<PAGE>
As filed with the Securities and Exchange Commission on October 9, 1997
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
FORM S-3
REGISTRATION STATEMENT Under
THE SECURITIES ACT OF 1933
----------------
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1701520
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
4 Country View Road
Malvern, Pennsylvania 19355
(610) 647-5930
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
----------------
Richard A. Blumenthal, General Counsel
Systems & Computer Technology Corporation
4 Country View Road
Malvern, Pennsylvania 19355
(610) 647-5930
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
----------------
With Copies to:
Barry M. Abelson, Esquire Robert Rosenman, Esquire
Paul T. Porrini, Esquire Cravath, Swaine & Moore
Pepper, Hamilton & Scheetz LLP Worldwide Plaza
3000 Two Logan Square 825 Eighth Avenue
Philadelphia, PA 19103-2799 New York, NY 10019
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effectiveness of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered(1) Unit(2) Price(2) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Convertible Subordinated
Debentures Due 2004 .................. $69,000,000 N/A N/A $20,909.09
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par
value ................................. (3) N/A N/A (4)
===========================================================================================================================
</TABLE>
(1) Includes Debentures that the Underwriters have the option to purchase to
cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457 of the Securities Act of
1933.
(3) Such indeterminable number of shares of Common Stock as may be required for
issuance upon conversion of the Debentures being registered hereunder and
such additional securities as may be issuable as a result of the
"anti-dilution" provisions thereof.
(4) Pursuant to Rule 457(i), no registration fee is required.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED OCTOBER 9, 1997
PROSPECTUS
$60,000,000
LOGO SCT
Systems & Computer Technology Corporation
% Convertible Subordinated Debentures Due 2004
---------------------
The Debentures offered hereby are convertible at any time prior to
maturity, unless previously redeemed, into Common Stock at a conversion price
of $ per share, subject to adjustment in certain events. The Common Stock is
quoted on the Nasdaq National Market under the symbol "SCTC." On October 8,
1997, the closing price for the Common Stock was $45.75 per share. The Company
has applied for listing of the Debentures for quotation on the Nasdaq SmallCap
Market under the symbol "SCTCG."
The Debentures are redeemable, in whole or in part, at any time on or
after October 15, 2000, at the option of the Company, at the redemption prices
set forth herein, plus accrued interest. The Debentures are unsecured and
subordinated in right of payment to all present and future Senior Indebtedness
of the Company. See "Description of Debentures."
---------------------
See "Risk Factors" beginning on page 8 for a description of certain risks that
should be considered in connection with an investment in the Debentures offered
hereby.
---------------------
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.
- --------------------------------------------------------------------------------
Underwriting
Price to Discounts Proceeds to
Public(1) and Commissions(2) Company(1)(3)
- --------------------------------------------------------------------------------
Per Debenture ...... 100% % %
- --------------------------------------------------------------------------------
Total(4) ............ $60,000,000 $ $
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from October , 1997.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $ .
(4) The Company has granted the several Underwriters an option, exercisable
within 30 days from the date hereof, to purchase up to an additional
$9,000,000 principal amount of Debentures solely to cover over-allotments.
If such option is exercised in full, the total Price to Public will be
$69,000,000, the total Underwriting Discounts and Commissions will be $ ,
and the total Proceeds to Company will be $ . See "Underwriting."
The Debentures are offered by the several Underwriters subject to receipt
and acceptance of such Debentures by them. The Underwriters reserve the right
to reject any order in whole or in part. It is expected that the Debentures
will be ready for delivery on or about October , 1997.
---------------------
Unterberg Harris Janney Montgomery Scott Inc.
, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES OR THE
COMMON STOCK, INCLUDING PURCHASES OF DEBENTURES OR COMMON STOCK TO STABILIZE
THE MARKET PRICE OF THE DEBENTURES OR COMMON STOCK, PURCHASES OF DEBENTURES TO
COVER SOME OR ALL OF A SHORT POSITION IN THE DEBENTURES MAINTAINED BY THE
UNDERWRITER AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER AND SELLING GROUP MEMBERS MAY
ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ IN
ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the following Regional Offices of the Commission: Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade
Center, 13th Floor, New York, New York 10048. Such materials also may be
accessed through the Commission's Internet Web site located at
http://www.sec.gov. Copies of such material may be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933 (the "Securities Act"), of which this
Prospectus constitutes a part, with respect to the securities offered hereby.
