled and tested for quality assurance at the
Company's manufacturing and warehouse facility located in Houston, Texas. The
Company's National Service Center is located in an adjacent facility on the
Houston campus. The Company also operates manufacturing facilities through its
Itronix(R) subsidiary in Spokane, Washington and through its Aironet(TM)
subsidiary in Markham, Ontario, Canada. The Company maintains an International
Procurement Office in Singapore to procure materials, sub-assemblies and some
finished products from lower cost suppliers.
The Company's corporate headquarters are located at 3330 West Market
Street, Akron, Ohio 44333, (216) 867-3700. Except as the context may otherwise
require, the terms "Telxon" and the "Company" also include all subsidiaries.
THE OFFERING
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Issuer ............................. Telxon Corporation.
Securities Offered ................. $82,500,000 aggregate principal amount of 5 3/4%
Convertible Subordinated Notes due 2003.
Interest ........................... Interest is payable semiannually on January 1 and July 1 of
each year at 5 3/4% per annum commencing July 1, 1996.
See "Description of Notes -- General."
Maturity ........................... January 1, 2003.
Conversion Rights .................. The Notes are convertible into Common Stock at the option
of the holder at any time after February 10, 1996 and at or
before maturity, unless previously redeemed, at a
conversion price of $27.50 per share (equivalent to a
conversion rate of approximately 36.36 shares per $1,000
principal amount of Notes), subject to adjustment in certain
events. See "Description of Notes--Conversion of Notes."
Redemption at the
Option of the
Company ............................. The Notes are redeemable at any time on or after
January 5, 1999, in whole or in part, at the option of the
</TABLE>
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<TABLE>
<S> <C>
Company, at declining redemption prices set
forth herein, together with accrued interest.
See "Description of Notes--Optional Redemption
by the Company."
Repurchase at Option
of Holders Upon
Repurchase Event .................... In the event any Repurchase Event (as defined)
occurs, each holder of Notes may require the
Company to repurchase all or any part of the
holder's Notes at 100% of the principal amount
thereof plus accrued interest to the repurchase
date. See "Description of Notes--Repurchase at
Option of Holders Upon Repurchase Event."
Subordination ....................... The Notes are unsecured and subordinated to all
existing and future Senior Indebtedness (as
defined) and are effectively subordinated to all
existing and future indebtedness and other
liabilities of subsidiaries of the Company. At
December 31, 1995, the Company had approximately
$24.4 million of outstanding indebtedness
constituting Senior Indebtedness and the
subsidiaries of the Company had approximately
$31.4 million of outstanding indebtedness and
other liabilities (excluding intercompany
liabilities and approximately $3.1 million in
subsidiaries' notes and letters of credit
guaranteed by the Company which are included in
the amount of Senior Indebtedness) to which the
Notes were effectively subordinated. The
Indenture contains no limitations on the
incurrence of additional indebtedness or other
liabilities by the Company and its subsidiaries.
See "Description of Notes--Subordination of
Notes."
Use of Proceeds ..................... The Company will not receive any of the proceeds
from the sale of any of the Notes or the Common
Stock issuable upon conversion thereof.
Trading ............................. Prior to the resale thereof pursuant to
this Registration Statement, each of the Notes
was eligible for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL")
Market. Notes sold pursuant to this
Registration Statement will no longer be
eligible for trading in the PORTAL Market. The shares
of Common Stock issuable upon conversion of the Notes have
been authorized for listing on the Nasdaq
National Market ("NNM") upon official notice of
issuance. The Company's
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<TABLE>
<S> <C>
Common Stock is traded on the NNM under the
symbol TLXN.
</TABLE>
RISK FACTORS
The following risk factors should be considered carefully in addition
to the other information contained in or incorporated by reference in this
Prospectus before purchasing the Notes offered hereby:
FACTORS AFFECTING OPERATING RESULTS. The Company's results of operations
are affected by a wide variety of factors, including economic conditions
specific to the industries in which it competes, decreases in average selling
price over the life of any particular product, the timing and manufacturing
complexity of new product introductions (both by the Company and its
competitors), the timely implementation of new manufacturing technologies, the
ability to safeguard patents and other intellectual property in a rapidly
evolving market, and the rapid increase in demand for some products and the
rapid decline in demand for others. Market demand for the Company's products,
particularly for those most recently introduced, can be difficult to predict.
This could lead to revenue volatility if the Company were unable to provide
sufficient quantities of specified products in a given quarter or if demand for
new products does not develop as anticipated.
The Company's shipments during any particular quarter generally
represent orders received either during that quarter or shortly before the
beginning of that quarter. Shipments for orders received in a fiscal quarter are
generally filled from products manufactured in that quarter. The Company
endeavors to maintain sufficient levels of raw materials and components to meet
the delivery requirements of its customers. There can be no assurance, however,
that during any given quarter the Company has or can procure the appropriate mix
of raw materials and components to accommodate any given order. Therefore, the
Company's financial performance in any given quarter is dependent to a
significant degree upon obtaining orders in that quarter which can be
manufactured and delivered to its customers in that quarter. Financial
performance for any given quarter cannot be known or fully assessed until near
the end of that quarter.
The Company has historically recognized a substantial portion of its
product revenues in the last month of each quarter. A significant portion of the
Company's expenses is relatively fixed, and the timing of increases or decreases
in such expenses is based in large part on the Company's forecast of future
revenues. As a result, the Company may be unable to quickly adjust expenses to
appropriate levels in the event that the level of actual or potential business
is greater or lesser than that anticipated by the Company, which could have a
material adverse effect on the Company's results of operations.
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COMPETITION. The markets in which the Company competes are intensely
competitive and are characterized by rapid technological change, introduction of
new products with improved performance characteristics, product obsolescence and
price erosion. Failure to keep pace with product and technological advances
could negatively affect the Company's competitive position and prospects for
growth. The Company competes directly and indirectly with a number of companies
in its market segments. Frequent competitors include Symbol Technologies, Inc.
("Symbol") and Norand Corporation. In addition, companies that are participants
in the broader computer industry are potential competitors. Some of the
Company's competitors and potential competitors have substantially greater
financial, technical, intellectual property, marketing and human resources than
the Company.
DEPENDENCE ON NEW PRODUCTS. The Company's future success depends on its
ability to develop and introduce on a timely basis new or enhanced products
which will compete effectively on the basis of price and performance. The
success of new product introductions is dependent upon several factors,
including timely completion of new product designs, the ability to manufacture
new products, achievement of acceptable margins and market acceptance.
There can be no assurance that the Company's research and development
activities will lead to the identification or successful introduction of new or
enhanced products or that the Company will not encounter delays or problems in
connection therewith. Furthermore, customers may defer purchases of existing
products in anticipation of new or enhanced products. Moreover, there can be no
assurance that there will not be delays in commencing volume production of such
products or that such products will ultimately be commercially successful.
In addition, the average selling prices for computer products generally
decrease over the products' lives. To mitigate such decreases, the Company seeks
to reduce manufacturing costs of existing products and to introduce new
products, functions and other price/performance-enhancing features. To the
extent that such cost reductions, product enhancements and new product
introductions do not occur in a timely manner or do not achieve market
acceptance, the Company's operating results could be materially adversely
affected.
PRODUCT AND PROCESS DEVELOPMENT AND TECHNOLOGICAL CHANGE; RECENT
ACQUISITIONS AND MANAGEMENT OF GROWTH. Markets for the Company's products are
characterized by rapid changes in both product architectures and process
technologies. The Company believes that its future success will depend, in part,
upon its ability to continue to improve its product architectures and develop
new technologies in order to remain competitive.
The Company's sales have been and continue to be concentrated in the
retail industry. The Company's future growth will depend, in part, on its
ability to
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successfully penetrate and expand its sales in new markets. There can be no
assurance that such penetration and expansion of new markets can be achieved.
The Company believes its future success is also dependent, in part, upon
its ability to continue to enhance and broaden its current line of products
through internal development and the acquisition of new businesses and
technologies. There can be no assurance that the Company will be able to
identify, acquire or profitably operate new businesses or otherwise implement
its growth strategy successfully. For the Company to manage its growth and
integrate any newly acquired entities, it must continue to improve operations
and financial and management information systems and effectively motivate and
manage employees. If the Company is unable to successfully pursue and manage
such growth, its business and results of operations could be materially
adversely affected.
INTELLECTUAL PROPERTY. The Company regards certain of its hardware and
software products as proprietary and relies on a combination of United States
and foreign patent, copyright, trademark and trade secret laws, as well as
license and other contractual confidentiality provisions, to protect its
proprietary rights. There can be no assurance that the Company's pending United
States or foreign patent applications will be approved or that its issued United
States or foreign patents or pending applications will not be challenged,
invalidated or circumvented by competitors, or that rights granted thereunder
will provide meaningful proprietary protection. Despite the Company's efforts to
safeguard and maintain its proprietary rights, there can be no assurance that
the Company will be successful in doing so or that the Company's competitors
will not independently develop or patent or license from others technologies
that are substantially equivalent or superior to the Company's technologies.
The Company's products also utilize hardware and software technologies
licensed from third parties, including patent rights licensed from Symbol
necessary for the Company's manufacture and sale of its integrated laser
scanning terminals which account for a material portion of the Company's current
sales. There can be no assurance that the Company will be able to license needed
technologies in the future. An early termination of certain of these license
agreements (including the Symbol license) could have a material adverse effect
on the Company's ability to market certain of its products and, hence, on its
business, results of operations and financial condition.
The Company believes that its products, processes and trademarks do not
infringe on the rights of third parties, but there can be no assurance that
third parties will not assert infringement or other related claims against the
Company or its licensors in the future, that any such assertions by third
parties will not result in litigation or that the Company and/or its licensors
would prevail in any such litigation or be able to license any valid and
infringed patents or other intellectual property from
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third parties on commercially reasonable terms. Litigation, regardless of its
outcome, could result in substantial cost and diversion of resources of the
Company. Any infringement claim or related litigation against the Company could
materially adversely affect the Company's ability to market its products and,
hence, its business, financial condition and results of operations.
DEPENDENCE UPON KEY SUPPLIERS AND MANUFACTURING CAPABILITY. Many
components and sub-assemblies for the Company's products are purchased from
outside sources. Certain of the Company's products, sub-assemblies and
components are procured from a single source supplier and others are procured
from only a limited number of suppliers. The Company has in the past
encountered, and may in the future encounter, shortages of supplies and delays
in deliveries of such products, sub-assemblies and components. While such
shortages and delays could have a material adverse effect on the Company's
ability to ship its products, the Company has not suffered any such effects as
the result of past shortages and delays. Additionally, the Company does not
believe that the loss of any one supplier would have a material long-term
adverse effect on its business, although set-up costs and delays could occur if
the Company changes any single source supplier.
Certain of the Company's manufacturing processes are highly complex,
require advanced and costly equipment and are continuously being modified in an
effort to reduce product costs and improve performance. From time to time, the
Company has experienced production difficulties that have caused delivery delays
and quality problems. There can be no assurance that the Company will not
experience manufacturing problems and product delivery delays in the future as a
result of, among other things, changing process technologies, ramping production
and installing new equipment at its facilities.
The Company's principal manufacturing and service facility is located in
Houston, Texas. If the Company were unable to use this facility, as a result of
a natural disaster or otherwise, the Company's operations would be materially
adversely affected until the Company could obtain other production and service
capability.
Telxon's International Procurement Office located in Singapore provides
the Company with the opportunity to procure materials and components from lower
cost suppliers, as well as the opportunity to employ lower cost manufacturing
capabilities. In addition, the Company subcontracts the manufacture of certain
of its products outside of the United States. International procurements,
however, are subject to the risks inherent in foreign operations, such as
protective tariffs, trade disputes, export/import controls and transportation
delays and interruptions.
RISKS OF SALES OUTSIDE OF THE UNITED STATES. In recent years,
approximately 26-30% of the Company's revenues has been from sales to customers
located outside of the United States. Sales outside of the United States carry a
number of inherent
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<PAGE> 17
risks, including risks of currency exchange fluctuations, the need for export
licenses, tariffs and other potential trade barriers and regulations,
transportation delays and interruptions, reduced protection for intellectual
property rights in some countries, the impact of recessionary environments in
economies outside the United States and generally longer receivables collection
periods. The Company's business is also subject to the risks associated with
changes in domestic or foreign regulatory requirements and safety and quality
standards. The Company cannot predict whether quotas, duties, taxes or other
charges or restrictions will be imposed by the United States or other countries
upon the importation or exportation of the Company's products or supplies in the
future or what, if any, effect such actions would have on the Company's
financial condition and results of operations.
GOVERNMENT REGULATIONS. The Company believes that all of its products
are in material compliance with currently applicable government regulations. The
European Economic Community recently promulgated new electromagnetic emissions
("EMC") standards which required various Company products to be re-certified,
and in some cases, modified by January 1, 1996. Most of the products which the
Company intends to sell into the European market have been modified to bring
them into compliance with these new standards, but there can be no assurance
that the remaining products can be made compliant. In addition, future
regulatory changes may require modifications to certain of the Company's
products in order for the Company to continue to be able to manufacture and
market these products. There can be no assurance that more stringent regulations
will not be issued in the future which could have a material adverse effect on
the business of the Company. In addition, sales of the Company's products could
be adversely affected if more stringent safety standards are adopted by
customers.
Certain of the Company's products intentionally transmit radio signals
as part of their normal operation. These products are subject to regulatory
approval by the Federal Communication Commission ("FCC") and corresponding
authorities in each country in which they are marketed. Such approvals are
typically valid for the life of the product unless and until the circuitry of
the product is altered in material respects, in which case a new approval may be
required.
Current FCC regulations permit license-free operations of FCC certified
spread spectrum wireless products in specific frequency bands. While the Company
believes that, in practice, spread spectrum communication devices generally have
not caused material interference with other transmission sources because of the
relatively low power output levels of spread spectrum devices, spread spectrum
users are secondary users who have a lower priority than instrumentation and
non-communications devices and licensed users operating in these same bands. In
the event there is interference between higher priority users and spread
spectrum users, a higher priority user can require the spread spectrum user to
curtail transmissions that create interference. This
15
<PAGE> 18
could require the Company and its customers, as well as other companies reliant
on spread spectrum technology, to modify their products to avoid interference.
Regulatory changes, including changes in the allocation of available
frequencies, could significantly impact the Company's operations by restricting
the Company's development efforts, obsoleting current products or increasing the
opportunity for additional competition. There can be no assurance that new
regulations will not be promulgated which could have a material adverse effect
on the Company's business and results of operations.
The Company also is subject to regulatory requirements in international
markets, and there can be no assurance that the Company will be able to comply
with regulations in any particular country. Changes in, or the failure by the
Company to comply with, applicable domestic and international regulations could
have a material adverse effect on the Company's business and operating results.
DEPENDENCE ON KEY PERSONNEL. The Company's future depends in large part
on the continued service of its key technical, marketing and management
personnel and on its ability to continue to attract and retain qualified
employees, particularly those highly skilled design, process and test engineers
involved in the manufacture of existing products and the development of new
products and processes. The competition for such personnel is intense, and the
loss of key employees could have a material adverse effect on the Company's
business, financial condition and results of operations.
HEALTH AND SAFETY RISKS. There has been publicity regarding the
potentially adverse effects of electromagnetic emissions from cellular
telephones. While the Company's wireless networking products also emit
electromagnetic radiation, the Company believes its products pose no material
safety concerns because of the low power output of the Company's products and
the distance typically maintained between the Company's products and the end
user in normal operation. There can be no assurance, however, that safety issues
related to the Company's products will not arise in the future. Any such safety
issues could have a material adverse effect on the Company's business. Even if
such safety concerns prove to be baseless, the resultant publicity could have a
material adverse effect on the Company's stock price and its ability to market
its products.
PENDING LITIGATION. The Company, former President and Chief Executive
Officer Raymond D. Meyo and then current President, Chief Operating Officer and
Chief Financial Officer Dan R. Wipff are defendants in a federal court class
action suit filed on behalf of Telxon stockholders who purchased Common Stock
between May 20, 1992 and December 14, 1992. The plaintiffs assert claims for
fraud on the market and negligent misrepresentation, based upon alleged
misrepresentations and omissions with respect to the Company's financial
performance and prospects, and for alleged
16
<PAGE> 19
trading activities of the named individual defendants. The class action seeks
unspecified compensatory damages, the imposition of a constructive trust on
certain of the defendants' assets and other unspecified extraordinary equitable
and/or injunctive relief, interest, attorneys' fees and costs. On September
14, 1995, subsequent to the certification of the class and the completion of
discovery (other than of experts), the trial court granted each defendant
summary judgment on all counts. The plaintiffs have appealed the granting of
summary judgment to the defendants to the United States Sixth Circuit Court of
Appeals, and the Company presently expects that the parties' briefing of the
appeal may be completed during the fourth quarter of fiscal 1996. No date for
oral argument of the appeal has been set. The defendants intend to continue
vigorously defending the class action. There can be no assurance that the
summary judgment as to the Company will be upheld on appeal on all counts or as
to the ultimate outcome of any portion of the case with respect to which the
summary judgment may be reversed.
The Company is a nominal defendant in a stockholder derivative action
filed in the Delaware Court of Chancery which, following the court's dismissal
of the plaintiff's allegations of corporate waste, is in the early stages of
discovery on the remaining claims of breach of fiduciary duty with respect to
certain transactions entered into by Telxon and compensation amounts paid by the
Company. The other defendants are Robert F. Meyerson, Chairman of the Board,
Chief Executive Officer and a director; Dan R. Wipff, then President, Chief
Operating Officer, Chief Financial Officer and a director; Robert A. Goodman,
Corporate Secretary and an outside director; Norton W. Rose, an outside director
and Dr. Raj Reddy, an outside director. The complaint seeks an accounting,
injunction, rescission, attorneys' fees and costs, but no monetary relief is
sought by the plaintiff from the Company.
ENVIRONMENTAL MATTER. The Company has been advised by the owner of a
facility formerly leased by the Company ("Facility") that there is alleged soil
contamination at the Facility which the owner asserts was caused and should be
remediated by the Company. To date, there is no outstanding claim for damages,
and no suit has been threatened or filed. The Company, with the assistance of
professional environmental consultants which have been engaged to investigate
the matter and assist the Company, is presently attempting to determine if the
Facility is, in fact, contaminated and, if so, the scope, nature and cause of
that contamination. Once obtained, such information will permit the Company to
determine the extent of its responsibility, if any, relating to any such
contamination, as well as the potential cost of remediation, if such remediation
is ultimately required to be undertaken by the Company.
At present, because the necessary investigation has only recently been
initiated, the Company cannot determine if remediation will be required to be
undertaken by the Company and, if required, what the ultimate remediation cost
would be. The Company has been advised by its various insurance providers that,
based on
17
<PAGE> 20
their preliminary examination of the matter, their policies do not provide
coverage to the Company relating to the subject contamination. The Company has
not conceded the denial of such coverage and may hereafter assert claims for
coverage, if that becomes appropriate.
The Company, based on its initial assessment of the situation and its
knowledge of the Facility, believes that the ultimate resolution of the matter
will not have a material adverse effect on the Company's business, financial
condition or results of operation. Notwithstanding the foregoing, it is possible
that if the Company were to be required to remediate any environmental
contamination relating to the Facility, the associated costs could have a
material adverse effect on results of operations for one or more quarters in
which the associated charge(s) would be taken.
SUBORDINATION. The Notes are unsecured and subordinated in right of
payment in full to all existing and future Senior Indebtedness of the Company.
As a result of such subordination, in the event of any insolvency, liquidation
or reorganization of the Company, default on Senior Indebtedness, or upon
acceleration of the Notes due to an event of default, the assets of the Company
will be available to pay obligations on the Notes only after all Senior
Indebtedness has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes then outstanding. The
Notes are effectively subordinated to the liabilities, including trade payables,
of the Company's subsidiaries. The Indenture does not prohibit or limit the
incurrence of Senior Indebtedness or the incurrence of other indebtedness and
other liabilities by the Company or its subsidiaries, and the incurrence of
additional indebtedness and other liabilities by the Company or its subsidiaries
could adversely affect the Company's ability to pay its obligations on the
Notes. As of December 31, 1995, the Company had approximately $24.4 million of
outstanding indebtedness constituting Senior Indebtedness, and the subsidiaries
of the Company had approximately $31.4 million of indebtedness and other
liabilities (excluding intercompany liabilities and approximately $3.1 million
in subsidiaries' notes and letters of credit guaranteed by the Company which are
included in the amount of Senior Indebtedness) to which the Notes were
effectively subordinated. The Company anticipates that from time to time it and
its subsidiaries will incur additional indebtedness, including Senior
Indebtedness. See "Description of Notes -- Subordination of Notes."
CORPORATE STRUCTURE. The Notes are obligations exclusively of the
Company. Since a significant portion of the operations of the Company are
conducted through subsidiaries, the cash flow and the consequent ability to
service debt, including the Notes, of the Company, are, to that extent,
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those subsidiaries to,
the Company. The subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any amounts due pursuant to the
Notes or to make any funds available therefor, whether
18
<PAGE> 21
by dividends, loans or other payments. In addition, the payment of dividends and
the making of loans and advances to the Company by its subsidiaries may be
subject to statutory or contractual restrictions, are dependent upon the
earnings of those subsidiaries and are subject to various business
considerations. Moreover, any right of the Company to receive assets of any of
its subsidiaries upon their liquidation or reorganization (and the consequent
right of the holders of the Notes to participate in those assets) is effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interests in the assets of such subsidiary and
any indebtedness of such subsidiary senior to that held by the Company.
Because a significant portion of the Company's operations are conducted
through its subsidiaries, claims of holders of indebtedness of such
subsidiaries, as well as claims of trade creditors of such subsidiaries, have
priority with respect to the assets and earnings of such subsidiaries over the
claims of creditors of the Company, including holders of the Notes. As of
December 31, 1995, there was approximately $31.4 million of indebtedness and
other obligations of subsidiaries of the Company (excluding intercompany
liabilities of approximately $3.1 million in subsidiaries' notes and letters of
credit guaranteed by the Company) outstanding as to which the Notes were
effectively subordinated. The Indenture does not limit the amount of additional
indebtedness which the Company can create, incur, assume or guarantee, nor does
the Indenture limit the amount of indebtedness which any subsidiaries can
create, incur, assume or guarantee.
LIMITATIONS ON REPURCHASE OF NOTES. Upon the occurrence of a Repurchase
Event (as defined), each holder of Notes may require the Company to repurchase
all or a portion of such holder's Notes. If a Repurchase Event were to occur,
there can be no assurance that the Company would have sufficient financial
resources, or would be able to arrange financing to pay the repurchase price for
all Notes tendered by holders thereof. In addition, the terms of certain of the
Company's existing debt agreements prohibit the Company from purchasing any
Notes and also identify certain events that would constitute Repurchase Events,
as well as certain other change in control events with respect to the Company or
certain of its subsidiaries, that would constitute an event of default under
such debt agreements. Any future credit agreements or other agreements relating
to other indebtedness (including other Senior Indebtedness) to which the Company
becomes a party may contain similar restrictions and provisions. In the event a
Repurchase Event occurs at a time when the Company is prohibited from purchasing
Notes, the Company could seek the consent of its lenders to the purchase of the
Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company would remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a further
default
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<PAGE> 22
under certain of the Company's existing debt agreements and may constitute a
default under the terms of other indebtedness that the Company may enter into
from time to time. In such circumstances, the subordination provisions in the
Indenture would prohibit payments to the holders of Notes. See "Description of
Notes -- Repurchase at Option of Holders Upon Repurchase Event."
VOLATILITY OF PRICE OF STOCK AND NOTES. There has been a history of
significant volatility in the market prices for securities of technology
companies, including the Company's Common Stock and 7 1/2% Convertible
Subordinated Debentures Due 2012. It is likely that the market price of the
shares of the Company's Common Stock and its outstanding Convertible
Subordinated Debentures Due 2012 will continue to be highly volatile and the
price of the Notes will also be subject to such fluctuations. Factors such as
the timing and market acceptance of new product introductions by the Company,
the introduction of new products by the Company's competitors, loss of key
personnel of the Company, variations in quarterly operating results, changes in
market conditions in technology industries generally, and the other factors
discussed above may have a significant impact on the market price of the
Company's Common Stock, Convertible Subordinated Debentures Due 2012 and the
Notes. Volatility in the price of the Company's Common Stock and Convertible
Subordinated Debentures Due 2012, changes in prevailing interest rates and
changes in perceptions of the Company's creditworthiness may in the future
materially adversely affect the price of the Notes.
ABSENCE OF PUBLIC MARKET FOR THE NOTES. Prior to this offering, there
has been no trading market for the Notes other than through PORTAL. There can
be no assurance that any market for the Notes will develop or, if one does
develop, that it will be maintained. If an active market for the Notes fails to
develop or be sustained, the trading price of such Notes could be materially
adversely affected.
The Notes and the Common Stock issuable upon conversion of the Notes
have not been registered under any state securities laws and, unless and until
so registered, may not be offered or sold except pursuant to an exemption from,
or in a transaction not subject to, registration under applicable state
securities laws. See "Description of Notes -- Registration Rights."
USE OF PROCEEDS
The Notes and the shares of Common Stock offered by the Selling
Securityholders are not being sold by the Company, and the Company will not
receive any proceeds from the sale thereof.
SELLING SECURITYHOLDERS
The Notes were issued by the Company pursuant to a Placement Agreement
dated December 6, 1995, and, except as set forth below, were acquired by the
Selling Securityholders offering Notes hereby in connection with resale
transactions pursuant to Rule 144A under the Securities Act, Regulation S under
the Securities Act, Rule 501(a)(1), (2), (3) or (7) under the Securities Act,
or from other holders acquiring such Notes from prior holders thereof. The
following table sets forth information concerning the principal amount of Notes
beneficially owned by each Selling Securityholder and the number of shares of
Common Stock issuable upon conversion of the Notes (the "Conversion Shares")
which may be offered from time to time pursuant to this Prospectus. Other than
their ownership of Company securities, none of the Selling Securityholders has
had any material relationship with the Company
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<PAGE> 23
within the past three years. The table has been prepared based upon the
information furnished to the Company by Bank One Trust Company, N.A., as
trustee (the "Trustee") for the Notes, by the Depository Trust Company and
by or on behalf of the Selling Securityholders.
<TABLE>
<CAPTION>
Principal
Amount of
Notes Number of
Beneficially Conversion Percentage
Owned Percentage Shares of Common
That May of Notes That May Stock
Name(1) Be Sold (1) Outstanding Be Sold (2) Outstanding (3)
- ------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Bank of Bermuda (New York) Ltd. 300,000 * 10,909 *
Bank of New York 6,510,000 7.89 236,727 1.45
Bankers Trust Company 6,480,000 7.85 235,836 1.45
Bear Stearns Securities Corp. 250,000 * 9,090 *
Boston Safe Deposit & Trust Co. 19,665,000 23.84 715,090 4.27
Chase Manhattan Bank NA 6,405,000 7.76 232,909 1.43
Chemical Bank 330,000 * 12,000 *
Custodial Trust Company 65,000 * 2,363 *
First Interstate Bank of California 5,800,000 7.032 10,909 1.30
First Tennessee Bank, NA Memphis 630,000 * 22,909 *
Fleet Bank of Massachusetts, NA 50,000 * 1,818 *
First National Bank of Boston 80,000 * 2,909 *
First National Bank of Maryland 150,000 * 5,454 *
Harris Trust & Savings Bank 3,330,000 4.04 121,090 *
Investors Fiduciary Trust Company 2,000,000 2.42 72,727 *
Investors Bank & Trust/MF Custody 6,140,000 7.44 223,272 1.37
Lewco Securities Corp. 2,600,000 3.15 94,545 *
Lehman Brothers International
Europe--Prime Broker 500,000 * 18,181 *
Mercantile, Safe Deposit & Trust
Company 3,220,000 3.90 117,090 *
Morgan Stanley Trust Company 1,000,000 1.21 36,363 *
NBD Bank, NA 65,000 * 2,363 *
Nations Bank of Texas Trust #1 75,000 * 2,727 *
Northern Trust Co.-Trust 1,165,000 1.41 42,363 *
OCM Convertible LP 250,000 * 9,090 *
Palisades Partners LP 30,000 * 1,090 *
PNC National Association 1,000,000 1.21 36,363 *
Robertson, Stephens & Company, LP 150,000 * 5,454 *
</TABLE>
21
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
Sanwa Bank California 2,550,000 3.09 92,727 *
SSB--Custodian 11,355,000 13.76 412,909 2.51
Texas Commerce Bank, NA 75,000 * 2,727 *
Wachovia Bank North Carolina 280,000 * 10,181 *
<FN>
- -------------------
* Less than 1%.
(1) The information set forth herein is as of February 2, 1996 and will be updated as required.
(2) Assumes conversion of the full amount of Notes held by such holder at the initial rate of $27.50 in principal amount of
Notes per share of Common Stock. Under the terms of the Indenture, fractional shares will not be issued upon conversion of the
Notes; cash will be paid in lieu of fractional shares, if any.
(3) Computed in accordance with Rule 13d-3(d)(i) promulgated under the Exchange Act based upon the 16,046,668 shares of Common
Stock outstanding as of December 31, 1995, treating as outstanding the number of Conversion Shares shown as being issuable
upon the assumed conversion by the named holder of the full amount of such holder's Notes but not assuming the conversion of
the Notes of any other holder.
</TABLE>
The information concerning the Selling Securityholders may change from
time to time and will be set forth in Supplements to this Prospectus. In
addition, the per share conversion price and, therefore, the number of shares of
Common Stock issuable upon conversion of the Notes is subject to adjustment
under certain circumstances. Accordingly, the aggregate principal amount of
Notes and the number of shares of Common Stock issuable upon conversion of the
Notes may increase or decrease. As of the date of this Prospectus, the aggregate
principal amount of Notes outstanding is $82,500,000 which may be converted into
3,000,000 shares of Common Stock.
The Company and the Selling Securityholders have agreed to indemnify
each other against certain liabilities arising under the Securities Act. The
Company has agreed to pay all expenses incident to the offer and sale of the
Notes and shares of Common Stock to the public pursuant to this Prospectus other
than selling commissions and fees.
Because the Selling Securityholders may offer all or some of the Notes
and shares of Common Stock issued upon conversion thereof pursuant to the
offering contemplated by this Prospectus, and to the Company's knowledge there
are currently no agreements, arrangements or understandings with respect to the
sale of any of the Notes or shares of Common Stock that may be held by the
Selling Securityholders after completion of this offering, no estimate can be
given as to the principal amount of Notes or shares of Common Stock that will be
held by the Selling Securityholders after completion of this offering. See "Plan
of Distribution."
22
<PAGE> 25
DESCRIPTION OF NOTES
The Notes were issued under an indenture dated as of December 1, 1995
(the "Indenture"), between the Company and the Trustee. This Prospectus is
being filed pursuant to the Registration Rights Agreement dated as of
December 1, 1995 by and among the Company and the initial purchasers of the
Notes ("Registration Rights Agreement"). Copies of the Indenture and
Registration Rights Agreement are available from the Trustee upon request by a
registered holder of the Notes. The following summaries of certain provisions
of the Notes, the Indenture and the Registration Rights Agreement do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Notes, the Indenture and the
Registration Rights Agreement, including the definitions therein of certain
terms which are not otherwise defined in this Prospectus. Wherever particular
provisions or defined terms of the Indenture (or the form of Note which is a
part thereof) or the Registration Rights Agreement are referred to, such
provisions or defined terms are incorporated herein by reference.
GENERAL
The Notes are unsecured general obligations of the Company subordinate
in right of payment to certain other obligations of the Company as described
under "Subordination of Notes" and convertible into Common Stock as described
under "Conversion of Notes." The Notes are limited to $82,500,000 aggregate
principal amount, are issued only in denominations of $1,000 or any multiple
thereof and will mature on January 1, 2003, unless earlier redeemed at the
option of the Company or repurchased upon a Repurchase Event (as defined).
The Indenture does not contain any financial covenants or restrictions
on the payment of dividends, the incurrence of Senior Indebtedness or issuance
or repurchase of securities of the Company. The Indenture contains no covenants
or other provisions to afford protection to holders of Notes in the event of a
highly leveraged transaction or a change in control of the Company except to
the extent described under "Repurchase at Option of Holders Upon Repurchase
Event" below.
The Notes bear interest at the annual rate of 5 3/4% from December 12,
1995, payable semi-annually on July 1 and January 1, commencing on July 1,
1996, to holders of record at the close of business on the preceding June 15
and December 15, respectively (other than with respect to a Note or portion
thereof called for redemption on a redemption date, or repurchased in
connection with a Repurchase Event, during the period from the record date to
(but excluding) the next succeeding interest payment date (in which case
accrued interest shall be payable to the extent required to the holder of the
Note or portion thereof redeemed or repurchased) or converted after the record
date and before the next succeeding interest payment date except to the extent
that at the time such Note or portion thereof is submitted for conversion,
23
<PAGE> 26
such Note or portion thereof was required to be accompanied by funds equal to
interest payable on such succeeding interest payment date on the principal
amount so converted; see "Conversion of Notes" below). Interest may, at the
Company's option, be paid by check mailed to such holders, provided that a
holder of Notes with an aggregate principal amount in excess of $5,000,000 will
be paid by wire transfer in immediately available funds at the election of such
holder. Interest will be computed on the basis of a 360-day year composed of
twelve 30-day months.
Principal and premium, if any, will be payable, and the Notes may be
presented for conversion, registration of transfer and exchange, without
service charge, at the office of the Company maintained for such purpose in New
York, New York, which is an agency of the Trustee.
NO LEGENDS. Notes and Common Stock sold hereunder will not bear legends
restricting the transferability thereof.
CONVERSION OF NOTES
The holders of Notes, subsequent to February 10, 1996 through the
close of business on the final maturity date of the Notes, subject to prior
redemption or repurchase, are entitled to convert any Notes or portions thereof
(in denominations of $1,000 or multiples thereof) into Common Stock of the
Company, at the initial conversion price of $27.50 per share of Common Stock,
subject to adjustment as described below. Except as described below, no
adjustment will be made on conversion of any Notes for interest accrued thereon
or for dividends on any Common Stock issued. If any Notes not called for
redemption are converted after a record date for the payment of interest and
prior to the next succeeding interest payment date, such Notes must be
accompanied by funds equal to the interest payable on such succeeding interest
payment date on the principal amount so converted. The Company is not required
to issue fractional shares of Common Stock upon conversion of Notes and, in
lieu thereof, will pay a cash adjustment based upon the market price of Common
Stock on the last business day prior to the date of conversion. In the case of
Notes called for redemption, conversion rights will expire at the close of
business on the business day preceding the day fixed for redemption unless the
Company defaults in payment of the redemption price. A Note in respect of which
a holder is exercising its option to require repurchase upon a Repurchase Event
may be converted only if such holder withdraws its election to exercise its
option in accordance with the terms of the Indenture.
The initial conversion price of $27.50 per share of Common Stock is
subject to adjustment (under formulae set forth in the Indenture) in certain
events, including: (i) the issuance of Common Stock as a dividend or
distribution on Common Stock of the Company; (ii) certain subdivisions and
combinations of the Common Stock; (iii) the issuance to all holders of Common
Stock of certain rights or warrants to purchase
24
<PAGE> 27
Common Stock at less than the Current Market Price (as defined) of the Common
Stock; (iv) the distribution to all holders of Common Stock of shares of
capital stock of the Company (other than Common Stock) or evidences of
indebtedness of the Company or assets (including securities, but excluding
those rights, warrants, dividends and distributions referred to above and
dividends and distributions in connection with the liquidation, dissolution or
winding up of the Company or paid in cash); (v) distributions consisting of
cash, excluding any quarterly cash dividend on the Common Stock to the extent
that the aggregate cash dividend per share of Common Stock in any quarter does
not exceed the greater of (x) the amount per share of Common Stock of the next
preceding quarterly cash dividend on the Common Stock to the extent that such
preceding quarterly dividend did not require an adjustment of the conversion
price pursuant to this clause (v) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (y) 3.75% of the average of the daily
Closing Prices (as defined) of the Common Stock for the ten consecutive Trading
Days (as defined) immediately prior to the date of declaration of such
dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company; and (vi) payment in
respect of a tender or exchange offer by the Company or any subsidiary of the
Company for the Common Stock to the extent that the cash and value of any other
consideration included in such payment per share of Common Stock exceeds the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the last date on which tenders or exchanges may be made pursuant to
such tender or exchange offer. If an adjustment is required to be made as set
forth in clause (v) above as a result of a distribution that is a quarterly
dividend, such adjustment would be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant to such clause (v).
Upon conversion of the Notes, the holders will receive, in addition to
the Common Stock issuable upon such conversion, the Common Stock purchase
rights issuable under the Company's Rights Plan (as defined) and described
under "Description of Capital Stock -- Rights Plan", notwithstanding the
occurrence of an event causing such rights to separate from the Common Stock at
or prior to the time of conversion. In addition, the Indenture provides that if
the Company implements a new stockholder rights plan, such rights plan must
provide that upon conversion of the Notes the holders will receive, in addition
to the Common Stock issuable upon such conversion, the rights issued under such
plan (notwithstanding the occurrence of an event causing such rights to
separate from the Common Stock at or prior to the time of conversion).
In the case of (i) any reclassification or change of the Common Stock
or (ii) a consolidation, merger or combination involving the Company or a sale
or conveyance to another person of the property and assets of the Company as an
entirety or substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, other securities,
or other property or assets
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<PAGE> 28
(including cash) with respect to or in exchange for such Common Stock, the
holders of the Notes then outstanding will be entitled thereafter to convert
such Notes into the kind and amount of shares of stock, other securities or
other property or assets which they would have owned or been entitled to
receive upon such reclassification, change, consolidation, merger, combination,
sale or conveyance had such Notes been converted into Common Stock immediately
prior to such reclassification, change, consolidation, merger, combination,
sale or conveyance assuming that a holder of Notes would not have exercised any
rights of election as to the stock, other securities or other property or
assets receivable in connection therewith.
In the event of a taxable distribution to holders of Common Stock (or
other transaction) which results in any adjustment of the conversion price, the
holders of Notes may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend; in
certain other circumstances, the absence of such an adjustment may result in a
taxable dividend to the holders of Common Stock. See "Certain Federal Income
Tax Considerations."
The Company, from time to time and to the extent permitted by law, may
reduce the conversion price by any amount for any period of at least 20 days,
in which case the Company shall give at least 15 days' notice of such
reduction, if the Board of Directors has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in
the conversion price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for United States federal
income tax purposes.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then
in effect; provided that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. Except as stated above, the conversion price will not be adjusted
for the issuance of Common Stock or any securities convertible into or
exchangeable for Common Stock or carrying the right to purchase any of the
foregoing.
OPTIONAL REDEMPTION BY THE COMPANY
The Notes are not entitled to any sinking fund. At any time on or
after January 5, 1999, the Notes will be redeemable at the Company's option on
at least 30 and not more than 60 days' notice as a whole or, from time to time,
in part at the following prices (expressed as percentages of the principal
amount), together with accrued interest to, but excluding, the date fixed for
redemption.
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<PAGE> 29
If redeemed during the 12-month period beginning January 1:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ---------
<S> <C>
1999 103.2857%
2000 102.4643
2001 101.6429
2002 100.8214
</TABLE>
and 100% at January 1, 2003; provided that any semi-annual payment of interest
becoming due on the date fixed for redemption shall be payable to the holders
of record on the relevant record date of the Notes being redeemed.
If fewer than all the Notes are to be redeemed, the Trustee will select
the Notes to be redeemed by lot. If any Note is to be redeemed in part only, a
new Note or Notes in principal amount equal to the unredeemed principal portion
thereof will be issued. If a portion of a holder's Notes are selected for
partial redemption and such holder converts a portion of such Notes, such
converted portion shall be deemed to be taken from the portion selected for
redemption.
REPURCHASE AT OPTION OF HOLDERS UPON REPURCHASE EVENT
The Indenture provides that if a Repurchase Event occurs, each holder
of Notes shall have the right to require the Company to repurchase all of such
holder's Notes, or any portion of the principal amount thereof that is an
integral multiple of $1,000, on the date (the "Repurchase Date") that is 30
days after the date of the Company Notice (as defined), for cash at a price
equal to 100% of the principal amount thereof (the "Repurchase Price") plus
accrued and unpaid interest to, but excluding, the Repurchase Date (subject to
the right of holders of record on the relevant record date to receive interest
due on an interest payment date that is on or prior to the Repurchase Date).
Within 30 days after the occurrence of a Repurchase Event, the Company
or, at the Company's request, the Trustee is obligated to give to all holders
of record of Notes a notice (the "Company Notice") of the occurrence of such
Repurchase Event and of the repurchase right arising as a result thereof. The
Company must also deliver a copy of the Company Notice to the Trustee. To
exercise the repurchase right, a holder of such Notes must deliver to the
Trustee on or before the 30th day after the date of the Company Notice written
notice of the holder's exercise of such right, together with the Notes with
respect to which the right is being exercised, duly endorsed for transfer to
the Company.
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<PAGE> 30
A "Repurchase Event" will be deemed to have occurred at such time after
the original issuance of the Notes as:
(i) any Person (including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act), other than the
Company, any subsidiary of the Company, or any employee benefit plan of the
Company or any such subsidiary, is or becomes the beneficial owner,
directly or indirectly, through a purchase or other acquisition transaction
or series of transactions (other than a merger or consolidation involving
the Company), of shares of capital stock of the Company entitling such
Person to exercise in excess of 50% of the total voting power of all shares
of capital stock of the Company entitled to vote generally in the election
of directors; or
(ii) there occurs any consolidation of the Company with,
or merger of the Company into, any other Person, any merger of another
Person into the Company, or any sale or transfer of all or substantially
all of the assets of the Company to another Person (other than (a) any such
transaction pursuant to which the holders of the Common Stock immediately
prior to such transaction have, directly or indirectly, shares of capital
stock of the continuing or surviving corporation immediately after such
transaction which entitle such holders to exercise in excess of 50% of the
total voting power of all shares of capital stock of the continuing or
surviving corporation entitled to vote generally in the election of
directors and (b) any merger (1) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock or (2) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common
Stock solely into shares of common stock);
provided, however, that a Repurchase Event shall not be deemed to have occurred
if either (a) the closing price per share of the Common Stock for any five
Trading Days within the period of ten consecutive Trading Days ending
immediately before the Repurchase Event shall equal or exceed 105% of the
conversion price in effect on each such trading day, or (b) at least 90% of the
consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Repurchase Event consists of
shares of common stock traded on a national securities exchange or quoted on
the NNM (or which will be so traded or quoted when issued or exchanged in such
connection with such Repurchase Event) and as a result of such transaction or
transactions such Notes become convertible solely into such common stock. The
term "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act.
To the extent applicable, the Company will comply with the provisions
of Rule 13e-4 or any other tender offer rules, and will file a Schedule 13E-4
or any other
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<PAGE> 31
schedule required under such rules, in connection with any offer by the Company
to repurchase Notes at the option of the holders thereof upon a Repurchase
Event.
The Repurchase Event feature of the Notes may in certain circumstances
make more difficult or discourage a takeover of the Company and, thus, the
removal of incumbent management. The repurchase right was not the result of
management's knowledge or any effort to accumulate Common Stock or to obtain
control of the Company by means of a merger, tender offer, solicitation, or
otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, this right was the result of negotiations between the
Company and the initial purchasers of the Notes.
The foregoing provisions would not necessarily afford holders of the
Notes protection in the event of a highly leveraged transaction, a change in
control of the Company or other transactions involving the Company that may
adversely affect such holders.
The Company's ability to repurchase Notes upon the occurrence of a
Repurchase Event is subject to limitations. If a Repurchase Event were to
occur, there can be no assurance that the Company would have sufficient
financial resources, or would be able to arrange financing, to pay the
repurchase price for all Notes tendered by holders thereof. In addition, the
terms of certain of the Company's existing debt agreements prohibit the Company
from purchasing any Notes and also identify certain events that would
constitute Repurchase Events, as well as certain other change in control events
with respect to the Company or certain of its subsidiaries, which would
constitute an event of default under such debt agreements. Any future credit
agreements or other agreements relating to other indebtedness (including other
Senior Indebtedness) to which the Company becomes a party may contain similar
restrictions and provisions. In the event a Repurchase Event occurs at a time
when the Company is prohibited from purchasing Notes, the Company could seek
the consent of its lenders to the purchase of the Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company would remain
prohibited from purchasing Notes. Any failure by the Company to repurchase the
Notes when required following a Repurchase Event would result in an Event of
Default under the Indenture whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn, cause
a default under Senior Indebtedness of the Company. Moreover, the occurrence
of a Repurchase Event may cause an event of default under Senior Indebtedness
of the Company. As a result, in each case, any repurchase of the Notes would,
absent a waiver, be prohibited under the subordination provisions of the
Indenture until the Senior Indebtedness is paid in full. See "Subordination of
Notes" below and "Risk Factors--Subordination."
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<PAGE> 32
SUBORDINATION OF NOTES
The indebtedness evidenced by the Notes is subordinated, to the extent
provided in the Indenture, to the prior payment in full of all Senior
Indebtedness (as defined). Upon any distribution of assets of the Company
resulting from any dissolution, winding up, liquidation or reorganization, the
payment of the principal of, or premium, if any, and interest on the Notes is
subordinated, to the extent provided in the Indenture, in right of payment to
the prior payment in full in cash of all Senior Indebtedness. In the event of
any acceleration of the Notes because of an Event of Default (as defined), the
holders of any Senior Indebtedness then outstanding would be entitled to
payment in full in cash of all obligations in respect of such Senior
Indebtedness before the holders of the Notes are entitled to receive any
payment or distribution in respect thereof. The Indenture requires that the
Company promptly notify holders of Senior Indebtedness if payment of the Notes
is accelerated because of an Event of Default.
The Company also may not make any payment upon or in respect of the
Notes if (i) a default in the payment of the principal of, premium, if any,
interest, rent or other obligations in respect of Senior Indebtedness occurs
and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to Designated Senior Indebtedness
(as defined) that permits holders of the Designated Senior Indebtedness as to
which such default relates to accelerate its maturity and the Trustee receives
a notice of such default (a "Payment Blockage Notice") from the Company or
other person permitted to give such notice under the Indenture. Payments on the
Notes may and shall be resumed (a) in case of a payment default, upon the date
on which such default is cured or waived and (b) in case of a nonpayment
default, the earlier of the date on which such nonpayment default is cured or
waived or 179 days after the date on which the applicable Payment Blockage
Notice is received. No new period of payment blockage may be commenced pursuant
to a Payment Blockage Notice unless and until (i) 365 days have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Notes
that have become due have been paid in full in cash. No nonpayment default
that existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice.
By reason of the subordination provisions described above, holders of
Senior Indebtedness may, in the event of the Company's bankruptcy, dissolution
or reorganization, receive more, ratably, and holders of the Notes may receive
less, ratably, than the other creditors of the Company. Such subordination will
not prevent the occurrence of any Event of Default under the Indenture.
The term "Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
30
<PAGE> 33
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness of the Company, whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company (including all deferrals,
renewals, extensions or refundings of, or amendments, modifications or
supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption
or guarantee thereof expressly provides that such indebtedness shall not be
senior in right of payment to the Notes or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Notes. Notwithstanding the
foregoing, Senior Indebtedness shall not include (i) any Indebtedness of the
Company to any subsidiary of the Company, a majority of the voting stock of
which is owned, directly or indirectly, by the Company or (ii) the Company's
7 1/2% Convertible Subordinated Debentures Due 2012. The term "Indebtedness"
means, with respect to any Person, and without duplication, (a) all
indebtedness, obligations and other liabilities (contingent or otherwise) of
such Person for borrowed money (including obligations of the Company in respect
of overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances from banks,
whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof) (other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services), (b) all reimbursement obligations and
other liabilities (contingent or otherwise) of such Person with respect to
letters of credit, bank guarantees or bankers' acceptances, (c) all obligations
and liabilities (contingent or otherwise) in respect of leases of such Person
as lessee required, in conformity with generally accepted accounting
principles, to be accounted for as capitalized lease obligations on the balance
sheet of such Person, and all obligations and other liabilities (contingent or
otherwise) under any lease or related document (including a purchase agreement)
in connection with any lease of real property which provides that such Person
is contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of such Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property, (d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase
or similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any
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<PAGE> 34
mortgage, pledge, lien or other encumbrance existing on property which is owned
or held by such Person, regardless of whether the indebtedness or other
obligation secured thereby shall have been assumed by such Person and, (g) any
and all deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (f).
The term "Designated Senior Indebtedness" means the Credit Agreement
(as defined), the Bank One Note (as defined), and any other Senior Indebtedness
if the instrument creating or evidencing the same or the assumption or
guarantee thereof (or related agreements or documents to which the Company is a
party) expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of the Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right
of such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness). The "Credit Agreement" is the Company's Amended and Restated
Revolving Credit, Term Loan and Security Agreement with The Bank of New York
Commercial Corporation, as Agent for the lenders, and the "Bank One Note" means
the Company's Business Purpose Revolving Promissory Note owing to Bank One,
Akron, N.A. The Company has entered into a commitment letter and is presently
negotiating with The Bank of New York (an affiliate of The Bank of New York
Commercial Corporation) for a new, five year unsecured credit facility for up
to $100 million being arranged with a syndicate of prospective participating
lenders to replace the Credit Agreement and anticipates entering into such new
credit arrangements prior to the expiration of the Bank One Note. The Company
is also engaged in discussions with Bank One, Akron, N.A. toward a continuing,
unsecured guidance facility for up to $20 million to supplement the proposed
new unsecured credit facility. The Company expects that both of such new credit
facilities will be Designated Senior Indebtedness. However, there can be no
assurance that the Company will be able to consummate either of such new credit
facilities on terms satisfactory to it or the amounts thereof.
The Notes are obligations exclusively of the Company. Since the
operations of the Company are partially conducted through its subsidiaries, the
cash flow and the consequent ability to service debt, including the Notes, of
the Company are partially dependent upon the earnings of any such subsidiaries
(some of which are less than wholly owned) and the distribution of those
earnings, or upon loans or other payments of funds, by those subsidiaries to
the Company. The subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any amounts due pursuant to the
Notes or to make any funds available therefor, whether by dividends,
distributions, loans or other payments. In addition, the payment of dividends
or distributions and the making of loans and other payments to the Company by
any such subsidiaries could be subject to statutory or contractual
restrictions, could be contingent upon the earnings of those subsidiaries, and
are subject to various business considerations.
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<PAGE> 35
Any right of the Company to receive any assets of any of its
subsidiaries upon their liquidation or reorganization (and the consequent right
of the holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would
still be subordinate to any security interest in the assets of such subsidiary
and any indebtedness of such subsidiary senior to that held by the Company.
At December 31, 1995, the Company had approximately $24.4 million of
outstanding indebtedness constituting Senior Indebtedness and the subsidiaries
of the Company had approximately $31.4 million of outstanding indebtedness and
other liabilities (excluding intercompany liabilities and approximately $3.1
million in subsidiaries' notes and letters of credit guaranteed by the Company
which are included in the amount of Senior Indebtedness) to which the Notes
were effectively subordinated. The Indenture contains no limitations on either
(i) the amount of additional indebtedness, including Senior Indebtedness, which
the Company can create, incur, assume or guarantee, or (ii) the amount of
indebtedness and other liabilities which any subsidiary can create, incur,
assume or guarantee. See "Risk Factors--Subordination" and "Risk
Factors--Corporate Structure."
In the event that, notwithstanding the foregoing, the Trustee or any
holder of Notes receives any payment or distribution of assets of the Company
of any kind in contravention of any of the subordination provisions of the
Indenture, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, in respect of the Notes before all
Senior Indebtedness is paid in full, then such payment or distribution will be
held by the recipient in trust for the benefit of holders of Senior
Indebtedness or their representative or representatives to the extent necessary
to make payment in full of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision therefor,
to or for the holders of Senior Indebtedness.
The Company is obligated to pay reasonable compensation to the Trustee
and to indemnify the Trustee against any losses, liabilities or expenses
incurred by it in connection with its duties relating to the Notes. The
Trustee's claims for such payments will be senior to claims of holders of the
Notes in respect of all funds collected or held by the Trustee.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default is defined in the Indenture as being: default in
payment of the principal of or premium, if any, on the Notes (including,
without limitation, any redemption price or repurchase price payable with
respect to any Note); default for 30 days in payment of any installment of
interest on the Notes; default by the Company
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<PAGE> 36
for 60 days after notice in the observance or performance of any other
covenants in the Indenture; acceleration prior to maturity as a result of an
event of default thereunder of the Company's 7 1/2% Convertible Subordinated
Debentures Due 2012; or certain events involving bankruptcy, insolvency or
reorganization of the Company. The Indenture provides that the Trustee may
withhold notice to the holders of Notes of any default (except in payment of
principal, premium, if any, or interest with respect to the Notes) if the
Trustee considers it in the interest of the holders of the Notes to do so.
The Indenture provides that if an Event of Default shall have occurred
and be continuing, the Trustee or the holders of not less than 25% in principal
amount of the Notes then outstanding may declare the principal of and accrued
interest on the Notes to be due and payable immediately, but if the Company
shall cure all defaults (except the nonpayment of principal of, premium, if
any, and interest on any of the Notes which shall have become due by
acceleration) and certain other conditions are met, with certain exceptions,
such declaration may be canceled and past defaults may be waived by the holders
of a majority of the principal amount of the Notes then outstanding. In the
case of certain events of bankruptcy, insolvency or reorganization, the
principal of and accrued interest on the Notes shall automatically become and
be immediately due and payable.
The holders of a majority in principal amount of the Notes then
outstanding shall have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
MODIFICATIONS OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Notes at the time outstanding, to modify the Indenture
or any supplemental indenture or the rights of the holders of the Notes, except
that no such modification shall (i) extend the fixed maturity of any Note,
reduce the rate or extend the time for payment of interest thereon, reduce the
principal amount thereof or premium, if any, thereon, reduce any amount payable
upon redemption thereof, change the obligation of the Company to repurchase any
Note upon the happening of a Repurchase Event in a manner adverse to holders of
Notes, impair the right of a holder to institute suit for the payment thereof,
change the currency in which the Notes are payable, impair the right to convert
the Notes into Common Stock subject to the terms set forth in the Indenture or
modify the provisions of the Indenture with respect to the subordination of the
Notes in a manner adverse to the holders of the Notes in any material respect,
without the consent of the holder of each Note so affected, or (ii) reduce the
aforesaid percentage of Notes without the consent of the holders of all of the
Notes then outstanding.
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<PAGE> 37
REGISTRATION RIGHTS
In compliance with its obligations under the Registration Rights
Agreement, the Company has, at its expense, filed with and caused to be
declared effective by the Commission the shelf registration statement (the
"Shelf Registration Statement") on Form S-3 of which this Prospectus is a part,
covering resales by holders of the Notes and the Common Stock issuable upon
conversion of the Notes (collectively, the "Securities"). The Company will use
its reasonable efforts to keep the Shelf Registration Statement effective until
the earlier of December 12, 1998 or until the Shelf Registration Statement is
no longer required for transfer of the Securities. The Registration Rights
Agreement requires that (i) the Company file the Shelf Registration Statement
with the Commission on or prior to 90 days after the earliest date of original
issuance of any Notes (the "Closing Date") and (ii) the Company cause the Shelf
Registration Statement to be declared effective by the Commission on or prior
to 150 days after the Closing Date. The Registration Rights Agreement further
provides that if (i) the Shelf Registration Statement is not filed with the
Commission on or prior to the date 90 days after the Closing Date, (ii) the
Shelf Registration Statement has not been declared effective by the Commission
within 150 days after the Closing Date or (iii) the Shelf Registration
Statement is filed and declared effective but shall thereafter cease to be
effective (without being succeeded immediately by an additional Shelf
Registration Statement filed and declared effective) for a period of time which
shall exceed 90 days in the aggregate per year (each such event referred to in
clauses (i) through (iii), a "Registration Default"), the Company will pay
liquidated damages to each holder of Securities, during the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $0.05 per week per $1,000 principal amount of Notes and, if
applicable, $0.01 per week per share (subject to adjustment in the event of
stock splits, stock recombinations, stock dividends and the like) of Common
Stock issued upon conversion of the Notes held by such holder. The amount of
the liquidated damages will increase by an additional $0.05 per week per $1,000
principal amount of Notes or $0.01 per week per share (subject to adjustment as
set forth above) of Common Stock upon conversion of the Notes for each
subsequent 90-day period until the applicable Registration Statement is filed
and the applicable Registration Statement is declared effective, or the Shelf
Registration Statement again becomes effective, as the case may be, up to a
maximum amount of liquidated damages of $0.25 per week per $1,000 principal
amount of Notes or $0.05 per week per share (subject to adjustment as set forth
above) of Common Stock. Following the cure of a Registration Default,
liquidated damages will cease to accrue with respect to such Registration
Default. The Company is required to provide to each registered holder copies of
such prospectus, notify each registered holder when the Shelf Registration
Statement has become effective and take certain other actions as are required
to permit unrestricted resales of the Securities. A holder who sells the
Securities pursuant to the Shelf Registration Statement generally will be
required to be named as a selling stockholder in the related prospectus and to
deliver a prospectus to purchasers and will be bound by the
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<PAGE> 38
provisions of the Registration Rights Agreement which are applicable to such
holder (including certain indemnification provisions). Holders of the
Securities will be required to make certain representations to the Company (as
described in the Registration Rights Agreement) and will be required to deliver
information to be used in connection with the Shelf Registration Statement in
order to have their Securities included in the Shelf Registration Statement.
The specific provisions relating to the registrations described above
are contained in the Registration Rights Agreement.
CONCERNING THE TRUSTEE
Bank One Trust Company, N.A., Trustee under the Indenture, has been
appointed by the Company as the initial paying agent, conversion agent,
registrar and custodian with regard to the Notes. The Trustee or its affiliates
may from time to time in the future provide banking and other services to the
Company in the ordinary course of their business.
An affiliate of the Trustee is one of the lenders to the Company under
its existing debt agreements. The Indenture contains certain limitations on the
rights of the Trustee, as long as it or any of its affiliates remains a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security
or otherwise. The Trustee and its affiliates are permitted to engage in other
transactions with the Company; provided, however, if it or any such affiliate
continues to have any conflicting interest (as defined) and a default occurs
with respect to the Notes, the Trustee must eliminate such conflict or resign.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, $.01 par value per share, and 500,000 shares of
Preferred Stock, $1.00 par value per share.
COMMON STOCK
As of December 31, 1995, there were 16,046,668 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each
share held of record on each matter submitted to a vote of stockholders and may
cumulate their votes in the election of directors. Subject to preferences that
may be applicable to any shares of Preferred Stock outstanding at the time and
any restrictions and agreements to which the Company is a party, the holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors
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<PAGE> 39
out of funds legally available therefor. In the event of the liquidation,
dissolution or winding-up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of all
liabilities, subject to prior distribution rights of Preferred Stock, if any,
then outstanding. Holders of Common Stock have no preemptive, conversion or
redemption rights. All outstanding shares of Common Stock are fully paid and
non-assessable, and the shares of Common Stock to be issued upon conversion of
the Notes will be fully paid and non-assessable.
PREFERRED STOCK
No shares of Preferred Stock currently are outstanding. The Board of
Directors has the authority to issue the Preferred Stock in one or more series
and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series or the designation of such series, without
further vote or action of the stockholders. The issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders and may adversely affect the
voting power (including the loss of voting control to others) and other rights
of the holders of Common Stock. At present, the Company has no plans to issue
any of the Preferred Stock.
RIGHTS PLAN
In 1987, the Company's Board of Directors declared a dividend of one
Common Stock purchase right (a "Right") on each outstanding share of Common
Stock pursuant to the Rights Agreement, dated as of August 25, 1987 (the
"Rights Plan"), between the Company and AmeriTrust Company National
Association, as Rights Agent (nka Society National Bank, as successor by
merger). Each Right, when exercisable, entitles the registered holder to
purchase one share of Common Stock at a price of $125 per share (the "Purchase
Price"), subject to adjustment. Unless they become exercisable upon the
occurrence of certain events as described below, or unless earlier redeemed by
the Company, the Rights will expire on March 31, 1997.
If the Company is party to a merger or other business combination
transaction (not approved by the Company's incumbent directors) in which the
Company is not the surviving corporation, or where the Common Stock is changed
or exchanged, or 50% or more of the Company's assets or earning power are sold,
each holder of a Right will have the right to receive shares of publicly traded
common stock of the acquiring company having a market value of two times the
Purchase Price of the Right.
If the Company is the surviving corporation in a merger and the Common
Stock is not changed or exchanged, or if an acquiring person engages in certain
self dealing
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<PAGE> 40
transactions specified in the Rights Plan, or becomes the beneficial owner of
25% or more of the outstanding Common Stock, each holder of a Right (other than
the acquiring person) will have the right to receive Common Stock having a
market value of two times the then current Purchase Price of the Right.
The Rights Plan discourages hostile takeovers by effectively allowing
the Company's stockholders to purchase additional shares of Common Stock at a
discount following a hostile acquisition of a large block of the Company's
outstanding Common Stock, and by increasing the value of consideration to be
received by stockholders in certain transactions following such an acquisition.
The Rights may be redeemed pursuant to the Rights Plan. The terms of the Rights
may be amended by the Board of Directors of the Company without the consent of
the holders of the Rights.
The foregoing summary description of the Rights Plan and the Rights
thereunder does not purport to be complete and is qualified in its entirety by
reference to the copy of the Rights Plan included in the Company's Registration
Statement on Form 8-A, as amended, incorporated by reference in this
Prospectus.
CERTAIN PROVISIONS OF THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
The Company's Restated Certificate of Incorporation contains certain
provisions that reduce the possibility that a third party could effect a sudden
or surprise change in majority control of the Board without the support of the
then incumbent directors. The Company has classified its Board such that
approximately one third of the Board is elected each year to three-year terms
of office. The number of directors constituting the Board is fixed from time to
time by a majority of the directors then in office. The holders of the
Company's Common Stock may remove a director from office only for cause and
only by the affirmative vote of the holders of at least 80% of the combined
voting power of all shares of capital stock entitled to vote generally in the
election of directors, voting together as a single class. One effect of the
classification of the Company's Board is to make it more difficult for a
minority interest to obtain representation on the Board.
The Company's Restated Certificate of Incorporation prohibits the
taking of any action by its stockholders by written consent, as otherwise
permitted by the Delaware General Corporation Law, and requires that all
stockholder action be taken only at a duly called annual or special meeting of
stockholders in which all stockholders of the Company have the opportunity to
participate. Special meetings of stockholders may be called under the Restated
Certificate of Incorporation and By-Laws by the Company's Chairman, Chief
Executive Officer or President, by the Board of Directors or upon the written
request of stockholders owning a majority of the Company's outstanding capital
stock entitled to vote.
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The Company's Restated Certificate of Incorporation contains certain
procedural requirements with respect to stockholder proposals, including
director nominations, that require, among other things, delivery of advance
notice of any such proposal to the Secretary of the Company at prescribed
periods prior to the date of the stockholders meeting at which such proposal is
to be considered.
The effect of these provisions may be to deter attempts to obtain
control of the Company or to acquire a substantial percentage of its stock
(even if either such proposed transaction were at a significant premium over
the then prevailing market value of the Company's Common Stock), and to deter
attempts to remove the Board of Directors and management of the Company, even
though some or a majority of the holders of the Company's Common Stock may
believe any such actions to be beneficial.
DELAWARE GENERAL CORPORATION LAW
As a corporation organized under the laws of the State of Delaware, the
Company is subject to Section 203 of the Delaware General Corporation Law,
which restricts certain business combinations between the Company and an
"interested stockholder" (in general, a stockholder owning 15% or more of the
Company's outstanding voting stock) or such stockholder's affiliates or
associates for a period of three years following the date on which the
stockholder becomes an "interested stockholder." The restrictions do not apply
if (i) prior to any interested stockholder becoming such, the Board of
Directors approves either the business combination or the transaction in which
such stockholder becomes an interested stockholder, (ii) upon consummation of
the transaction in which the stockholder becomes an interested stockholder,
such interested stockholder owns at least 85% of the voting stock of the
Company outstanding at the time the transaction commenced (excluding shares
owned by certain employee stock ownership plans and persons who are both
directors and officers of the Company), or (iii) on or subsequent to the date
an interested stockholder becomes such, the business combination is both
approved by the Board of Directors and authorized at an annual or special
meeting of the Company's stockholders (and not by written consent) by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Society
National Bank.
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<PAGE> 42
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal
income tax considerations relevant to holders of the Notes. This
discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, Internal Revenue Service
("IRS") rulings and judicial decisions in effect as of the date of
this Prospectus, all of which are subject to change (possibly with
retroactive effect) and different interpretations. This summary does
not purport to discuss all aspects of federal income taxation that
may be relevant to a particular holder in light of its individual
investment circumstances or to certain types of holders which may be
subject to special tax rules (e.g., dealers in securities, banks,
insurance companies, tax-exempt organizations and non-United States
persons). In addition, this summary does not discuss any aspect of
state, local or foreign tax law and assumes that the holders will
hold the Notes as "capital assets" within the meaning of Section
1221 of the Code.
ALL PROSPECTIVE PURCHASERS OF THE NOTES ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE NOTES AND THE COMMON STOCK.
CONVERSION OF NOTES INTO COMMON STOCK. In general, no gain or
loss will be recognized for federal income tax purposes on the
conversion of a Note into shares of Common Stock. However, a holder
will recognize capital gain (or loss) with respect to cash paid in
lieu of a fractional share of Common Stock, to the extent that the
amount of such cash exceeds (or is exceeded by) the portion of the
adjusted tax basis of the Note allocable to such fractional share.
Such gain (or loss) will be long term if the Note has been held for
more than one year. The adjusted tax basis of shares of Common Stock
received on conversion will equal the adjusted tax basis of the Note
converted, reduced by the portion of the adjusted tax basis
allocated to any fractional share of Common Stock exchanged for
cash. The holding period of a holder in the Common Stock received on
conversion will include the period during which he has held the
converted Notes.
CONSTRUCTIVE DIVIDEND. The conversion price of the Notes is
subject to adjustment under certain circumstances. Certain
adjustments in the conversion price that may occur in limited
circumstances (particularly adjustments to reflect a taxable
dividend to holders of Common Stock) may be deemed to constitute a
constructive distribution if and to the extent that such adjustments
increase the proportionate interest of a holder in the fully diluted
Common Stock, whether or not such holder ever exercises its
conversion privilege. Such a constructive distribution will result
in ordinary income to holders (subject to a possible dividends
received deduction in the case of corporate holders) to the extent
of the Company's current and accumulated earnings and profits. For
example, a decrease in the conversion price in the event of
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<PAGE> 43
distributions of evidences of indebtedness or assets to holders of Common Stock
will generally result in deemed dividend treatment to holders, whereas a
decrease in the event of stock dividends or the distribution of rights to
subscribe for Common Stock generally will not.
The conversion price of the Notes is subject to adjustment under certain
circumstances. See "Description of Notes -- Conversion of Notes." Section 305
of the Code and the Treasury Regulations issued thereunder may treat the
holders of the Notes as having received a constructive distribution, resulting
in ordinary income (subject to a possible dividends received deduction in the
case of corporate holders) to the extent of the Company's current earnings and
profits as of the end of the taxable year to which constructive distribution
relates and/or accumulated earnings and profits, if and to the extent that
certain adjustments in the conversion price that may occur in limited
circumstances (particularly an adjustment to reflect a taxable dividend to
holders of Common Stock) increase the proportionate interest of a holder of
Notes in the fully diluted Common Stock, whether or not such holder ever
exercises its conversion privilege. Moreover, if there is not a full adjustment
to the conversion price of the Notes to reflect a stock dividend or other event
increasing the proportionate interest of the holders of outstanding Common
Stock in the assets or earnings and profits of the Company, then such increase
in the proportionate interest of the holders of the Common Stock generally will
be treated as a distribution to such holders, taxable as ordinary income
(subject to a possible dividends received deduction in the case of corporate
holders) to the extent of the Company's current earnings and profits as of the
end of the taxable year to which constructive distribution relates and/or
accumulated earnings and profits.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES. In general, a holder will
recognize gain or loss upon the sale, exchange, redemption, retirement or other
disposition of Notes measured by the difference (if any) between (i) the amount
of cash and the fair market value of any property received (except to the
extent that such cash or other property is attributable to the payment of
accrued interest not previously included in income, which amount will be
taxable as ordinary income) and (ii) the holder's adjusted tax basis in the
Notes. Any such gain or loss would be long-term capital gain or loss if the
Note has been held for more than one year at the time of the sale or exchange.
A holder's initial tax basis in a Note will be the cash price it paid therefor.
MARKET DISCOUNT. Investors acquiring Notes pursuant to this
Prospectus should note that the resale of those Notes may be adversely affected
by the market discount provisions of Sections 1276 through 1278 of the Code.
Under the market discount rules, if a holder of a Note purchases it at market
discount (i.e., at a price below its stated redemption price at maturity) in
excess of a statutorily-defined de minimis amount and thereafter recognizes
gain upon a disposition or retirement of the Note, then the lesser of the gain
recognized or the portion of the market discount that accrued on a ratable
basis (or, if elected, on a constant interest rate basis) generally
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<PAGE> 44
will be treated as ordinary income at the time of the disposition.
Moreover, any market discount on a Note may be taxable to an
investor to the extent of appreciation at the time of certain
otherwise non-taxable transactions (e.g., gifts). Any accrued market
discount not previously taken into income prior to a conversion of a
Note, however, should (under Treasury Regulations not yet issued)
carry over to the Common Stock received on conversion and be treated
as ordinary income upon a subsequent disposition of such Common
Stock to the extent of any gain recognized on such disposition. In
addition, absent an election to include market discount in income as
it accrues, a holder of a market discount debt instrument may be
required to defer a portion of any interest expense that otherwise
may be deductible on any indebtedness incurred or maintained to
purchase or carry such debt instrument until the holder disposes of
the debt instrument in a taxable transaction.
BACKUP WITHHOLDING. A holder may be subject to "backup
withholding" at a rate of 31% with respect to certain "reportable
payments", including interest payments and, under certain
circumstances, principal payments on the Notes and proceeds of a sale
of Notes. These backup withholding rules apply if the holder, among
other things, (i) fails to furnish a social security number or other
taxpayer identification number ("TIN") certified under penalties of
perjury within a reasonable time after the request therefor, (ii)
furnishes an incorrect TIN, (iii) fails to report properly interest
or dividends, or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN
furnished is the correct number and that such holder is not subject
to backup withholding. A holder who does not provide the Company with
its correct TIN also may be subject to penalties imposed by the IRS.
Any amount withheld from a payment to a holder under the backup
withholding rules is refundable or creditable against the holder's
federal income tax liability, provided that the required information
is furnished to the IRS. Backup withholding will not apply, however,
with respect to payments made to certain holders, including
corporations, tax-exempt organizations and certain foreign persons,
provided their exemptions from backup withholding is properly
established.
The Company will report to the holders of Notes and Common
Stock and to the IRS the amount of any "reportable payments" for
each calendar year and the amount of tax withheld, if any, with
respect to such payments.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code prohibit certain transactions
between persons who are "parties in interest" under ERISA or
"disqualified persons" under the Code, including the extension of
credit between a plan subject to ERISA or the Code (a "Plan") and a
party in interest or disqualified person. Any person proposing to
purchase the Notes of or on behalf of a Plan should consult with its
counsel with respect to the potential
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<PAGE> 45
applicability of ERISA and the Code to such investment and whether
any exemption would be applicable and determine on its own whether
all conditions have been satisfied.
Accordingly, each person investing on behalf of a Plan should
determine whether, under the general fiduciary standards of
investment prudence and diversification, an investment in the Notes
is appropriate, taking into account the overall investment policy of
the Plan and the composition of the Plan's portfolio.
PLAN OF DISTRIBUTION
This Prospectus relates to the resale of $82,500,000 of Notes
issued in a private placement on December 12, 1995 and the resale
of up to 3,000,000 shares of Common Stock which are initially
issuable upon conversion of Notes by any holders of Notes that did
not purchase the Notes under the Registration Statement (of which
this Prospectus is a part). The Registration Statement (of which
this Prospectus is a part) does not cover the issuance of shares of
Common Stock upon conversion of the Notes into shares of Common
Stock.
The Company will not receive any of the proceeds from the
offering of Notes and the shares of Common Stock issuable upon
conversion thereof by the Selling Securityholders and which are sold
pursuant to the Registration Statement (of which this Prospectus is
a part). The Company has been advised by the Selling
Securityholders that the Selling Securityholders may sell all or a
portion of the Notes and shares of Common Stock beneficially owned
by them and which may be offered hereby from time to time on any
exchange or market on which the securities are listed or quoted, as
applicable, on terms to be determined at the times of such sales.
The Selling Securityholders may also make private sales directly or
through a broker or brokers. Alternatively, any of the Selling
Securityholders may from time to time offer the Notes or shares of
Common Stock which may be offered hereby and beneficially owned by
them through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, commissions or
concessions from the Selling Securityholders and the purchasers of
the notes of shares of Common
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<PAGE> 46
Stock for whom they may act as agent. Such dealers may include the
initial purchasers of the Notes, which may perform investment
banking or other services for or engage in other transactions with
the Company from time to time in the future.
To the extent required, the aggregate principal amount of Notes
and number of shares of Common Stock to be sold hereby, the names of
the Selling Securityholders, the purchase price, the name of any
such agent, dealer or underwriter and any applicable commissions,
discounts or other terms constituting compensation with respect to a
particular offer will be set forth in an accompanying Prospectus
Supplement. The aggregate proceeds to the Selling Securityholders
from the sale of the Notes or shares of Common Stock offered by them
hereby will be the purchase price of such Notes or shares of Common
Stock less discounts and commissions, if any.
The Notes and the shares of Common Stock which may be offered
hereby may be sold from time to time in one or more transactions at
fixed offering prices, which may be changed, or at varying prices
determined at the time of sale or at negotiated prices. Such prices
will be determined by the holders of such securities or by agreement
between such holders and underwriters or dealers who may receive
fees of commissions in connection therewith.
The outstanding Common Stock is listed for trading on the NNM,
and the Company the shares of Common Stock issuable upon conversion
of the Notes have been authorized for listing on the NNM upon
official notice of issuance. There is no assurance as to the
development or liquidity of any trading market that may develop for
the Notes.
In order to comply with the securities laws of certain states,
if applicable, the Notes and shares of Common Stock offered hereby
will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the
Notes and shares of Common Stock offered hereby may not be sold
unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and compliance with same is
effected.
The Selling Securityholders and any broker-dealers, agents or
underwriters that participate with the Selling Securityholders in
the distribution of the Notes of shares of Common Stock offered
hereby may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any commissions or discounts received
by such broker-dealers, agents or underwriters and any profit on the
resale of the Notes or shares of Common Stock offered hereby and
purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
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<PAGE> 47
The Company and the Selling Securityholders have agreed to indemnify each
other against certain liabilities arising under the Securities Act. The Company
has agreed to pay all expenses incident to the offer and sale of the Notes and
Common Stock offered hereby by the Selling Securityholders to the public, other
than selling commissions and fees.
The Registration Statement does not cover the issuance of shares of
Common Stock upon conversion of the Notes into shares of Common Stock.
LEGAL MATTERS
The validity of the Notes offered hereby and the Common Stock issuable
upon conversion of the Notes have been passed upon for the Company by Goodman
Weiss Miller Goldfarb, Cleveland, Ohio. Robert A. Goodman, the senior partner
of such firm, is a director and the Secretary of the Company. Certain members
of the firm own 19,340 shares, and have options to acquire 108,500 additional
shares of the Company's Common Stock.
EXPERTS
The consolidated balance sheets of the Company as of March 31, 1995 and
1994, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended March
31, 1995 have been incorporated by reference herein and in the Registration
Statement in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, incorporated by reference herein, which report is given upon the
authority of said firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized statement of all
estimated expenses in connection with the issuance and distribution
of the securities being registered:
<TABLE>
<S> <C>
SEC registration fee $28,448.48
Legal expenses 35,000.00
Accounting fees and expenses 2,500.00
Printing and miscellaneous 2,000.00
Total $67,948.48
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law, under
which law Registrant is incorporated, grants corporations the power
to indemnify their directors, officers, employees and agents in
accordance with the provisions therein set forth. The provisions
governing the indemnification by Registrant of its directors,
officers, employees and agents are set forth in Section ELEVENTH of
Registrant's Restated Certificate of Incorporation.
Paragraph A of Article ELEVENTH provides in part as follows:
A. The Corporation (1) shall indemnify any person who is
or was a director or officer of the Corporation, and (2) may,
in the discretion of the Board of Directors, indemnify any
person who is or was an employee or agent of the Corporation,
where such director, officer, employee or agent was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
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Paragraphs B, C, D, E and F of Article ELEVENTH provide as follows:
B. The Corporation (1) shall indemnify any person who
is or was a director or officer of the Corporation, and (2) may, in
the discretion of the Board of Directors, indemnify any person who
is or was an employee or agent of the Corporation, where such
director, officer, employee or agent was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Corporation and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and
only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
C. To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in Paragraph A or B of this Article ELEVENTH, or in the
defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith.
D. Any indemnification under Paragraph A or B of this
Article ELEVENTH (unless ordered by a court) shall be made by
the Corporation only as authorized in the specific case upon a
determination that indemnification of the director,
officer, employee or agent is proper in the circumstances
because he has met the applicable standards of conduct set
forth in Paragraph A and B of this Article ELEVENTH. Such
determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such
quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
E. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount
if it
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shall ultimately be determined that he is entitled to be indemnified by
the Corporation as authorized in this Article ELEVENTH.
Paragraph F of Article ELEVENTH provides in part as follows:
F. The indemnification and advancement of expenses provided by this
Article ELEVENTH shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Registrant maintains and pays the premium on contracts insuring
Registrant (with certain exclusions) against any liability to directors and
officers it may incur under the above indemnity provisions and insuring each
director and officer of Registrant (with certain exclusions) against liability
and expense, including legal fees, which he may incur by reason of his
relationship to Registrant, even if Registrant does not have the obligation or
right to indemnify him against such liability or expense.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
4.1 Indenture by and between the Registrant and Bank One Trust Company, N.A.,
as Trustee, dated as of December 1, 1995, regarding Registrant's 5 3/4%
Convertible Subordinated Notes due 2003, filed herewith.
4.2 Form of Registrant's 5 3/4% Convertible Subordinated Note due 2003 issued
under the Indenture included as Exhibit 4.1 above, filed herewith.
4.3 Registration Rights Agreement by and among the Registrant and Hambrecht &
Quist LLC and Prudential Securities Incorporated, as the Initial Purchasers of
Registrant's 5 3/4% Convertible Subordinated Notes due 2003, with respect to
the registration of said Notes under applicable securities laws, filed herewith.
4.4 Text of form of Certificate for the Registrant's Common Stock, par value $.01
per share, and description of graphic and image material appearing thereon,
filed as Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q filed for
the quarter ended June 30, 1995 and incorporated herein by reference.
</TABLE>
II-3
<PAGE> 51
<TABLE>
<S> <C>
4.5 Rights Agreement, dated as of August 25, 1987, between the Registrant and
Ameritrust Company National Association, as Rights Agent, filed as Exhibit 2(c)
to Amendment No. 1 to the Registration Statement on Form 8-A filed by the
Registrant with respect to its Common Stock pursuant to Section 12(g) of the
Exchange Act and incorporated herein by reference.
4.6 Form of Rights Certificate (included as Exhibit A to the Rights Agreement
included as Exhibit 4.5 to this Registration Statement). Until the Distribution
Date (as defined in the Rights Agreement), the Rights Agreement provides that
the Common Stock purchase rights created thereunder are evidenced by the
certificates for Registrant's Common Stock (the text of which and description
thereof are included as Exhibit 4.4 to this Registration Statement, which stock
certificates are deemed also to be certificates for such Common Stock
purchase rights) and not by separate Rights Certificates; as soon as practicable
after the Distribution Date, Rights Certificates will be mailed to each holder of
the Registrant's Common Stock as of the close of business on the Distribution
Date.
5.1 Opinion of Goodman Weiss Miller Goldfarb.
12.1 Computation of earnings to fixed charges.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Goodman Weiss Miller Goldfarb (incorporated into Exhibit 5.1
hereto).
24.1 Power of Attorney and related Resolution of Board of Directors.
25.1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee on Form T-1.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement 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.
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<PAGE> 52
(2) 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
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 foregoing provisions, 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.
The undersigned Registrant hereby undertakes that, 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 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.
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 of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective. 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-5
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Cleveland, State of Ohio on this 23rd day of February, 1996.
TELXON CORPORATION
By: /s/ Robert F. Meyerson
--------------------------------
Robert F. Meyerson, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert F. Meverson Chairman of the Board, February 23, 1996
------------------------ Chief Executive Officer
Robert F. Meyerson (principal executive
officer) and Director
* John H. Cribb Vice Chairman of the February 23, 1996
------------------------ Board and Director
John H. Cribb
* William J. Murphy President, Chief Operating February 23, 1996
------------------------ Officer and Director
William J. Murphy
/s/ Kenneth W. Haver Senior Vice President, February 23, 1996
------------------------ Chief Financial Officer
Kenneth W. Haver (principal financial officer)
and Treasurer
</TABLE>
II-6
<PAGE> 54
<TABLE>
<S> <C>
/s/ Gerald J. Gabriel Vice President, Financial February 23, 1996
- -------------------------- Planning (principal
Gerald J. Gabriel accounting officer)
* Dr. Rai Reddy Director February 23, 1996
- --------------------------
Dr. Raj Reddy
* Robert A. Goodman Secretary and Director February 23, 1996
- --------------------------
Robert A. Goodman
* Norton W. Rose Director February 23, 1996
- --------------------------
Norton W. Rose
* Richard J. Bogomolny Director February 23, 1996
- --------------------------
Richard J. Bogomolny
</TABLE>
*The undersigned does hereby sign this Registration Statement on Form S-3
on behalf of the above persons pursuant to powers of attorney duly executed and
filed with the Securities and Exchange Commission as Exhibit 25.1 hereto, all
in the capacities indicated and on the 23rd day of February, 1996.
/s/ Robert F. Meyerson
------------------------------------
Robert F. Meyerson, Attorney-in-Fact
II-7
<PAGE> 55
TELXON CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4.1 Indenture by and between the Registrant and Bank One
Trust Company, N.A., as Trustee, dated as of
December 1,1995, regarding Registrant's 5 3/4%
Convertible Subordinated Notes due 2003, filed
herewith.
4.2 Form of Registrant's 5 3/4% Convertible Subordinated
Note due 2003 issued under the Indenture included as
Exhibit 4.1 above, filed herewith.
4.3 Registration Rights Agreement by and among the
Registrant and Hambrecht & Quist LLC and Prudential
Securities Incorporated, as the Initial Purchasers of
Registrant's 5 3/4% Convertible Subordinated Notes due
2003, with respect to the registration of said Notes
under applicable securities laws, filed herewith.
+4.4 Text of form of Certificate for the Registrant's Common
Stock, par value $.01 per share, and description of
graphic and image material appearing thereon, filed as
Exhibit 4.2 to the Registrant's Quarterly Report on
Form 10-Q filed for the quarter ended June 30, 1995
and incorporated herein by reference.
+4.5 Rights Agreement, dated as of August 25, 1987,
between the Registrant and Ameritrust Company
National Association, as Rights Agent, filed as
Exhibit 2(c) to Amendment No.1 to the Registration
Statement on Form 8-A filed by the Registrant with
respect to its Common Stock pursuant to Section 12(g)
of the Exchange Act and incorporated herein by
reference.