The Registration Statement, including exhibits and schedules thereto, may be
obtained from the Commission's principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by
the Commission. Statements contained in this Prospectus as to the contents of
any document referred to are not necessarily complete and in each instance
reference is made to the copy of the appropriate document filed as an exhibit
to, or incorporated by reference into, the Registration Statement, each
statement being qualified in all respects by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, filed with the Commission (File No. 0-11521)
pursuant to the Exchange Act are hereby incorporated by reference: (a) Annual
Report on Form 10-K of the Company for the fiscal year ended September 30,
1996, (b) Quarterly Reports on Form 10-Q of the Company for the quarters ended
December 31, 1996, March 31, 1997 and June 30, 1997, and (c) Current Report on
Form 8-K of the Company dated April 9, 1997. In addition, all documents filed
by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the termination of
this offering shall be deemed to be incorporated by reference herein and to be
a part of this Prospectus from the respective dates of filing of such
documents. Such incorporation by reference shall not be deemed to incorporate
by reference the information referred to in Item 402(a)(8) of Regulation S-K.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purpose of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any 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 request, a copy of any or all of the foregoing
documents described above which have been incorporated by reference in this
Prospectus other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such request
should be directed to Systems & Computer Technology Corporation, 4 Country View
Road, Malvern, Pennsylvania 19355, Attention: Secretary, (610) 647-5930.
2
<PAGE>
As used in this Prospectus, references to a "fiscal" year refer to the
fiscal year ending September 30 of such year. Unless otherwise indicated, all
information and data in this Prospectus assumes no exercise of the
Underwriters' over-allotment option.
BANNER(R) and SCT(R) are registered trademarks of the Company and
BANNER2000(TM) and ADAGE(TM) are trademarks of the Company. All other trade
names referenced herein are the service marks, trademarks or registered
trademarks of their respective companies or organizations.
FORWARD LOOKING STATEMENTS
This Prospectus, including any document incorporated herein by reference,
contains certain forward-looking statements that involve substantial risks and
uncertainties as more fully described below. When used in this Prospectus or in
any such documents incorporated herein by reference, the words "anticipate,"
"believe," "estimate," "expect" and similar expressions as they relate to the
Company or its management are intended to identify such forward-looking
statements. From time to time, the Company or its representatives have made or
may make forward-looking statements, orally or in writing. Such forward-looking
statements may be included in various filings made by the Company with the
Commission, or in press releases or oral statements made by or with the
approval of an authorized executive officer of the Company. The Company's
actual results, performance or achievements could differ materially from the
results expressed in, or implied by, these forward-looking statements.
Potential risks and uncertainties that could affect the Company's future
operating results include, without limitation, the effect of publicity on
demand for the Company's products and services, general economic conditions,
the Company's ability to attract and retain highly skilled technical,
managerial, sales and marketing personnel, continued market acceptance of the
Company's products and services, the timing of the receipt of software
licenses, the timing of services contracts and renewals, the timing and
complexity of large transactions, continued competitive and pricing pressures
in the marketplace, the Company's ability to develop and market new and updated
products and enhancements cost effectively and on a timely basis, and the
Company's ability to complete fixed-price contracts profitably. See "Risk
Factors."
3
<PAGE>
THE COMPANY
SCT develops, licenses and supports a suite of client/server, enterprise
software and provides a range of information technology ("IT") outsourcing
services. In addition, the Company offers a series of related services
including systems implementation, systems integration and maintenance and
enhancements. The Company's served vertical markets are higher education,
manufacturing and distribution, utilities and local government.