4.6 Form of Rights Certificate (included as Exhibit A to the
Rights Agreement included as Exhibit 4.5 to this
Registration Statement). Until the Distribution Date (as
i
</TABLE>
<PAGE> 56
<TABLE>
<S> <C>
defined in the Rights Agreement), the Rights Agreement
provides that the Common Stock purchase rights created
thereunder are evidenced by the certificates for
Registrant's Common Stock (the text of which and
description thereof are included as Exhibit 4.4 to this
Registration Statement, which stock certificates are
deemed also to be certificates for such Common Stock
purchase rights) and not by separate Rights Certificates;
as soon as practicable after the Distribution Date, Rights
Certificates will be mailed to each holder of the
Registrant's Common Stock as of the close of business on
the Distribution Date.
5.1 Opinion of Goodman Weiss Miller Goldfarb.
12.1 Computation of earnings to fixed charges.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Goodman Weiss Miller Goldfarb
(incorporated into Exhibit 5.1 hereto).
24.1 Power of Attorney and related Resolution of Board of
Directors.
25.1 Statement of Eligibility and Qualification Under the Trust
Indenture Act of 1939 of a Corporation Designated to
Act as Trustee on Form T-1.
</TABLE>
[+ PREVIOUSLY FILED.]
ii
<PAGE> 1
EXHIBIT 4.1
INDENTURE
INDENTURE dated as of December 1, 1995, between Telxon Corporation, a
Delaware corporation (hereinafter sometimes called the "Company", as more fully
set forth in Section 1.1), and Bank One Trust Company, N.A., a national banking
association duly organized and existing under the laws of the United States, as
trustee hereunder (hereinafter sometimes called the "Trustee", as more fully set
forth in Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue of its 5 3/4% Convertible Subordinated Notes due 2003 (hereinafter
sometimes called the "Notes"), in an aggregate principal amount not to exceed
$86,250,000 and, to provide the terms and conditions upon which the Notes are to
be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect repurchase upon a
Repurchase Event, a form of conversion notice and a certificate of transfer to
be borne by the Notes are to be substantially in the forms hereinafter provided
for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The terms defined in this Section 1.1 (except as
herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture that are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as
the singular.
AFFILIATE: The term "Affiliate" of any specified Person shall mean 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 or cause the direction of 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.
BANK ONE NOTE: The term "Bank One Note" means that certain Business
Purpose Revolving Promissory Note, dated November 24, 1995, between the Company
and Bank One, Akron, N.A.
BOARD OF DIRECTORS: The term "Board of Directors" shall mean the Board of
Directors of the Company or a committee of such Board duly authorized to act for
it hereunder.
BUSINESS DAY: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.
CLOSING PRICE: The term "Closing Price" shall have the meaning specified
in Section 15.5(g)(1).
COMMISSION: The term "Commission" shall mean the Securities and Exchange
Commission.
-2-
<PAGE> 3
COMMON STOCK: The term "Common Stock" shall mean any stock of any class of
the Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the Company.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
COMPANY: The term "Company" shall mean Telxon Corporation, a Delaware
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.
CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 15.4.
CORPORATE TRUST OFFICE: The term "Corporate Trust Office" or other similar
term, shall mean the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which office is, at
the date as of which this Indenture is dated, located at 100 E. Broad Street,
8th Floor, Columbus, Ohio, 43271, Attention: Corporate Trust Division (Telxon
Corporation, 5 3/4% Convertible Subordinated Notes due 2003).
CREDIT AGREEMENT: The term "Credit Agreement" means that certain Amended
and Restated Credit, Term Loan and Security Agreement, dated March 31, 1995,
among Telxon Corporation, the Retail Technology Group, Inc., Teletransaction,
Inc., Itronix Corporation, Microoffice Systems Technology, Inc., and PTC Airco,
Inc., as borrowers (the "Borrowers"), the financial institutions named therein
(the "Lenders"), and The Bank of New York Commercial Corporation, as agent (the
"Agent"), as amended by Amendment 1 to the Amended and Restated Credit, Term
Loan and Security Agreement, dated June 16, 1995, among the Borrowers, Lenders
and Agent and Amendment 2 to the Amended and Restated Credit, Term Loan and
Security Agreement, dated December 12, 1995, among the Borrowers, Lenders and
Agent, as amended, amended and restated, supplemented or otherwise modified from
time to time.
CUSTODIAN: The term "Custodian" shall mean Bank One Trust Company, N.A.,
as custodian with respect to the Notes in global form, or any successor entity
thereto.
-3-
<PAGE> 4
DEFAULT: The term "default" shall mean any event that is, or after notice
or passage of time, or both, would be, an Event of Default.
DEPOSITARY: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.
DESIGNATED SENIOR INDEBTEDNESS: The term "Designated Senior Indebtedness"
means the Credit Agreement, the Bank One Note and any other Senior Indebtedness
if the instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of this Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right of
such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness).
EXCHANGE ACT: The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
as in effect from time to time.
EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 7.1(a), (b), (c), (d), (e) or (f).
INDEBTEDNESS: The term "Indebtedness" means, with respect to any Person,
and without duplication, (a) all indebtedness, obligations and other liabilities
(contingent or otherwise) of such Person for borrowed money (including
obligations of the Company in respect of overdrafts, foreign exchange contracts,
currency exchange agreements, interest rate protection agreements, and any loans
or advances from banks, whether or not evidenced by notes or similar
instruments) or evidenced by bonds, debentures, notes or similar instruments
(whether or not the recourse of the lender is to the whole of the assets of such
Person or to only a portion thereof) (other than any account payable or other
accrued current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services), (b) all
reimbursement obligations and other liabilities (contingent or otherwise) of
such Person with respect to letters of credit, bank guarantees or bankers'
acceptances, (c) all obligations and liabilities (contingent or otherwise) in
respect of leases of such Person as lessee required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person, and all obligations and
other liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with any lease of real property
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the
-4-
<PAGE> 5
leased property and thereby guarantee a minimum residual value of the
leased property to the lessor and the obligations of such Person under such
lease or related document to purchase or to cause a third party to purchase such
leased property, (d) all obligations of such Person (contingent or otherwise)
with respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).
INDENTURE: The term "Indenture" shall mean this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented.
INITIAL PURCHASERS: The term "Initial Purchasers" means Hambrecht & Quist
LLC and Prudential Securities Incorporated.
NEW RIGHTS PLAN: The term "New Rights Plan" has the meaning specified in
Section 15.5(d).
NOTE or NOTES: The terms "Note" or "Notes" shall mean any Note or Notes,
as the case may be, authenticated and delivered under this Indenture.
NOTEHOLDER or HOLDER: The terms "Noteholder" or "holder" as applied to any
Note, or other similar terms (but excluding the term "beneficial holder"), shall
mean any person in whose name at the time a particular Note is registered on the
Note registrar's books.
NOTE REGISTER: The term "Note register" shall have the meaning specified
in Section 2.5.
OFFICERS' CERTIFICATE: The term "Officers' Certificate," when used with
respect to the Company, shall mean a certificate signed by both (a) the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) by the Treasurer
or any Assistant Treasurer or Secretary or any Assistant Secretary of the
Company.
-5-
<PAGE> 6
OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an opinion in
writing signed by legal counsel, who may be an employee of or counsel to the
Company, or other counsel acceptable to the Trustee.
OUTSTANDING: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for the redemption of which monies in
the necessary amount shall have been deposited in trust with the Trustee or
with any paying agent (other than the Company) or shall have been set aside
and segregated in trust by the Company (if the Company shall act as its own
paying agent); provided that if such Notes are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in
Article III provided, or provision satisfactory to the Trustee shall have
been made for giving such notice;
(c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 unless proof satisfactory to the Trustee is presented that any
such Notes are held by bona fide holders in due course; and
(d) Notes converted into Common Stock pursuant to Article XV and Notes
deemed not outstanding pursuant to Article III or Article XVI.
PAYMENT BLOCKAGE NOTICE: The term "Payment Blockage Notice" has the
meaning specified in Section 4.2.
PERSON: The term "Person" shall mean a corporation, an association, a
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
PORTAL MARKET: The term "PORTAL Market" shall mean the Private Offerings,
Resales and Trading through Automated Linkages Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note shall
mean every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition, any
Note authenticated and delivered under Section 2.6 in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the lost, destroyed
or stolen Note that it replaces.
-6-
<PAGE> 7
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
REGISTRATION RIGHTS PLAN: The term "Registration Rights Plan" means that
certain Registration Rights Plan, dated as of December 1, 1995, between the
Company and the Initial Purchasers.
REGULATION S: The term "Regulation S" shall mean Regulation S as
promulgated under the Securities Act.
REPURCHASE EVENT: The term "Repurchase Event" has the meaning specified in
Section 16.4.
RESPONSIBLE OFFICER: The term "Responsible Officer," when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
corporate trust matters.
RESTRICTED SECURITIES: The term "Restricted Securities" has the meaning
specified in Section 2.5.
RIGHTS PLAN: The term "Rights Plan" means that certain Rights Plan, dated
as of August 25, 1987, between the Company and Society National Bank, as
successor in interest to AmeriTrust Company National Association, as amended,
supplemented or otherwise modified from time to time.
RIGHTS: The term "Rights" shall mean "Rights" as such term is defined in
the Rights Plan.
RULE 144A: The term "Rule 144A" shall mean Rule 144A as promulgated under
the Securities Act.
SECURITIES ACT: The term "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
SENIOR INDEBTEDNESS: The term "Senior Indebtedness" means the principal of,
premium, if any, interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding) and rent
payable on or in connection with, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, Indebtedness of the Company,
whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to the foregoing), unless in the case of any
particular
-7-
<PAGE> 8
Indebtedness the instrument creating or evidencing the same or the assumption
or guarantee thereof expressly provides that such Indebtedness shall not be
senior in right of payment to the Notes or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Notes. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include (i) any Indebtedness
of the Company to any subsidiary of the Company, a majority of the voting stock
of which is owned, directly or indirectly, by the Company or (ii) the Company's
7 1/2% Convertible Subordinated Notes Due 2012.
SUBSIDIARY: The term "subsidiary" means, with respect to any person, (i)
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such person or one or more of the other subsidiaries of that
person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or managing general partner of which is such person or a subsidiary of
such person or (b) the only general partners of which are such person or of one
or more subsidiaries of such person (or any combination thereof).
TRADING DAY: The term "Trading Day" shall have the meaning specified in
Section 15.5(g)(5).
TRIGGER EVENT: The term "Trigger Event" shall have the meaning specified
in Section 15.5(d).
TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the Trust
Indenture Act of 1939, as amended, as it was in force at the date of execution
of this Indenture, except as provided in Sections 11.3 and 15.6; PROVIDED,
HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after the
date hereof, the term "Trust Indenture Act" shall mean, to the extent required
by such amendment, the Trust Indenture Act of 1939 as so amended.
TRUSTEE: The term "Trustee" shall mean Bank One Trust Company, N.A. and
its successors and any corporation resulting from or surviving any consolidation
or merger to which it or its successors may be a party and any successor trustee
at the time serving as successor trustee hereunder.
The definitions of certain other terms are as specified in Sections 2.5,
Article XV and Article XVI.
-8-
<PAGE> 9
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 DESIGNATION, AMOUNT AND ISSUE OF NOTES. The Notes shall be
designated as "5 3/4% Convertible Subordinated Notes due 2003." Notes not to
exceed the aggregate principal amount of $75,000,000 (or $86,250,000 if the
over-allotment option set forth in Section 3(c) of the Placement Agreement dated
December 6, 1995 (as amended from time to time by the parties thereto) by and
between the Company and the Initial Purchasers is exercised in full) (except
pursuant to Sections 2.5, 2.6, 3.3, 15.2 and 16.2 hereof) upon the execution of
this Indenture, or from time to time thereafter, may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by its (a) Chairman of the Board, President, Executive or Senior Vice
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title "Vice President") and
(b) Treasurer or Assistant Treasurer or its Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
Section 2.2 FORM OF NOTES. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Note in global form shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Note in global form to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in such manner and upon instructions given by the holder of such Notes in
accordance with this Indenture. Payment of principal of and interest and
premium, if any, on any Note in global form shall be made to the holder of such
Note.
-9-
<PAGE> 10
The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, shall bear interest from the applicable
date in each case as specified on the face of the form of Note attached as
Exhibit A hereto.
The person in whose name any Note (or its Predecessor Note) is registered
at the close of business on any record date with respect to any interest payment
date (including any Note that is converted after the record date and on or
before the interest payment date) shall be entitled to receive the interest
payable on such interest payment date notwithstanding the cancellation of such
Note upon any transfer, exchange or conversion subsequent to the record date and
on or prior to such interest payment date; provided, that in the case of any
Note, or portion thereof, called for redemption on a redemption date or
repurchased in connection with a Repurchase Event on a Repurchase Date that is
after a record date and prior to (but excluding) the next succeeding interest
payment date, interest shall not be paid to the person in whose name the Note,
or portion thereof, is registered on the close of business on such record date
and the Company shall have no obligation to pay interest on such Note or such
portion except to the extent required to be paid upon redemption or repurchase
of such Note or portion thereof, as the case may be, pursuant to Section 3.3 or
16.2 hereof. Interest may, at the option of the Company, be paid by check
mailed to the address of such person on the registry kept for such purposes;
PROVIDED that, with respect to any holder of Notes with an aggregate principal
amount equal to or in excess of $5,000,000, at the request of such holder in
writing to the Company (who shall then furnish written notice to such effect to
the Trustee), interest on such holder's Notes shall be paid by wire transfer
(the costs of such wire transfer to be borne by the Company) in immediately
available funds in accordance with the wire transfer instructions supplied by
such holder to the Trustee and paying agent (if different from the Trustee). The
term "record date" with respect to any interest payment date shall mean the
December 15 or June 15 preceding said January 1 or July 1, respectively.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any said January 1 or July 1 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder; and such Defaulted
Interest shall be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor
Notes) 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 to be paid on each Note and the date of the
payment (which shall be not less than twenty-five (25) days after the
receipt by the Trustee of such notice, unless the Trustee shall consent to
an earlier date), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount 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 fifteen (15) days and
not less than ten (10) days prior to the date of the proposed payment and
not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class
postage prepaid, to each Noteholder as of such special record date at his
address as it appears in the Note register, not less than ten (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 Notes (or their respective Predecessor Notes) were registered at the
close of business on such special record date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange and automated quotation system on which the Notes may
be listed or designated for issuance, and upon such notice as may be
required by such exchange and automated quotation system, 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.
Section 2.4 EXECUTION OF NOTES. The Notes shall be signed in the name and
on behalf of the Company by the facsimile signature of its Chairman of the
Board, President, any Executive or Senior Vice President or any Vice President
(whether or not designated by a number or numbers or word or words added before
or after the title "Vice President") and attested by the facsimile signature of
its Secretary or any of its Assistant Secretaries (which may be printed,
engraved or otherwise reproduced thereon, by facsimile or otherwise). Only such
Notes as shall bear thereon a certificate of authentication
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substantially in the form set forth on the form of Note attached as Exhibit A
hereto, manually executed by the Trustee (or an authenticating agent appointed
by the Trustee as provided by Section 17.11), shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate
by the Trustee (or such an authenticating agent) upon any Note executed by the
Company shall be conclusive evidence that the Note so authenticated has been
duly authenticated and delivered hereunder and that the holder is entitled to
the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES: RESTRICTIONS
ON TRANSFER: DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which,
subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Notes and of transfers of Notes. The
Note register shall be in written form or in any form capable of being
converted into written form within a reasonably prompt period of time. The
Trustee is hereby appointed "Note registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. The Company may change
the Note register or appoint one or more co-registrars in accordance with
Section 5.2 without any prior notice to any holders, provided that a Note
register shall be at all times maintained at the Corporate Trust Office.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for
such transfer set forth in this Section 2.5, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant
to
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Section 5.2. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Notes which the Noteholder making the exchange is entitled to receive
bearing registration numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption or conversion shall (if so required by the Company or
the Note registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company,
and the Notes shall be duly executed by the Noteholder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes.
Neither the Company nor the Trustee nor any Note registrar or any
Company-registrar shall be required to exchange or register a transfer of
(a) any Notes for a period of fifteen (15) days next preceding any
selection of Notes to be redeemed or (b) any Notes or portions thereof
called for redemption pursuant to Article III or (c) any Notes or portion
thereof surrendered for conversion pursuant to Article XV.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, unless otherwise required by law, all Notes to be traded on
the PORTAL Market or to a Person who is not a U.S. Person (as defined in
Regulation S) who is acquiring the Note in an offshore transaction (a
"Non-U.S. Person") in accordance with Regulation S shall be represented by
a Note in global form registered in the name of the Depositary or the
nominee of the Depositary. The transfer and exchange of beneficial
interests in such Note in global form, which does not involve the issuance
of a Note in definitive form, shall be effected through the Depositary, in
accordance with this Indenture (including the restrictions on transfer set
forth herein) and the procedures of the Depositary therefor.
At any time at the request of the beneficial holder of an interest in
a Note in global form to obtain a Note in definitive form, such beneficial
holder shall be entitled to obtain a definitive Note upon written request
to the Trustee and the Custodian in accordance with the standing
instructions and procedures existing
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<PAGE> 14
between the Custodian and Depositary for the issuance thereof. Upon
receipt of any such request, the Trustee, or the Custodian at the direction
of the Trustee, will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Custodian, the
aggregate principal amount of the Note in global form to be reduced by the
principal amount of the definitive Note issued upon such request to such
beneficial holder and, following such reduction, the Company will execute
and the Trustee will authenticate and deliver to such beneficial holder (or
its nominee) a definitive Note or Notes in the appropriate aggregate
principal amount in the name of such beneficial holder (or its nominee) and
bearing such restrictive legends as may be required by this Indenture.
Any transfer of a beneficial interest in a Note in global form which
cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a definitive Note or Notes
registered in the name of the transferee (or its nominee) on the books
maintained by the Note registrar in accordance with the transfer
restrictions set forth herein. With respect to any such transfer, the
Trustee, or the Custodian at the direction of the Trustee, will cause, in
accordance with the standing instructions and procedures existing between
the Depositary and the Custodian, the aggregate principal amount of the
Note in global form to be reduced by the principal amount of the beneficial
interest in the Note in global form being transferred and, following such
reduction, the Company will execute and the Trustee will authenticate and
deliver to the transferee (or such transferee's nominee, as the case may
be), a Note or Notes in the appropriate aggregate principal amount in the
name of such transferee (or its nominee) and bearing such restrictive
legends as may be required by this Indenture.
(c) So long as the Notes are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Note to
a QIB in accordance with Rule 144A or a Non-U.S. Person in accordance with
Regulation S, and upon receipt of the definitive Note or Notes being so
transferred, together with a certification from the transferor that the
transferee is a QIB or a Non-U.S. Person (or other evidence satisfactory to
the Trustee), the Trustee shall make, or direct the Custodian to make, an
endorsement on the Note in global form to reflect an increase in the
aggregate principal amount of the Notes represented by the Note in global
form, and the Trustee shall cancel such definitive Note or Notes and cause,
or direct the Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Custodian, the aggregate principal amount of Notes represented by the Note
in global form to be increased accordingly; provided that no definitive
Note, or portion thereof, in respect of which the Company or an Affiliate
of the Company held any beneficial interest shall be included in such Note
in global form until such definitive Note is freely tradable in accordance
with Rule 144(k); PROVIDED FURTHER that the Trustee shall
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<PAGE> 15
issue Notes in definitive form upon any transfer of a beneficial
interest in the Note in global form to the Company or an Affiliate of the
Company.
Any Note in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Indenture as may be required by the Custodian, the
Depositary or by the National Association of Securities Dealers, Inc. in
order for the Notes to be tradeable on the PORTAL Market, or as may be
required for the Notes to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or Regulation S under the
Securities Act or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be listed
or traded, or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Notes are subject.
(d) Every Note that bears or is required under this Section 2.5(d) to
bear the legend set forth in this Section 2.5(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend
set forth in Section 2.5(e), collectively, the "Restricted Securities" or
each individually, a "Restricted Security") shall be subject to the
restrictions on transfer set forth in this Section 2.5(d) (including those
set forth in the legend set forth below) unless such restrictions on
transfer shall be waived by written consent of the Company, and the holder
of each such Restricted Security, by such Noteholder's acceptance thereof,
agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale,
pledge, transfer or other disposition whatsoever of any legal or beneficial
interest in any Restricted Security.
Until three (3) years after the original issuance date of any Note,
any certificate evidencing such Note (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued
upon conversion thereof, which shall bear the legend set forth in Section
2.5(e), if applicable) shall bear a legend in substantially the following
form, unless otherwise agreed by the Company in writing, with written
notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR
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<PAGE> 16
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION (2) AGREES THAT
IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED
HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE
EXCEPT (A) TO TELXON CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO BANK ONE TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE SUCH TRUSTEE OR SUCCESSOR TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED
HEREBY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO BANK ONE
TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO BANK ONE TRUST
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<PAGE> 17
COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS NOTE EVIDENCED HEREBY
PURSUANT TO CLAUSE 2(F) ABOVE OR THE EXPIRATION OF THREE YEARS FROM
THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance
with their terms may, upon surrender of such Note for exchange to the Note
registrar in accordance with the provisions of this Section 2.5, be
exchanged for a new Note or Notes, of like tenor and aggregate principal
amount, which shall not bear the restrictive legend required by this
Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.5(d)), a Note in global form may not
be transferred as a whole or in part except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company
to act as Depositary with respect to the Notes in global form. Initially,
the global Note shall be issued to the Depositary, registered in the name
of Cede & Co., as the nominee of the Depositary, and deposited with the
Custodian for Cede & Co.
If at any time the Depositary for the Note in global form notifies the
Company that it is unwilling or unable to continue as Depositary for the
Note, the Company may appoint a successor Depositary with respect to such
Note. If a successor Depositary is not appointed by the Company within
ninety (90) days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of Notes, will authenticate and deliver, Notes
in definitive form, in an aggregate principal
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<PAGE> 18
amount equal to the principal amount of the Note in global form, in
exchange for such Note in global form.
If a definitive Note is issued in exchange for any portion of a Note
in global form after the close of business at the office or agency where
such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date,
interest will not be payable on such interest payment date in respect of
such Note, but will be payable on such interest payment date only to the
person to whom interest in respect of such portion of such Note in global
form is payable in accordance with the provisions of this Indenture.
Definitive Notes issued in exchange for all or a part of a Note in
global form pursuant to this Section 2.5 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Notes to the persons in whose names such definitive
Notes are so registered.
At such time as all interests in a Note in global form have been
redeemed, converted, repurchased, canceled, exchanged for definitive Notes,
or transferred to a transferee who receives definitive Notes thereof, such
Note in global form shall, upon receipt thereof, be canceled by the Trustee
in accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such cancellation,
if any interest in a global Note is exchanged for definitive Notes,
redeemed, converted, repurchased or canceled or transferred to a transferee
who receives definitive Notes therefor or any definitive Note is exchanged
or transferred for part of a Note in global form, the principal amount of
such Note in global form shall, in accordance with the standing procedures
and instructions existing between the Depositary and the Custodian, be
appropriately reduced or increased, as the case may be, and an endorsement
shall be made on such Note in global form, by the Trustee or the Custodian,
at the direction of the Trustee, to reflect such reduction or increase.
(e) Until three (3) years after the original issuance date of any
Note, any stock certificate representing Common Stock issued upon
conversion of such Note shall bear a legend in substantially the following
form, unless such Common Stock has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and
which continues to be effective at the time of such transfer) or such
Common Stock has been issued upon conversion of Notes that have been
transferred pursuant to a registration statement that has been declared
effective under the Securities Act, or unless otherwise agreed by the
Company in writing with written notice thereof to the transfer agent:
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<PAGE> 19
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT, UNTIL THE
EXPIRATION OF THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON
THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED,
(1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK
EVIDENCED HEREBY EXCEPT (A) TO TELXON CORPORATION OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO SOCIETY NATIONAL BANK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE)), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), (2) PRIOR TO
SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE),
IT WILL FURNISH SOCIETY NATIONAL BANK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE
COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN
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<PAGE> 20
A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE) A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT
TO CLAUSE 1(E) OR CLAUSE 1(F) ABOVE OR THE EXPIRATION OF THREE YEARS
FROM THE ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH
THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED OR UPON THE EARLIER
SATISFACTION OF SOCIETY NATIONAL BANK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), THAT THE COMMON STOCK HAS
BEEN OR IS BEING OFFERED AND SOLD IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms may, upon surrender of the
certificates representing such shares of Common Stock for exchange in
accordance with the procedures of the transfer agent for the Common Stock,
be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend
required by this Section 2.5(e).
(f) Any certificate evidencing a Note that has been transferred to an
Affiliate of the Company within three years after the original issuance
date of the Note, as evidenced by a notation on the Assignment Form for
such transfer or in the representation letter delivered in respect thereof,
shall, until three years after the last date on which the Company or any
Affiliate of the Company was an owner of such Note, bear a legend in
substantially the following form, unless otherwise agreed by the Company
(with written notice thereof to the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO TELXON CORPORATION
OR ANY SUBSIDIARY THEREOF, (B) IN A TRANSACTION REGISTERED UNDER THE
SECURITIES ACT OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED
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BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (2) THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS
LEGEND SHALL BE REMOVED UPON THE TRANSFER OF THE NOTE EVIDENCED HEREBY
OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE PURSUANT TO
THE IMMEDIATELY PRECEDING SENTENCE. IF THE PROPOSED TRANSFER IS
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
BANK ONE TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any stock certificate representing Common Stock issued upon conversion
of such Note shall also bear a legend in substantially the form indicated
above, unless otherwise agreed by the Company (with written notice thereof
to the Trustee).
(g) Notwithstanding any provision of Section 2.5 to the contrary, in
the event Rule 144(k) as promulgated under the Securities Act (or any
successor rule) is amended to shorten the three-year period under Rule
144(k) (or the corresponding period under any successor rule), then in that
event, from and after receipt by the Trustee of the Officers' Certificate
and Opinion of Counsel provided for in this Section 2.5(g), (i) the
references in the first sentence of the second paragraph of Section 2.5(d)
to "three (3) years" and in the restrictive legend set forth in such
paragraph to "THREE YEARS" shall be deemed for all purposes hereof to be
references to such shorter period, (ii) the references in the first
paragraph of Section 2.5(e) to "three (3) years" and in the restrictive
legend set forth in such paragraph to "THREE YEARS" shall be deemed for all
purposes hereof to be references to such shorter period and (iii) all
corresponding references in the Notes and the restrictive legends thereon
(including the restrictive legends on any Common Stock issuable upon
conversion of the Notes) shall be deemed for all purposes hereof to be
references to such shorter period, provided that such changes shall not
become effective if they are otherwise prohibited by, or would otherwise
cause a violation of, the then-applicable federal securities laws. As soon
as practicable after the Company has knowledge of the effectiveness of any
such amendment to shorten the three-year period under Rule 144(k) (or the
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corresponding period under any successor rule), unless such changes would
otherwise be prohibited by, or would otherwise cause a violation of, the
then-applicable securities laws, the Company shall provide to the Trustee
an Officers' Certificate and Opinion of Counsel informing the Trustee of
the effectiveness of such amendment and the effectiveness of the foregoing
changes to Sections 2.5(d) and 2.5(e) and the Notes. This Section 2.5(g)
shall apply to successive amendments to Rule 144(k) (or any successor rule)
shortening the holding period thereunder.
Section 2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case any Note
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and deliver, a new Note,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution for the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless for any loss, liability, cost or expense caused by or
connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require from the holder of such Note the payment of a sum sufficient to cover
The Company's reasonable out-of-pocket expenses and any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Note which has matured or is about to
mature or has been called for redemption or is about to be converted into Common
Stock shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Note, pay or authorize the payment of or convert
or authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such payment
or conversion shall furnish to the Company, to the Trustee and, if applicable,
to such authenticating agent such security or indemnity as may be required by
them to save each of them harmless for any loss, liability, cost or expense
caused by or connected with such substitution, and, in case of destruction, loss
or theft, evidence satisfactory to the Company, the Trustee and, if applicable,
any paying agent or conversion agent of the destruction, loss or theft of such
Note and of the ownership thereof.
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Every substitute Note issued pursuant to the provisions of this Section 2.6
by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 TEMPORARY NOTES. Pending the preparation of definitive Notes,
the Company may execute and the Trustee or an authenticating agent appointed by
the Trustee shall, upon the written request of the Company, authenticate and
deliver temporary Notes (printed or lithographed). Temporary Notes shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Notes, but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company. Every
such temporary Note shall be executed by the Company and authenticated by the
Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Notes. Without unreasonable delay the Company will execute and deliver to the
Trustee or such authenticating agent definitive Notes (other than in the case of
Notes in global form) and thereupon any or all temporary Notes (other than any
such Note in global form) may be surrendered in exchange therefor, at each
office or agency maintained by the Company pursuant to Section 5.2 and the
Trustee or such authenticating agent shall authenticate and deliver in exchange
for such temporary Notes an equal aggregate principal amount of definitive
Notes. Such exchange shall be made by the Company at its own expense and
without any charge therefor. Until so exchanged, the temporary Notes shall in
all respects be entitled to the same benefits and subject to the same
limitations under this Indenture as definitive Notes authenticated and delivered
hereunder.
Section 2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for
the purpose of payment, redemption, conversion, exchange or registration of
transfer, shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it (provided that in the case of any Note or portion thereof
submitted for repurchase, the Trustee shall not cancel such Note or portion
thereof until after the Repurchase Date), or, if surrendered to the Trustee,
shall be promptly canceled by it, and no Notes shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee shall destroy canceled Notes (unless the Company directs it to do
otherwise) and, after such destruction, shall, if requested by the Company,
deliver a certificate of such destruction to
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the Company. If the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Notes unless and until the same are delivered to the
Trustee for cancellation.
ARTICLE III
REDEMPTION OF NOTES
Section 3.1 REDEMPTION PRICES. The Company may not redeem the Notes prior
to January 5, 1999. At any time on or after January 5, 1999, the Company may,
at its option, redeem all or from time to time any part of the Notes on any date
prior to maturity, upon notice as set forth in Section 3.2, and at the optional
redemption prices set forth in the form of Note attached as Exhibit A hereto,
together with accrued interest to, but excluding, the date fixed for redemption.
Section 3.2 NOTICE OF REDEMPTION: SELECTION OF NOTES. In case the Company
shall desire to exercise the right to redeem all or, as the case may be, any
part of the Notes pursuant to Section 3.1, it shall fix a date for redemption
and it or, at its request, the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption at least
30 and not more than 60 days prior to the date fixed for redemption to the
holders of Notes so to be redeemed as a whole or in part at their most recent
available addresses as the same appear on the Note register (provided that if
the Company shall give such notice, it shall also give written notice, and
written notice of the Notes to be redeemed, to the Trustee). Such mailing shall
be by first class mail. The notice if mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
holder receives such notice. In any case, failure to give such notice by mail
or any defect in the notice to the holder of any Note designated for redemption
as a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.
Each such notice of redemption shall specify the aggregate principal amount
of Notes to be redeemed, the date fixed for redemption, the redemption price at
which Notes are to be redeemed, the place or places of payment, that payment
will be made upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in said
notice, and that on and after said date interest thereon or on the portion
thereof to be redeemed will cease to accrue. Such notice shall also state the
current Conversion Price and the date on which the right to convert such Notes
or portions thereof into Common Stock will expire. If fewer than all the Notes
are to be redeemed, the notice of redemption shall identify the Notes to be
redeemed. In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date
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fixed for redemption, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.2, the Company will deposit with the Trustee
or with one or more paying agents (or, if the Company is acting as its own
paying agent, set aside, segregate and hold in trust as provided in Section 5.4)
an amount of money sufficient to redeem on the redemption date all the Notes (or
portions thereof) so called for redemption (other than those theretofore
surrendered for conversion into Common Stock) at the appropriate redemption
price, together with accrued interest to, but excluding, the date fixed for
redemption; PROVIDED that if such payment is made on the redemption date it must
be received by the Trustee or paying agent, as the case may be, by 10:00 a.m.
New York City time, on such date. If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its written request, or, if then held by the
Company, shall be discharged from such trust. If fewer than all the Notes are
to be redeemed, the Company will give the Trustee written notice in the form of
an Officers' Certificate not fewer than forty-five (45) days (or such shorter
period of time as may be acceptable to the Trustee) prior to the redemption date
as to the aggregate principal amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed (in principal amounts of $1,000 or
integral multiples thereof), by lot. If any Note selected for partial
redemption is converted in part after such selection, the converted portion of
such Note shall be deemed (so far as may be) to be the portion to be selected
for redemption. The Notes (or portions thereof) so selected shall be deemed
duly selected for redemption for all purposes hereof, notwithstanding that any
such Note is converted as a whole or in part before the mailing of the notice of
redemption.
Upon any redemption of less than all Notes, the Company and the Trustee may
(but need not) treat as outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as outstanding any Note authenticated
and delivered during such period in exchange for the unconverted portion of any
Note converted in part during such period.
Section 3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the redemption
date and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the
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Company shall default in the payment of such Notes at the redemption price,
together with interest accrued to said date) interest on the Notes or portion
of Notes so called for redemption shall cease to accrue and such Notes shall
cease after the close of business on the Business Day next preceding the date
fixed for redemption to be convertible into Common Stock and, except as
provided in Sections 8.5 and 13.4, to be entitled to any benefit or security
under this Indenture, and the holders thereof shall have no right in respect of
such Notes except the right to receive the redemption price thereof and unpaid
interest to (but excluding) the date fixed for redemption. On presentation and
surrender of such Notes at a place of payment in said notice specified, the
said Notes or the specified portions thereof shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to (but excluding) the date fixed for redemption; PROVIDED that, if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Note or Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Sections 7.1(a) or 7.1(b),
a Responsible Officer of the Trustee has knowledge. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.
Section 3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to (but
excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders
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thereof may, at the option of the Company, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article XV) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Notes shall be extended through such time), subject to payment of the above
amount as aforesaid. At the direction of the Company, the Trustee shall hold
and dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Notes. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and hold it harmless against, any loss, liability or expense
arising out of or in connection with any such arrangement for the purchase and
conversion of any Notes between the Company and such purchasers to which the
Trustee has not consented in writing, including the costs and expenses,
including reasonable legal fees, incurred by the Trustee in the defense of any
claim or liability arising out of or in connection with the exercise or
performance of any of its powers, duties, responsibilities or obligations under
this Indenture.
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 AGREEMENT OF SUBORDINATION. The Company covenants and agrees,
and each holder of Notes issued hereunder by his acceptance thereof likewise
covenants and agrees, that all Notes shall be issued subject to the provisions
of this Article IV; and each Person holding any Note, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees to be
bound by such provisions.
The payment of the principal of, premium, if any, and interest on all Notes
(including, but not limited to, the redemption price with respect to the Notes
called for redemption in accordance with Section 3.2 or submitted for repurchase
in accordance with Section 16.2, as the case may be, as provided in the
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.
No provision of this Article IV shall prevent the occurrence of any default
or Event of Default hereunder.
Section 4.2 PAYMENTS TO NOTEHOLDERS. No payment shall be made with
respect to the principal of, or premium, if any, or interest on the Notes
(including, but not limited to,
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the redemption price with respect to the Notes to be called for redemption in
accordance with Section 3.2 or submitted for repurchase in accordance with
Section 16.2, as the case may be, as provided in the Indenture), except
payments and distributions made by the Trustee as permitted by the first or
second paragraph of Section 4.5, if:
(i) a default in the payment of principal, premium, interest, rent or
other obligations due on any Senior Indebtedness occurs and is continuing
(or, in the case of Senior Indebtedness for which there is a period of
grace, in the event of such a default that continues beyond the period of
grace, if any, specified in the instrument or lease evidencing such Senior
Indebtedness), unless and until such default shall have been cured or
waived or shall have ceased to exist; or
(ii) a default, other than a payment default, on a Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Person who may give it pursuant to Section 4.5 hereof.
If the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until (A) at least 365 days shall have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice, and (B) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions in respect
of the Notes upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in clause (ii) above, 179 days
pass after notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated,
unless this Article IV otherwise prohibits the payment or distribution at the
time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all
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amounts due or to become due upon all Senior Indebtedness shall first be paid
in full in cash or other payment satisfactory to the holders of such Senior
Indebtedness, or payment thereof in accordance with its terms shall be provided
for in cash or other payment satisfactory to the holders of such Senior
Indebtedness before any payment is made on account of the principal of,
premium, if any, or interest on the Notes (except payments made pursuant to
Article XIII from monies deposited with the Trustee pursuant thereto prior to
commencement of proceedings for such dissolution, winding-up, liquidation or
reorganization); and upon any such dissolution or winding-up or liquidation or
reorganization of the Company or bankruptcy, insolvency, receivership or other
proceeding, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Notes or the Trustee would be entitled, except for the
provision of this Article IV, shall (except as aforesaid) be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the holders of the
Notes or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, or
as otherwise required by law or a court order) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full, in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness, before
any payment or distribution is made to the holders of the Notes or to the
Trustee.
For purposes of this Article IV, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article IV with respect to
the Notes to the payment of all Senior Indebtedness which may at the time be
outstanding; PROVIDED that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XII shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 4.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article XII.
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In the event of the acceleration of the Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest on the
Notes (including, but not limited to, the redemption price with respect to the
Notes called for redemption in accordance with Section 3.2 or submitted for
repurchase in accordance with Section 16.2, as the case may be, as provided in
the Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of the acceleration.
In the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
holders of the Notes before all Senior Indebtedness is paid in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of such Senior Indebtedness, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.6. This Section 4.2 shall be subject to
the further provisions of Section 4.5.
Section 4.3 SUBROGATION OF NOTES. Subject to the payment in full of all
Senior Indebtedness, the rights of the holders of the Notes shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article IV (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest on the Notes shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to
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the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article IV, and no payments pursuant to the provisions of
this Article IV, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company
to or for the account of the Notes. It is understood that the provisions of
this Article IV are and are intended solely for the purposes of defining the
relative rights of the holders of the Notes, on the one hand, and the holders
of the Senior Indebtedness, on the other hand.
Nothing contained in this Article IV or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article IV of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article IV, the Trustee, subject to the provisions of Section 8.1, and the
holders of the Notes shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article IV.
Section 4.4 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of a Note
by the holder's acceptance thereof authorizes and directs the Trustee on the
holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article IV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof
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of debt in the form required in any proceeding referred to in the third
paragraph of Section 7.2 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Indebtedness or their
representatives are hereby authorized to file an appropriate claim for and on
behalf of the holders of the Notes.
Section 4.5 NOTICE TO TRUSTEE. The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article IV.
Notwithstanding the provisions of this Article IV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article IV,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company or a
holder or holders of Senior Indebtedness or from any trustee thereof; and before
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 8.1, shall be entitled in all respects to assume that no such facts
exist; PROVIDED that if on a date not fewer than one Business Day prior to the
date upon which by the terms hereof any such monies may become payable for any
purpose (including, without limitation, the payment of the principal of, or
premium, if any, or interest on any Note) the Trustee shall not have received,
with respect to such monies, the notice provided for in this Section 4.5, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Notwithstanding anything in this Article IV to the contrary, nothing shall
prevent (a) any payment by the Company or the Trustee to the Trustee or
Noteholders of amounts in connection with a redemption of Notes (including a
redemption pursuant to Section 3.5) if (i) notice of such redemption has been
given pursuant to Article III prior to the receipt by the Trustee of written
notice as aforesaid, and (ii) such notice of redemption is given not earlier
than sixty (60) days before the redemption date or (b) any payment by the
Trustee to the Noteholders of monies deposited with it pursuant to Section 13.1,
and any such payment shall not be subject to the provisions of Section 4.1 or
4.2.
The Trustee, subject to the provisions of Section 8.1, shall be entitled to
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article IV, the Trustee may
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request such person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such person, the extent
to which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
IV, and if such evidence is not furnished the Trustee may defer any payment to
such person pending judicial determination as to the right of such person to
receive such payment.
Section 4.6 TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to holders of Notes, the
Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article IV or otherwise.
Section 4.7 NO IMPAIRMENT OF SUBORDINATION. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
Section 4.8 CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes of this
Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section 4.8, the term "junior securities" means (a) shares of
any stock of any class of the Company, or (b) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Notes are so
subordinated as provided in this Article. Nothing contained
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in this Article IV or elsewhere in this Indenture or in the Notes is intended
to or shall impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Noteholders, the right, which is absolute and
unconditional, of the Holder of any Note to convert such Note in accordance
with Article XV.
Section 4.9 ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; PROVIDED, HOWEVER, that the first paragraph of Section 4.5
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.
Section 4.10 SENIOR INDEBTEDNESS ENTITLED TO RELY. The holders of Senior
Indebtedness (including, without limitation, Designated Senior Indebtedness)
shall have the right to rely upon this Article IV, and no amendment or
modification of the provisions contained herein shall diminish the rights of
such holders unless such holders shall have agreed in writing thereto.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual
interest payment date may be paid by mailing checks for the interest payable to
or upon the written order of the holders of Notes entitled thereto as they shall
appear on the registry books of the Company; provided, that; with respect to any
holder of Notes with an aggregate principal amount equal to or in excess of
$5,000,000, at the request of such holder in writing to the Company (who shall
then furnish notice to such effect to the Trustee), interest on such holder's
Notes shall be paid by wire transfer (the cost of such wire transfer to be borne
by the Company) in immediately available funds in accordance with the wire
transfer instructions supplied by such holder to the Trustee and paying agent
(if different from the Trustee).
Section 5.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in
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respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by the Trustee.
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 or agency of the Trustee in the Borough of Manhattan,
The City of New York.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED 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
any such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar, Custodian and conversion agent, and the Corporate Trust Office of the
Trustee and the agency of the Trustee in the Borough of Manhattan, The City of
New York (which shall initially be First Chicago Trust Company of New York,
located at 14 Wall Street, 8th Floor, New York, New York, 10005), one such
office or agency of the Company for each of the aforesaid purposes.
So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notices set forth in Section 8.10(a) and the third
paragraph of Section 8.11.