SCT Products and Services
SCT software and services allow clients to enhance their ability to
compete through improved quality of information. The Company's focus on four
vertical markets enables it to develop and utilize a base of industry expertise
to deliver products and services which address specific client requirements. By
offering a continuum of IT solutions ranging from application software to
large-scale outsourcing contracts, the Company makes available technology and
management tools to enable clients to manage information resources efficiently
and cost-effectively. For the nine months ended June 30, 1997, IT outsourcing
services accounted for 35% of total revenue, software sales accounted for 25%,
software services accounted for 21% and maintenance and enhancements accounted
for 19%.
Application Software. The Company develops and licenses application
software to each of its served vertical markets. The component applications of
the BANNER product line are developed for a client/server, ORACLE relational
database environment. ADAGE software, introduced to the process manufacturing
market in 1995, is an object oriented, enterprise resource planning ("ERP")
system which combines client/server technology with multi-site functionality
using a number of relational database platforms including Oracle and Microsoft
SQL Server. The following are the Company's key application software products:
BANNER2000 and Plus2000. BANNER2000 is SCT's net-centric, object-based
software for administrative computing in higher education. This suite of
software applications is built with a business process orientation and a
business enterprise focus. The software enables institutions to process
student information including financial aid, student records, admissions
and registration in a centralized or distributed information environment
using workflow, imaging, and end-user self service. In addition, BANNER2000
offers systems to assist with common administrative functions, including
human resources and financial management. Plus2000 offers a suite of web
enabled administrative applications to traditional mainframe and
minicomputer-based institutions.
BANNER Internet Applications. SCT's web enabled applications address client
requirements for decentralized routine processing and inquiry while
maintaining centralized control of information and access. These
applications are currently available for the higher education market under
the product names "Web for Student," "Web for Employees" and "Web for
Faculty & Advisors."
ADAGE. SCT offers its ADAGE ERP software to the manufacturing and
distribution industry. ADAGE employs a series of workflows composed of
industry-specific objects and business rules that model key business
processes across the supply chain. ADAGE enables users to integrate
corporate functions such as manufacturing planning, sales forecasting,
procurement, inventory management, distribution and finance. ADAGE is
designed to meet the specific requirements of process manufacturers
including food and beverage, chemicals, metals, minerals, and consumer
packaged goods manufacturers on the Windows NT and UNIX platforms.
BANNER CIS. For utilities, SCT provides BANNER CIS (customer information
system) to gas, electric, water, wastewater, refuse, and other utilities.
BANNER CIS is rule-based, can be quickly adapted for changes in business
strategy and provides utilities with customer management, marketing, and
supply chain management tools to support their changing needs and
competitive requirements. BANNER CIS assists utilities in providing
customer service, responding to customer inquiries, supporting new service
offerings, generating accurate and timely billing, and managing back office
resources.
BANNER for Local Governments. SCT offers a variety of administrative
products including BANNER Courts, Records Indexing, Finance and Human
Resources to address the requirements of local governments that are seeking
simplified access to public information. For example, BANNER Courts helps
to streamline complex court processing including docket management,
scheduling and document management.
4
<PAGE>
Software Services, Maintenance and Enhancements. SCT provides support
services to its software licensees, including implementation, modification,
user training, and consulting services. When purchasing a license for SCT
software, clients typically purchase specific initial services, such as
installation support and training. In addition to a license of the Company's
application software, SCT offers maintenance agreements usually for terms
ranging from one to seven years, which entitle clients to telephone support,
regulatory updates and functional and technical enhancements. The annual
maintenance fee generally is 15% of the license fee, and generally increases
each year by a specified percentage. SCT also provides systems integration
services in connection with the implementation of the Company's application
software. Modifications to existing software or SCT products can be contracted
on either a fixed price or time and materials basis.