Section 5.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, it will cause
such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of
this Section 5.4:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest on the
Notes (whether such sums have been paid to it by the Company or by any
other obligor on the Notes) in trust for the benefit of the holders of
the Notes;
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(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of
the principal of and premium, if any, or interest on the Notes when
the same shall be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a
sum sufficient to pay such principal, premium, if any, or interest, and
(unless such paying agent is the Trustee) the Company will promptly notify
the Trustee of any failure to take such action; provided that if such
deposit is made on the due date, such deposit shall be received by the
paying agent by 10:00 a.m. New York City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest on
the Notes, set aside, segregate and hold in trust for the benefit of the
holders of the Notes a sum sufficient to pay such principal, premium, if
any, or interest so becoming due and will notify the Trustee of any failure
to take such action and of any failure by the Company (or any other obligor
under the Notes) to make any payment of the principal of, premium, if any,
or interest on the Notes when the same shall become due and payable.
(c) Anything in this Section 5.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust by the Company or any paying
agent hereunder as required by this Section 5.4, such sums to be held by
the Trustee upon the trusts herein contained and upon such payment by the
Company or any paying agent to the Trustee, the Company or such paying
agent shall be released from all further liability with respect to such
sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
Section 5.5 CORPORATE EXISTENCE. Subject to Article XII, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence.
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Section 5.6 RULE 144A INFORMATION REQUIREMENT. During the period
beginning on the latest date of the original issuance of the Notes and ending on
the date that is three years from such date, the Company covenants and agrees
that it shall, during any period in which it is not subject to Section 13 or
15(d) under the Exchange Act, make available to any holder or beneficial holder
of Notes or any Common Stock issued upon conversion thereof which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of Notes or such Common Stock from such holder or beneficial holder,
the information required pursuant to Rule 144A(d)(4) under the Securities Act
upon the request of any holder or beneficial holder of the Notes or such Common
Stock and it will take such further action as any holder or beneficial holder of
such Notes or such Common Stock may reasonably request, all to the extent
required from time to time to enable such holder or beneficial holder to sell
its Notes or Common Stock without registration under the Securities Act within
the limitation of the exemption provided by Rule 144A, as such Rule may be
amended from time to time. Upon the request of any holder or any beneficial
holder of the Notes or such Common Stock, the Company will deliver to such
holder a written statement as to whether it has complied with such requirements.
Section 5.7 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this Indenture
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, 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 has been enacted.
Section 5.8 RESALE OF CERTAIN NOTES. During the period beginning on the
original issuance date of the Notes and ending on the date that is three years
from such date, the Company will not resell, and will use its reasonable efforts
to prevent any of its Affiliates from reselling, (x) any Notes which constitute
"restricted securities" under Rule 144 and (y) any securities into which such
Notes have been converted under this Indenture which constitute "restricted
securities" under Rule 144.
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Section 5.9 COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on March 31, 1996) an Officers'
Certificate stating whether or not the signers know of any Event of Default that
occurred during such period. If such signers know of any Event of Default that
occurred during such period, such Officers' Certificate shall describe the Event
of Default and its status.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 6.1 NOTEHOLDERS' LISTS. The Company covenants and agrees that it
will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each December 15 and June 15 in each year beginning
with June 15, 1996, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished so long as the Trustee is acting as Note registrar.
Section 6.2 PRESERVATION AND DISCLOSURE OF LISTS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders
of Notes contained in the most recent list furnished to it as provided in
Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided
in Section 6.1 upon receipt of a new list so furnished.
(b) The rights of Noteholders to communicate with other holders of
Notes with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Noteholder, 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
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information as to names and addresses of holders of Notes made pursuant to
the Trust Indenture Act.
Section 6.3 REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the year
1996, the Trustee shall transmit to holders of Notes such reports dated as
of May 15 of the year in which such reports are made 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 such report shall, at the time of such transmission to
holders of Notes, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Notes are listed and with the
Company. The Company will notify the Trustee within a reasonable time when
the Notes are listed on any stock exchange and automated quotation system.
Section 6.4 REPORTS BY COMPANY. The Company shall file with the Trustee
(and the Commission if at any time after the Indenture becomes qualified under
the Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act; PROVIDED that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within 15 days after the same is so
required to be filed with the Commission.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON AN EVENT OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. In case one or more of the following
Events of Default (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) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest (including,
without limitation, any interest payable as liquidated damages under the
Registration Rights Agreement) upon any of the Notes as and when the same
shall become due and payable, and continuance of such default for a period
of thirty (30) days, whether or not such payment is permitted under Article
IV hereof; or
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(b) default in the payment of the principal of and premium, if any, on
any of the Notes as and when the same shall become due and payable either
at maturity or in connection with any redemption pursuant to Article III or
repurchase pursuant to Article XVI, by acceleration or otherwise, whether
or not such payment is permitted under Article IV hereof; or
(c) an event of default under the Indenture, dated June 1, 1987,
between the Company and Society National Bank, as successor by merger to
AmeriTrust Company National Association, that results in the Company's 7
1/2% Convertible Subordinated Debentures due 2012 (the "Debentures")
becoming due and payable prior to the scheduled maturity of the Debentures.
(d) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Notes or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 7.1
specifically dealt with) continued for a period of sixty (60) days after
the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, or to
the Company and a Responsible Officer of the Trustee by the holders of at
least 25 percent in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4; or
(e) the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced against
the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety
(90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(e) or (f)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than 25 percent in aggregate
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principal amount of the Notes then outstanding hereunder determined in
accordance with Section 9.4, by notice in writing to the Company (and to the
Trustee if given by Noteholders), may declare the principal of all the Notes
and the interest accrued thereon to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Notes contained to the contrary
notwithstanding. In the event a declaration of acceleration because of an
Event of Default specified in Section 7.1(c) hereof has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
such default is cured or waived or the holders of the Debentures have rescinded
their declaration of acceleration in respect of such indebtedness within 60
days thereof and the Trustee has received written notice of such cure, waiver
or rescission and no other Event of Default described in Section 71(c) hereof
has occurred that has not been cured or waived within 60 days of the
declaration of such acceleration in respect thereof. If an Event of Default
specified in Section 7.1(e) or (f) occurs, the principal of all the Notes and
the interest accrued thereon shall be immediately and automatically due and
payable without necessity of further action. This provision, however, is
subject to the conditions that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all Notes and
the principal of and premium, if any, on any and all Notes which shall have
become due otherwise than by acceleration (with interest on overdue
installments of interest (to the extent that payment of such interest is
enforceable under applicable law) and on such principal and premium, if any, at
the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 8.6, and if any and all defaults
under this Indenture, other than the nonpayment of principal of and premium, if
any, and accrued interest on Notes which shall have become due by acceleration,
shall have been cured or waived pursuant to Section 7.7 -- then and in every
such case the holders of a majority in aggregate principal amount of the Notes
then outstanding, by written notice to the Company and to the Trustee, may
waive all defaults or Events of Default and rescind and annul such declaration
and its consequences; but no such waiver or rescission and annulment shall
extend to or shall affect any subsequent default or Event of Default, or shall
impair any right consequent thereon. The Company shall notify a Responsible
Officer of the Trustee, promptly upon becoming aware thereof, of any Event of
Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
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Section 7.2 PAYMENTS OF NOTES ON DEFAULT: SUIT THEREFOR. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of thirty
(30) days, or (b) in case default shall be made in the payment of the principal
of or premium, if any, on any of the Notes as and when the same shall have
become due and payable, whether at maturity of the Notes or in connection with
any redemption, by or under this Indenture declaration or otherwise -- then,
upon demand of the Trustee, the Company will pay to the Trustee, for the benefit
of the holders of the Notes, the whole amount that then shall have become due
and payable on all such Notes for principal and premium, if any, or interest, or
both, as the case may be, with interest upon the overdue principal and premium,
if any, and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest at the rate borne by
the Notes; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including reasonable compensation
to the Trustee, its agents, attorneys and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through its negligence
or bad faith. Until such demand by the Trustee, the Company may pay the
principal of and premium, if any, and interest on the Notes to the registered
holders, whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under Title
11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest owing and unpaid in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
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as may be necessary or advisable in order to have the claims of the Trustee and
of the Noteholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.6; and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar
official is hereby authorized by each of the Noteholders 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 Noteholders, to pay to the Trustee any amount
due it for reasonable compensation, expenses, advances and disbursements,
including counsel fees incurred by it up to the date of such distribution. To
the extent that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, monies, securities and other
property which the holders of the Notes may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or 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 Notes.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.
Section 7.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon 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
8.6;
Second: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on the Notes in default in the order of the
maturity of the installments of such interest, with interest (to the extent
that such interest has been collected by
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the Trustee) upon the overdue installments of interest at the rate borne by
the Notes, such payments to be made ratably to the persons entitled
thereto;
Third: Subject to the provisions of Article IV, in case the principal
of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid, to the payment of the whole amount then owing and
unpaid upon the Notes for principal and premium, if any, and interest, with
interest on the overdue principal and premium, if any, and (to the extent
that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Notes; and in case such
monies shall be insufficient to pay in full the whole amounts so due and
unpaid upon the Notes, then to the payment of such principal and premium,
if any, and interest without preference or priority of principal and
premium, if any, over interest, or of interest over principal and premium,
if any, or of any installment of interest over any other installment of
interest, or of any Note over any other Note, ratably to the aggregate of
such principal and premium, if any, and accrued and unpaid interest; and
Fourth: Subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other person lawfully entitled
thereto.
Section 7.4 PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25 percent in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for sixty (60) days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 7.7; it being understood and intended, and being expressly
covenanted by the taker and holder of every Note with every other taker and
holder and the Trustee, that no one or more holders of Notes 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 holder of
Notes, or to obtain or seek to obtain priority over or preference to any other
such holder, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all holders of
Notes (except as otherwise provided herein). For the protection and enforcement
of this
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Section 7.4, each and every Noteholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, his rights of
conversion as provided herein.
Section 7.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
Section 7.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
Section 2.6, all powers and remedies given by this Article VII to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other powers and remedies available
to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or any acquiescence therein; and, subject to the provisions of Section
7.4, every power and remedy given by this Article VII or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF
NOTEHOLDERS. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 shall
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided, however, that
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(a) such direction shall not be in conflict with any rule of law or with this
Indenture, and (b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction. The holders of a
majority in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 9.4 may on behalf of the holders of all
of the Notes waive any past default or Event of Default hereunder and its
consequences except (i) a default in the payment of interest or premium, if
any, on, or the principal of, the Notes, (ii) a failure by the Company to
convert any Notes into Common Stock, (iii) a default in the payment of
redemption price pursuant to Article III or (iv) a default in respect of a
covenant or provisions hereof which under Article XI cannot be modified or
amended without the consent of the holders of all Notes then outstanding. Upon
any such waiver the Company, the Trustee and the holders of the Notes shall be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by this Section 7.7, said default
or Event of Default shall for all purposes of the Notes and this Indenture be
deemed to have been cured and to be not continuing; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
Section 7.8 NOTICE OF DEFAULTS. The Trustee shall, within ninety (90)
days after it has knowledge of the occurrence of a default, mail to all
Noteholders, as the names and addresses of such holders appear upon the Note
register, notice of all defaults known to a Responsible Officer, unless such
defaults shall have been cured or waived before the giving of such notice; and
PROVIDED that, except in the case of default in the payment of the principal of,
or premium, if any, or interest on any of the Notes, the Trustee shall be
protected in withholding such notice if and so long as a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the Noteholders.
Section 7.9 UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, 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 or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; PROVIDED that the provisions of this Section 7.9 (to the extent
permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or group of Noteholders, holding in the
aggregate more than ten percent in principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note
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on or after the due date expressed in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the provisions
of Article XV.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE. The Trustee, prior to
the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture and the
Trust Indenture Act, and the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Indenture and no implied covenants or obligations shall
be read into this Indenture and the Trust Indenture Act against the
Trustee; and
(2) in the absence of bad faith and willful misconduct on the
part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but, in the case
of any such certificates or opinions which by any provisions hereof
are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless the
Trustee was negligent in ascertaining the pertinent facts;
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(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less than a majority in principal amount of the Notes
at the time outstanding determined as provided in Section 9.4 relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture; and
(d) whether or not therein 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.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Section 8.2 RELIANCE ON DOCUMENTS, OPINIONS. ETC. Except as otherwise
provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
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(e) 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 or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; PROVIDED, HOWEVER, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expenses or liability as a condition to so
proceeding; the reasonable expenses of every such examination shall be paid
by the Company or, if paid by the Trustee or any predecessor Trustee, shall
be repaid by the Company upon demand; and
(f) 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 by it with due
care hereunder.
Section 8.3 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN
NOTES. The Trustee, any paying agent, any conversion agent or Note registrar,
in its individual or any other capacity, may become the owner or pledgee of
Notes with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note registrar.
Section 8.5 MONIES TO BE HELD IN TRUST. Subject to the provisions of
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
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 may be
agreed from time to time by the Company and the Trustee.
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Section 8.6 COMPENSATION AND EXPENSES OF TRUSTEE. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence, willful misconduct, recklessness or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct, recklessness, or bad faith on the part of the
Trustee or such agent or authenticating agent, as the case may be, and arising
out of or in connection with the acceptance or administration of this trust or
in any other capacity hereunder, including the reasonable costs and expenses of
defending themselves against any claim of liability in the premises, PROVIDED
that (i) each of the Trustee or such agent or authenticating agent, as the case
may be, shall notify the Company promptly of any claim or liability asserted
against such party for which it may seek indemnification, (ii) the Company shall
defend such claim and each of the Trustee, such agent or authenticating agent,
as the case may be, shall cooperate with the Company's defense of such claim or
liability, (iii) the Trustee, such agent and authenticating agent may hire
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel, but (A) the Company will not be required to pay such fees and
expenses if it assumes such parties' defense and there is no conflict of
interest between the Company and such parties in connection with such defense
and (B) the Company shall not be liable, in connection with any such claim or
laibility or substantially similar or related claims or liabilities, at any
time, for the fees and expenses of more than one separate firm of attorneys (in
addition to local counsel). The Company need not pay for any settlement made
without its writen consent. The obligations of the Company under this Section
8.6 to compensate or indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall be secured by a lien prior to
that of the Notes 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
Notes. The obligation of the Company under this Section shall survive the
satisfaction and discharge of this Indenture.
When the Trustee and its agents and any authenticating agent incur expenses
or render services after an Event of Default specified in Section 7.1(e) or (f)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency or
similar laws.
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Section 8.7 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness,
or bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee.
Section 8.8 CONFLICTING INTERESTS OF TRUSTEE. 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 8.9 ELIGIBILITY OF TRUSTEE. 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, together with its parent, a combined
capital and surplus of at least $50,000,000. If such person publishes reports
of condition at least annually, pursuant to law or to the requirements of any
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 8.10 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted
appointment sixty (60) days after the mailing of such notice of resignation
to the Noteholders, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Noteholder who has been a bona fide holder of a Note or Notes for at least
six months may, subject to the provisions of Section 7.9, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
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(1) the Trustee shall fail to comply with Section 8.8 after
written request therefor by the Company or by any Noteholder who has
been a bona fide holder of a Note or Notes for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; 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, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee, or, subject
to the provisions of Section 7.9, any Noteholder who has been a bona fide
holder of a Note or Notes for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten (10) days after notice to the Company of such
nomination the Company objects thereto, in which case the Trustee so
removed or any Noteholder, upon the terms and conditions and otherwise as
in Section 8.10(a) provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.11.
Section 8.11 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with
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all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein; but, nevertheless,
on the written request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 8.6, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act. Upon reasonable request of any such successor trustee, the Company shall
execute such instruments in writing as necessary for fully and certainly
vesting in and confirming to such successor trustee all such rights and powers.
Any trustee ceasing to act shall, nevertheless, retain a lien upon all property
and funds held or collected by such trustee as such, except for funds held in
trust for the benefit of holders of particular Notes, to secure any amounts
then due it pursuant to the provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, either the Company or the former trustee shall mail or cause to be
mailed notice of the succession of such trustee hereunder to the holders of
Notes at their addresses as they shall appear on the Note register. If the
Company or the former Trustee fails to mail such notice within ten (10) days
after acceptance of appointment by the successor trustee, the successor trustee
shall mail or cause such notice to be mailed to the holders of Notes.
Section 8.12 SUCCESSION BY MERGER, ETC. 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 of the trust business of the Trustee, shall be the successor to the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that in the case of any corporation
succeeding to all or substantially all of the trust business of the Trustee such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this
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Indenture provided that the certificate of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.
Section 8.13 LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR. If and when
the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Notes), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1 ACTION BY NOTEHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.
Section 9.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the provisions
of Sections 8.1, 8.2 and 10.5, proof of the execution of any instrument by a
Noteholder or his agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the registry of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.6.
Section 9.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the Trustee, any
paying agent, any conversion agent and any Note registrar may deem the person in
whose
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name such Note shall be registered upon the Note register to be, and may treat
him as, the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of,
premium, if any, and interest on such Note, for conversion of such Note and for
all other purposes; and neither the Company nor the Trustee nor any paying
agent nor any conversion agent nor any Note registrar shall be affected by any
notice to the contrary. All such payments so made to any holder for the time
being, or upon his order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to fully satisfy and discharge the liability for monies
payable upon any such Note.
Section 9.4 COMPANY-OWNED NOTES DISREGARDED. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; PROVIDED that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or a person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee. Upon request of
the Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Notes, if any, known by the Company to
be owned or held by or for the account of any of the above described persons;
and, subject to Section 8.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Notes not listed therein are outstanding for the purpose of
any such determination.
Section 9.5 REVOCATION OF CONSENTS: FUTURE HOLDERS BOUND. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note
shall be conclusive and binding upon such holder and upon all future holders and
owners of such
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Note and of any Notes issued in exchange or substitution therefor, irrespective
of whether any notation in regard thereto is made upon such Note or any Note
issued in exchange or substitution therefor.
ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1 PURPOSE OF MEETINGS. A meeting of Noteholders may be called
at any time and from time to time pursuant to the provisions of this Article X
for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to give any
directions to the Trustee permitted under this Indenture, or to consent to
the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Noteholders pursuant to any of the provisions of Article VII;
(2) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article VIII;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of the Notes under
any other provision of this Indenture or under applicable law.
Section 10.2 CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place at a location within 10 miles of the
Corporate Trust Office or the Borough of Manhattan, The City of New York, as the
Trustee shall determine. Notice of every meeting of the Noteholders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
pursuant to Section 9.1, shall be mailed to holders of Notes at their addresses
as they shall appear on the Note register. Such notice shall also be mailed to
the Company. Such notices shall be mailed not less than twenty (20) nor more
than ninety (90) days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are
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either present by duly authorized representatives or have, before or after the
meeting, waived notice.
Section 10.3 CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place at any location within
10 miles of the Corporate Trust Office or the Borough of Manhattan, The City of
New York for such meeting and may call such meeting to take any action
authorized in Section 10.1, by mailing notice thereof as provided in Section
10.2.
Section 10.4 QUALIFICATIONS FOR VOTING. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 10.5 REGULATIONS. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each Noteholder or
proxyholder shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly
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designating him as the proxy to vote on behalf of other Noteholders. Any
meeting of Noteholders duly called pursuant to the provisions of Section 10.2
or 10.3 may be adjourned from time to time by the holders of a majority of the
aggregate principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
Section 10.6 VOTING. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 NO DELAY OF RIGHTS BY MEETING. Nothing in this Article X
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. The
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
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(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6;
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;
(c) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation
of the covenants, agreements and obligations of the Company pursuant to
Article XII;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; PROVIDED, HOWEVER, that in
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the
case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to
provide for exchangeability of such Notes with the Notes issued hereunder
in fully registered form and to make all appropriate changes for such
purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture which shall not
materially adversely affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualifications of this
Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
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The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.
Section 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. With
the consent (evidenced as provided in Article IX) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time 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 any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; PROVIDED, HOWEVER, that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, or impair the right of any Noteholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Notes, or modify
the provisions of this Indenture with respect to the subordination of the Notes
in a manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to repurchase any Note upon the happening of a
Repurchase Event in a manner adverse to the holder of Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth herein,
including Section 15.6, in each case without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.
Upon the request of the Company, accompanied by a copy of the resolutions
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Noteholders as aforesaid,
the Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in is discretion, but shall not be obligated to, enter into such
supplemental indenture.
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It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 EFFECT OF SUPPLEMENTAL INDENTURE. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect; PROVIDED that this Section 11.3
shall not require such supplemental indenture or the Trustee to be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act, nor shall it constitute any admission
or acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article XI, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 11.4 NOTATION ON NOTES. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article XI may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Notes so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 17.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section 11.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
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ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS. Subject to
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the Company or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance or lease (or successive sales, conveyances or leases) of all or
substantially all of the property of the Company, to any other corporation
(whether or not affiliated with the Company), authorized to acquire and operate
the same and which shall be organized under the laws of the United States of
America, any state thereof or the District of Columbia; PROVIDED, that upon any
such consolidation, merger, sale, conveyance or lease, the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the corporation (if other than the Company) formed by such consolidation, or
into which the Company shall have been merged, or by the corporation which shall
have acquired or leased such property, and such supplemental indenture shall
provide for the applicable conversion rights set forth in Section 15.6.
Section 12.2 SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Telxon Corporation any or all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the Notes
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
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terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the person named as the "Company" in the first paragraph
of this Indenture or any successor which shall thereafter have become such in
the manner prescribed in this Article XII may be dissolved, wound up and
liquidated at any time thereafter and such person shall be released from its
liabilities as obligor and maker of the Notes and from its obligations under
this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
Section 12.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 DISCHARGE OF INDENTURE. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes which have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes which shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) not theretofore canceled or delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due to such date of maturity or redemption date, as
the case may be, and if in either case the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect (except as to (i) remaining rights of registration
of transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders to receive payments of principal of and premium, if
any, and interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder), and the Trustee, on demand of the
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Company accompanied by an Officers' Certificate and an Opinion of Counsel as
required by Section 17.5 and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture; the Company, however, hereby agreeing to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the
Trustee and to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Notes.
Section 13.2 DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE. Subject to
Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1 and
not in violation of Article IV shall be held in trust for the sole benefit of
the Noteholders and not to be subject to the subordination provisions of Article
IV, and such monies shall be applied by the Trustee to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest and premium, if
any.
Section 13.3 PAYING AGENT TO REPAY MONIES HELD. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
Section 13.4 RETURN OF UNCLAIMED MONIES. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 13.5 REINSTATEMENT. If the Trustee or the paying agent is unable
to apply any money in accordance with Section 13.2 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
PROVIDED, HOWEVER, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall
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be subrogated to the rights of the holders of such Notes to receive such
payment from the money held by the Trustee or paying agent.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
Section 15.1 RIGHT TO CONVERT. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time after sixty (60) days following the latest date of
original issuance of the Notes and prior to the close of business on January 1,
2003 (except that, with respect to any Note or portion of a Note which shall be
called for redemption, such right shall terminate, except as provided in Section
15.2 or Section 3.4, at the close of business on the Business Day next preceding
the date fixed for redemption of such Note or portion of a Note unless the
Company shall default in the payment due upon redemption thereof or that, with
respect to a Note or portion of a Note submitted for repurchase, such right
shall terminate at the close of business on the Repurchase Date unless the
Company shall default in the payment due on repurchase) to convert the principal
amount of any such Note, or any portion of such principal amount which is $1,000
or an integral multiple thereof, into that number of fully paid and
non-assessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of the Note or portion thereof
surrendered for conversion by the Conversion Price in effect at such time, by
surrender of the Note so to be converted in whole or in part in the manner
provided,
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together with any required funds, in Section 15.2. A holder of Notes is not
entitled to any rights of a holder of Common Stock until such holder has
converted his Notes to Common Stock, and only to the extent such Notes are
deemed to have been converted to Common Stock under this Article XV.
Section 15.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK
ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to exercise
the conversion privilege with respect to any Note in definitive form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion in
the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
the portion thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any interest
in a Note in global form, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depository's book-entry
conversion program, deliver by book-entry delivery an interest in such Note in
global form to the Trustee, furnish appropriate endorsements and transfer
documents if required by the Company or the Trustee or conversion agent, and pay
the funds, if any, required by this Section 15.2 and any transfer taxes if
required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 15.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and deliver to the holder of the Note so
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surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 15.2 have been satisfied as to such Note (or portion thereof), and
the person in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; PROVIDED,
HOWEVER, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date to
the close of business on the Business Day next preceding the following interest
payment date shall (unless such Note or portion thereof being converted shall
have been called for redemption during the period from the close of business on
such record date to the close of business on the Business Day next preceding the
following interest payment date) be accompanied by payment, in New York Clearing
House funds or other funds acceptable to the Company, of an amount equal to the
interest otherwise payable on such interest payment date on the principal amount
being converted; PROVIDED, HOWEVER, that no such payment need be made if there
shall exist at the time of conversion a default in the payment of interest on
the Notes. Except as provided above in this Section 15.2, no adjustment shall
be made for interest accrued on any Note converted or for dividends on any
shares issued upon the conversion of such Note as provided in this Article.
Upon the conversion of an interest in a Note in global form, the Trustee,
or the Custodian at the direction of the Trustee, shall make a notation on such
Note in global form as to the reduction in the principal amount represented
thereby.
Section 15.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market value thereof to
the holder of Notes. The current market value of a share of Common Stock shall
be the
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Closing Price on the first Business Day immediately preceding the day on which
the Notes (or specified portions thereof) are deemed to have been converted.
Section 15.4 CONVERSION PRICE. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XV.
Section 15.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of
Common Stock, the Conversion Price in effect at the opening of business on
the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company. If any dividend or distribution of the type
described in this Section 15.5(a) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such dividend or distribution had not been
declared.
(b) In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for
or purchase shares of Common Stock at a price per share less than the
Current Market Price (as defined below) on the date fixed for determination
of stockholders entitled to receive such rights or warrants, the Conversion
Price shall be adjusted so that the same shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the date
fixed for determination of stockholders entitled to receive such rights or
warrants by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed for
determination of stockholders entitled to receive such rights and warrants
plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Current Market Price,
and of which the nominiator shall be the number of shares of Common Stock
outstanding on the date fixed for determination of stockholders entitled to
receive such rights and
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warrants plus the total number of additional shares of Common Stock offered
for subscription or purchase. Such adjustment shall be successively made
whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following
the date fixed for determination of stockholders entitled to receive such
rights or warrants. To the extent that shares of Common Stock are not
delivered after the expiration of such rights or warrants, the Conversion
Price shall be readjusted to the Conversion Price which would then be in
effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. In the event that such rights or warrants
are not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants
had not been fixed. In determining whether any rights or warrants entitle
the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering
price of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 15.5(a)
applies) or evidences of its indebtedness or assets (including securities,
but excluding any rights or warrants referred to in Section 15.5(b), and
excluding any dividend or distribution (x) in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, (y) paid exclusively in cash or (z) referred to in Section
15.5(a) (any of the foregoing hereinafter in this Section 15.5(d) called
the "Securities")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Noteholders upon the
conversion of the Notes so that any such holder converting Notes will
receive upon such conversion, in addition to the shares of Common Stock to
which such holder is entitled, the amount and kind of such Securities which
such holder would
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have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(g) for
such distribution of the Securities)), the Conversion Price shall be
reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect on the Record Date with respect
to such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on such Record Date less
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the
Board of Directors) on the Record Date of the portion of the Securities so
distributed applicable to one share of Common Stock and the denominator
shall be the Current Market Price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of business
on the day following such Record Date; PROVIDED, HOWEVER, that in the event
the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Noteholder shall have the right to receive upon
conversion the amount of Securities such holder would have received had
such holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes
of this Section 15.5(d) by reference to the actual or when issued trading
market for any securities, it must in doing so consider the prices in such
market over the same period used in computing the Current Market Price of
the Common Stock.
Each share of Common Stock issued upon conversion of Notes pursuant to
this Article XV shall be entitled to receive the appropriate number of
Rights, and the certificates representing the Common Stock issued upon such
conversion shall bear such legends, in each case as provided by and subject
to the terms of the Rights Plan as in effect at the time of such conversion
(whether or not such Rights have separated from the Common Stock at the
time of conversion). In the event that the Company implements any new
stockholders' rights plan, as amended, supplemented or modified from time
to time (a "New Rights Plan"), such New Rights Plan shall provide that upon
conversion of the Notes the holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights (whether or not such rights
have separated from Common Stock at the time of the conversion) issuable
pursuant to the New Rights Plan.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of
the Company's capital stock (either initially or under certain
circumstances), which
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rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of
Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have
been distributed for purposes of this Section 15.5 (and no adjustment to
the Conversion Price under this Section 15.5 will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under
this Section 15.5(d). If any such right or warrant, including any such
existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences
of indebtedness or other assets, then the date of the occurrence of any and
each such event shall be deemed to be the date of distribution and record
date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without
exercise by any of the holders thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section
15.5 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to
the per share redemption or repurchase price received by a holder or
holders of Common Stock with respect to such rights or warrants (assuming
such holder had retained such rights or warrants), made to all holders of
Common Stock as of the date of such redemption or repurchase, and (2) in
the case of such rights or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Conversion Price
shall be readjusted as if such rights and warrants had not been issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that
also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed instead
to be (1) a dividend or distribution of the evidences of indebtedness,
assets or shares of capital stock other than such shares of Common Stock or
rights or warrants (and any Conversion Price reduction required by this
Section 15.5(d) with respect to such dividend or distribution shall then be
made) immediately followed by (2) a dividend or distribution of such shares
of Common Stock or such rights or warrants (and any further Conversion
Price reduction required by Sections 15.5(a) and (b) with respect to such
dividend or distribution shall then be made), except (A) the Record
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Date of such dividend or distribution shall be substituted as "the date
fixed for the determination of stockholders entitled to receive such
dividend or other distribution" and "the date fixed for such determination"
within the meaning of Sections 15.5(a) and (b) and (B) any shares of Common
Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash
dividend on the Common Stock to the extent the aggregate cash dividend per
share of Common Stock in any fiscal quarter does not exceed the greater of
(A) the amount per share of Common Stock of the next preceding quarterly
cash dividend on the Common Stock to the extent that such preceding
quarterly dividend did not require any adjustment of the Conversion Price
pursuant to this Section 15.5(e) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (B) 3.75% of the arithmetic average
of the Closing Price (determined as set forth in Section 15.5(g)) during
the ten Trading Days (as defined in Section 15.5(g)) immediately prior to
the date of declaration of such dividend, and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary), then, in such case, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such Record Date by a fraction of which the
numerator shall be the Current Market Price of the Common Stock on the
Record Date less the amount of cash so distributed (and not excluded as
provided above) applicable to one share of Common Stock and the denominator
shall be such Current Market Price of the Common Stock, such reduction to
be effective immediately prior to the opening of business on the day
following the Record Date; PROVIDED, HOWEVER, that in the event the portion
of the cash so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Noteholder shall have the right to receive upon
conversion the amount of cash such holder would have received had such
holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared. If any adjustment
is required to be made as set forth in this Section 15.5(e) as a result of
a distribution that is a quarterly dividend, such adjustment shall be based
upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an
adjustment is required to be made as set forth in this Section 15.5(e)
above as a result of a distribution that is not a quarterly dividend, such
adjustment shall be based upon the full amount of the distribution.
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(f) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per
share of Common Stock having a fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board if Directors) that, as of the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender
or exchange offer (as it may be amended) exceeds the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time,
the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the Expiration Time by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) on the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time. In
the event that the Company is obligated to purchase shares pursuant to any
such tender or exchange offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender or exchange
offer had not been made.
(g) For purposes of this Section 15.5, the following terms shall have
the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New
York Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the
average of the closing bid and asked prices of such security on
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the over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors for that purpose, or a price
determined in good faith by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof,
whose determination shall be conclusive.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question; PROVIDED,
HOWEVER, that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution or Repurchase Event
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.5(a), (b), (c), (d), (e) or
(f) occurs during such ten consecutive Trading Days, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result
of such other event, (2) if the "ex" date for any event (other than
the issuance, distribution or Repurchase Event requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 15.5(a), (b), (c), (d), (e) or (f) occurs on or
after the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for
each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted
as a result of such other event, and (3) if the "ex" date for the
issuance, distribution or Repurchase Date requiring such computation
is prior to the day in question, after taking into account any
adjustment required pursuant to clause (1) or (2) of this proviso, the
Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of
Section 15.5(d) or (f), whose determination shall be conclusive and
described in a resolution of the Board of Directors or such duly
authorized committee thereof, as the case may be) of the evidences of
indebtedness, shares of capital stock or assets being distributed
applicable to one share of Common Stock as of the close of business on
the day before such "ex" date. For purposes of any computation under
Section 15.5(f), the Current Market Price of the Common Stock on any
date shall be deemed to be the average of the daily Closing Prices per
share of Common Stock for such day and the next two succeeding Trading
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Days; PROVIDED, HOWEVER, that if the "ex" date for any event (other
than the tender or exchange offer requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and
prior to the day in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by
which the Conversion Price is so required to be adjusted as a result
of such other event. For purposes of this paragraph, the term "ex"
date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on
the relevant exchange or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender or exchange
offer means the first date on which the Common Stock trades regular
way on such exchange or in such market after the Expiration Time of
such offer.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security)
is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of shareholders
entitled to receive such cash, securities or other property (whether
such date is fixed by the Board of Directors or by statute, contract
or otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or
another national security exchange, a day on which the New York Stock
Exchange or another national security exchange is open for business or
(y) if the applicable security is quoted on the Nasdaq National
Market, a day on which trades may be made on thereon or (z) if the
applicable security is not so listed, admitted for trading or quoted,
any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by
law or executive order to close.
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(h) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5 (a), (b), (c), (d), (e) and (f)
as the Board of Directors considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time
if the period is at least twenty (20) days, the reduction is irrevocable
during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail
to holders of record of the Notes a notice of the reduction at least
fifteen (15) days prior to the date the reduced Conversion Price takes
effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; PROVIDED, HOWEVER, that any adjustments which by reason of this
Section 15.5(i) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Article XV shall be made by the Company and shall be made to the
nearest cent or to the nearest one hundredth of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest. To
the extent the Notes become convertible into cash, assets, property or
securities (other than capital stock of the Company), no adjustment need be
made thereafter as to the cash, assets, property or such securities.
Interest will not accrue on the cash.
(j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date
on which each adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the holder of each Note at his
last address appearing on the Note register provided for in Section 2.5 of
this Indenture, within 20 days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of any such
adjustment.
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(k) In any case in which this Section 15.5 provides that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any amount in cash
in lieu of any fraction pursuant to Section 15.3.
(l) For purposes of this Section 15.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury
of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
Section 15.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("nonelecting share")), then for the purposes of this
Section 15.6 the kind and amount of securities, cash or other property
receivable upon such consolidation, merger,
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statutory exchange, sale or conveyance for each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares. Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.
Section 15.7 TAXES ON SHARES ISSUED. The issue of stock certificates
on conversions of Notes shall be made without charge to the converting
Noteholder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any Note converted, and the Company shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
Section 15.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK. The Company
shall provide, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide
for the conversion of the Notes from time to time as such Notes are presented
for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free from all taxes, liens and charges with respect to the
issue thereof.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of Notes hereunder require registration with or
approval of any
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governmental authority under any federal or state law before such shares may be
validly issued upon conversion, the Company will in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.
The Company further covenants that if at any time the Common Stock shall
be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes.
Section 15.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 8.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 15.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in
the Conversion Price pursuant to Section 15.5; or
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(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
share of any class or any other rights or warrants (other than the
Rights granted pursuant to the Rights Plan, provided that the holders of
the Notes receive the same notice received by all holders of Common
Stock regarding such grant in accordance with the applicable notice
provisions of the Rights Plan); or
(c) of any reclassification or reorganization of the Common Stock
of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to
no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or of the sale
or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at
least fifteen (15) days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or
occur, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up.
ARTICLE XVI
REPURCHASE OF NOTES AT THE
OPTION OF THE HOLDER UPON REPURCHASE EVENT
Section 16.1 RIGHT TO REQUIRE REPURCHASE. In the event that a
Repurchase Event (as hereinafter defined) shall occur, then each holder shall
have the right, at the holder's option, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
holder's Notes, or any portion of the principal amount thereof that is an
integral multiple of U.S.$1,000 (provided that no single Note
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may be repurchased in part unless the portion of the principal amount of such
Note to be outstanding after such repurchase is equal to U.S.$1,000 or integral
multiples of U.S.$1,000), on the date (the "Repurchase Date") that is 30 days
after the date of the Company Notice (as defined in Section 16.2) for cash at a
purchase price equal to 100% of the principal amount plus interest accrued and
unpaid interest to, but excluding, the Repurchase Date (the "Repurchase
Price"); provided that if the Repurchase Date is January 1 or July 1, then the
interest payable on such date shall be paid to the holder of record of the Note
on the next preceding December 15 or June 15, respectively. Whenever in this
Indenture there is a reference, in any context, to the principal of any Note as
of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made.
Section 16.2 NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for
redemption all of the outstanding Notes pursuant to Article III, on or
before the 30th day after the occurrence of a Repurchase Event, the
Company or, at the request of the Company on or before the 15th day
after such occurrence, the Trustee shall give to all holders of Notes
notice (the "Company Notice") of the occurrence of the Repurchase Event
and of the repurchase right set forth herein arising as a result
thereof. The Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a holder must follow to
exercise a repurchase right,
(5) that on the Repurchase Date the Repurchase Price will become due and
payable upon each such Note designated by the holder to be repurchased, and that
interest thereon shall cease to accrue on and after said date,
(6) the Conversion Price, the date on which the right to convert the
Notes to be repurchased will terminate and the places where such Notes may be
surrendered for conversion, and
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(7) the place or places where such Notes are to be surrendered for
payment of the Repurchase Price and accrued interest, if any.
No failure of the Company to give the foregoing notices or defect
therein shall limit any holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a holder shall deliver to the
Trustee or any paying agent on or before the 30th day after the date of
the Company Notice (i) written notice of the holder's exercise of such
right, which notice shall set forth the name of the holder, the
principal amount of the Notes to be repurchased (and, if any Note is to
repurchased in part, the serial number thereof, the portion of the
principal amount thereof to be repurchased and the name of the Person in
which the portion thereof to remain outstanding after such repurchase is
to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and (ii) the Notes with respect
to which the repurchase right is being exercised.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be
paid to the Trustee or the paying agent the Repurchase Price in cash,
for payment to the holder on the Repurchase Date, together with accrued
and unpaid interest to, but excluding, the Repurchase Date payable with
respect to the Notes as to which the purchase right has been exercised.
(d) If any Note (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of
such Note (or portion thereof, as the case may be) shall, until paid,
bear interest from the Repurchase Date at the rate of 5 3/4% per annum,
and each Note shall remain convertible into Common Stock until the
principal of such Note (or portion thereof, as the case may be) shall
have been paid or duly provided for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to
the holder of such Note without service charge, a new Note or Notes,
containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for
the unrepurchased portion of the principal of the Note so surrendered.
Section 16.3 CERTAIN DEFINITIONS. For purposes of this Article XVI,
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(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3 promulgated by the Commission pursuant to the Exchange
Act; and
(b) the term "Person" shall include any syndicate or group which
would be deemed to be a "person" under Section 13(d)(3) of the Exchange
Act.
Section 16.4 REPURCHASE EVENT. A "Repurchase Event" shall be deemed
to have occurred at such time as:
(a) any Person, other than the Company, any subsidiary of the
Company, or any employee benefit plan of the Company or any such
subsidiary, is or becomes the beneficial owner, directly or indirectly,
through a purchase or other acquisition transaction or series of
transactions (other than a merger or consolidation involving the
Company), of shares of capital stock of the Company entitling such
Person to exercise in excess of 50% of the total voting power of all
shares of capital stock of the Company entitled to vote generally in the
election of directors; or
(b) there occurs any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another Person into
the Company, or any sale or transfer of all or substantially all of the
assets of the Company to another Person (other than (i) any such
transaction pursuant to which the holders of the Common Stock
immediately prior to such transaction have, directly or indirectly,
shares of capital stock of the continuing or surviving corporation
immediately after such transaction which entitle such holders to
exercise in excess of 50% of the total voting power of all shares of
capital stock of the continuing or surviving corporation entitled to
vote generally in the election of directors and (ii) any merger (1)
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock or (2) which is
effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock);
provided, however, that a Repurchase Event shall not be deemed to have occurred
if either (a) the Closing Price per share of the Common Stock for any five
Trading Days within the period of ten consecutive Trading Days ending
immediately before the Repurchase Event shall equal or exceed 105% of the
Conversion Price in effect on each such trading day, or (b) at least 90% of the
consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Repurchase Event consists of
shares of common stock traded on a national securities exchange or quoted on
the Nasdaq National Market (or which will be so traded or quoted when issued or
exchanged in such connection with such Repurchase Event) and as a result of
such transaction or transactions such Notes become convertible solely into such
common stock.
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ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 17.2 OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 17.3 ADDRESSES FOR NOTICES, ETC. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes, if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Telxon Corporation, 3330 West Market Street, Akron, Ohio, 44333,
Attention: Chief Financial Officer. Any notice, direction, request or demand
hereunder to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or served by being deposited postage prepaid
by registered or certified mail in a post office letter box addressed to the
Corporate Trust Office, which office is, at the date as of which this Indenture
is dated, located at 100 E. Broad Street, 8th Floor, Columbus, Ohio, 43271,
Attention: Corporate Trust Division (Telxon Corporation 5 3/4% Convertible
Subordinated Notes due 2003).
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 17.4 GOVERNING LAW. This Indenture and each Note shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York.
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Section 17.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 17.6 LEGAL HOLIDAYS. In any case where the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 17.7 TRUST INDENTURE ACT. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern indentures qualified under the Trust
Indenture Act; provided, however, that, unless otherwise required by law,
notwithstanding the foregoing, this Indenture and the Notes issued hereunder
shall not be subject to the provisions of subsections (a)(1), (a)(2), and (a)(3)
of Section 314 of the Trust Indenture Act as now in effect or as hereafter
amended or modified; provided, further, that this Section 17.7 shall not require
this Indenture or the Trustee to be qualified under the Trust Indenture Act
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act, nor shall it constitute any admission or acknowledgment by
any party to such supplemental indenture that any such qualification is required
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act. If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in an indenture
qualified under the Trust Indenture Act, such required provision shall control.
Section 17.8 NO SECURITY INTEREST CREATED. Nothing in this Indenture
or in the Notes, whether expressed or implied, shall be construed to constitute,
create or perfect a
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security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction where property of
the Company or its subsidiaries is located.
Section 17.9 BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Notes, whether expressed or implied, shall give to any Person, other
than the parties hereto, any paying agent, any authenticating agent, any Note
registrar and their successors hereunder, the holders of Notes and the holders
of Senior Indebtedness, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 17.10 TABLE OF CONTENTS, HEADINGS, ETC. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 17.11 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 16.2, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 17.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any authenticating agent by giving written
notice of termination 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 any authenticating agent shall cease to be eligible under this
Section, the Trustee shall promptly appoint a successor authenticating
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agent (which may be the Trustee), shall give written notice of such appointment
to the Company and shall mail notice of such appointment to all holders of
Notes as the names and addresses of such holders appear on the Note register.
The Trustee agrees to pay to the authenticating agent from time to
time reasonable compensation for its services (to the extent pre-approved by
the Company in writing), and the Trustee shall be entitled to be reimbursed for
such pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11
shall be applicable to any authenticating agent.
Section 17.12 EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Bank One Trust Company, N.A. hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed, all as of the date first written above.
TELXON CORPORATION
By: /s/ Kenneth W. Haver
----------------------------------------------
Name: Kenneth W. Haver
--------------------------------------------
Title: Senior Vice President, Chief Financial
-------------------------------------------
Officer and Treasurer
BANK ONE TRUST COMPANY, N.A., as Trustee
By: /s/ John Rothrock
----------------------------------------------
Name: John Rothrock
--------------------------------------------
Title: Senior Trust Officer
-------------------------------------------
<PAGE> 1
EXHIBIT 4.2
[For global Note only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE
CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.]
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO TELXON
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO BANK ONE TRUST COMPANY,
N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN
<PAGE> 2
BE OBTAINED FROM SUCH TRUSTEE OR SUCCESSOR TRUSTEE, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THE NOTE EVIDENCED HEREBY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF
SUCH NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS NOTE TO BANK ONE TRUST COMPANY, N.A.,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO BANK ONE
TRUST COMPANY, N.A. (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), AS TRUSTEE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER
OF THIS NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F) ABOVE OR THE EXPIRATION
OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
-2-
<PAGE> 3
TELXON CORPORATION
5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2003
No. __ CUSIP 879700 AB 8
Telxon Corporation, a corporation duly organized and validly existing under
the laws of the State of Delaware (herein called the "Company"), which term
includes any successor corporation under the Indenture referred to on the
reverse hereof, for value received hereby promises to pay to [for global Note,
insert: CEDE & CO.] or registered assigns, the principal sum of
_______________ ($____________) on January 1, 2003, at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, The City
of New York, or, at the option of the holder of this Note, at the Corporate
Trust Office, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on January 1 and July 1 of each year,
commencing July 1, 1996, on said principal sum at said office or agency, in
like coin or currency, at the rate per annum of 5 3/4%, from January 1 or July
1, as the case may be, next preceding the date of this Note to which interest
has been paid or duly provided for, unless the date hereof is a date to which
interest has been paid or duly provided for, in which case from the date of
this Note, or unless no interest has been paid or duly provided for on the
Notes, in which case from December 12, 1995, until payment of said principal
sum has been made or duly provided for. Notwithstanding the foregoing, if the
date hereof is after any December 15 or June 15, as the case may be, and before
the following January 1 or July 1, this Note shall bear interest from such
January 1 or July 1; PROVIDED, HOWEVER, that if the Company shall default in
the payment of interest due on such January 1 or July 1, then this Note shall
bear interest from the next preceding January 1 or July 1 to which interest has
been paid or duly provided for or, if no interest has been paid or duly
provided for on such Note, from December 12, 1995. The interest payable on the
Note pursuant to the Indenture on any January 1 or July 1 will be paid to the
person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the record date, which shall be the December 15 or
June 15 (whether or not a Business Day) next preceding such January 1 or July
1, as provided in the Indenture; PROVIDED that any such interest not punctually
paid or duly provided for shall be payable as provided in the Indenture.
Interest may, at the option of the Company, be paid by check mailed to the
registered address of such person.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
-3-
<PAGE> 4
This Note shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with and
governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under
its corporate seal.
Dated: December 12, 1995 TELXON CORPORATION
By:
----------------------------------
Attest:
----------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the
within-named Indenture.
BANK ONE TRUST COMPANY, N.A., as Trustee
By:
---------------------------------------------------
Authorized Signatory
By:
---------------------------------------------------
As Authenticating Agent (if different from Trustee)
-4-
<PAGE> 5
[FORM OF REVERSE OF NOTE]
TELXON CORPORATION
5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2003
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5 3/4% Convertible Subordinated Notes due 2003 (herein called
the "Notes"), limited to the aggregate principal amount of $86,250,000 all
issued or to be issued under and pursuant to an indenture dated as of December
1, 1995 (herein called the "Indenture"), between the Company and Bank One Trust
Company, N.A., as trustee (herein called the "Trustee"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all Notes
may be declared, and upon said declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as
in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, or impair the right of any Noteholder to
institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Note, or modify the provisions of the Indenture with
respect to the subordination of the Notes in a manner adverse to the
Noteholders in any material respect, or change the obligation of the Company to
make repurchase of any Note upon the happening of a Repurchase Event in a
manner adverse to the holder of the Notes, or impair the right to convert the
Notes into Common Stock subject to the terms set forth in the Indenture,
including Section 15.6 thereof, without the consent of the holder of each Note
so affected or (ii) reduce the aforesaid percentage of Notes, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding. It is also provided in
the Indenture that, prior to any declaration accelerating the maturity of the
Notes, the holders of a majority in aggregate principal amount of the Notes at
the time outstanding may on behalf of the holders of all of the Notes waive any
past default or Event of Default under the
-5-
<PAGE> 6
Indenture and its consequences except a default in the payment of interest or
any premium on or the principal of any of the Notes, a default in the payment
of redemption price pursuant to Article III or a failure by the Company to
convert any Notes into Common Stock of the Company. Any such consent or waiver
by the holder of this Note (unless revoked as provided in the Indenture) shall
be conclusive and binding upon such holder and upon all future holders and
owners of this Note and any Notes which may be issued in exchange or substitute
hereof, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture
or thereafter incurred, and this Note is issued subject to the provisions of
the Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the
Trustee his attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Note at the place, at the respective times, at the rate and in
the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year of
twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
January 5, 1999. At any time on or after January 5, 1999, and prior to
maturity, the Notes may be redeemed at the option of the Company as a whole, or
from time to time in part, upon mailing a notice of such redemption not less
than 30 nor more than 60 days before the date fixed for redemption to the
holders of Notes at their last registered addresses, all as provided in the
Indenture, at the following optional redemption prices (expressed as
percentages of the principal amount), together in each case with accrued
interest to, but excluding, the date fixed for redemption.
-6-
<PAGE> 7
If redeemed during the 12-month period beginning January 1:
<TABLE>
<CAPTION>
Year Percentage Year Percentage
-------------------- ---------- ------------------ ----------
<S> <C> <C> <C>
1999 . . . . . . . . . . . . . . . 103.2857% 2001 . . . . . . . . . . . . 101.6429%
2000 . . . . . . . . . . . . . . . 102.4643% 2002 . . . . . . . . . . . . 100.8214%
</TABLE>
and 100% at January 1, 2003; provided that if the date fixed for redemption is
on January 1 or July 1, then the interest payable on such date shall be paid to
the holder of record on the next preceding December 15 or June 15,
respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Repurchase Event (as defined in the Indenture) occurs prior to
January 1, 2003, the holder of this Note shall have the right, in accordance
with the provisions of the Indenture, to require the Company to repurchase this
Note for cash at a Repurchase Price equal to 100% of the principal amount plus
accrued and unpaid interest to, but excluding, the Repurchase Date; provided
that if such Repurchase Date is January 1 or July 1, then the interest payable
on such date shall be to the holder of record of the Note on the next preceding
December 15 or June 15, respectively. Within 30 days after the occurrence of a
Repurchase Event, the Company is obligated to give all holders of record of
Notes notice of the occurrence of such Repurchase Event and of the repurchase
right arising as a result thereof.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 60 days following original issuance of
the Notes and prior to the close of business on January 1, 2003, or, as to all
or any portion hereof called for redemption, prior to the close of business on
the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
the principal hereof or any portion of such principal which is $1,000 or an
integral multiple thereof, into that number of shares of Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Note or portion thereof to be
converted by the Conversion Price of $27.50 or such Conversion Price as
adjusted from time to time as provided in the Indenture, upon surrender of this
Note, together with a conversion notice as provided in the Indenture, to the
Company at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York, or at the option of such
holder, the Corporate Trust Office, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by, or
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the holder or by his duly authorized attorney. No adjustment in
respect of interest or dividends will be made upon any conversion; PROVIDED,
HOWEVER,
that if this Note shall be surrendered for conversion during the
period from the close of business on any record date for
-7-
<PAGE> 8
the payment of interest to the close of business on the Business Day preceding
the interest payment date, this Note (unless it or the portion being converted
shall have been called for redemption during the period from the close of
business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted. No fractional shares
will be issued upon any conversion, but an adjustment in cash will be made, as
provided in the Indenture, in respect of any fraction of a share which would
otherwise be issuable upon the surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Notes at an amount equal to the
applicable redemption price, together with accrued interest to, but excluding,
the date fixed for redemption, by one or more investment bankers or other
purchasers who may agree with the Company to purchase such Notes from the
holders thereof and convert them into Common Stock of the Company and to make
payment for such Notes as aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust
Office, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon made by anyone other than the Company or any Note registrar), for the
purpose of receiving payment hereof, or on account hereof, for the conversion
hereof and for all other purposes, and neither the Company nor the Trustee nor
any other authenticating agent nor any paying agent nor any other conversion
agent nor any Note registrar shall be affected by any notice to the contrary.
All payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, satisfy and discharge liability for monies
payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer or
director or subsidiary, as such, past, present or future, of the Company or of
any
-8-
<PAGE> 9
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein
as therein defined.
-9-
<PAGE> 10
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT -- ________ Custodian_________
TEN ENT -as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to Minors
JT TEN -as joint tenants with Act ______________________________________
right of survivorship (State)
and not as tenants in
common
Additional abbreviations may also be used
though not in the above list.
-10-
<PAGE> 11
CONVERSION NOTICE
To: TELXON CORPORATION
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Telxon Corporation in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated: ________________________
_____________________________
_____________________________
Signature(s)
Signature(s) must be
guaranteed by a commercial
bank or trust company or a
member firm of a major
stock exchange if shares of
Common Stock are to be
issued, or Notes to be
delivered, other than to and
in the name of the registered
holder.
_____________________________
Signature Guarantee
-11-
<PAGE> 12
Fill in for registration of
shares of Common Stock if to be issued, and
Notes if to be delivered,
other than to and in the name
of the registered holder:
_______________________________
(Name)
_______________________________
(Street Address)
_______________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $__________
________________________________
Social Security or Other Taxpayer
Identification Number
-12-
<PAGE> 13
OPTION TO ELECT REPURCHASE
UPON A REPURCHASE EVENT
To: TELXON CORPORATION
The undersigned registered owner of this Note hereby acknowledges
receipt of a notice from Telxon Corporation (the "Company") as to the
occurrence of a Repurchase Event with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the repurchase price, together with accrued interest to, but excluding,
such date, to the registered holder hereof.
Dated: ________________________ ________________________________________
________________________________________
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with
the name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
Principal amount to be converted (if
less than all):
$__________
________________________________________
Social Security or Other Taxpayer
Identification Number
-13-
<PAGE> 14
ASSIGNMENT
For value received ____________________________ hereby sell(s),
assign(s) and transfer(s) unto ____________________________ (Please insert
social security or other Taxpayer Identification Number of assignee) the within
Note, and hereby irrevocably constitutes and appoints ________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
In connection with any transfer of the within Note within three years
of the date of original issuance of such Note, the undersigned confirms that
such Note is being transferred:
[ ] To Telxon Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated: ____________________ _______________________________________
_______________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange
if shares of Common Stock are to be
issued, or Notes to be delivered, other
than to or in the name of the
registered holder.
_______________________________________
Signature Guarantee
-14-
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of December 1,
1995, by and among Telxon Corporation, a Delaware corporation (the "Company"),
and Hambrecht & Quist LLC and Prudential Securities Incorporated (the "Initial
Purchasers") who have purchased or have the right to purchase up to $86,250,000
in aggregate principal amount of 5 3/4% Convertible Subordinated Notes due 2003
(the "Notes") of the Company pursuant to the Placement Agreement (as such term
is defined below).
This Agreement is made pursuant to the Placement Agreement, dated December 6,
1995, among the Company and the Initial Purchasers (the "Placement Agreement").
In order to induce the Initial Purchasers to enter into the Placement
Agreement, the Company has agreed to provide the registration rights provided
for in this Agreement to the Initial Purchasers and their respective direct and
indirect transferees (i) for the benefit of the Initial Purchasers, (ii) for
the benefit of the holders from time to time of the Notes (including the
Initial Purchasers) and the holders from time to time of the Common Stock
issuable or issued upon conversion of the Notes and (iii) for the benefit of
the securities constituting the Transfer Restricted Securities. The execution
of this Agreement is a condition to the closing of the transactions
contemplated by the Placement Agreement.
The parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
ADVICE: As defined in the last paragraph of Section 4(r) hereof.
AFFILIATE: An affiliate of any specified person shall mean 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 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 "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
AGREEMENT: This Registration Rights Agreement, as the same may
be amended, supplemented or modified from time to time in accordance with
the terms hereof.
BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
CLOSING DATE: December 12, 1995.
COMMON STOCK: Common Stock, $.01 par value per share, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Notes.
<PAGE> 2
COMPANY: Telxon Corporation, a Delaware corporation, and any
successor corporation thereto.
CONTROLLING PERSON: As defined in Section 6(a) hereof.
DAMAGES PAYMENT DATE: Each of the semi-annual interest payment
dates provided in the Indenture.
EFFECTIVENESS PERIOD: As defined in Section 2(a) hereof.
EFFECTIVENESS TARGET DATE: The 150th day following the Closing
Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC pursuant thereto.
FILING DATE: The 90th day after the Closing Date.
HOLDER: Each registered holder of any Transfer Restricted
Securities.
INDEMNIFIED PERSON: As defined in Section 6(a) hereof.
INDENTURE: The Indenture, dated the date hereof, between the
Company and the Trustee thereunder, pursuant to which the Notes are being
issued, as amended, modified or supplemented from time to time in accordance
with the terms thereof.
INITIAL PURCHASERS: As defined in the first paragraph hereof.
LIQUIDATED DAMAGES: As defined in Section 3(a) hereof.
NOTES: The $75,000,000 aggregate principal amount of 5 3/4%
Convertible Subordinated Notes due 2003 of the Company being issued pursuant to
the Indenture (together with the up to $11,250,000 aggregate principal amount
of such Notes, if, and to the extent the Initial Purchasers' over allotment
option is exercised).
PLACEMENT AGREEMENT: As defined in the second paragraph hereof.
PROCEEDING: An action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as
disposition), whether commenced or threatened.
PROSPECTUS: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Transfer
Restricted
-2-
<PAGE> 3
Securities covered by such Registration Statement, and all other amendments and
supplements to any such prospectus, including post-effective amendments, and
all materials incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
RECORD HOLDER: (i) with respect to any Damages Payment Date relating
to any Note as to which any such Liquidated Damages have accrued, the
registered Holder of such Note on the record date with respect to the interest
payment date under the Indenture on which such Damages Payment Date shall occur
and (ii) with respect to any Damages Payment Date relating to any Common Stock
as to which any such Liquidated Damages have accrued, the registered holder of
such Common Stock 15 days prior to the next succeeding Damages Payment Date.
REGISTRATION DEFAULT: As defined in Section 3(a) hereof.
REGISTRATION STATEMENT: Any registration statement of the Company that
covers any of the Notes pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.
RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
-3-
<PAGE> 4
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF REGISTRATION STATEMENT: As defined in Section 2 hereof.
SPECIAL COUNSEL: Any special counsel to the holders of Transfer
Restricted Securities, for which holders of Transfer Restricted Securities
will be reimbursed pursuant to Section 5 hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRANSFER RESTRICTED SECURITIES: The Notes and the shares of Common
Stock into which the Notes are converted or convertible (including any shares
of Common Stock issued or issuable thereon upon any stock split, stock
combinations, stock dividend or the like), upon original issuance thereof, and
at all times subsequent thereto, and associated related rights, if any, until,
in the case of any such Note or share (and associated rights) (i) the date on
which it has been registered effectively pursuant to the Securities Act and
disposed of in accordance with the Registration Statement relating to it, (ii)
the date on which either such Note or the shares of Common Stock issued upon
conversion of such Note are distributed to the public pursuant to Rule 144 (or
any similar provisions then in effect) or are saleable pursuant to Rule 144(k)
promulgated by the SEC pursuant to the Securities Act or (iii) the date on
which it ceases to be outstanding.
TRUSTEE: The Trustee under the Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
References herein to the term "Holders of a majority in aggregate
principal amount of Transfer Restricted Securities" or words to a similar
effect shall mean, with respect to any request, notice, demand, objection or
other action by the holders of Transfer Restricted Securities hereunder or
pursuant hereto (each, an "Act"), registered holders of a number of shares of
then outstanding Common Stock constituting Transfer Restricted Securities and
an aggregate principal amount of then outstanding Notes constituting Transfer
Restricted Securities, such that the sum of such shares of Common Stock and the
shares of Common Stock issuable upon conversion of such Notes constitute in
excess of 50% of the sum of all of the then outstanding shares of Common Stock
constituting Transfer Restricted Securities and the number of shares of Common
Stock issuable upon conversion of then outstanding Notes constituting Transfer
Restricted Securities. For purposes of the immediately preceding sentence, any
Holder may elect to take any Act with respect to all or any portion of Transfer
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<PAGE> 5
Restricted Securities held by it and only the portion as to which such Act is
taken shall be included in the numerator of the fraction described in the
preceding sentence.
2. Shelf Registration Statement
----------------------------
(a) The Company agrees to file with the SEC as soon as practicable
after the Closing Date, but in no event later than the Filing Date, a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Transfer Restricted Securities (the
"Shelf Registration Statement"). The Shelf Registration Statement shall be on
Form S-3 under the Securities Act or another appropriate form permitting
registration of such Transfer Restricted Securities for resale by the Holders
in the manner or manners reasonably designated by them (including, without
limitation, one or more underwritten offerings). The Company shall not permit
any securities other than the Transfer Restricted Securities to be included in
the Shelf Registration Statement. The Company shall use its reasonable efforts
to cause the Shelf Registration Statement to be declared effective pursuant to
the Securities Act as promptly as practicable following the filing thereof, but
in no event later than the Effectiveness Target Date, and to keep the Shelf
Registration Statement continuously effective under the Securities Act for 36
months after the date on which all the Notes are sold (including those sold
pursuant to the over-allotment option granted to the Initial Purchasers in the
Placement Agreement) to the Initial Purchasers (subject to extension pursuant
to Sections 2(b) and 2(d) hereof) (the "Effectiveness Period"), or such shorter
period ending when there cease to be outstanding any Transfer Restricted
Securities.
(b) SUPPLEMENTS AND AMENDMENTS. The Company shall use its reasonable
efforts to keep the Shelf Registration Statement continuously effective by
supplementing and amending the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities or by any underwriter of such Transfer
Restricted Securities; provided that the Effectiveness Period shall be extended
to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174 and as otherwise provided herein.
(c) SELLING SECURITYHOLDER INFORMATION. The Company may require each
Holder of Transfer Restricted Securities as to which any registration is being
effected to furnish to the Company, within 20 Business Days after written
request therefor has been made by the Company, such information regarding the
distribution of such Transfer Restricted Securities as is required by law to be
disclosed in the applicable Registration Statement (the "Requisite
Information").
The Company shall file, within two Business Days of the receipt of
notice from any Holder which includes the Requisite Information with respect to
such Holder, a Prospectus supplement pursuant to Rule 424 to amend or
supplement such Registration Statement to include in the Registration Statement
the Requisite Information as to such
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<PAGE> 6
Holder (and the Transfer Restricted Securities held by such Holder), and the
Company shall provide such Holder and the Special Counsel within two Business
Days of such notice with a copy of such Prospectus as so amended or
supplemented containing the Requisite Information in order to permit such
holder to comply with the Prospectus delivery requirements of the Securities
Act in a timely manner with respect to any proposed disposition of such
Holder's Transfer Restricted Securities.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (i) the insertion therein of language, in form
and substance reasonably satisfactory to such Holder and the Company, to the
effect that the holding by such Holder of such securities is not to be
construed as a recommendation by such Holder of the investment quality of the
Company's securities covered thereby and that such holding does not imply that
such Holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar Federal statute
then in force, the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
No Holder shall be entitled to use the Prospectus unless and until such
Holder shall have furnished the information required by this Section 2(c) in
accordance with the first or second paragraph hereof.
(d) CERTAIN NOTICES; SUSPENSION OF SALES. Each Holder of Transfer
Restricted Securities agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(v) or
4(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Transfer Restricted Securities covered by such Registration Statement or
Prospectus (other than in transactions exempt from the registration
requirements under the Securities Act) until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 4(i)
hereof, or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus. If the Company
shall give any such notice, the Effectiveness Period shall be extended by the
number of days during such period from and including the date of the giving of
such notice to and including the date when each Holder shall have received (x)
the copies of the supplemented or amended Prospectus contemplated by Section
4(i) hereof or (y) the Advice, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.
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<PAGE> 7
3. Liquidated Damages
(a) The Company and the Initial Purchasers agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Section 2 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder
of Transfer Restricted Securities under the circumstances and to the extent set
forth below:
(i) if the Shelf Registration Statement has not
been filed with the SEC on or prior to the Filing Date; or
(ii) if the Shelf Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness
Target Date; or
(iii) if the Shelf Registration Statement has been
declared effective by the SEC and such Shelf Registration
Statement ceases to be effective or usable at any time during
the Effectiveness Period (without being succeeded on the same
day immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is
itself immediately declared effective) for a period of time
which shall exceed 90 days in the aggregate per year;
(any of the foregoing, a "Registration Default"). In the event of any such
Registration Default, the Company shall pay Liquidated Damages to each Holder
of Transfer Restricted Securities during the first 90-day period immediately
following the occurrence of such Registration Default in an amount equal to
$.05 per week per $1,000 principal amount of Notes and, if applicable, $.01 per
week per share (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) of Common Stock constituting
Transfer Restricted Securities held by such holder for each week or portion
thereof that the Registration Default continues. The amount of such Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal
amount of Notes and $.01 per week per share (subject to adjustment as set forth
above) of Common Stock constituting Transfer Restricted Securities for each
subsequent 90-day period until all Registration Defaults have been cured;
Provided, However, that Liquidated Damages shall not at any time exceed $.25
per week per $1,000 principal amount of Notes and $.05 per week per share
(subject to adjustment as set forth above) of Common Stock constituting
Transfer Restricted Securities. Following the cure of all Registration
Defaults relating to any Transfer Restricted Securities, the accrual of
Liquidated Damages with respect to such Transfer Restricted Securities will
cease (without in any way limiting the effect of any subsequent Registration
Default). A Registration Default under clause (i) above shall be cured on the
date that the Shelf Registration Statement is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that
the Shelf Registration Statement is declared effective by the SEC; and a
Registration Default under clause (iii) above shall be cured on the date the
Shelf Registration Statement is declared effective or usable.
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<PAGE> 8
(b) The Company shall notify the Trustee within one
Business Day after each and every date on which a Registration Default occurs.
Liquidated Damages shall be paid by the Company to the Record Holders on each
Damages Payment Date by wire transfer of immediately available funds to the
accounts specified by them or by mailing checks to their registered addresses
as they appear in the Note register (as defined in the Indenture), in the case
of the Notes, and in the register of the Company for the Common Stock, in the
case of the Common Stock, if no such accounts have been specified on or before
the Damage Payment Date; provided, however, that any Liquidated Damages accrued
with respect to any Note or portion thereof called for redemption on a
redemption date, repurchased in connection with a Repurchase Event (as defined
in the Indenture) on a repurchase date, or converted into Common Stock on a
conversion date prior to the Damages Payment Date, shall, in any such event, be
paid instead to the holder who submitted such Note or portion thereof for
redemption, repurchase or conversion on the applicable redemption date,
repurchase date or conversion date, as the case may be, on such date (promptly
following the conversion date, in the case of conversion of a Note). Each
obligation to pay Liquidated Damages shall be deemed to commence accruing on
the date of the applicable Registration Default and to cease accruing when all
Registration Defaults have been cured. In no event shall the Company be
required to pay Liquidated Damages in excess of the applicable maximum weekly
amount set forth above, regardless of whether one or multiple Registration
Defaults exist.
(c) All of the Company's obligations set forth in this
Section 3 which are outstanding with respect to any Transfer Restricted
Securities at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such security have been satisfied in full.
(d) Any payments due and payable pursuant to this Section
3 shall be subject to the provisions of Article IV of the Indenture as if such
payments were additional interest on the Notes.
4. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall effect such registrations
on the appropriate form available for the sale of the Transfer Restricted
Securities to permit the sale of Transfer Restricted Securities in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:
(a) No fewer than five Business Days prior to the initial
filing of a Registration Statement or Prospectus and no fewer than two Business
Days prior to the filing of any amendment or supplement thereto (but, with
respect to any document that would be incorporated or deemed to be incorporated
therein by reference, substantially concurrently with, but not prior to, filing
thereof), furnish to the Holders of the Transfer Restricted Securities, their
Special Counsel and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents (including, but not prior to
filing, those incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders, their Special Counsel and such
underwriters, if any, and cause the officers and
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<PAGE> 9
directors of the Company, counsel to the Company and independent certified
public accountants to the Company to respond to such inquiries as shall be
necessary in connection with such Registration Statement, in the opinion of
respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act; provided
that any supplement or amendment to the Registration Statement or Prospectus
filed pursuant to the second paragraph of Section 2(c) hereof need only be
furnished in accordance with time periods set forth in such paragraph;
provided, further, however, that the Company shall not be deemed to have kept a
Registration Statement effective during the applicable period if it voluntarily
takes or fails to take any action that results in selling Holders of the
Transfer Restricted Securities covered thereby not being able to sell such
Transfer Restricted Securities pursuant to Federal securities laws during that
period (and the time period during which such Registration Statement is
required to remain effective hereunder shall be extended by the number of days
during which such selling Holders of Transfer Restricted Securities are not
able to sell Transfer Restricted Securities). The Company shall not file any
such Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities, their Special Counsel, or the
managing underwriters, if any, shall reasonably object on a timely basis;
(b) Prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
applicable time period set forth in Section 3(a) hereof; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) under the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented (including, without limitation, the filing
of any Prospectus supplement pursuant to Rule 424 in order to add or change any
selling security holder information (including any such supplements or
amendments pursuant to Section 2(c) hereof, provided such holder of Transfer
Restricted Securities to which such change applies complies with the
information requirements of the first or second paragraph of Section 2(c)
hereof));
(c) Notify the Holders of Transfer Restricted Securities
to be sold or their Special Counsel and the managing underwriters, if any,
promptly (and in the case of an event specified by clause (i)(A) of this
paragraph in no event fewer than two Business Days prior to such filing), and
(if requested by any such person), confirm such notice in writing, (i)(A) when
a Prospectus or any Prospectus supplement or post-effective amendment is
proposed to be filed, and, (B) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request of the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information related thereto, (iii) of the issuance by the SEC,
any state securities commission, any other governmental agency or any court of
any stop order,
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<PAGE> 10
order or injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 4(m) hereof cease to be true and correct in all material respects,
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Transfer Restricted Securities for sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, and (vi) of the existence of
any fact and the happening of any event that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect,
or that requires the making of any changes in such Registration Statement,
Prospectus or document so that in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and that, in the case of the Prospectus, such Prospectus
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(d) Use its reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of any order enjoining or suspending the
use or effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Transfer Restricted Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the managing underwriters, if any, or
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold in connection with such offering, (i) promptly
incorporate in a Prospectus supplement or post- effective amendment such
information as the managing underwriters, if any, and such Holders agree should
be included therein, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 4(e)
that would, in the opinion of counsel for the Company, violate applicable law
or to include information to which the Company reasonably objects;
(f) Furnish to each Holder, their Special Counsel and
each managing underwriter, if any, without charge, at least one conformed copy
of each Registration Statement and each amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits, unless requested in writing
by such Holder, counsel or managing underwriter);
(g) Deliver to each Holder, their Special Counsel, and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto to such persons reasonably request;
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<PAGE> 11
and the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities and the underwriters, if any, in connection with the
offering and sale of the Transfer Restricted Securities covered by such
Prospectus and any amendment or supplement thereto, provided that no Holder
shall be entitled to use the Prospectus unless and until such Holder shall have
furnished to the Company any required information pursuant to the first or
second paragraph of Section 2(c) hereof;
(h) Prior to any public offering of Transfer Restricted
Securities, use its reasonable efforts to register or qualify, or cooperate
with the Holders of Transfer Restricted Securities to be sold or tendered for,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any Holder or underwriter reasonably requests in writing, keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject;
(i) In connection with any sale or transfer of Transfer
Restricted Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders and the managing
underwriters, if any, to (A) facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends, shall bear a CUSIP number
different from the CUSIP number for the Transfer Restricted Securities and
shall be in a form eligible for deposit with The Depository Trust Company and
(B) enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or Holders may
request at least two Business Days prior to any sale of Transfer Restricted
Securities;
(j) Use its reasonable efforts to cause the offering of
the Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
within the United States, except as may be required as a consequence of the
nature of such selling Holder's business, in which case the Company will
cooperate in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Transfer Restricted Securities; provided, however, that the
Company shall not be required to register the Transfer Restricted Securities in
any jurisdiction that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
tax in any such
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<PAGE> 12
jurisdiction where it is not then so subject or to require the Company to
qualify to do business in any jurisdiction where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by
Section 4(c)(vi) hereof, as promptly as practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to each
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, such
Prospectus will 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 light of the circumstances under which they were made,
not misleading;
(l) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, to provide a CUSIP
number for the Transfer Restricted Securities to be sold pursuant to the
Registration Statement;
(m) Enter into such agreements (including an underwriting
agreement in form, scope and substance to is customary in underwritten
offerings) and take all such other reasonable actions in connection therewith
(including those reasonably requested by the managing underwriters, if any, or
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold) in order to expedite or facilitate the
disposition of such Transfer Restricted Securities, and in such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the Holders of such Transfer Restricted Securities and the
underwriters, if any, with respect to the business of the Company and its
subsidiaries (including with respect to businesses or assets acquired or to be
acquired by any of them), and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and Special
Counsel to the Holders of the Transfer Restricted Securities being sold
(provided that such counsel may be any of the counsel identified in Section
9(f)(ii) hereof)), addressed to each selling Holder of Transfer Restricted
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) use its reasonable efforts to obtain customary "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed (where
reasonably possible) to each selling Holder of Transfer Restricted Securities
and each of the underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
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<PAGE> 13
in connection with underwritten offerings; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable to the selling Holders of Transfer Restricted Securities and
the underwriters, if any, than those set forth in Section 6 hereof (or such
other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities covered by
such Registration Statement and the managing underwriters); and (v) deliver
such documents and certificates as may be reasonably requested by the Holders
of majority in aggregate principal amount of the Transfer Restricted Securities
being sold, their Special Counsel or the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) of this Section 4(m) and to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company;
(n) Make available for inspection by a representative of
the Holders of Transfer Restricted Securities being sold, any underwriter
participating in any such disposition of Transfer Restricted Securities, if
any, and any attorney, consultant or accountant retained by such selling
Holders or underwriter, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries as they may reasonably
request (including with respect to business and assets acquired or to be
acquired to the extent that such information is available to the Company), and
cause the officers, directors, agents and employees of the Company and its
subsidiaries (including with respect to business assets acquired or to be
acquired to the extent that such information is available to the Company) to
supply all information in each case reasonably requested by any such
representative, underwriter, attorney, consultant or accountant in connection
with such Registration Statement, provided, however, that such persons shall
first agree in writing with the Company that any information that is reasonably
and in good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such
persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities, (ii) disclosure of such information is required by law (including
any disclosure requirements pursuant to Federal securities laws in connection
with the filing of any Registration Statement or the use of any prospectus
referred to in this Agreement), (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by any such person or (iv) such information becomes available to any
such person from a source other than the Company and such source is not bound
by a confidentiality agreement.
(o) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement relating to
the Transfer Restricted Securities; and in connection therewith, cooperate with
the Trustee under the Indenture and the holders of the Transfer Restricted
Securities to effect such changes to the Indenture, if any, as may be required
for such Indenture to be so qualified in accordance with the terms of the TIA;
and execute, and use its reasonable best efforts to cause such trustee to
execute, all customary documents as may be required to effect such changes, and
all other forms and documents
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<PAGE> 14
(including the Form T-1) required to be filed with the SEC to enable the
Indenture to be so qualified under the TIA in a timely manner.
(p) Comply with applicable rules and regulations of the
SEC and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act), no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or reasonable efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter after the effective date of a
Registration Statement, which statement shall cover said period, consistent
with the requirements of Rule 158; and
(q) (i) list all Common Stock covered by such
Registration Statement on any securities exchange on which the Common Stock is
then listed or (ii) authorize for quotation on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq") or the National Market
System of Nasdaq all Common Stock covered by such Registration Statement if the
Common Stock is then so authorized for quotation.
5. Registration Expenses
---------------------
(a) All reasonable fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by it whether or not any Registration Statement is filed or becomes effective
and whether or not any securities are issued or sold pursuant to any
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filings
fees (including without limitation, fees and expenses (A) with respect to
filings required to be made with the National Association of Securities
Dealers, Inc. and (B) in compliance with securities or Blue Sky laws
(including, without limitation and in addition to that provided for in (b)
below, fees and disbursements of counsel for the underwriters or Special
Counsel for the Holders in connection with Blue Sky qualifications of the
Transfer Restricted Securities and determination of the eligibility of the
Transfer Restricted Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or Holders of a majority in
aggregate principal amount of Transfer Restricted Securities, may designate)),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities in a form eligible for deposit
with The Depository Trust Company and of printing Prospectuses if the printing
of Prospectuses is reasonably required by the managing underwriters, if any, or
by the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities included in or tendered for in connection with any
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel for the
Holders (plus any local counsel, deemed appropriate by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities)
in accordance with the provisions of Section 5(b) hereof, (v) fees and
-14-
<PAGE> 15
disbursements of all independent certified public accountants referred to in
Section 4(m)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) Securities Act liability insurance, if the Company so desires such
insurance, and (vii) fees and expenses of all other persons retained by the
Company. In addition, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of an annual audit, and the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange. Notwithstanding the foregoing or
anything in this Agreement to the contrary, each Holder shall pay all
underwriting discounts and commissions of any underwriters with respect to any
Transfer Restricted Securities sold by it.
(b) In connection with any registration hereunder, the
Company shall reimburse the Holders of the Transfer Restricted Securities being
registered or tendered for in such registration for the reasonable fees and
disbursements of not more than one firm of attorneys representing the selling
Holders (in addition to any local counsel), which firm shall be chosen by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities. Wilson Sonsini Goodrich & Rosati, P.C., shall be Special Counsel
for all purposes hereof unless and until another Special Counsel shall have
been selected by a majority in aggregate principal amount of the Transfer
Restricted Securities and notice hereof shall have been given to the Company.
6. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless (i)
each of the Initial Purchasers, (ii) each Holder of Transfer Restricted
Securities, (iii) each person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the
foregoing (any of the persons referred to in this clause (iii) being
hereinafter referred to as a "controlling person"), and (iv) the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchasers, each Holder of Transfer Restricted Securities, or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "Indemnified Person"), from and against
any and all losses, claims, damages, liabilities, expenses and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of Prospectus or in
any amendment or supplement thereto or in 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 (in the case
of any Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities, expenses or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Indemnified Person furnished in writing
to the Company by or on behalf of such Indemnified Person expressly for use
therein; provided that the foregoing indemnity with respect to any preliminary
Prospectus shall not inure to the benefit of any Indemnified Person from whom
the
-15-
<PAGE> 16
person asserting such losses, claims, damages, liabilities, expenses and
judgments purchased securities if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary Prospectus is eliminated
or remedied in the Prospectus and a copy of the Prospectus shall not have been
furnished to such person in a timely manner due to the wrongful action or
wrongful inaction of such Indemnified Person, whether as a result of negligence
or otherwise.
(b) In case any action shall be brought against any
Indemnified Person, based upon any Registration Statement or any such
Prospectus or any amendment or supplement thereto and with respect to which
indemnity may be sought against the Company, such Indemnified Person shall
promptly notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Person and payment of all reasonable fees and expenses. Any
Indemnified Person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person, unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the Company, (ii) the Company shall have failed to assume the defense and
employ counsel or (iii) such Indemnified Person or Persons shall have been
advised by counsel that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action or proceeding or that there may be legal
defenses available to such Indemnified Person or Persons different from or in
addition to those available to the indemnifying party or parties (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Indemnified Person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Indemnified Persons, which firm shall be
designated in writing by such Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such action effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Indemnified Person from and against
any loss or liability by reason of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(c) In connection with any Registration Statement in
which the Holder of Transfer Restricted Securities is participating, such
Holder of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and any
person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity
-16-
<PAGE> 17
from the Company to each Indemnified Person but only with reference to
information relating to such Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use in such Registration
Statement. In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on such
Registration Statement and in respect of which indemnity may be sought against
any Indemnified Person, the Indemnified Person shall have the rights and duties
given to the Company (except that if the Company shall have assumed the defense
thereof, such Indemnified Person shall not be required to do so, but may employ
separate counsel therein and participate in defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person),
and the Company, its directors, any such officers and any person controlling
the Company shall have the rights and duties given to the Indemnified Person by
Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities, expenses or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, expenses and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and each Indemnified Person on the other hand from
the offering of the Transfer Restricted 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 and each such
Indemnified Person in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, expenses or judgments,
as well as any other relevant equitable considerations. The relative fault of
the Company and each such Indemnified Person shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Company or such Indemnified Person and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Indemnified Person were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, expenses or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no Indemnified Person shall be required to contribute any amount in
excess of the amount by which the total net profit received by it in connection
with the sale of the Transfer Restricted Securities pursuant to this Agreement
exceeds the amount of any damages which such Indemnified Person has otherwise
been required to pay by reason of such
-17-
<PAGE> 18
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 Indemnified Persons'
obligations to contribute pursuant to this Section 6(d) are several in
proportion to the respective amount of Transfer Restricted Securities included
in and sold pursuant to any such Registration Statement by each Indemnified
Person and not joint.
7. Rules 144 and 144A
------------------
The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but
in the past had been required to or did file such reports, it will, upon the
request of any Holder, make available other information as required by, and so
long as necessary to permit sales of, its Transfer Restricted Securities
pursuant to Rule 144 and Rule 144A . Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
8. Underwritten Registrations
--------------------------
If any of the Transfer Restricted Securities covered by any
Shelf Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of such Transfer Restricted Securities included in
such offering, subject to the consent of the Company (which will not be
unreasonably withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Miscellaneous
-------------
(a) REMEDIES. In the event of a breach by the Company,
or by a holder of Transfer Restricted Securities, of any of their obligations
under this Agreement, each holder of Transfer Restricted Securities or the
Company, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby
-18-
<PAGE> 19
further agree that, in the event of any action for specific performance in
respect of such breach, they shall waive the defense that a remedy at law would
be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the holders of Transfer Restricted Securities in
this Agreement or otherwise conflicts with the provisions hereof. The Company
is not currently a party to any agreement granting any registration rights with
respect to any of its securities to any person which conflicts with the
Company's obligations hereunder or gives any other party the right to include
any securities in any Registration Statement filed pursuant hereto. Without
limiting the generality of the foregoing, without the written consent of the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities, the Company shall not grant to any person the right to request it
to register any of its securities under the Securities Act unless the rights so
granted are subject in all respect to the prior rights of the holders of
Transfer Restricted Securities set forth herein, and are not otherwise in
conflict or inconsistent with the provisions of this Agreement.
(c) NO ADVERSE ACTION AFFECTING THE TRANSFER RESTRICTED
SECURITIES. The Company will not take any action with respect to the Transfer
Restricted Securities which would adversely affect the ability of any of the
Holders of Transfer Restricted Securities to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement.
(d) NO PIGGYBACK ON REGISTRATIONS. The Company shall not
grant to any of its security holders (other than the Holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement other than Transfer Restricted
Securities.
(e) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof, may not be given, without the written consent of the Holders
of a majority of the then outstanding Transfer Restricted Securities on a fully
converted basis; provided, however, that, for the purposes of this Agreement,
Transfer Restricted Securities that are owned. directly or indirectly, by
either the Company or an Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Transfer Restricted Securities whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
may be given by Holders of a majority of the Transfer Restricted Securities (on
a fully converted basis) being sold by such Holders pursuant to such
Registration Statement; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
-19-
<PAGE> 20
(f) NOTICES. All notices and other communications
provided for herein shall be made in writing by hand-delivery, next day air
courier, certified first-class mail, return receipt requested or telecopy:
(i) if to a Holder of Transfer Restricted
Securities, to the address of such Holder as
it appears in the Note or Common Stock
register of the Company, as applicable; and
(ii) if to the Company, to:
Telxon Corporation
3330 West Market Street
Akron, Ohio 44333
Attention: Legal Department
Telecopy No.: (216) 873-2083
with a copy to:
Goodman Weiss Miller
100 Erieview Plaza
27th Floor
Cleveland, Ohio 44114
Attention: Robert A. Goodman, Esq.
Telecopy No.: (216) 363-5835
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 3rd Avenue
New York, New York 10022
Attention: Mark C. Smith, Esq.
Telecopy No.: (212) 735-2000; and
(iii) if to the Special Counsel, to:
Wilson, Sonsini, Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: John A. Fore, Esq.
Telecopy No.: (415) 493-6811
-20-
<PAGE> 21
or such other Special Counsel at such other
address and telecopy number as a majority in
aggregate principal amount of the Transfer
Restricted Securities shall have given notice
to the Company as contemplated by Section
5(b) hereof.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given, when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier, five Business Days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each existing and future
Holder of Transfer Restricted Securities. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder of Transfer Restricted Securities.
(h) COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same Agreement.
(i) Governing Law; Submission to Jurisdiction
-----------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
-21-
<PAGE> 22
(j) SEVERABILITY. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(k) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.
(l) ATTORNEYS' FEES. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover its reasonable attorneys' fees in addition
to any other available remedy.
-22-
<PAGE> 23
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
TELXON CORPORATION
By:/s/ Kenneth W. Haver
-----------------------------------
Name: Kenneth W. Haver
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
The foregoing Registration Rights
Agreement is hereby confirmed and
agreed to as of the date first above
written:
HAMBRECHT & QUIST LLC
PRUDENTIAL SECURITIES INCORPORATED
By Hambrecht & Quist LLC
/s/ S. N. Machtinger
- --------------------------------------
<PAGE> 1
EXHIBIT 5.1
GOODMAN WEISS MILLER GOLDFARB
100 Erieview Plaza, 27th Floor
Cleveland, Ohio 44114-1824
Telephone: (216) 696-3366
Telecopier: (216) 363-5835
February 23, 1996
Board of Directors
Telxon Corporation
3330 West Market Street
Akron, Ohio 44333
Re: Registration Statement on Form S-3 relating to 5 3/4 % Convertible
Subordinated Notes due 2003 and the resale of up to 3,000,000 shares of
Common Stock, par value $.01 per share
Gentlemen:
We have acted as counsel to Telxon Corporation (the "Company"), a Delaware
corporation, in connection with its registration for resale of $82,500,000 of
its 5 3/4% Convertible Subordinated Notes due 2003 (the "Notes") and 3,000,000
shares of Common Stock issuable upon conversion of the Notes (the "Common
Stock") as described in the Company's Registration Statement on Form S-3, filed
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended ("Registration Statement").
We are familiar with the corporate proceedings taken by the Company in
connection with the issuance and sale of the Notes and the authorization of the
Common Stock. It is our opinion that the Notes have been duly authorized and
are validly issued and that the Common Stock, when issued in accordance with
the terms of the Notes, will be duly authorized, validly issued, fully paid and
nonassessable.
We consent to the filing of a copy of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is part of the Registration Statement.
Very truly yours,
/s/ Goodman Weiss Miller Goldfarb
GOODMAN WEISS MILLER GOLDFARB
<PAGE> 1
<TABLE>
EXHIBIT 12.1
RATIO OF EARNINGS (DEFICIENCY) TO FIXED CHARGES)
<CAPTION>
Nine Months
Fiscal Years Ended March 31 Ended
- --------------------------------------------------------------------------------------------------------------------- December 31,
1991 1992 1993 1994 1995 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Income from continuing operations before income taxes $19,870 $25,037 $(15,681) $ (1,924) $17,210 $ 9,245
Portion of rents attributable to interest 1,719 2,135 2,430 2,654 3,737 2,870
Interest on indebtedness 2,560 2,203 2,271 2,459 4,354 4,646
Amortization of debt expense 32 32 32 32 32 32
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings as adjusted $24,181 $29,407 $(10,948) $ 3,221 $25,333 $16,800
- -----------------------------------------------------------------------------------------------------------------------------------
FIXED CHARGES:
Portion of rents attributable to interest 1,719 2,135 2,430 2,654 3,737 2,870
Interest on indebtedness 2,560 2,203 2,271 2,459 4,354 4,646
Amortization of debt expense 32 32 32 32 32 32
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed charges $ 4,311 $ 4,370 $ 4,733 $ 5,145 $ 8,123 $ 7,555
- -----------------------------------------------------------------------------------------------------------------------------------
RATIO OF EARNINGS (DEFICIENCY) TO FIXED CHARGES: 5.61 6.73 (2.31) 0.63 3.12 2.22
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus constituting
part of this Registration Statement of Telxon Corporation on Form S-3, with
respect to the resale of $82,500,000 in aggregate principal amount of the
registrant's 5 3/4% Convertible Subordinated Notes due 2003 and the shares of
registrant's Common Stock issuable upon the conversion of such Notes by any
holders of said Notes that do not purchase the Notes under this Registration
Statement, of our report dated June 19, 1995, which includes an explanatory
paragraph related to a Consolidated Class Action, on our audits of the
consolidated financial statements and financial statement schedules of Telxon
Corporation and Subsidiaries, as of March 31, 1995 and 1994 and for each of the
three years in the period ended March 31, 1995, appearing on page 30 of the
Annual Report of Telxon Corporation on Form 10-K for the year ended March 31,
1995. We also consent to the reference to our Firm under the caption "Experts"
appearing in the Prospectus.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Akron, Ohio
February 20, 1996
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Officers and
Directors of TELXON CORPORATION, a Delaware corporation ("Registrant"), hereby
constitutes and appoints Robert F. Meyerson, William J. Murphy, Kenneth W.
Haver, Glenn S. Hansen and Larry E. Shai, his attorneys-in-fact and agents, and
each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to prepare
or cause to be prepared and to sign a Registration Statement on Form S-3 (or
other appropriate Form) under the provisions of the Securities Act of 1933, as
amended (the "Act"), with respect to $82,500,000 in aggregate face principal
amount of the Registrant's 5-3/4% Convertible Subordinated Notes due 2003 (the
"Notes"), which have heretofore been placed by the Registrant in a transaction
exempt from the registration requirements of the Act for resale to certain
qualified institutional buyers pursuant to Rule 144A promulgated under the Act
and outside the United States in reliance upon Regulation S promulgated under
the Act, and the shares of Registrant's Common Stock, par value $.01 per share,
issuable upon any conversions of the Notes or any portion thereof in accordance
with their terms, and any and all amendments, both pre-effective and post-
effective, and supplements to such Registration Statement and the prospectus
included therein; to file or cause the filing of the same, including all
exhibits thereto and other instruments and documents required in connection
therewith, with the Securities and Exchange Commission; and to take or cause to
be taken all such other actions as may be necessary to maintain the
effectiveness of the same in accordance with the terms of the Notes so as to
permit the public sale of the aforementioned securities by the holders thereof
from time to time; granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might and could do in person, hereby ratifying and
affirming all that said attorneys-in-fact and agents and any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this instrument in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- ---- -------- ----
<S> <C> <C>
/s/ Richard J. Bogomolny Director January 24, 1996
- ---------------------------
Richard J. Bogomolny
/s/ John H. Cribb Vice Chairman of the January 24, 1996
- --------------------------- Board and Director
John H. Cribb
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
/s/ Gerald J. Gabriel Vice President, January 25, 1996
- ------------------------- Financial Planning
Gerald J. Gabriel
/s/ Robert A. Goodman Secretary and Director January 24, 1996
- -------------------------
Robert A. Goodman
/s/ Kenneth W. Haver Senior Vice President, January 24, 1996
- ------------------------- Chief Financial Officer,
Kenneth W. Haver and Treasurer
/s/ Robert F. Meyerson Chairman of the Board, January 24, 1996
- ------------------------- Chief Executive Officer
Robert F. Meyerson and Director
/s/ William J. Murphy President, January 24, 1996
- ------------------------- Chief Operating Officer
William J. Murphy and Director
/s/ Raj Reddy Director January 24, 1996
- -------------------------
Raj Reddy
/s/ Norton W. Rose Director January 24, 1996
- -------------------------
Norton W. Rose
/s/ Larry E. Shai Corporate Controller January 25, 1996
- -------------------------
Larry E. Shai
</TABLE>
2
<PAGE> 3
CERTIFICATE OF THE SECRETARY OF THE
TELXON CORPORATION
I, Robert A. Goodman, Secretary of Telxon Corporation, a Delaware
corporation (the "Corporation"), do hereby certify that the following
resolution, namely:
WHEREAS, at the meeting of this Board held November 20, 1995, as
part of the Board's authorization of the Corporation's issuance of up to
$75,000,000 in principal amount of convertible subordinated notes due 2003
(subject to increase under such over-allotment option as may be
negotiated), the Executive Officers of the Corporation were authorized and
directed to, and to cause proper officers of the Corporation to, negotiate,
execute and deliver an agreement providing for the registration with the
Securities and Exchange Commission of such notes and/or the common stock of
the Corporation issuable upon conversion thereof; and
WHEREAS, on December 12, 1995, in accordance with the authorization
granted at the November 20, 1995 meeting, the Corporation consummated its
issuance of $82,500,000 aggregate in principal amount of 5-3/4% Convertible
Subordinated Notes due 2003 and in connection therewith executed and
delivered a Registration Rights Agreement, dated as of December 1, 1995
providing for the Corporation's registration with the Securities and
Exchange Commission of said Notes and of the common stock issuable upon
conversion thereof;
NOW, THEREFORE, BE IT RESOLVED, that the name of any officer or
officers of the Corporation whose signature on behalf of the Corporation as
registrant is to be made upon any registration statement, including any
amendments, both pre-effective and post-effective, or supplements thereto
or to the prospectus included therein, being filed with the Securities and
Exchange Commission with respect to the Corporation's 5-3/4% Convertible
Subordinated Notes due 2003 and the common stock of the Corporation
issuable thereunder and who has signed the Power of Attorney signed by the
members of this Board with respect to said registration is hereby
authorized to be signed pursuant to said Power of Attorney in accordance
with Item 601(b)(24) of Regulation S-K promulgated by the Commission.
was duly adopted by the Board of Directors of the Corporation on January 24,
1996, has not been amended or modified, and is in full force and effect.
IN WITNESS WHEREOF, I have signed this certificate as Secretary of
the Corporation.
Dated: February 16, 1996
/s/ Robert A. Goodman
-----------------------------
Robert A. Goodman
Secretary of Telxon Corporation
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF
1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, COLUMBUS, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal (Zip Code) executive offices)
Ted Kravits
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-2566
(Name, address and telephone number of agent for service)
TELXON CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 74-1666060
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
3330 West Market Street 44333
Akron, Ohio (Zip Code)
(Address of principal executive
offices)
<PAGE> 2
5 3/4% CONVERTIBLE SUBORDINATED NOTES DUE JANUARY 1, 2003
(Title of the Indenture securities)
GENERAL
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System,
Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY AND QUALIFICATION. (EXHIBITS IDENTIFIED IN PARENTHESES,
ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS
EXHIBITS HERETO.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 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 Form S-3 relating
to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers, see Exhibit 3 to Form T-1, filed in connection with Form S-3
relating to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
<PAGE> 3
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
December 31, 1995, published pursuant to the requirements of the Comptroller of
the Company.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, Bank One, Columbus, NA, a national banking association
organized under the National Banking Act, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in Columbus, Ohio, on February 14, 1996.
Bank One, Columbus, NA
By: /s/ Ted Kravits
--------------------------
Ted Kravits
Authorized Signer
<PAGE> 4
Exhibit 1
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
-----------------------
For the purpose of organizing an association to carry on the business of
banking under the laws of the United States, the following Articles of
Association are entered into:
FIRST. The title of this Association shall be BANK ONE, COLUMBUS,
NATIONAL ASSOCIATION.
SECOND. The main office of the Association shall be in Columbus, County
of Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five Directors, the exact number of
Directors within such minimum and maximum limits to be fixed and determined
from time-to-time by resolution of the shareholders at any annual or special
meeting thereof, provided, however, that the Board of Directors, by resolution
of a majority thereof, shall be authorized to increase the number of its
members by not more than two between regular meetings of the shareholders.
Each Director, during the full term of his directorship, shall own, as
qualifying shares, the minimum number of shares of either this Association or
of its parent bank holding company in accordance with the provisions of
applicable law. Unless otherwise provided by the laws of the United States,
any vacancy in the Board of Directors for any reason, including an increase in
the number thereof, may be filled by action of the Board of Directors.
<PAGE> 5
FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office of this Association or such other
place as the Board of Directors may designate, on the day of each year
specified therefor in the By-Laws, but if no election is held on that day, it
may be held on any subsequent business day according to the provisions of law;
and all elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall
be 2,073,750 shares of common stock of the par value of Ten Dollars ($10) each;
but said capital stock may be increased or decreased from time-to-time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the
Association shall have the preemptive or preferential right of subscription to
any share of any class of stock of this Association, whether now or hereafter
authorized or to any obligations convertible into stock of this Association,
issued or sold, nor any right of subscription to any thereof other than such,
if any, as the Board of Directors, in its discretion, may from time-to-time
determine and at such price as the Board of Directors may from time-to-time
fix.
This Association, at any time and from time-to-time, may authorize
and issue debt obligations, whether or not subordinated, without the approval
of the shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
of the Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall
have the power to appoint one or more Vice Presidents and to appoint a
Secretary and such other officers and employees as may be required to transact
the business of this Association.
-5-
<PAGE> 6
The Board of Directors shall have the power to define the duties
of the officers and employees of this Association; to fix the salaries to be
paid to them; to dismiss them; to require bonds from them and to fix the
penalty thereof; to regulate the manner in which any increase of the capital of
this Association shall be made; to manage and administer the business and
affairs of this Association; to make all By-Laws that it may be lawful for them
to make; and generally to do and perform all acts that it may be legal for a
Board of Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Columbus, Ohio, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time.
Unless otherwise provided by the laws of the United States, a notice of the
time, place and purpose of every annual and special meeting of the shareholders
shall be given by first-class mail, postage prepaid, mailed at least ten days
prior to the date of such meeting to each shareholder of record at his address
as shown upon the books of this Association.
-6-
<PAGE> 7
TENTH. Every person who is or was a Director, officer or employee of the
Association or of any other corporation which he served as a Director, officer
or employee at the request of the Association as part of his regularly assigned
duties may be indemnified by the Association in accordance with the provisions
of this paragraph against all liability (including, without limitation,
judgments, fines, penalties and settlements) and all reasonable expenses
(including, without limitation, attorneys' fees and investigative expenses)
that may be incurred or paid by him in connection with any claim, action, suit
or proceeding, whether civil, criminal or administrative (all referred to
hereafter in this paragraphs as "Claims") or in connection with any appeal
relating thereto in which he may become involved as a party or otherwise or
with which he may be threatened by reason of his being or having been a
Director, officer or employee of the Association or such other corporation, or
by reason of any action taken or omitted by him in his capacity as such
Director, officer or employee, whether or not he continues to be such at the
time such liability or expenses are incurred, provided that nothing contained
in this paragraph shall be construed to permit indemnification of any such
person who is adjudged guilty of, or liable for, willful misconduct, gross
neglect of duty or criminal acts, unless, at the time such indemnification is
sought, such indemnification in such instance is permissible under applicable
law and regulations, including published rulings of the Comptroller of the
Currency or other appropriate supervisory or regulatory authority, and provided
further that there shall be no indemnification of directors, officers, or
employees against expenses, penalties, or other payments incurred in an
administrative proceeding or action instituted by an appropriate regulatory
agency which proceeding or action results in a final order assessing civil
money penalties or requiring affirmative action by an individual or individuals
in the form of payments to the Association. Every person who may be
indemnified under the provisions of this paragraph and who has been wholly
successful on the merits with respect to any Claim shall be entitled to
indemnification as of right. Except as provided in the preceding sentence, any
indemnification under this paragraph shall be at the sole discretion of the
Board of Directors and shall be made only if the Board of Directors or the
Executive Committee acting by a quorum consisting of
-7-
<PAGE> 8
Directors who are not parties to such Claim shall find or if independent legal
counsel (who may be the regular counsel of the Association) selected by the
Board of Directors or Executive Committee whether or not a disinterested quorum
exists shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or
non-existence of a contract of insurance or indemnity under which the
Association would be wholly or partially reimbursed for such indemnification,
but the existence or non-existence of such insurance is not the sole
circumstance to be considered nor shall it be wholly determinative of whether
such indemnification shall be made. In addition to such finding or opinion, no
indemnification under this paragraph shall be made unless the Board of
Directors or the Executive Committee acting by a quorum consisting of Directors
who are not parties to such Claim shall find or if independent legal counsel
(who may be the regular counsel of the Association) selected by the Board of
Directors or Executive Committee whether or not a disinterested quorum exists
shall render their opinion that the Director, officer or employee acted in good
faith in what he reasonably believed to be the best interests of the
Association or such other corporation and further in the case of any criminal
action or proceeding, that the Director, officer or employee reasonably
believed his conduct to be lawful. Determination of any Claim by judgment
adverse to a Director, officer or employee by settlement with or without Court
approval or conviction upon a plea of guilty or of NOLOCONTENDERE or its
equivalent shall not create a presumption that a Director, officer or employee
failed to meet the standards of conduct set forth in this paragraph. Expenses
incurred with respect to any Claim may be advanced by the Association prior to
the final disposition thereof upon receipt of an undertaking satisfactory to
the Association by or on behalf of the recipient to repay such amount unless it
is ultimately determined that he is entitled to indemnification under this
paragraph. The rights of indemnification provided in this paragraph shall be
in addition to any rights to which any Director, officer or employee may
otherwise be entitled by contract or as a matter of law.
-8-
<PAGE> 9
Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon the
right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
-9-
<PAGE> 10
Exhibit 4
BY-LAWS
-------
OF
--
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
----------------------------------------
ARTICLE I
---------
MEETING OF SHAREHOLDERS
-----------------------
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders
of the Bank for the election of Directors and for the transaction of such
business as may properly come before the meeting shall be held at its main
banking house, or other convenient place duly authorized by the Board of
Directors, on the third Monday of January of each year, or on the next
succeeding banking day, if the day fixed falls on a legal holiday. If from any
cause, an election of directors is not made on the day fixed for the regular
meeting of shareholders or, in the event of a legal holiday, on the next
succeeding banking day, the Board of Directors shall order the election to be
held on some subsequent day, as soon thereafter as practicable, according to
the provisions of law; and notice thereof shall be given in the manner herein
provided for the annual meeting. Notice of such annual meeting shall be given
by or under the direction of the Secretary or such other officer as may be
designated by the Chief Executive Officer by first-class mail, postage prepaid,
to all shareholders of record of the Bank at their respective addresses as
shown upon the books of the Bank mailed not less than ten days prior to the
date fixed for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
Bank may be called at any time by the Board of Directors or by any three or
more shareholders owning, in the aggregate, not less than ten percent of the
stock of this Bank. The notice of any special meeting of the shareholders
called by the Board of Directors, stating the time, place and purpose of the
meeting, shall be given by or under the direction of the Secretary, or such
other officer as is designated by the Chief Executive Officer, by first-class
mail, postage prepaid, to all shareholders of
-10-
<PAGE> 11
record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its
proceedings recorded in the manner prescribed in these By-Laws for annual
meetings of shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these By-Laws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns
made by the judges and election and other proceedings to be recorded in the
minute book of the Bank. The presiding officer shall notify the
directors-elect of their election and to meet forthwith for the organization of
the new board.
The minutes of the meeting shall be signed by the presiding officer and
the Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many
as three shareholders to be judges of the election, who shall hold and conduct
the same, and who shall, after the election has been held, notify, in writing
over their signatures, the secretary of the shareholders' meeting of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election at
the request of the chairman of the
-11-
<PAGE> 12
meeting, shall act as tellers of any other vote by ballot taken at such
meeting, and shall notify, in writing over their signatures, the secretary of
the Board of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall
have the right to vote the number of shares of record in his name for as many
persons as there are Directors to be elected, or to cumulate such shares as
provided by Federal Law. In deciding all other questions at meetings of
shareholders, each shareholder shall be entitled to one vote on each share of
stock of record in his name. Shareholders may vote by proxy duly authorized in
writing. All proxies used at the annual meeting shall be secured for that
meeting only, or any adjournment thereof, and shall be dated, and if not dated
by the shareholder, shall be dated as of the date of receipt thereof. No
officer or employee of this Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting
less than a quorum may, without further notice, adjourn the meeting from time
to time until a quorum is obtained. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
-12-
<PAGE> 13
ARTICLE II
----------
DIRECTORS
---------
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be
managed by the Board of Directors. Each director of the Bank shall be the
beneficial owner of a substantial number of shares of BANC ONE CORPORATION and
shall be employed either in the position of Chief Executive Officer or active
leadership within his or her business, professional or community interest which
shall be located within the geographic area in which the Bank operates, or as
an executive officer of the Bank. A director shall not be eligible for
nomination and re-election as a director of the Bank if such person's executive
or leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The
age of 70 is the mandatory retirement age as a director of the Bank. When a
person's eligibility as director of the Bank terminates, whether because of
change in share ownership, position, residency or age, within 30 days after
such termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event
shall such person be nominated or elected as a director. Provided, however,
following a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the
right to participate in board meetings but shall be without the power to vote
and shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
- 13 -
<PAGE> 14
SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until
the annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify, subject, however, to his prior
death, resignation, or removal from office. Whenever any vacancy shall occur
among the directors, the remaining directors shall constitute the directors of
the Bank until such vacancy is filled by the remaining directors, and any
director so appointed shall hold office for the unexpired term of his or her
successor. Notwithstanding the foregoing, each director shall hold office and
serve at the pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share-
holders shall meet for organization of the new board at the time fixed by the
presiding officer of the annual meeting. If at the time fixed for such meeting
there is no quorum present, the Directors in attendance may adjourn from time
to time until a quorum is obtained. A majority of the number of Directors
elected by the shareholders shall constitute a quorum for the transaction of
business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of
Directors shall be held on the third Monday of each calendar month excluding
March and July, which meeting will be held at 4:00 p.m. When any regular
meeting of the Board falls on a holiday, the meeting shall be held on such
other day as the Board may previously designate or should the Board fail to so
designate, on such day as the Chairman of the Board of President may fix.
Whenever a quorum is not present, the directors in attendance shall adjourn the
meeting to a time not later than the date fixed by the Bylaws for the next
succeeding regular meeting of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held at the call of the Chairman of the Board or President, or at the
request of two or more Directors. Any special meeting may be held at such
place in Franklin County, Ohio, and at such time as may be fixed in the call.
Written or oral notice shall be given to each Director not later than the day
next preceding the day on which special meeting is to be held, which notice may
be waived in writing.
- 14 -
<PAGE> 15
The presence of a Director at any meeting of the Board shall be deemed a waiver
of notice thereof by him. Whenever a quorum is not present the Directors in
attendance shall adjourn the special meeting from day to day until a quorum is
obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank
may be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall
receive such fees for, and transportation expenses incident to, attendance at
Board and Board Committee Meetings and such fees for service as a Director
irrespective of meeting attendance as from time to time are fixed by resolution
of the Board; provided, however, that payment hereunder shall not be made to a
Director for meetings attended and/or Board service which are not for the
Bank's sole benefit and which are concurrent and duplicative with meetings
attended or board service for an affiliate of the Bank for which the Director
receives payment; and provided further, that payment hereunder shall not be
made in the case of any Director in the regular employment of the Bank or of
one of its affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of the
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all powers of the Board that may
lawfully be delegated. The Executive Committee shall also exercise the powers
of the Board of Directors in accordance with the Provisions of the "Employees
Retirement Plan" and the "Agreement and Declaration of Trust" as the same now
- 15 -
<PAGE> 16
exist or may be amended hereafter. The Executive Committee shall consist of
not fewer than four board members, including the Chairman of the Board and
President of the Bank, one of whom, as hereinafter required by these By-laws,
shall be the Chief Executive Officer. The other members of the Committee shall
be appointed by the Chairman of the Board or by the President, with the
approval of the Board and shall continue as members of the Executive Committee
until their successors are appointed, provided, however, that any member of the
Executive Committee may be removed by the Board upon a majority vote thereof at
any regular or special meeting of the Board. The Chairman or President shall
fill any vacancy in the Committee by the appointment of another Director,
subject to the approval of the Board of Directors. The regular meetings of the
Executive Committee shall be held on a regular basis as scheduled by the Board
of Directors. Special meetings of the Executive Committee shall be held at the
call of the Chairman or President or any two members thereof at such time or
times as may be designated. In the event of the absence of any member or
members of the Committee, the presiding member may appoint a member or members
of the Board to fill the place or places of such absent member or members to
serve during such absence. Not fewer than three members of the Committee must
be present at any meeting of the Executive Committee to constitute a quorum,
provided, however that with regard to any matters on which the Executive
Committee shall vote, a majority of the Committee members present at the
meeting at which a vote is to be taken shall not be officers of the Bank and,
provided further, that if, at any meeting at which the Chairman of the Board
and President are both present, Committee members who are not officers are not
in the majority, then the Chairman of the Board or President, which ever of
such officers is not also the Chief Executive Officer, shall not be eligible to
vote at such meeting and shall not be recognized for purposes of determining if
a quorum is present at such meeting. When neither the Chairman of the Board
nor President are present, the Committee shall appoint a presiding officer.
The Executive Committee shall keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
- 16 -
<PAGE> 17
SECTION 2.10 COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE.
There shall be a standing committee of the Board of Directors known as the
Community Reinvestment Act and Compliance Policy Committee the duties of which
shall be, at least once in each calendar year, to review, develop and recommend
policies and programs related to the Bank's Community Reinvestment Act
Compliance and regulatory compliance with all existing statutes, rules and
regulations affecting the Bank under state and federal law. Such Committee
shall provide and promptly make a full report of such review of current Bank
policies with regard to Community Reinvestment Act and regulatory compliance in
writing to the Board, with recommendations, if any, which may be necessary to
correct any unsatisfactory conditions. Such Committee may, in its discretion,
in fulfilling its duties, utilize the Community Reinvestment Act officers of
the Bank, Banc One Ohio Corporation and Banc One Corporation and may engage
outside Community Reinvestment Act experts, as approved by the Board, to
review, develop and recommend policies and programs as herein required. The
Community Reinvestment Act and regulatory compliance policies and procedures
established and the recommendations made shall be consistent with, and shall
supplement, the Community Reinvestment Act and regulatory compliance programs,
policies and procedures of Banc One Corporation and Banc One Ohio Corporation.
The Community Reinvestment Act and Compliance Policy Committee shall consist of
not fewer than four board members, one of whom shall be the Chief Executive
Officer and a majority of whom are not officers of the Bank. Not fewer than
three members of the Committee, a majority of whom are not officers of the
Bank, must be present to constitute a quorum. The Chairman of the Board or
President of the Bank, whichever is not the Chief Executive Officer, shall be
an ex officio member of the Community Reinvestment Act and Compliance Policy
Committee. The Community Reinvestment Act and Compliance Policy Committee,
whose chairman shall be appointed by the Board, shall keep a record of its
proceedings and report its proceedings and the action taken by it to the Board
of Directors.
- 17 -
<PAGE> 18
SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees known
as the Trust Management Committee and the Trust Examination Committee appointed
as hereinafter provided.
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such
special committees from time to time as are in its judgment necessary in the
interest of the Bank.
- 18 -
<PAGE> 19
ARTICLE III
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
(a) The officers of the Bank shall include a President, Secretary and
Security Officer and may include a Chairman of the Board, one
or more Vice Chairmen, one or more Vice Presidents (which may
include one or more Executive Vice Presidents and/or Senior Vice
Presidents) and one or more Assistant Secretaries, all of whom
shall be elected by the Board. All other officers may be elected
by the Board or appointed in writing by the Chief Executive
Officer. The salaries of all officers elected by the Board shall
be fixed by the Board. The Board from time-to-time shall designate
the President or Chairman of the Board to serve as the Bank's
Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President shall be
elected by the Board from their own number. The President and
Chairman of the Board shall be re-elected by the Board annually at
the organizational meeting of the Board of Directors following the
Annual Meeting of Shareholders. Such officers as the Board shall
elect from their own number shall hold office from the date of
their election as officers until the organization meeting of the
Board of Directors following the next Annual Meeting of
Shareholders, provided, however, that such officers may be
relieved of their duties at any time by action of the Board in
which event all the powers incident to their office shall
immediately terminate.
(c) Except as provided in the case of the elected officers who are
members of the Board, all officers, whether elected or appointed,
shall hold office at the pleasure of the Board. Except as
otherwise limited by law or these By-laws, the Board assigns to
Chief Executive Officer and/or his
- 19 -
<PAGE> 20
designees the authority to appoint and dismiss any elected or
appointed officer or other member of the Bank's management staff
and other employees of the Bank, as the person in charge of and
responsible for any branch office, department, section, operation,
function, assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers elected
by the Board, officers appointed by the Chief Executive Officer,
and such other persons in the employment of the Bank who, pursuant
to written appointment and authorization by a duly authorized
officer of the Bank, perform management functions and have
management responsibilities. Any two or more offices may be
held by the same person except that no person shall hold the
office of Chairman of the Board and/or President and at the same
time also hold the office of Secretary.
(e) The Chief Executive Officer of the Bank and any other officer
of the Bank, to the extent that such officer is authorized in
writing by the Chief Executive Officer, may appoint persons other
than officers who are in the employment of the Bank to serve in
management positions and in connection therewith, the appointing
officer may assign such title, salary, responsibilities and
functions as are deemed appropriate by him, provided, however,
that nothing contained herein shall be construed as placing any
limitation on the authority of the Chief Executive Officer as
provided in this and other sections of these By-Laws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
Bank shall have general and active management of the business of the Bank and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. Except as otherwise prescribed or limited by these By-Laws, the
Chief Executive Officer shall have full right, authority and power to control
all personnel, including elected and appointed officers, of the Bank, to employ
or direct the
- 20 -
<PAGE> 21
employment of such personnel and officers as he may deem necessary, including
the fixing of salaries and the dismissal of them at pleasure, and to define and
prescribe the duties and responsibility of all Officers of the Bank, subject to
such further limitations and directions as he may from time-to-time deem
proper. The Chief Executive Officer shall perform all duties incident to his
office and such other and further duties, as may, from time-to-time, be
required of him by the Board of Directors or the shareholders. The
specification of authority in these By-Laws wherever and to whomever granted
shall not be construed to limit in any manner the general powers of delegation
granted to the Chief Executive Officer in conducting the business of the Bank.
The Chief Executive Officer or, in his absence, the Chairman of the Board or
President of the Bank, as designated by the Chief Executive Officer, shall
preside at all meetings of shareholders and meetings of the Board. In the
absence of the Chief Executive Officer, such officer as is designated by the
Chief Executive Officer shall be vested with all the powers and perform all the
duties of the Chief Executive Officer as defined by these By-Laws. When
designating an officer to serve in his absence, the Chief Executive Officer
shall select an officer who is a member of the Board of Directors whenever such
officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attor-
neys; to sign and give any notice required to be given; to demand payment
and/or to declare due for any default any debt or obligation due or payable to
the Bank upon demand or authorized to be declared due; to foreclose any mort-
gages, to exercise any option, privilege or election to forfeit, terminate,
extend or renew any lease; to authorize and direct any proceedings for the
collection of any money or for the enforcement
- 21 -
<PAGE> 22
of any right or obligation; to adjust, settle and compromise all claims of
every kind and description in favor of or against the Bank, and to give
receipts, releases and discharges therefor; to borrow money and in connection
therewith to make, execute and deliver notes, bonds or other evidences of
indebtedness; to pledge or hypothecate any securities or any stocks, bonds,
notes or any property real or personal held or owned by the Bank, or to
rediscount any notes or other obligations held or owned by the Bank, to
employ or direct the employment of all personnel, including elected and
appointed officers, and the dismissal of them at pleasure, and in furtherance
of and in addition to the powers hereinabove set forth to do all such acts and
to take all such proceedings as in his judgment are necessary and incidental to
the operation of the Bank.
Other persons in the employment of the Bank, including but not limited to
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
chief Executive Officer, to perform the powers set forth above, subject, how-
ever, to such limitations and conditions as are set forth in the authorization
given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman
of the Board, President, any officer being a member of the Bank's management
staff who is also a person in charge of and responsible for any department
within the Bank and any other officer to the extent such officer is so
designated and authorized by the Chief Executive Officer, the Chairman of the
- 22 -
<PAGE> 23
Board, the President, or any other officer who is a member of the Bank's
management staff who is in charge of and responsible for any department within
the Bank, are hereby authorized on behalf of the Bank to sell, assign, lease,
mortgage, transfer, deliver and convey any real or personal property now or
hereafter owned by or standing in the name of the Bank or its nominee, or held
by this Bank as collateral security, and to execute and deliver such deeds,
contracts, leases, assignments, bills of sale, transfers or other papers or
documents as may be appropriate in the circumstances; to execute any loan
agreement, security agreement, commitment letters and financing statements and
other documents on behalf of the Bank as a lender; to execute purchase orders,
documents and agreements entered into by the Bank in the ordinary course of
business, relating to purchase, sale, exchange or lease of services, tangible
personal property, materials and equipment for the use of the Bank; to execute
powers of attorney to perform specific or general functions in the name of or
on behalf of the Bank; to execute promissory notes or other instruments
evidencing debt of the Bank; to execute instruments pledging or releasing
securities for public funds, documents submitting public fund bids on behalf of
the Bank and public fund contracts; to purchase and acquire any real or
personal property including loan portfolios and to execute and deliver such
agreements, contracts or other papers or documents as may be appropriate in the
circumstances; to execute any indemnity and fidelity bonds, proxies or other
papers or documents of like or different character necessary, desirable or
incidental to the conduct of its banking business; to execute and deliver
settlement agreements or other papers or documents as may be appropriate in
connection with a dismissal authorized by Section 3.01(c) of these By-laws; to
execute agreements, instruments, documents, contracts or other papers of like
or difference character necessary, desirable or incidental to the conduct of
its banking business; and to execute and deliver partial releases from and
discharges or assignments of mortgages, financing statements and assignments or
surrender of insurance policies, now or hereafter held by this Bank.
- 23 -
<PAGE> 24
The Chief Executive Officer, Chairman of the Board, President, any
officer being a member of the Bank's management staff who is also a person in
charge of and responsible for any department within the Bank, and any other
officer of the Bank so designated and authorized by the Chief Executive
Officer, Chairman of the Board, President or any officer who is a member of the
Bank's management staff who is in charge of and responsible for any department
within the Bank are authorized for and on behalf of the Bank to sign and issue
checks, drafts, and certificates of deposit; to sign and endorse bills of
exchange, to sign and countersign foreign and domestic letters of credit, to
receive and receipt for payments of principal, interest, dividends, rents, fees
and payments of every kind and description paid to the Bank, to sign receipts
for property acquired by or entrusted to the Bank, to guarantee the genuineness
of signatures on assignments of stocks, bonds or other securities, to sign
certifications of checks, to endorse and deliver checks, drafts, warrants,
bills, notes, certificates of deposit and acceptances in all business
transactions of the Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management
staff, may be authorized by the Chief Executive Officer, Chairman of the Board,
President or by an officer so designated by the Chief Executive Officer,
Chairman of the Board, or President to perform the acts and to execute the
documents set forth above, subject, however, to such limitations and conditions
as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall
be bonded for the honest and faithful performance of their duties for such
amount as may be prescribed by the Board of Directors.
- 24 -
<PAGE> 25
ARTICLE IV
TRUST DEPARTMENT
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to
this Bank under the provisions of Federal Law and Regulations of the Comp-
troller of the Currency, there shall be maintained a separate Trust Department
of the Bank, which shall be operated in the manner specified herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing Committee
known as the Trust Management Committee, consisting of at least five members, a
majority of whom shall not be officers of the Bank. The Committee shall
consist of the Chairman of the Board who shall be Chairman of the Com- mittee,
the President, and at least three other Directors appointed by the Board of
Directors and who shall continue as members of the Committee until their
successors are appointed. Any vacancy in the Trust Management Committee may be
filled by the Board at any regular or special meeting. In the event of the
absence of any member or members, such Committee may, in its discretion,
appoint members of the Board to fill the place of such absent members to serve
during such absence. Three members of the Committee shall constitute a quorum.
Any member of the Committee may be removed by the Board by a majority vote at
any regular or special meeting of the Board. The Committee shall meet at such
times as it may determine or at the call of the Chairman, or President or any
two members thereof.
The Trust Management Committee, under the general direction of the Board
of Directors, shall supervise the policy of the Trust Department which shall be
formulated and executed in accordance with Law, Regulations of the Comp-
troller of the Currency, and sound fiduciary principles.
- 25 -
<PAGE> 26
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing Commit-
tee known as the Trust Examination Committee, consisting of three directors
appointed by the Board of Directors and who shall continue as members of the
committee until their successors are appointed. Such members shall not be
active officers of the Bank. Two members of the Committee shall constitute a
quorum. Any member of the Committee may be removed by the Board by a majority
vote at any regular or special meeting of the Board. The Committee shall meet
at such times as it may determine or at the call of two members thereof.
This Committee shall, at least once during each calendar year and within
fifteen months of the last such audit, or at such other time(s) as may be
required by Regulations of the Comptroller of the Currency, make suitable
audits of the Trust Department or cause suitable audits to be made by auditors
responsible only to the Board of Directors, and at such time shall ascertain
whether the Department has been administered in accordance with Law, Regula-
tions of the Comptroller of the Currency and sound fiduciary principles.
The Committee shall promptly make a full report of such audits in writing
to the Board of Directors of the Bank, together with a recommendation as to
what action, if any, may be necessary to correct any unsatisfactory condition.
A report of the audits together with the action taken thereon shall be noted in
the Minutes of the Board of Directors and such report shall be a part of the
records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the management
and supervision of an officer of the Bank or of the trust affiliate of the Bank
designated by and subject to the advice and direction of the Chief Executive
Officer. Such officer having supervisory responsibility over the Trust
Department shall do or cause to be done all things necessary or proper in
carrying on the business of the Trust Department in accordance with provi-
sions of law and applicable regulations.
- 26 -
<PAGE> 27
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department may
be carried in the name of the Bank in its fiduciary capacity, in the name of
Bank, or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary
capacity awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify
the character or class of investments to be made and does not vest in the Bank
any discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint custody
or control of not less than two of the officers or employees of the Bank or of
the trust affiliate of the Bank designated for the purpose by the Trust
Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman
of the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real
property or personal property and to purchase and acquire any real or personal
property and to execute and deliver such agreements, contracts, or other papers
and documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute
and deliver partial releases from
- 27 -
<PAGE> 28
any discharges or assignments or mortgages and assignments or surrender of
insurance policies, to execute and deliver deeds, contracts, leases,
assignments, bills of sale, transfers or such other papers or documents as may
be appropriate in the circumstances for property now or hereafter held by this
Bank in any fiduciary capacity or owned by any principal for whom this Bank may
now or hereafter be acting under a power of attorney or as agent; to execute
and deliver settlement agreements or other papers or documents as may be
appropriate in connection with a dismissal authorized by Section 3.01(c) of
these By-laws; provided that the signature of any such person shall be attested
in each case by any officer of the Trust Department or by any other person who
is specifically authorized by the Chief Executive Officer, the President or the
officer in charge of the Trust Department.
The Chief Executive Officer, Chairman of the Board, President, any
officer of the Trust Department and such other officers of the trust affiliate
of the Bank as are specifically designated and authorized by the Chief
Executive Officer, the President, or the officer in charge of the Trust
Department, or any other person or corporation as is specifically authorized by
the Chief Executive Officer, the President or the officer in charge of the
Trust Department, are hereby authorized on behalf of this Bank, to sign any and
all pleadings and papers in probate and other court proceedings, to execute any
indemnity and fidelity bonds, trust agreements, proxies or other papers or
documents of like or different character necessary, desirable or incidental to
the appointment of the Bank in any fiduciary capacity and the conduct of its
business in any fiduciary capacity; also to foreclose any mortgage, to execute
and deliver receipts for payments of principal, interest, dividends, rents,
fees and payments of every kind and description paid to the Bank; to sign
receipts for property acquired or entrusted to the Bank; also to sign stock or
bond certificates on behalf of this Bank in any fiduciary capacity and on
behalf of this Bank as transfer agent or registrar; to guarantee the
genuineness of signatures on assignments of stocks, bonds or other securities,
and to authenticate bonds, debentures, land or lease trust certificates or
other forms of security issued pursuant to any indenture under which this Bank
now or hereafter is acting as
- 28 -
<PAGE> 29
Trustee. Any such person, as well as such other persons as are specifically
authorized by the Chief Executive Officer or the officer in charge of the Trust
Department, may sign checks, drafts and orders for the payment of money
executed by the Trust Department in the course of its business.
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any
officer of the Trust Department, any officer of the trust affiliate of the Bank
and such other persons as may be specifically authorized by Resolution of the
Trust Management Committee or the Board of Directors, may vote shares of stock
of a corporation of record on the books of the issuing company in the name of
the Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law
applicable to such fiduciary account. In the case of shares of stock which are
held by a nominee of the Bank, such shares may be voted by such person(s)
authorized by such nominee.
- 29 -
<PAGE> 30
ARTICLE V
STOCKS AND STOCK CERTIFICATES
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the President, or a Vice President (which signature may be engraved,
printed or impressed), and shall be signed manually by the Secretary, or any
other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its fact
that the stock represented thereby is transferable only upon the books of the
Bank properly endorsed and shall recite such other information as is required
by law and deemed appropriate by the Board. The corporate seal may be
facsimile engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall
be transferable only upon the stock transfer books of the Bank and except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of any affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the President, or a Vice President. The Board of Directors, or the
Chief Executive Officer, may authorize the issuance of a new certificate
therefor without the furnishing of indemnity. Stock Transfer Books, in which
all transfers of stock shall be recorded, shall be provided.
- 30 -
<PAGE> 31
The stock transfer books may be closed for a reasonable period and under
such conditions as the Board of Directors may at any time determine for any
meeting of shareholders, the payment of dividends or any other lawful purpose.
In lieu of closing the transfer books, the Board may, in its discretion, fix a
record date and hour constituting a reasonable period prior to the day
designated for the holding of any meeting of the shareholders or the day
appointed for the payment of any dividend or for any other purpose at the time
as of which shareholders entitled to notice of and to vote at any such meeting
or to receive such dividend or to be treated as shareholders for such other
purpose shall be determined, and only shareholders of record at such time shall
be entitled to notice of or to vote at such meeting or to receive such
dividends or to be treated as shareholders for such other purpose.
- 31 -
<PAGE> 32
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. SEAL. The impression made below is an impression of the seal
adopted by the Board of Directors of BANK ONE, COLUMBUS, NATIONAL ASSOCIATION.
The Seal may be affixed by any officer of the Bank to any document executed by
an authorized officer on behalf of the Bank, and any officer may certify any
act, proceedings, record, instrument or authority of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive
Committee, the Bank and each of its Branches shall be open for business on such
days and during such hours as the Chief Executive Officer of the Bank shall,
from time to time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the Articles
of Association, the returns of the judges of elections, the By-Laws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors, and reports of the committees of
the Board of Directors shall be recorded in the minute book of the Bank. The
minutes of each such meeting shall be signed by the presiding Officer and
attested by the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These By-Laws may be amended by vote of a
majority of the Directors.
- 32 -
<PAGE> 33
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT
The undersigned, designated to act as Trustee under the Indenture for Telxon
Corporation described in the attached Statement of Eligibility and
Qualification, does hereby consent that reports of examinations by Federal,
State, Territorial, or District Authorities may be furnished by such
authorities to the Commission upon the request of the Commission.
This Consent is given pursuant to the provision of Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Bank One, Columbus, NA
Dated: February 14, 1996
By: /s/ Ted Kravits
-------------------------------
/s/ Ted Kravits
Authorized Signer
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<PAGE> 34
EXHIBIT 7
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1996
Federal Financial Institutions Examination Council
[ logo ] 1
Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices-FFIEC 031
(951231)
-----------
Report at the close of business December 31, 1995 (RCRI 9999)
This report is required by law: 12 U.S.C. (Section) 324 (State
member banks); 12 U.S.C. (Section) 1817 (State nonmember banks);
and 12 U.S.C. (Section) 161 (National banks).
This report form is to be filed by banks with branches and
consolidated subsidiaries in U.S. territories and possessions,
Edge or Agreement subsidiaries, foreign branches, consoli-
dated foreign subsidiaries, or International Banking Facilities.
NOTE: The Reports of Condition and Income must be signed
by an authorized officer and the Report of Condition must be
attested to by not less than two directors (trustees) for State
nonmember banks and three directors for State member and
National banks.
I, Richard D. Nadler, Controller
---------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of
Condition and Income (including the supporting schedules)
have been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and belief.
/s/ Richard D. Nadler
- -----------------------------------------------
Signature of Officer Authorized to Sign Report
1/29/96
- -----------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in
accordance with Federal regulatory authority instructions.
NOTE: These instructions may in some cases differ from
generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the
correctness of this Report of Condition (including the
supporting schedules) 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.
/s/ Frederick L. Cullen
- -----------------------------------------------
Director (Trustee)
/s/ William M. Bennett
- -----------------------------------------------
Director (Trustee)
/s/ Alex Shumate
- -----------------------------------------------
Director (Trustee)
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the
appropriate Federal Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the
special return address envelope provided. If express mail is
used in lieu of the special return address envelope, return the
original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court. Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return
address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only
to the FDIC, c/o Quality Data Systems, 2127 Espey Court,
Suite 204, Crofton, MD 21114.
FDIC Certificate Number _____________
(RCRI 9050)
Board of Governors of the Federal Reserve System,
Federal Deposit Insurance Corporation,
Office of the Comptroller of the Currency
<PAGE> 35
FFIEC 031
Page i
Consolidated Reports of Condition and Income for 2
A Bank With Domestic and Foreign Offices
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SIGNATURE PAGE Cover
<S> <C>
REPORT OF INCOME
Schedule RI-Income Statement RI-1, 2, 3
Schedule RI-A-Changes in Equity Capital RI-4
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses RI-4, 5
Schedule RI-C-Applicable Income Taxes by
Taxing Authority RI-5
Schedule RI-D-Income from
International Operations RI-6
Schedule RI-E-Explanations RI-7, 8
</TABLE>
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
31.6 hours per respondent and is estimated to vary from 15 to 225 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in
the required form, and completing the information collection, but exclude
the time for compiling and maintaining business records in the normal
course of a respondent's activities. Comments concerning the accuracy of
this burden estimate and suggestions for reducing this burden should be
directed to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington. D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
<TABLE>
<CAPTION>
REPORT OF CONDITION
<S> <C>
Schedule RC--Balance Sheet RC-1, 2
Schedule RC-A-Cash and Balances Due
From Depository Institutions RC-3
Schedule RC-B--Securities RC-3, 4, 5
Schedule RC-C-Loans and Lease Financing
Receivables:
Part I. Loans and Leases RC-6, 7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only) RC-7a, 7b
Schedule RC-D-Trading Assets and Liabilities
(to be completed only by selected banks) RC-8
Schedule RC-E-Deposit Liabilities RC-9, 10, 11
Schedule RC-F-Other Assets RC-11
Schedule RC-G--Other Liabilities RC-11
Schedule RC-H-Selected Balance Sheet Items
for Domestic Offices RC-12
Schedule RC-I-Selected Assets and Liabilities
of IBFs RC-13
Schedule RC-K-Quarterly Averages RC-13
Schedule RC-L-Off-Balance Sheet
Items RC-14, 15, 16
Schedule RC-M--Memoranda RC-17, 18
Schedule RC-N-Past Due and Nonaccrual
Loans, Leases, and Other Assets RC-19, 20
Schedule RC-0-Other Data for Deposit
Insurance Assessments RC-21, 22
Schedule RC-R-Risk-Based Capital RC-23, 24
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income RC-25
Special Report (to be completed by all banks)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
</TABLE>
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW,
Washington, D.C. 20429, toll free on (800) 688-FDIC(3342), Monday through
Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks should
contact their Federal Reserve District Bank.
<PAGE> 36
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-1
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1995-DECEMBER 31, 1995
All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars.
</TABLE>
<TABLE>
Schedule RI- - Income Statement
<CAPTION> ----
1480 <-
----
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------
<S> <C>
1. Interest income: //////////////////
a. Interest and fee income on loans: //////////////////
(1) In domestic offices: //////////////////
(a) Loans secured by real estate 4011 106,698 1.a.(1)(a)
(b) Loans to depository institutions 4019 9 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers 4024 635 1.a.(1)(c)
(d) Commercial and industrial loans 4012 56,589 1.a.(1)(d)
(e) Acceptances of other banks 4026 0 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures://////////////////
(1) Credit cards and related plans 4054 314,920 1.a.(1)(f)(1)
(2) Other 4055 90,364 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political //////////////////
subdivisions in the U.S.: //////////////////
(1) Taxable obligations 4503 122 1.a.(1)(h)(1)
(2) Tax-exempt obligations 4504 1,240 1.a.(1)(h)(2)
(i) All other loans in domestic offices 4058 4,864 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs 4059 0 1.a.(2)
b. Income from lease financing receivables: //////////////////
(1) Taxable leases 4505 48,748 1.b.(1)
(2) Tax-exempt leases 4307 377 1.b.(2)
c. Interest income on balances due from depository institutions:(1) //////////////////
(1) In domestic offices 4105 0 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs 4106 1,642 1.c.(2)
d. Interest and dividend income on securities: //////////////////
(1) U.S. Treasury securities and U.S. Government agency and corporation
obligations 4027 34,861 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: //////////////////
(a) Taxable securities 4506 0 1.d.(2)(a)
(b) Tax-exempt securities 4507 3,426 1.d.(2)(b)
(3) Other domestic debt securities 3657 1,848 1.d.(3)
(4) Foreign debt securities 3658 230 1.d.(4)
(5) Equity securities (including investments in mutual funds) 3659 231 1.d.(5)
e. Interest income from trading assets 4069 0 1.e.
<FN>
(1) Includes interest income on time certificates of deposit not held for trading.
</TABLE>
3
<PAGE> 37
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-2
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
Schedule RI- - Continued
</TABLE>
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Year-to-Date
- ----------------------------------------------------------------------------------------------------------
<S> <C>
1. Interest income (continued) RIAD Bil Mil Thou
f. Interest income on federal funds sold and securities purchased under //////////////////
agreements to resell in domestic offices of the bank and of its Edge //////////////////
and Agreement subsidiaries, and in IBFs 4020 14,994 1.f.
g. Total interest income (sum of items 1.a through 1.f) 4107 681,798 1.g.
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Interest on deposits in domestic offices: //////////////////
(a) Transaction accounts (NOW accounts, ATS accounts, and //////////////////
telephone and preauthorized transfer accounts) 4508 7,799 2.a.(1)(a)
(b) Nontransaction accounts: /////////////////
(1) Money market deposit accounts (MMDAs) 4509 46,379 2.a.(1)(b)(1)
(2) Other savings deposits 4511 22,405 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more 4174 4,626 2.a.(1)(b)(3)
(4) All other time deposits 4512 72,451 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs 4172 25,989 2.a.(2)
b. Expense of federal funds purchased and securities sold under //////////////////
agreements to repurchase in domestic offices of the bank and of its //////////////////
Edge and Agreement subsidiaries, and in IBFs 4180 57,653 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money 4185 29,265 2.c.
d. Interest on mortgage indebtedness and obligations under capitalized //////////////////
leases 4072 394 2.d.
e. Interest on subordinated notes and debentures 4200 10,554 2.e.
f. Total interest expense (sum of items 2.a through 2.e) 4073 277,515 2.f.
3. Net interest income (item 1.g minus 2.f) ////////////////// RIAD 4074 404,283 3.
4. Provisions: //////////////////
a. Provision for loan and lease losses ////////////////// RIAD 4230 113,555 4.a.
b. Provision for allocated transfer risk ////////////////// RIAD 4243 0 4.b.
5. Noninterest income: //////////////////
a . Income from fiduciary activities 4070 17,170 5.a.
b. Service charges on deposit accounts in domestic offices 4080 34,541 5.b.
c. Trading gains (losses) and fees from foreign exchange transactions 4075 1,559 5.c.
d. Other foreign transaction gains (losses) 4076 327 5.d.
e. Other gains (losses) and fees from trading assets and liabilities 4077 0 5.e.
f. Other noninterest income: //////////////////
(1) Other fee income 5407 326,590 5.f.(1)
(2) All other noninterest income* 5408 86,422 5.f.(2)
g. Total noninterest income (sum of items 5.a through 5.f) ////////////////// RIAD 4079 466,609 5.g
6. a. Realized gains (losses) on held-to-maturity securities ////////////////// RIAD 3521 53 6.a
b. Realized gains (losses) on available-for-sale securities ////////////////// RIAD 3196 0 6.b
7. Noninterest expense: //////////////////
a. Salaries and employee benefits 4135 132,928 7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest) 4217 23,441 7.b.
c. Other noninterest expense* 4092 412,812 7.c.
d. Total noninterest expense (sum of items 7.a through 7.c) ////////////////// RIAD 4093 569,181 7.d
8. Income (loss) before income taxes and extraordinary items and other //////////////////
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) ////////////////// RIAD 4301 188,209 8.
9. Applicable income taxes (on item 8) ////////////////// RIAD 4302 62,302 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 //////////////////
minus 9) ////////////////// RIAD 4300 125,907 10.
</TABLE>
* Describe on Schedule RI-E--Explanations.
4
<PAGE> 38
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-3
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
Schedule RI- - Continued
-------------
<CAPTION> Year-to-Date
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------
<S> <C>
11. Extraordinary items and other adjustments: ///////////////////
a. Extraordinary items and other adjustments, gross of income taxes* 4310 0 11.a.
b. Applicable income taxes (on item 11.a)* 4315 0 11.b.
c. Extraordinary items and other adjustments, net of income taxes //////////////////
(item 11.a minus 11.b) ////////////////// RIAD 4320 0 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ////////////////// RIAD 4340 125,907 12.
----
Memoranda I481 <-
----
Year-to-date
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after //////////////////
August 7, 1986, that is not deductible for federal income tax purposes 4513 306 M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices //////////////////
(included in Schedule RI, item 8) 8431 815 M.2.
3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above 4309 0 M.3.
4. To be completed only by banks with $1 billion or more in total assets: //////////////////
Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary //////////////////
items and other adjustments" (item 8 above) 1244 3,042 M.4.
5. Number of full-time equivalent employees on payroll at end of current period (round to //// Number
nearest whole number) 4150 3,480 M.5.
6. Not applicable //////////////////
7. If the reporting bank has restated its balance sheet as a result of applying push down //// MM DD YY
accounting this calendar year, report the date of the bank's acquisition 9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) //////////////////
(included in Schedule RI, items 5.c and 5.e): //// Bil Mil Thou
a. Interest rate exposures 8757 0 M.8.a.
b. Foreign exchange exposures 8758 0 M.8.b.
c. Equity security and index exposures 8759 0 M.8.c.
d. Commodity and other exposures 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: //////////////////
a. Net increase (decrease) to interest income 8761 (14,179) M.9.a.
b. Net (increase) decrease to interest expense 8762 504 M.9.b.
c. Other (noninterest) allocations 8763 6,179 M.9.c.
*Describe on Schedule RI-E--Explanations.
</TABLE>
5
<PAGE> 39
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-4
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
Schedule RI-A - - Changes in Equity Capital
Indicate decrease and losses in parentheses.
</TABLE>
<TABLE>
<CAPTION>
--------
I483 <-
--------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1994, Reports of Condition //////////////////
and Income 3215 533,224 1.
2. Equity capital adjustments from amended Reports of Income, net* 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) 3217 533,224 3.
4. Net income (loss) (must equal Schedule RI, item 12) 4340 125,907 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net 4346 0 5.
6. Changes incident to business combinations, net 4356 0 6.
7. LESS: Cash dividends declared on preferred stock 4470 0 7.
8. LESS: Cash dividends declared on common stock 4460 160,000 8.
9. Cumulative effect of changes in accounting principles from prior years* //////////////////
(see instructions for this schedule) 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this
schedule) 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities 8433 2,061 11.
12. Foreign currency translation adjustments 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) 4415 0 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal //////////////////
Schedule RC, item 28) 3210 501,192 14.
- ------------------------------
<FN>
* Describe on Schedule RI-E--Explanations.
</TABLE>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
<TABLE>
<CAPTION> ------
I486 <-
---------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
---------------------------------------
Calendar year-to-date
---------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Loans secured by real estate: ////////////////// //////////////////
a. To U.S. addressees (domicile) 4651 2,666 4661 4,248 1.a.
b. To non-U.S. addressees (domicile) 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptances of other banks: ////////////////// //////////////////
a. To U.S. banks and other U.S. depository institutions 4653 0 4663 0 2.a.
b. To foreign banks 4654 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers 4655 0 4665 9 3.
4. Commercial and industrial loans: ////////////////// //////////////////
a. To U.S. addressees (domicile) 4645 1,112 4617 2,093 4.a.
b. To non-U.S. addressees (domicile) 4646 0 4618 0 4.b.
5. Loans to individuals for household, family, and other personal ////////////////// //////////////////
expenditures: ////////////////// //////////////////
a. Credit cards and related plans 4656 78,408 4666 13,108 5.a.
b. Other (includes single payment, installment, and all student
loans) 4657 29,462 4667 10,694 5.b.
6. Loans to foreign governments and official institutions 4643 0 4627 0 6.
7. All other loans 4644 211 4628 68 7.
8. Lease financing receivables: ////////////////// //////////////////
a. Of U.S. addressees (domicile) 4658 769 4668 320 8.a.
b. Of non-U.S. addressees (domicile) 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8) 4635 112,628 4605 30,540 9.
6
</TABLE>
<PAGE> 40
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-5
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
Schedule RI-B- -Continued
Part I. Continued
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
------------------------------------------
Memoranda Calendar year-to-date
------------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1-3. Not applicable ////////////////// //////////////////
4. Loans to finance commercial real estate, construction, and land ////////////////// //////////////////
development activities (not secured by real estate) included in ////////////////// //////////////////
Schedule RI-B, part I, items 4 and 7, above 5409 211 5410 0 M.4.
5. Loans secured by real estate in domestic offices (included in ////////////////// //////////////////
Schedule RI-B, part I, item 1, above): ////////////////// //////////////////
a. Construction and land development 3582 387 3583 4 M.5.a.
b. Secured by farmland 3584 0 3585 11 M.5.b.
c. Secured by 1-4 family residential properties: ////////////////// //////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ////////////////// //////////////////
properties and extended under lines of credit 5411 1,116 5412 58 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties5413 777 5414 328 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties 3588 0 3589 470 M.5.d.
e. Secured by nonfarm nonresidential properties 3590 386 3591 3,377 M.5.e.
</TABLE>
<TABLE>
<CAPTION>
Part II. Changes in Allowance for Loan and Lease Losses
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Balance originally reported in the December 31, 1994, Reports of Condition and Income 3124 120,654 1.
2. Recoveries (must equal part I, item 9, column B above) 4605 30,540 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) 4635 112,628 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a) 4230 113,555 4.
5. Adjustments* (see instructions for this schedule) 4815 0 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, /////////////////
item 4.b) 3123 152,121 6.
<FN>
*Describe on Schedule RI-E--Explanations.
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-C- -Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
--------
I489 <-
--------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Federal 4780 61,344 1.
2. State and local 4790 958 2.
3. Foreign 4795 0 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) 4770 62,302 4.
5. Deferred portion of item 4 RIAD 4772 17,848 ////////////////// 5.
7
</TABLE>
<PAGE> 41
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-6
City, State Zip: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
Schedule RI-D- - Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs
where international operations account for more than 10 percent of total
revenues, total assets, or net income.
Part I. Estimated Income from International Operations
----
I492 <-
------------
Year-to-date
------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, //////////////////
and IBFs: //////////////////
a. Interest income booked 4837 1,872 1.a.
b. Interest expense booked 4838 25,989 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and //////////////////
IBFs (item 1.a minus 1.b) 4839 (24,117) 1.c.
2. Adjustments for booking location of international operations: //////////////////
a. Net interest income attributable to international operations booked at domestic offices 4840 0 2.a.
b. Net interest income attributable to domestic business booked at foreign offices 4841 0 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) 4842 0 2.c.
3. Noninterest income and expense attributable to international operations: //////////////////
a. Noninterest income attributable to international operations 4097 0 3.a.
b. Provision for loan and lease losses attributable to international operations 4235 0 3.b.
c. Other noninterest expense attributable to international operations 4239 0 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a minus //////////////////
3.b and 3.c) 4843 0 3.d.
4. Estimated pretax income attributable to international operations before capital allocation //////////////////
adjustment (sum of items 1.c, 2.c, and 3.d) 4844 (24,117) 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect //////////////////
the effects of equity capital on overall bank funding costs 4845 0 5.
6. Estimated pretax income attributable to international operations after capital allocation //////////////////
adjustment (sum of items 4 and 5) 4846 (24,117) 6.
7. Income taxes attributable to income from international operations as estimated in item 6 4797 (8,441) 7.
8. Estimated net income attributable to international operations (item 6 minus 7) 4341 (15,676) 8.
</TABLE>
<TABLE>
<CAPTION>
Memoranda
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Intracompany interest income included in item 1.a above 4847 0 M.1.
2. Intracompany interest expense included in item 1.b above 4848 0 M.2.
</TABLE>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
<TABLE>
<CAPTION>
Year-to-date
------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Interest income booked at IBFs 4849 0 1.
2. Interest expense booked at IBFs 4850 0 2.
3. Noninterest income attributable to international operations booked at domestic offices //////////////////
(excluding IBFs): //////////////////
a. Gains (losses) and extraordinary items 5491 0 3.a.
b. Fees and other noninterest income 5492 0 3.b.
4. Provision for loan and lease losses attributable to international operations booked at domestic //////////////////
offices (excluding IBFs) 4852 0 4.
5. Other noninterest expense attributable to international operations booked at domestic offices //////////////////
(excluding IBFs) 4853 0 5.
8
</TABLE>
<PAGE> 42
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-7
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedule RI-A and R-B, all extraordinary items
and other adjustments in Schedule RI, and all significant items of other
noninterest income and other noninterest expense in Schedule RI. (See
instructions for details.)
<TABLE>
<CAPTION>
----
I495 <-
----
Year-to-date
-----------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) //////////////////
Report amounts that exceed 10% of Schedule RI, item 5.f.(2) //////////////////
a. Net gains on other real estate owned 5415 0 1.a.
b. Net gains on sales of loans 5416 0 1.b.
c. Net gains on sales of premises and fixed assets 5417 0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, //////////////////
item 5.f.(2) //////////////////
d. TEXT 4461 Card Processing Income 4461 68,043 1.d.
e. TEXT 4462 4462 1.e.
f. TEXT 4463 4463 1.f.
2. Other noninterest expense (from Schedule RI, item 7.c): //////////////////
a. Amortization expense of intangible assets 4531 7,278 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: //////////////////
b. Net losses on other real estate owned 5418 0 2.b.
c. Net losses on sales of loans 5419 0 2.c.
d. Net losses on sales of premises and fixed assets 5420 0 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, //////////////////
item 7.c: //////////////////
e. TEXT 4464 Card Processing Expense 4464 116,516 2.e.
f. TEXT 4467 Card Servicing Expense 4467 51,603 2.f.
g. TEXT 4468 Communication Expense 4468 43,830 2.g.
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable //////////////////
income tax effect (from Schedule RI), item 11.b) (itemize and describe all extraordinary //////////////////
items and other adjustments): //////////////////
a. (1) TEXT 4469 4469 3.a.(1)
(2) Applicable income tax effect RIAD 4486 ////////////////// 3.a.(2)
b. (1) TEXT 4487 4487 3.b.(1)
(2) Applicable income tax effect RIAD 4488 ////////////////// 3.b.(2)
c. (1) TEXT 4489 4489 3.c.(1)
(2) Applicable income tax effect RIAD 4491 ////////////////// 3.c.(2)
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) //////////////////
(itemize and describe all adjustments): //////////////////
a. TEXT 4492 4492 4.a.
b. TEXT 4493 4493 4.b.
5. Cumulative effect of changes in accounting principles from prior years //////////////////
(from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): //////////////////
a. TEXT 4494 4494 5.a.
b. TEXT 4495 4495 5.b.
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) //////////////////
(itemize and describe all corrections): //////////////////
a. TEXT 4496 4496 6.a.
b. TEXT 4497 4497 6.b.
9
</TABLE>
<PAGE> 43
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-8
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued ------------
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) ///////////////////
(itemize and describe all such transactions): ///////////////////
a. TEXT 4498 4498 7.a.
b. TEXT 4499 4499 7.b.
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5) ///////////////////
(itemize and describe all adjustments): ///////////////////
a. TEXT 4521 4521 8.a.
b. TEXT 4522 4522 8.b.
9. Other explanations (the space below is provided for the bank to briefly I498 I499 <-
describe, at its option, any other significant items affecting the Report of Income):
No comment [] (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE> 44
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-1
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the Last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
----
C400 <-
-------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin(1) 0081 610,984 1.a.
b. Interest-bearing balances(2) 0071 0 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 47,212 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 441,164 2.b.
3. Federal funds sold and securities purchased under agreements to resell //////////////////
in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: //////////////////
a. Federal funds sold 0276 202,693 3.a.
b. Securities purchased under agreements to resell 0277 0 3.b.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 6,028,178 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses RCFD 3123 152,121 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 5,876,057 4.d.
5. Trading assets (from Schedule RC-D) 3545 0 5.
6. Premises and fixed assets (including capitalized leases) 2145 62,570 6.
7. Other real estate owned (from Schedule RC-M) 2150 2,032 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 438 8.
9. Customers' liability to this bank on acceptances outstanding 2155 4,862 9.
10. Intangible assets (from Schedule RC-M) 2143 40,428 10.
11. Other assets (from Schedule RC-F) 2160 380,758 11.
12. Total assets (sum of items 1 through 11) 2170 7,669,198 12.
_______________
<FN>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
11
<PAGE> 45
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-2
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<S> <C> <C>
Schedule RC--Continued
Dollar Amounts in Thousands ///////// Bil Mil Thou
LIABILITIES //////////////////////
13. Deposits: //////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, //////////////////////
part I) RCON 2200 4,288,945 13.a.
(1) Noninterest-bearing(1) RCON 6631 1,337,211 /////////////////////// 13.a.(1)
(2) Interest-bearing RCON 6636 2,951,734 /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFS (from Schedule RC-E, ///////////////////////
part II) RCFN 2200 663,007 13.b.
(1) Noninterest-bearing RCFN 6631 0 /////////////////////// 13.b.(1)
(2) Interest-bearing RCFN 6636 663,007 /////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in domestic ///////////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: ///////////////////////
a. Federal funds purchased RCFD 0278 967,674 14.a.
b. Securities sold under agreements to repurchase RCFD 0279 0 14.b.
15. a. Demand notes issued to the U.S. Treasury RCON 2840 27,548 15.a.
b. Trading liabilities (from Schedule RC-D) RCFD 3548 0 15.b.
16. Other borrowed money: ///////////////////////
a. With original maturity of one year or less RCFD 2332 739,797 16.a.
b. With original maturity of more than one year RCFD 2333 52,226 16.b.
17. Mortgage indebtedness and obligations under capitalized leases RCFD 2910 4,122 17.
18. Bank's liability on acceptances executed and outstanding RCFD 2920 4,862 18.
19. Subordinated notes and debentures RCFD 3200 189,240 19.
20. Other liabilities (from Schedule RC-G) RCFD 2930 230,585 20.
21. Total liabilities (sum of items 13 through 20) RCFD 2948 7,168,006 21.
///////////////////////
22. Limited-life preferred stock and related surplus RCFD 3282 0 22.
EOUITY CAPITAL ///////////////////////
23. Perpetual preferred stock and related surplus RCFD 3838 0 23.
24. Common stock RCFD 3230 20,738 24.
25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 107,356 25.
26. a. Undivided profits and capital reserves RCFD 3632 371,367 26.a.
b. Netunrealized holding gains (losses) on available-for-sale securities RCFD 8434 1,731 26.b.
27. Cumulative foreign currency translation adjustments RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) RCFD 3210 501,192 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, ///////////////////////
and 28) RCFD 3300 7,669,198 29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
<S> <C>
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the
bank by independent external Number
auditors as of any date during 1994 RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank
with generally accepted auditing standards by a certified performed by other external auditors
public accounting firm which submits a report on the bank (may be required by state
2 = Independent audit of the bank's parent holding company chartering authority)
conducted in accordance with generally accepted auditing 5 = Review of the bank's financial
standards by a certified public accounting firm which statements by external auditors
submits a report on the consolidated holding company 6 = Compilation of the bank's financial
(but not on the bank separately) statements by external auditors
3 = Directors' examination of the bank conducted in 7 = Other audit procedures (excluding
accordance with generally accepted auditing standards tax preparation work)
by a certified public accounting firm (may be required by 8 = No external audit work
state chartering authority)
____________________
<FN>
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
12
<PAGE> 46
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-3
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
<TABLE>
<CAPTION> ----
C405 <-
----------------------------------------
(Column A) (CoLumn B)
Consolidated Domestic
Bank Offices
----------------------------------------
Dollar Amounts in Thousands RCFD BiL Mil Thou RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and ////////////////// //////////////////
coin 0022 572,393 ////////////////// 1.
a. Cash items in process of collection and unposted debits ////////////////// 0020 509,914 1.a.
b. Currency and coin ////////////////// 0080 62,479 1.b.
2. Balances due from depository institutions in the U.S ////////////////// 0082 4,880 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) 0083 0 ////////////////// 2.a.
b. Other commerciaL banks in the U.S. and other depository institutions ////////////////// //////////////////
in the U.S. (including their IBFs) 0085 4,880 ////////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central banks ////////////////// 0070 3,686 3.
a. Foreign branches of other U.S. banks 0073 0 ////////////////// 3.a.
b. Other banks in foreign countries and foreign central banks 0074 3,686 ////////////////// 3.b.
4. Balances due from Federal Reserve Banks 0090 30,025 0090 30,025 4.
5. Total (sum of items 1 through 4) (total of column A must equal ////////////////// //////////////////
Schedule RC, sum of items 1.a and 1.b) 0010 610,984 0010 610,984 5.
</TABLE>
<TABLE>
<S> <C>
-------------------
Memorandum Dollar Amount in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
1. Noninterest-bearing balances due from commercial banks in the ///////////////////
U.S. (included in item 2, column B above) 0050 4,880 M.1.
</TABLE>
<TABLE>
Schedule RC-B- -Securities
Exclude assets held for trading.
<CAPTION> ----
C410 <-
---------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
---------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
-------------------- -------------------- -------------------- -------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD BiL Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------ -------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
1. U.S. Treasury securities 0211 0 0213 0 1286 70,735 1287 71,201 1.
2. U.S. Government agency ////////////////// ////////////////// ///////////////// /////////////////
and corporation obligations ////////////////// ////////////////// ///////////////// /////////////////
(exclude mortgage-backed ////////////////// ////////////////// ///////////////// /////////////////
securities): ////////////////// ////////////////// ///////////////// /////////////////
a . Issued by U.S. Govern- ////////////////// ////////////////// ///////////////// /////////////////
ment agencies(2) 1289 0 1290 0 1291 0 1293 0 2.a.
b. Issued by U.S. ////////////////// ////////////////// ///////////////// /////////////////
Government-sponsored ////////////////// ////////////////// ///////////////// /////////////////
agencies(3) 1294 0 1295 0 1297 316,148 1298 317,886 2.b.
___________________________
<FN>
(1) Includes equity securities without readily determinable fair values
at historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime
Administration obligations, and Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued
by the Farm Credit System, the Federal Home Loan Bank System, the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage Association,
the Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
</TABLE>
<PAGE> 47
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1550 FFIEC 031
Address: 100 East Broad Street Page RC-4
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-B--Continued
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
---------------------------------------------------------------------------------
(Column A) (Column B) (Colum C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
------------------ ------------------ ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
3. Securities issued by states ////////////////// ////////////////// ////////////////// //////////////////
and political subdivisions ////////////////// ////////////////// ////////////////// //////////////////
in the U.S.: ////////////////// ///////////////// ////////////////// //////////////////
a. General obligations 1676 12,195 1677 16,673 1678 0 1679 0 3.a.
b. Revenue obligations 1681 17,907 1686 15,889 1690 645 1691 658 3.b.
c. Industrial development ////////////////// ////////////////// ////////////////// //////////////////
and similar obligations 1694 9,560 1695 9,639 1696 0 1697 0 3.c.
4. Mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (MBS): ////////////////// ////////////////// ////////////////// //////////////////
a. Pass-through securities: ////////////////// ////////////////// ////////////////// //////////////////
(1) Guaranteed by ////////////////// ////////////////// ////////////////// //////////////////
GNMA 1698 0 1699 0 1701 0 1702 0 4.a.(1)
(2) Issued by FNMA ////////////////// ////////////////// ////////////////// //////////////////
and FHLMC 1703 0 1705 0 1706 16,199 1707 16,395 4.a.(2)
(3) Other pass-through ////////////////// ////////////////// ////////////////// //////////////////
securities 1709 4,800 1710 4,655 1711 6,709 1713 6,882 4.a.(3)
b. Other mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (include CMOs, ////////////////// ////////////////// ////////////////// //////////////////
REMICs, and stripped ////////////////// ////////////////// ////////////////// //////////////////
MBS): ////////////////// ////////////////// ////////////////// //////////////////
(1) Issued or guaranteed ////////////////// ////////////////// ////////////////// //////////////////
by FNMA, FHLMC, ////////////////// ////////////////// ////////////////// //////////////////
or GNMA 1714 0 1715 0 1716 23,312 1717 23,366 4.b.(1)
(2) Collateralized ////////////////// ////////////////// ////////////////// //////////////////
by MBS issued or ////////////////// ////////////////// ////////////////// //////////////////
guaranteed by FNMA ////////////////// ////////////////// ////////////////// /////////////////
FHLMC, or GNMA 1718 0 1719 0 1731 0 1732 0 4.b.(2)
(3) All other mortgage- ////////////////// ////////////////// ////////////////// //////////////////
backed securities 1733 0 1734 0 1735 248 1736 249 4.b.(3)
5. Other debt securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Other domestic debt ////////////////// ////////////////// ////////////////// //////////////////
securities 1737 0 1738 0 1739 661 1741 683 5.a.
b. Foreign debt ////////////////// ////////////////// ////////////////// //////////////////
securities 1742 2,750 1743 2,750 1744 0 1746 0 5.b.
6. Equity securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Investments in mutual ////////////////// ////////////////// ////////////////// //////////////////
funds ////////////////// ////////////////// 1747 0 1748 0 6.a.
b. Other equity securities ////////////////// ////////////////// ////////////////// //////////////////
with readily determin- ////////////////// ////////////////// ////////////////// //////////////////
able fair values ////////////////// ////////////////// 1749 0 1751 0 6.b
c. All other equity ////////////////// ////////////////// ////////////////// //////////////////
securities(1) ////////////////// ////////////////// 1752 3,844 1753 3,844 6.c.
7. Total (sum of items 1 ////////////////// ////////////////// ////////////////// //////////////////
through 6) (total of ////////////////// ////////////////// ////////////////// //////////////////
column A must equal ////////////////// ////////////////// ////////////////// //////////////////
Schedule RC, item 2.a) ////////////////// ////////////////// ////////////////// //////////////////
(total of column D must ////////////////// ////////////////// ////////////////// //////////////////
equal Schedule RC, ////////////////// ////////////////// ////////////////// //////////////////
item 2.b) 1754 47,212 1771 49,606 1772 438,501 1773 441,164 7.
<FN>
___________________
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
</TABLE>
14
<PAGE> 48
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-5
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
Memoranda ----
C412 <-
----
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Pledged securities(2) 0416 448,695 M.1.
2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status): ///////////////////
a. Fixed rate debt securities with a remaining maturity of: ///////////////////
(1) Three months or less 0343 52,739 M.2.a.(1)
(2) Over three months through 12 months 0344 1,067 M.2.a.(2)
(3) Over one year through five years 0345 96,768 M.2.a.(3)
(4) Over five years 0346 36,183 M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4) 0347 186,757 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: ///////////////////
(1) Quarterly or more frequently 4544 294,697 M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly 4545 2,250 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually 4551 0 M.2.b.(3)
(4) Less frequently than every five years 4552 828 M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) 4553 297,775 M.2.b.(5)
c. Total debt Securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total ///////////////////
debt securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus ///////////////////
nonaccrual debt securities included in Schedule RC-N, item 9, column C) 0393 484,532 M.2.c.
3. Not applicable ///////////////////
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included ///////////////////
in Schedule RC-B, items 3 through 5, column A, above) 5365 0 M.4.
5. Not applicable ///////////////////
6. Floating rate debt securities with a remaining maturity of one year or less (2)(5) (to be ///////////////////
completed by all banks) 5519 150,003 M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or ///////////////////
trading securities during the calendar year-to-date (report the amortized cost at date of sale ///////////////////
or transfer) 1778 27,357 M.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale ///////////////////
accounts in Schedule RC-B, item 4.b): ///////////////////
a. Amortized cost 8780 0 M.8.a.
b. Fair value 8781 0 M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in ///////////////////
Schedule RC-B, items 2, 3, and 5): ///////////////////
a. Amortized cost 8782 18,655 M.9.a.
b. Fair value 8783 18,767 M.9.b.
<FN>
____________________
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and
preferred stock.
(4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J.
(5) For commercial banks, the debt securities included in Memorandum item 6 will also have been reported in
Memorandum item 2.b above. For savings banks, the debt securities included in Memorandum item 6 will also
have been reported in supplemental Schedule RC-J, part I, item 4. Savings banks should note that available-for-sale
debt securities are reported at fair value in Memorandum item 6 and at amortized cost in Schedule RC-J.
</TABLE>
15
<PAGE> 49
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-6
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts
reported in this schedule. Report total loans and leases, net
of unearned income: Exclude assets held for trading:
<TABLE>
<CAPTION>
----
C415 <-
---------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
----------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1: Loans secured by real estate 1410 1,222,835 ////////////////// 1.
a. Construction and land development /////////////////// 1415 143,807 1.a.
b. Secured by farmland (including farm residential and other /////////////////// //////////////////
improvements) /////////////////// 1420 6,721 1.b.
c. Secured by 1-4 family residential properties: /////////////////// //////////////////
(1) Revolving, open-end loans secured by 1-4 family residential /////////////////// //////////////////
properties and extended under lines of credit /////////////////// 1797 395,209 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: /////////////////// //////////////////
(a) Secured by first liens /////////////////// 5367 182,782 1.c.(2)(a)
(b) Secured by junior liens /////////////////// 5368 109,796 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties /////////////////// 1460 37,034 1.d.
e. Secured by nonfarm nonresidential properties /////////////////// 1480 347,486 1.e.
2. Loans to depository institutions: /////////////////// //////////////////
a. To commercial banks in the U.S /////////////////// 1505 98 2.a.
(1) To U.S. branches and agencies of foreign banks 1506 0 ////////////////// 2.a.(1)
(2) To other commercial banks in the U.S 1507 98 ////////////////// 2.a.(2)
b. To other depository institutions in the U.S 1517 132 1517 132 2.b.
c. To banks in foreign countries /////////////////// 1510 155 2.c.
(1) To foreign branches of other U.S. banks 1513 0 ////////////////// 2.c.(1)
(2) To other banks in foreign countries 1516 155 ////////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers 1590 6,619 1590 6,619 3.
4. Commercial and industrial loans: /////////////////// //////////////////
a. To U.S. addressees (domicile) 1763 736,043 1763 736,043 4.a.
b. To non-U.S. addressees (domicile) 1764 0 1764 0 4.b.
5. Acceptances of other banks: /////////////////// //////////////////
a. of U.S. banks 1756 0 1756 0 5.a.
b. of foreign banks 1757 0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal /////////////////// //////////////////
expenditures (i.e., consumer loans) (includes purchased paper) /////////////////// 1975 3,186,879 6.
a. Credit cards and related plans (includes check credit and other /////////////////// //////////////////
revolving credit plans) 2008 2,537,878 ////////////////// 6.a.
b. Other (includes single payment, installment, and all student loans) 2011 649,001 ////////////////// 6.b.
7. Loans to foreign governments and official institutions (including /////////////////// //////////////////
foreign central banks) 2081 0 2081 0 7.
8. obligations (other than securities and leases) of states and political /////////////////// //////////////////
subdivisions in the U.S. (includes nonrated industrial development /////////////////// //////////////////
obligations) 2107 18,510 2107 18,510 8.
9. Other loans 1563 141,198 ////////////////// 9.
a. Loans for purchasing or carrying securities (secured and unsecured) /////////////////// 1545 9,708 9.a.
b. All other loans (exclude consumer loans) /////////////////// 1564 131,490 9.b.
10. Lease financing receivables (net of unearned income) /////////////////// 2165 717,473 10.
a. Of U.S. addressees (domicile) 2182 717,473 ////////////////// 10.a.
b. of non-U.S. addressees (domicile) 2183 0 ////////////////// 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above 2123 1,764 2123 1,764 11.
12. Total loans and leases, net of unearned income (sum of items 1 /////////////////// //////////////////
through 10 minus item 11) (total of column A must equal /////////////////// //////////////////
Schedule RC, item 4.a) 2122 6,028,178 2122 6,028,178 12.
</TABLE>
16
<PAGE> 50
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-7
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued
Part I. Continued ----------------- ------------------
(Column A) (Column B)
Consolidated Domestic
Memoranda Bank Offices
----------------- ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above 1496 0 1496 0 M.1.
2. Loans and leases restructured and in compliance with modified terms ////////////////// //////////////////
(included in Schedule RC-C, part I, above and not reported as past due or ////////////////// //////////////////
nonaccrual in Schedule RC-N, Memorandum item 1): ////////////////// //////////////////
a. Loans secured by real estate: ////////////////// //////////////////
(1) To U.S. addressees (domicile) 1687 0 M.2.a.(1)
(2) To non-U.S. addressees (domicile) 1689 0 M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans to //////////////////
individuals for household, family, and other personal expenditures) 8691 0 M.2.b.
c. Commercial and industrial loans to and lease financing receivables //////////////////
of non-U.S. addressees (domicile) included in Memorandum item 2.b //////////////////
above 8692 0 M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those in //////////////////
nonaccrual status): //////////////////
a. Fixed rate loans and leases with a remaining maturity of: //////////////////
(1) Three months or less 0348 188,668 M.3.a.(1)
(2) Over three months through 12 months 0349 226,298 M.3.a.(2)
(3) Over one year through five years 0356 1,306,993 M.3.a.(3)
(4) Over five years 0357 314,426 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum //////////////////
items 3.a.(1) through 3.a.(4)) 0358 2,036,385 M.3.a.(5)
b. Floating rate loans with a repricing frequency of: //////////////////
(1) Quarterly or more frequently 4554 3,443,070 M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly 4555 517,086 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than //////////////////
annually 4561 6,641 M.3.b.(3)
(4) Less frequently than every five years 4564 0 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) //////////////////
through 3.b.(4)) 4567 3,966,797 M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and //////////////////
3.b.(5) (must equal the sum of total loans and leases, net, from //////////////////
Schedule RC-C, part I, item 12, plus unearned income from //////////////////
Schedule RC-C, part I, item 11, minus total nonaccrual loans and //////////////////
leases from Schedule RC-N, sum of items 1 through 8, column C) 1479 6,003,182 M.3.c.
4. Loans to finance commercial real estate, construction, and land //////////////////
development activities (not secured by real estate) included in //////////////////
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) 2746 12,909 M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, //////////////////
above) 5369 0 M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family ////////////////// ------------------
residential properties (included in Schedule RC-C, part I, item 1.c.(2)(a), ////////////////// RCON Bil Mil Thou
column B, page RC-6) ////////////////// ------------------
////////////////// 5370 85,065 M.6.
---------------------------------------
<FN>
- -------------------
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.
</TABLE>
17
<PAGE> 51
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-8
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
Schedule RC-D--Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in
par/notional amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A
through D).
</TABLE>
<TABLE>
<CAPTION>
----
C420
-----------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou <-
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS ///////////////////////
1. U.S. Treasury securities in domestic offices RCON 3531 0 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- ///////////////////////
backed securities) RCON 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices RCON 3533 0 3.
4. Mortgage-backed securities (MBS) in domestic offices: ///////////////////////
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA RCON 3534 0 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA ///////////////////////
(include CMOs, REMICs, and stripped MBS) RCON 3535 0 4.b.
c. All other mortgage-backed securities RCON 3536 0 4.c.
5. Other debt securities in domestic offices RCON 3537 0 5.
6. Certificates of deposit in domestic offices RCON 3538 0 6.
7. Commercial paper in domestic offices RCON 3539 0 7.
8. Bankers acceptances in domestic offices RCON 3540 0 8.
9. Other trading assets in domestic offices RCON 3541 0 9.
10. Trading assets in foreign offices RCFN 3542 0 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity ///////////////////////
contracts: ///////////////////////
a. In domestic offices RCON 3543 0 11.a.
b. In foreign offices RCFN 3544 0 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) RCFD 3545 0 12.
-------------------------------
-------------------------------
LIABILITIES ///////// Bil Mil Thou
-------------------------------
13. Liability for short positions RCFD 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity ///////////////////////
contracts RCFD 3547 0 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) RCFD 3548 0 15.
-------------------------------
</TABLE>
18
<PAGE> 52
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-9
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.:06559
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices ----
C425 <-
------------------------------------------------------------------
Nontransaction
Transaction Accounts Accounts
-------------------------------------------------------------------
(Column A) (Column B) (Column C)
Total transaction Memo: Total Total
accounts (including demand deposit nontransaction
total demand (included in accounts
deposits) column A) (including MMDAs)
------------------ ------------------ ------------------
Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits of: ////////////////// ////////////////// //////////////////
1. Individuals, partnerships, and corporations 2201 1,069,417 2240 1,018,833 2346 2,851,531 1.
2. U.S. Government 2202 10,010 2280 10,010 2520 0 2.
3. States and political subdivisions in the U.S 2203 34,858 2290 32,851 2530 31,945 3.
4. Commercial banks in the U.S 2206 206,337 2310 206,337 ////////////////// 4.
a. U.S. branches and agencies of foreign banks ////////////////// ////////////////// 2347 0 4.a.
b. Other commercial banks in the U.S ////////////////// ////////////////// 2348 15,667 4.b.
5. Other depository institutions in the U.S 2207 9,278 2312 9,278 2349 0 5.
6. Banks in foreign countries 2213 1,555 2320 1,555 ////////////////// 6.
a. Foreign branches of other U.S. banks ////////////////// ////////////////// 2367 0 6.a.
b. Other banks in foreign countries ////////////////// ////////////////// 2373 0 6.b
7. Foreign governments and official institutions ////////////////// ////////////////// //////////////////
(including foreign central banks) 2216 0 2300 0 2377 0 7.
8. Certified and official checks 2330 58,347 2330 58,347 ////////////////// 8.
9. Total (sum of items 1 through 8) (sum of ////////////////// ////////////////// //////////////////
columns A and C must equal Schedule RC, ////////////////// ////////////////// //////////////////
item 13.a) 2215 1,389,802 2210 1,337,211 2385 2,899,143 9.
</TABLE>
<TABLE>
<CAPTION>
Memoranda ------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): //////////////////
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts 6835 246,782 M.1.a.
b. Total brokered deposits 2365 4,083 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): //////////////////
(1) Issued in denominations of less than $100,000 2343 169 M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than //////////////////
$100,000 and participated out by the broker in shares of $100,000 or less 2344 3,452 M.1.c.(2)
d. Total deposits denominated in foreign currencies 3776 0 M.1.d.
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S //////////////////
reported in item 3 above which are secured or collateralized as required
under state law) 5590 65,046 M.1.e.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d //////////////////
must equal item 9, column C above): //////////////////
a. Savings deposits: //////////////////
(1) Money market deposit accounts (MMDAs) 6810 1,305,470 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) 0352 471,665 M.2.a.(2)
b. Total time deposits of less than $100,000 6648 1,007,826 M.2.b.
c. Time certificates of deposit of $100,000 or more 6645 114,182 M.2.c.
d. Open-account time deposits of $100,000 or more 6646 0 M.2.d.
3. All NOW accounts (included in column A above) 2398 52,591 M.3.
</TABLE>
19
<PAGE> 53
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-10
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
<TABLE>
<CAPTION>
Deposit Totals for FDIC Insurance Assessments ------------------
Dollar Amounts in Thousands RCON Bill Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) ///////////////////
(must equal Schedule RC, item 13.a) 2200 4,288,945 M.4.
///////////////////
a. Total demand deposits (must equal item 9, column B) 2210 1,337,211 M.4.a.
b. Total time and savings deposits(1) (must equal item 9, column A plus item 9, column C //////////////////
minus item 9, column B) 2350 2,951,734 M.4.b.
- --------------------
(1) For FDIC insurance assessment purposes, "total time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</TABLE>
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more //////////////////
(included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing //////////////////
frequency of:(1) //////////////////
a. Three months or less 0359 158,142 M.5.a.
b. Over three months through 12 months (but not over 12 months) 3644 387,590 M.5.b.
6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) //////////////////
a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: //////////////////
(1) Three months or less 2761 59,524 M.6.a.(1)
(2) Over three months through 12 months 2762 34,347 M.6.a.(2)
(3) Over one year through five years 2763 17,959 M.6.a.(3)
(4) Over five years 2765 2,352 M.6.a.(4)
(5) Total fixed rate time certificates of deposit of $100,000 or more (sum of //////////////////
Memorandum items 6.a.(1) through 6.a.(4) 2767 114,182 M.6.a.(5)
b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency of: //////////////////
(1) Quarterly or more frequently 4568 0 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly 4569 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually 4571 0 M.6.b.(3)
(4) Less frequently than every five years 4572 0 M.6.b.(4)
(5) Total floating rate time certificates of deposit of $100,000 or more (sum of //////////////////
Memorandum items 6.b.(1) through 6.b.(4)) 4573 0 M.6.b.(5)
c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) //////////////////
and 6.b.(5)) (must equal Memorandum item 2.c. above) 6645 114,182 M.6.c.
- -----------------------------
<FN>
(1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>
20
<PAGE> 54
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-11
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and Agreement
subsidiaries and IBFs)
<TABLE>
<CAPTION>
-----------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Deposits of: //////////////////
1. Individuals, partnerships, and corporations 2621 413,075 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) 2623 249,932 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs) 2625 0 3.
4. Foreign governments and official institutions (including foreign central banks) 2650 0 4.
5. Certified and official checks 2330 0 5.
6. All other deposits 2668 0 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) 2200 663,007 7.
</TABLE>
Schedule RC-F--Other Assets
<TABLE>
<CAPTION>
----
C430 <-
-----------------------
Dollar Amounts in Thousands ////////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Income earned, not collected on loans RCFD 2164 58,187 1.
2. Net deferred tax assets(1) RCFD 2148 0 2.
3. Excess residential mortgage servicing fees receivable RCFD 5371 0 3.
4. Other (itemize amounts that exceed 25% of this item) RCFD 2168 322,571 4.
a. TEXT 3549 Cash Surrender Value of Life Insurance RCFD 3549 130,703 /////////////////////// 4.a.
b. TEXT 3550 RCFD 3550 /////////////////////// 4.b.
c. TEXT 3551 RCFD 3551 /////////////////////// 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) RCFD 2160 380,758 5.
</TABLE>
Memorandum
<TABLE>
<CAPTION> -----------------------
Dollar Amounts in Thousands ////////// Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Deferred tax assets disallowed for regulatory capital purposes RCFD 5610 0 M.1.
</TABLE>
Schedule RC-G--Other Liabilities
<TABLE>
<CAPTION>
----
C435 <-
-----------------------
Dollar Amounts in Thousands ////////// Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) RCON 3645 27,814 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) RCFD 3646 112,500 1.b.
2. Net deferred tax liabilities(1) RCFD 3049 47,642 2.
3. Minority interest in consolidated subsidiaries RCFD 3000 0 3.
4. Other (itemize amounts that exceed 25% of this item) RCFD 2938 42,629 4.
a. TEXT 3552 Deferred Fees Received on Swaps RCFD 3552 38,492 /////////////////////// 4.a.
b. TEXT 3553 RCFD 3553 /////////////////////// 4.b.
c. TEXT 3554 RCFD 3554 /////////////////////// 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) RCFD 2930 230,585 5.
- --------------------------
<FN>
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
</TABLE>
21
<PAGE> 55
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-12
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
<CAPTION>
SCHEDULE RC-H--SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
------
C440 <-
---------------------
Domestic Offices
---------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding 2155 4,862 1.
2. Bank's liability on acceptances executed and outstanding 2920 4,862 2.
3. Federal funds sold and securities purchased under agreements to resell 1350 202,693 3.
4. Federal funds purchased and securities sold under agreements to repurchase 2800 967,674 4.
5. Other borrowed money 3190 792,023 5.
EITHER /////////////////////
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs 2163 N/A 6.
OR /////////////////////
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs 2941 667,270 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement /////////////////////
subsidiaries, and IBFs) 2192 7,666,440 8.
9. Total liabilities (excludes net due to foreign offices, Edge and /////////////////////
Agreement subsidiaries, and IBFs) 3129 6,497,978 9.
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices.
---------------------
RCON Bil Mil Thou
---------------------
10. U.S. Treasury securities 1779 71,201 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed /////////////////////
securities) 1785 317,886 11.
12. Securities issued by states and political subdivisions in the U.S 1786 40,320 12.
13. Mortgage-backed securities (MBS): /////////////////////
a. Pass-through securities: /////////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA 1787 16,395 13.a.(1)
(2) Other pass-through securities 1869 11,682 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): /////////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA 1877 23,366 13.b.(1)
(2) All other mortgage-backed securities 2253 249 13.b.(2)
14. Other domestic debt securities 3159 683 14.
15. Foreign debt securities 3160 0 15.
16. Equity securities: /////////////////////
a. Investments in mutual funds 3161 0 16.a.
b. Other equity securities with readily determinable fair values 3162 0 16.b.
c. All other equity securities 3169 3,844 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 /////////////////////
through 16) 3170 485,626 17.
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
---------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------
EITHER /////////////////////
1. Net due from the IBF of the domestic offices of the reporting bank 3051 N/A M.1.
OR /////////////////////
2. Net due to the IBF of the domestic offices of the reporting bank 3059 N/A M.2.
</TABLE>
22
.
<PAGE> 56
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address 100 East Broad Street Page RC-13
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
SCHEDULE RC-I -- SELECTED ASSETS AND LIABILITIES OF IBFs
To be completed only by banks with IBFs and other "foreign" offices.
<TABLE>
<CAPTION>
----
C445 <-
--------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) 2133 N/A 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, ////////////////////
item 12, column A) 2076 N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, ////////////////////
item 4, column A) 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21) 2898 N/A
5. IBF deposit liabilities due to bank, including other IBFs (component of Schedule RC-E, ////////////////////
part II, items 2 and 3) 2379 N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) 2381 N/A 6.
SCHEDULE RC-K--QUARTERLY AVERAGES (1)
----
C455 <-
--------------------
Dollar Amounts in Thousands ////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
ASSETS /////////////////////
1. Interest-bearing balances due from depository institutions RCFD 3381 935 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) RCFD 3382 442,049 2.
3. Securities issued by states and political subdivisions in the U.S.(2) RCFD 3383 40,925 3.
4. a. Other debt securities(2) RCFD 3647 16,831 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) RCFD 3648 3,844 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic offices /////////////////////
of the bank and of its Edge and Agreement subsidiaries, and in IBFs RCFD 3365 213,209 5.
6. Loans: /////////////////////
a. Loans in domestic offices: /////////////////////
(1) Total loans RCON 3360 5,395,744 6.a.(1)
(2) Loans secured by real estate RCON 3385 1,233,793 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers RCON 3386 7,131 6.a.(3)
(4) Commercial and industrial loans RCON 3387 831,867 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures RCON 3388 3,288,313 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs RCFN 3360 0 6.b.
7. Trading assets RCFD 3401 0 7.
8. Lease financing receivables (net of unearned income) RCFD 3484 666,624 8.
9. Total assets(4) RCFD 3368 7,616,579 9.
LIABILITIES /////////////////////
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, /////////////////////
and telephone and preauthorized transfer accounts) (exclude demand deposits) RCON 3485 300,998 10.
11. Nontransaction accounts in domestic offices: /////////////////////
a. Money market deposit accounts (MMDAs) RCON 3486 1,087,400 11.a.
b. Other savings deposits RCON 3487 575,346 11.b.
c. Time certificates of deposit of $100,000 or more RCON 3345 108,278 11.c.
d. All other time deposits RCON 3469 1,024,362 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement /////////////////////
subsidiaries, and IBFs RCFN 3404 357,397 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic /////////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs RCFD 3353 1,066,837 13.
14. Other borrowed money RCFD 3355 838,608 14.
- ----------------
(1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or (2) an average
of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
(4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized cost, equity
securities with readily determinable fair values at the lower of cost or fair value, and equity securities without readily
determinable fair values at historical cost.
</TABLE>
23
<PAGE> 57
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-14
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RC-L--OFF-BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.
----
C460 <-
--------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Unused commitments: ////////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., ////////////////////
home equity lines 3814 345,906 1.a.
b. Credit card lines 3815 26,044,114 1.b.
c. Commercial real estate, construction, and land development: ////////////////////
(1) Commitments to fund loans secured by real estate 3816 96,891 1.c.(1)
(2) Commitments to fund loans not secured by real estate 6550 2,113 1.c.(2)
d. Securities underwriting 3817 0 1.d.
e. Other unused commitments 3818 1,490,094 1.e.
2. Financial standby letters of credit and foreign office guarantees 3819 461,516 2.
a. Amount of financial standby letters of credit conveyed to others RCFD 3820 171,087 //////////////////// 2.a.
3. Performance standby letters of credit and foreign office guarantees 3821 109,590 3.
a. Amount of performance standby letters of credit conveyed to others RCFD 3822 15,290 //////////////////// 3.a.
4. Commercial and similar letters of credit 3411 62,777 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the ////////////////////
reporting bank 3428 0 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting ////////////////////
(nonaccepting) bank 3429 0 6.
7. Securities borrowed 3432 0 7.
8. Securities lent (including customers' securities lent where the customer is indemnified ////////////////////
against loss by the reporting bank) 3433 0 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as ////////////////////
sold for Call Report purposes: ////////////////////
a. FNMA and FHLMC residential mortgage loan pools: ////////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date 3650 0 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date 3651 0 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: ////////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date 3652 0 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date 3653 0 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: ////////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date 3654 0 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date 3655 0 9.c.(2)
10. When-issued securities: ////////////////////
a. Gross commitments to purchase 3434 0 10.a.
b. Gross commitments to sell 3435 0 10.b.
11. Spot foreign exchange contracts 8765 9,087 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) ////////////////////
(itemize and describe each component of this item over 25% of Schedule RC, item 28, ////////////////////
"Total equity capital") 3430 0 12.
a. TEXT 3555 _______________________________________________________ RCFD 3555 //////////////////// 12.a.
b. TEXT 3556 _______________________________________________________ RCFD 3556 //////////////////// 12.b.
c. TEXT 3557 _______________________________________________________ RCFD 3557 //////////////////// 12.c.
d. TEXT 3558 _______________________________________________________ RCFD 3558 //////////////////// 12.d.
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize ////////////////////
and describe each component of this item over 25% of Schedule RC, item 28, "Total ////////////////////
equity capital") 5591 79,107 13.
a. TEXT 5592 _______________________________________________________ RCFD 5592 //////////////////// 13.a.
b. TEXT 5593 _______________________________________________________ RCFD 5593 //////////////////// 13.b.
c. TEXT 5594 _______________________________________________________ RCFD 5594 //////////////////// 13.c.
d. TEXT 5595 _______________________________________________________ RCFD 5595 //////////////////// 13.d.
</TABLE>
24
<PAGE> 58
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-15
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RC-L--CONTINUED
-----
C461 <-
----------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ----------------------------------------------------------------------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
14. Gross amounts (e.g., notional amounts) /////////////// /////////////// /////////////// ///////////////
(for each column, sum of items 14.a /////////////// /////////////// /////////////// ///////////////
through 14.e must equal sum of items 15, /////////////// /////////////// /////////////// ///////////////
16.a, and 16.b): /////////////// /////////////// /////////////// ///////////////
a. Futures contracts 0 0 0 0 14.a.
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
b. Forward contracts 60,000 101,193 0 0 14.b.
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
c. Exchange-traded contracts: /////////////// /////////////// /////////////// ///////////////
(1) Written options 0 0 0 0 14.c.(1)
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
(2) Purchased options 0 0 0 0 14.c.(2)
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
d. Over-the-counter option contracts: /////////////// /////////////// /////////////// ///////////////
(1) Written options 2,705,243 0 0 0 14.d.(1)
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
(2) Purchased options 3,981,243 0 0 0 14.d.(2)
e. Swaps RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
19,574,346 0 0 0 14.e.
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
15. Total gross notional amount of /////////////// /////////////// /////////////// ///////////////
derivative contracts held for trading 0 0 0 0 15.
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
16. Total gross notional amount of /////////////// /////////////// /////////////// ///////////////
derivative contracts held for /////////////// /////////////// /////////////// ///////////////
purposes other than trading: /////////////// /////////////// /////////////// ///////////////
a. Contracts marked to market 355,999 101,193 0 0 16.a.
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
b. Contracts not marked to market 25,964,833 0 0 0 16.b.
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
</TABLE>
25
<PAGE> 59
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-16
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RC-L--CONTINUED
--------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Interest Rate Foreign Exchange Equity Derivative Commodity and
Dollar Amounts in Thousands Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives --------------------------------------------------------------------------------
Position Indicators RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
17. Gross fair values of ///////////////// //////////////// ///////////////// /////////////////
derivative contracts: ///////////////// //////////////// ///////////////// /////////////////
a. Contracts held for trading: ///////////////// //////////////// ///////////////// /////////////////
(1) Gross positive ///////////////// //////////////// ///////////////// /////////////////
fair value 8733 0 8734 0 8735 0 8736 0 17.a.(1)
(2) Gross negative ///////////////// //////////////// ///////////////// /////////////////
fair value 8737 0 8738 0 8739 0 8740 0 17.a.(2)
b. Contracts held for ///////////////// //////////////// ///////////////// /////////////////
purposes other than ///////////////// //////////////// ///////////////// /////////////////
trading that are marked ///////////////// //////////////// ///////////////// /////////////////
to market: ///////////////// //////////////// ///////////////// /////////////////
(1) Gross positive ///////////////// //////////////// ///////////////// /////////////////
fair value 8741 439 8742 1,041 8743 0 8744 0 17.b.(1)
(2) Gross negative ///////////////// //////////////// ///////////////// /////////////////
fair value 8745 601 8746 1,038 8747 0 8748 0 17.b.(2)
c. Contracts held for ///////////////// //////////////// ///////////////// /////////////////
purposes other than ///////////////// //////////////// ///////////////// /////////////////
trading that are not ///////////////// //////////////// ///////////////// /////////////////
marked to market: ///////////////// //////////////// ///////////////// /////////////////
(1) Gross positive ///////////////// //////////////// ///////////////// /////////////////
fair value 8749 111,455 8750 0 8751 0 8752 0 17.c.(1)
(2) Gross negative ///////////////// //////////////// ///////////////// /////////////////
fair value 8733 81,592 8754 0 8755 0 8756 0 17.c.(2)
------------------
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
1.-2. Not applicable //////////////////
3. Unused commitments with an original maturity exceeding one year that are reported in //////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments //////////////////
that are fee paid or otherwise legally binding) 3833 1,110,559 M.3.
a. Participations in commitments with an original maturity //////////////////
exceeding one year conveyed to others RCFD 3834 144,672 ////////////////// M.3.a.
4. To be completed only by banks with $1 billion or more in total assets: //////////////////
Standby letters of credit and foreign office guarantees (both financial //////////////////
and performance) issued to non-U.S. addressees (domicile) included in //////////////////
Schedule RC-L, items 2 and 3, above 3377 1,013 M.4.
5. To be completed for the September report only: //////////////////
Installment loans to individuals for household, //////////////////
family, and other personal expenditures that //////////////////
have been securitized and sold without recourse //////////////////
(with servicing retained), amounts outstanding //////////////////
by type of loan: //////////////////
a. Loans to purchase private passenger automobiles 2741 N/A M.5.a.
b. Credit cards and related plans 2742 N/A M.5.b.
c. All other consumer installment credit (including mobile home loans) 2743 N/A M.5.c.
</TABLE>
26
<PAGE> 60
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-17
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RC-M--MEMORANDA
----
C465 <-
----------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal //////////////////////
shareholders, and their related interests as of the report date: //////////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors, //////////////////////
principal shareholders, and their related interests 6164 193,527 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of //////////////////////
all extensions of credit by the reporting bank (including extensions of credit to //////////////////////
related interests) equals or exceeds the lesser of $500,000 or 5 percent of Number //////////////////////
total capital as defined for this purpose in agency regulations. RCFD 6165 12 ////////////////////// 1.b.
2. Federal funds sold and securities purchased under agreements to resell with //////////////////////
U.S. branches and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) 3405 0 2.
3. Not applicable //////////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans //////////////////////
serviced for others (include both retained servicing and purchased servicing): //////////////////////
a. Mortgages serviced under a GNMA contract 5500 0 4.a.
b. Mortgages serviced under a FHLMC contract: //////////////////////
(1) Serviced with recourse to servicer 5501 0 4.b.(1)
(2) Serviced without recourse to servicer 5502 0 4.b.(2)
c. Mortgages serviced under a FNMA contract: //////////////////////
(1) Serviced under a regular option contract 5503 0 4.c.(1)
(2) Serviced under a special option contract 5504 0 4.c.(2)
d. Mortgages serviced under other servicing contracts 5505 0 4.d.
5. To be completed only by banks with $1 billion or more in total assets: //////////////////////
Customers' liability to this bank on acceptances outstanding (sum of items //////////////////////
5.a and 5.b must equal Schedule RC, item 9): //////////////////////
a. U.S. addressees (domicile) 2103 4,862 5.a.
b. Non-U.S. addressees (domicile) 2104 0 5.b.
6. Intangible assets: //////////////////////
a. Mortgage servicing rights 3164 0 6.a.
b. Other identifiable intangible assets: //////////////////////
(1) Purchased credit card relationships 5506 24,768 6.b.(1)
(2) All other identifiable intangible assets 5507 2,856 6.b.(2)
c. Goodwill 3163 12,804 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) 2143 40,428 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have //////////////////////
been grandfathered or are otherwise qualifying for regulatory capital purposes 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to //////////////////////
redeem the debt 3295 0 7.
<FN>
(1) Do not report federal funds sold and securities purchased under
agreements to resell with other commercial banks in the U.S. in this
item.
</TABLE>
27
<PAGE> 61
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-18
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
SCHEDULE RC-M--CONTINUED
--------------------
Dollar Amounts in Thousands Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
8.a. Other real estate owned: ////////////////////
(1) Direct and indirect investments in real estate ventures RCFD 5372 0 8.a.(1)
(2) All other real estate owned: ////////////////////
(a) Construction and land development in domestic offices RCON 5508 0 8.a.(2)(a)
(b) Farmland in domestic offices RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices RCON 5510 132 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices RCON 5511 0 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices RCON 5512 1,900 8.a.(2)(e)
(f) In foreign offices RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) RCFD 2150 2,032 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: ////////////////////
(1) Direct and indirect investments in real estate ventures RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies RCFD 5375 438 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) RCFD 2130 438 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies RCFD 5376 14,078 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, ////////////////////
item 23, "Perpetual preferred stock and related surplus" RCFD 3778 0 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include ////////////////////
proprietary, private label, and third party products): ////////////////////
a. Money market funds RCON 6441 6 10.a.
b. Equity securities funds RCON 8427 4,535 10.b.
c. Debt securities funds RCON 8428 1,801 10.c.
d. Other mutual funds RCON 8429 0 10.d.
e. Annuities RCON 8430 6,384 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 1O.a through ////////////////////
1O.e above) RCON 8784 3,546 10.f.
<FN>
--------------------
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------
1. Interbank holdings of capital instruments (to be completed for the December report only): ////////////////////
a. Reciprocal holdings of banking organizations' capital instruments 3836 0 M.1.a.
b. Nonreciprocal holdings of banking organizations' capital instruments 3837 0 M.1.b.
</TABLE>
28
<PAGE> 62
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-19
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-N--PAST DUE AND NONACCRUAL LOANS, LEASES, AND OTHER ASSETS
The FFIEC regards the information reported in ----
all of Memorandum item 1, in items 1 through 10, C470 <-
column A, and in Memorandum items 2 through 4, -------------------------------------------------------------
column A, as confidential. (Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Loans secured by real estate: ////////////////// ////////////////// //////////////////
a. To U.S. addressees (domicile) 1245 1246 4,344 1247 11,363 1.a.
b. To non-U.S. addressees (domicile) 1248 1249 0 1250 0 1.b.
2. Loans to depository institutions and acceptances ////////////////// ////////////////// //////////////////
of other banks: ////////////////// ////////////////// //////////////////
a. To U.S. banks and other U.S. depository institutions 5377 5378 0 5379 0 2.a.
b. To foreign banks 5380 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and ////////////////// ////////////////// //////////////////
other loans to farmers 1594 1597 0 1583 95 3.
4. Commercial and industrial loans: ////////////////// ////////////////// //////////////////
a. To U.S. addressees (domicile) 1251 1252 5,024 1253 9,636 4.a.
b. To non-U.S. addressees (domicile) 1254 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, and ////////////////// ////////////////// //////////////////
other personal expenditures: ////////////////// ////////////////// //////////////////
a. Credit cards and related plans 5383 5384 44,765 5385 0 5.a.
b. Other (includes single payment, installment, ////////////////// ////////////////// //////////////////
and all student loans) 5386 5387 12,162 5388 4,032 5.b.
6. Loans to foreign governments and official ////////////////// ////////////////// //////////////////
institutions 5389 5390 0 5391 0 6.
7. All other loans 5459 5460 0 5461 943 7.
8. Lease financing receivables: ////////////////// ////////////////// //////////////////
a. Of U.S. addressees (domicile) 1257 1258 486 1259 691 8.a.
b. Of non-U.S. addressees (domicile) 1271 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude other ////////////////// ////////////////// //////////////////
real estate owned and other repossessed assets) 3505 13506 0 3507 15,374 9.
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
------------------------------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
<S> <C> <C> <C>
10. Loans and leases reported in items 1 ------------------------------------------------------------
through 8 above which are wholly or partially ////////////////// ////////////////// //////////////////
guaranteed by the U.S. Government 5612 5613 4,561 5614 58 10.
a. Guaranteed portion of loans and leases ////////////////// ////////////////// //////////////////
included in item 10 above 5615 5616 4,561 5617 47 10.a.
</TABLE>
29
<PAGE> 63
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-20
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<CAPTION>
----
Schedule RC-N--Continued C473 <-
------------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
Memoranda accruing accruing
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Restructured loans and leases included in ////////////////// ////////////////// //////////////////
Schedule RC-N, items 1 through 8, above (and not ////////////////// ////////////////// //////////////////
reported in Schedule RC-C, part I, Memorandum ////////////////// ////////////////// //////////////////
item 2) 1658 1659 1661 M.1.
2. Loans to finance commercial real estate, ////////////////// ////////////////// //////////////////
construction, and land development activities ////////////////// ////////////////// //////////////////
(not secured by real estate) included in ////////////////// ////////////////// //////////////////
Schedule RC-N, items 4 and 7, above 6558 6559 0 6560 2,730 M.2.
RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
3. Loans secured by real estate in domestic offices -------------------------------------------------------------------
(included in Schedule RC-N, item 1, above): ////////////////// ////////////////// //////////////////
a. Construction and land development 2759 2769 146 3492 2,362 M.3.a.
b. Secured by farmland 3493 3494 0 3495 0 M.3.b.
c. Secured by 1-4 family residential properties: ////////////////// ////////////////// //////////////////
(1) Revolving, open-end loans secured by ////////////////// ////////////////// //////////////////
1-4 family residential properties and ////////////////// ////////////////// //////////////////
extended under lines of credit 5398 5399 627 5400 730 M.3.c.(1)
(2) All other loans secured by 1-4 family ////////////////// ////////////////// //////////////////
residential properties 5401 5402 2,474 5403 4,934 M.3.c.(2)
d. Secured by multifamily (5 or more) residential ////////////////// ////////////////// //////////////////
properties 3499 3500 0 3501 0 M.3.d.
e. Secured by nonfarm nonresidential properties 3502 3503 1,097 3504 3,337 M.3.e.
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------
(Column A) (Column B)
Past due 30 Past due 90
through 89 days days or more
RCON Bil Mil Thou RCON Bil Mil Thou
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
4. Interest rate, foreign exchange rate, and other ////////////////// //////////////////
commodity and equity contracts: ////////////////// //////////////////
a. Book value of amounts carried as assets 3522 3528 0 M.4.a.
b. Replacement cost of contracts with a ////////////////// //////////////////
positive replacement cost 3529 3530 0 M.4.b.
</TABLE>
30
<PAGE> 64
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-21
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
SCHEDULE RC-O--OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS
<TABLE>
<CAPTION>
----
C475 <-
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------
<S> <C>
1. Unposted debits (see instructions): //////////////////
a. Actual amount of all unposted debits 0030 N/A 1.a.
OR //////////////////
b. Separate amount of unposted debits: //////////////////
(1) Actual amount of unposted debits to demand deposits 0031 0 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits (1) 0032 0 1.b.(2)
2. Unposted credits (see instructions): //////////////////
a. Actual amount of all unposted credits 3510 N/A 2.a.
OR //////////////////
b. Separate amount of unposted credits: //////////////////
(1) Actual amount of unposted credits to demand deposits 3512 0 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) 3514 0 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not //////////////////
included in total deposits in domestic offices) 3520 0 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured //////////////////
branches in Puerto Rico and U.S. territories and possessions //////////////////
(not included in total deposits): //////////////////
a. Demand deposits of consolidated subsidiaries 2211 9,301 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries 2351 14,152 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: //////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) 2229 0 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, //////////////////
Part II) 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches (included in //////////////////
Schedule RC-G, item 1.b) 515 0 5.c.
Item 6 is not applicable to state nonmember banks that have not been authorized by the //////////////////
Federal Reserve to act as pass-through correspondents. //////////////////
6. Reserve balances actually passed through to the Federal Reserve by the reporting //////////////////
bank on behalf of its respondent depository institutions that are also reflected //////////////////
as deposit liabilities of the reporting bank: //////////////////
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, //////////////////
Memorandum item 4.a) 2314 0 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, //////////////////
Part I, Memorandum item 4.b) 2315 0 6.b
7. Unamortized premiums and discounts on time and savings deposits:(1) //////////////////
a. Unamortized premiums 5516 0 7.a.
b. Unamortized discounts 5517 0 7.b.
- ------------------------------------------------------------------------------------------------------------------------
8. To be completed by banks with "Oakar deposits." //////////////////
Total "Adjusted Attributable Deposits" of all institutions acquired under //////////////////
Section 5(d)(3) of the Federal Deposit Insurance Act (from most recent FDIC //////////////////
Oakar Transaction Worksheet(s)) 5518 N/A 8.
- ------------------------------------------------------------------------------------------------------------------------
9. Deposits in lifeline accounts 5596 ///////////// 9.
10. Benefit-responsive "Depository Institution Investment Contracts" //////////////////
(included in total deposits in domestic offices) 8432 0 10.
<FN>
- ------------------------
(1) For FDIC insurance assessment purposes, "time and savings deposits"
consists of nontransaction accounts and all transaction accounts other
than demand deposits.
</TABLE>
31
<PAGE> 65
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-22
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued -----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for //////////////////
certain reciprocal demand balances: //////////////////
a. Amount by which demand deposits would be reduced if reciprocal demand balances //////////////////
between the reporting bank and savings associations were reported on a net basis //////////////////
rather than a gross basis in Schedule RC-E 8785 0 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances //////////////////
between the reporting bank and U.S. branches and agencies of foreign banks were //////////////////
reported on a gross basis rather than a net basis in Schedule RC-E A181 0 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of //////////////////
collection were included in the calculation of net reciprocal demand balances between //////////////////
the reporting bank and the domestic offices of U.S. banks and savings associations //////////////////
in Schedule RC-E A182 0 11.c.
</TABLE>
<TABLE>
<CAPTION>
Memoranda (to be completed each quarter except as noted) -----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and //////////////////
1.b. (1) must equal Schedule RC, item 13.a): //////////////////
a. Deposit accounts of $100,000 or less: //////////////////
(1) Amount of deposit accounts of $100,000 or less 2702 2,499,540 M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number //////////////////
completed for the June report only) RCON 3779 N/A ////////////////// M.1.a.(2)
b. Deposit accounts of more than $100,000: //////////////////
(1) Amount of deposit accounts of more than $100,000 2710 1,789,405 M.1.b.(1)
Number //////////////////
(2) Number of deposit accounts of more than $100,000 RCON 2722 3,877 ////////////////// M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying
the number of deposit accounts of more than $100,000 reported in Memorandum
item 1.b.(2) above by $100,000 and subtracting the result from the amount of
deposit accounts of more than $100,000 reported in Memorandum item
1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the YES NO
estimate described above RCON 6861 /// x M.2.b.
b. If the box marked YES has been checked, report the estimate of uninsured deposits Bil Mil Thou
determined by using your bank's method or procedure RCON 5597 N/A M.2.b.
- ------------------------------------------------------------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and Income should be directed: C477 <-
Elizabeth G. Gilliland, Assistant Vice-President (614) 248-8563
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
</TABLE>
32
<PAGE> 66
<TABLE>
<S> <C>
Legal Title of Bank: BANK DNE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-23
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-R--Risk-Based Capital
This schedule must be completed by all banks as follows: Banks that
reported total assets of $1 billion or more in Schedule RC, item 12, for June
30, 1994, must complete items 2 through 9 and Memoranda items 1 and 2. Banks
with assets of less than $1 billion must complete items 1 and 2 below or
Schedule RC-R in its entirety, depending on their response to item 1 below.
<TABLE>
<CAPTION>
1. Test for determining the extent to which Schedule RC-R must be completed. To be ----
completed only by banks with total assets of less than $1 billion. Indicate in the C480 <-
appropriate box at the right whether the bank has total capital greater than or --------------------
equal to eight percent of adjusted total assets YES NO
-----------------------------
RCFD 6056 //// 1.
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease
losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete item 2 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than
eight percent or that the bank is not in compliance with the risk-based capital guidelines.
----------------------------------------------------
(Column A) (Column B)
Subordinated Debt(1) Other
and Intermediate Limited-
Item 2 is to be completed by all banks. Term Preferred Life Capital
Stock Instruments
----------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments ////////////////// //////////////////
(original) weighted average maturity of at least five years) with a ////////////////// //////////////////
remaining maturity of: ////////////////// //////////////////
a. One year or less 3780 0 3786 0 2.a.
b. Over one year through two years 3781 0 3787 0 2.b.
c. Over two years through three years 3782 0 3788 0 2.c.
d. Over three years through four years 3783 0 3789 0 2.d.
e. Over four years through five years 3784 0 3790 0 2.e.
f. Over five years 3785 189,240 3791 0 2.f.
3.Not applicable
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------
Items 4-9 and Memoranda items 1 and 2 are to be completed (Column A) (Column B)
by banks that answered NO to item 1 above and Assets Credit Equiv-
by banks with total assets of $1 billion or more. Recorded alent Amount
on the of Off-Balance
Balance Sheet Sheet Items (2)
----------------------------------------------------
4. Assets and credit equivalent amounts of off-balance sheet items RCFD Bil Mil Thou RCFD Bil Mil Thou
----------------------------------------------------
<S> <C> <C>
assigned to the Zero percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet: ////////////////// //////////////////
(1) Securities issued by, other claims on, and claims ////////////////// //////////////////
unconditionally guaranteed by, the U.S. Government and ////////////////// //////////////////
its agencies and other OECD central governments 3794 70,889 ////////////////// 4.a.(1)
(2) All other 3795 96,348 ////////////////// 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ////////////////// 3796 108.191 4.b.
- ----------------------------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
</TABLE>
33
<PAGE> 67
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-24
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Schedule RC-R--Continued
<TABLE>
<CAPTION>
----------------------------------------------------
(Column A) (Column B)
Assets Credit Equiv-
Recorded alent Amount
on the of Off-BaLance
Balance Sheet Sheet Items(1)
----------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 20 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet: ////////////////// //////////////////
(1) Claims conditionally guaranteed by the U.S. Government and ////////////////// //////////////////
its agencies and other OECD central governments 3798 149,329 ////////////////// 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Government ////////////////// //////////////////
and it agencies and other OECD central governments; by ////////////////// //////////////////
securities issued by U.S. Government-sponsored agencies; and ////////////////// //////////////////
by cash on deposit 3799 0 ////////////////// 5.a.(2)
(3) All other 3800 1,125,548 ////////////////// 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ////////////////// 3801 406,211 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 50 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet 3802 203,714 ////////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items ////////////////// 3803 2,140 6.b.
7: Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 100 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet 3804 6,172,827 ////////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items ////////////////// 3805 724,887 7.b.
8. On-balance sheet asset values excluded from the calculation of the ////////////////// //////////////////
risk-based capital ratio(2) 3806 2,664 ////////////////// 8.
9: Total assets recorded on the balance sheet (sum of ////////////////// //////////////////
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, ////////////////// //////////////////
item 12 plus items 4.b and 4.c) 3807 7,821,319 ////////////////// 9.
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Current credit exposure across all off-balance sheet derivative contracts covered by the //////////////////
risk-based capital standards 8764 112,932 M.1.
</TABLE>
<TABLE>
<CAPTION>
With a remaining maturity of
------------------------------------------------------------------------------
(Column A) (Column B) (Column C)
One year or less Over one year Over five years
------------------------------------------------------------------------------
2. Notional principal amounts of through five years
off-balance sheet derivative contracts(3): RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
------------------------------------------------------------------------------
<S> <C> <C> <C>
a. Interest rate contracts 3809 10,344,788 8766 7,137,802 8767 511,000 M.2.a.
b. Foreign exchange contracts 3812 99,718 8769 0 8770 0 M.2.b.
c. Gold contracts 8771 0 8772 0 8773 0 M.2.c.
d. Other precious metals contracts 8774 0 8775 0 8776 0 M.2.d.
e. Other commodity contracts 8777 0 8778 0 8779 0 M.2.e.
f. Equity derivative contracts A000 0 A001 0 A002 0 M.2.f.
- ------------------------
<FN>
(1) Do not report in column B the risk-weighted amount of assets reported in column A.
(2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report the
amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or portions
thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g., futures
contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as any
portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts.
</TABLE>
34
<PAGE> 68
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-25
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on December 31, 1995
BANK ONE , COLUMBUS, NA Columbus Ohio
- --------------------------------------------------------------------------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of
Schedule RC-N is regarded as confidential and will not be released to the
public. BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT
THE STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF
INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE
CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE
NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR
CUSTOMERS. Banks choosing not to make a statement may check the "No comment"
box below and should make no entries of any kind in the space provided for the
narrative statement; i.e., DO NOT enter in this space such phrases as "No
statement," "Not applicable," "N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement
must not exceed 750 characters, including punctuation, indentation, and
standard spacing between words and sentences. If any submission should exceed
750 characters, as defined, it will be truncated at 750 characters with no
notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in computer-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative Statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a Statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
No comment / / (RCON 6979) C471 C472 <-
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
For regulatory purposes, the Bank defers the recognition of certain excess
income relating to securitized loan sales until cash is received. The
effect of this accounting method has decreased net income for the current
year $24,937,000 and decreased retained earnings on a cumulative basis
$98,794,000.
/s/ ?????????? 1/29/96
Signature of Executive Officer of Bank Date of Signature
35
<PAGE> 69
<TABLE>
<S> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 12/31/95 ST-BK: 39-1580
Address: 100 East Broad Street
City, State: Columbus, OH
Zip: 43271-1066
FDIC Certificate No.: 06559
</TABLE>
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
NAME AND ADDRESS OF BANK OMB No. For OCC: 1557-0081
OMB No. For FDIC: 3064-0052
CALL NO. 194 31 12-31-95 OMB No. For Federal Reserve: 7100-0036
Expiration Date: 3/31/96
ST8K: 39-158010088 STCERT: 39-06559
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION SPECIAL REPORT
100 EAST BROAD STREET (Dollar Amounts in Thousands)
COLUMBUS, OH 43271
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
CLOSE OF BUSINESS FDIC Certificate Number
C-700 <-
DATE
12/31/95 06559
- ------------------------------------------------------------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition.
With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to their
executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other extensions of
credit are not required. If no such loans or other extensions of credit were made during the period, insert "none" against subitem
(a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See Sections 215.2 and
215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation 0) for the definitions of "executive officer"
and "extension of credit," respectively. Exclude loans and other extensions of credit to directors and principal shareholders who
are not executive officers.
- ------------------------------------------------------------------------------------------------------------------------------------
a. Number of loans made to executive officers since the previous Call Report date RCFD 3561 2 a.
b. Total dollar amount of above loans (in thousands of dollars) RCFD 3562 52 b.
c. Range of interest charged on above loans
(example: 9 3/4% = 9.75) RCFD 7701 9.50 % to RCFD 7702 18.00 % c.
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT DATE (Month, Day, Year)
/s/ Elizabeth G. Gilliland January 26,1996
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) AREA CODE/PHONE NUMBER/EXTENSION
(TEXT 8904)
Elizabeth G. Gilliland, Asssistant Vice-President (614) 248-8563
FDIC 8040/53 (6-95)
</TABLE>
36