IT Outsourcing. SCT provides OnSite services, a range of IT outsourcing
services which encompass end-user computing solutions, network management,
applications outsourcing, and business process outsourcing. These services are
designed to assume total or partial control and responsibility of clients'
information resources, generally on a long-term basis. The Company provides
management, staffing and support with skilled information systems personnel and
industry specialists who are knowledgeable in both computer-based technologies
and the functional aspects of clients' activities. In addition to offering
OnSite comprehensive data center outsourcing, SCT provides separate service
offerings allowing for scaleable contracts based upon client need. The
Company's SinglePoint Solutions assist utilities and energy companies in
serving the newly deregulated utility market. By combining software
applications, IT outsourcing and operations management, a utility or energy
service company can access SCT's application software products while SCT
operates the client's back office functions.
Markets
SCT primarily serves the higher education, manufacturing and distribution,
utilities and local government markets. For the first nine months of fiscal
year 1997, approximately 44% of the Company's revenue was derived from higher
education, approximately 23% was derived from local government, approximately
22% was derived from utilities, and approximately 11% was derived from
manufacturing and distribution. The Company's foreign operations represented
approximately 6% of the Company's revenue for the first nine months of fiscal
year 1997.
Higher Education. SCT has developed substantial functional knowledge and
technical expertise about the IT requirements of higher education institutions.
As institutions attempt to reduce administrative costs and focus on improving
the quality of academic programs, the Company believes that efficient
administrative systems that support a customer-centric, self-service paradigm
are increasingly important. In the United States, SCT targets the 2,200
institutions with over 2,000 students for its software and services. SCT serves
this market with its BANNER2000, Plus2000, web enabled administrative software
and OnSite services.
Utilities. SCT provides application software and services to a target
market of approximately 1,000 water, gas and electric utilities. The Company
believes that the deregulation of the utility market in the U.S. and the U.K.
is driving significant investment in IT and customer services. Clients range
from mid-size municipalities to investor-owned utilities serving millions of
customers.
Manufacturing and Distribution. ADAGE ERP software and OnSite services are
marketed to the process manufacturing industry. The Company believes that ERP
systems are being increasingly adopted by manufacturers, which are
re-engineering their business processes to serve customers better. SCT's target
market consists of the 8,400 process manufacturers and distributors which have
over $100 million in annual revenue.
Local Government. The IT services and application software market for
local government jurisdictions is highly fragmented, with many competitors,
including in-house computing departments of local governments, custom software
programmers and packaged application software vendors. The Company serves its
target market of approximately 1,000 local government entities with its
applicable BANNER software products and its OnSite services.
5
<PAGE>
Strategy
The Company's goal is to be a leading provider of solutions to clients in
its four vertical markets by providing both application software and IT
services. The Company seeks to accomplish this objective by: (i) focusing on
specific vertical markets in which the Company can utilize its established
reputation, market presence, and broad functional and technical expertise; (ii)
providing comprehensive IT solutions consisting of application software and
professional and outsourcing services and making these solutions available for
numerous industry standard platforms; (iii) offering object oriented, enterprise
wide software solutions which are designed for flexible, rapid implementation
and which allow users to accurately model the operation of their organization,
and (iv) supplementing its growth through strategic acquisitions, which the
Company has done in the past and regularly reviews as a means to expand its
business.
Nine Month Revenue
In the first nine months of fiscal year 1997, revenue increased 29% to
$203.0 million from the corresponding period in fiscal year 1996. Software
sales experienced significant growth in this period, increasing 51% to $50.6
million from the corresponding period in fiscal year 1996. This increase was
due primarily to increased licenses of ADAGE ERP software in the second and
third quarters, increased BANNER software licenses to the higher education
market during the third quarter and increased licenses of BANNER CIS software
to the utility market in the first and second quarters of fiscal year 1997.
The Company was incorporated in Delaware in 1968. Unless the context
otherwise requires, "SCT" or the "Company" refers to Systems & Computer
Technology Corporation and its subsidiaries. The Company's executive offices
are located at 4 Country View Road, Malvern, Pennsylvania 19355, and its
telephone number is (610) 647-5930.
SUMMARY TERMS OF THE DEBENTURES
<TABLE>
<S> <C>
Securities Offered ......... $60,000,000 principal amount of % Convertible Subordinated
Debentures due 2004 (the "Debentures").
Interest Payment Dates ...... April 15 and October 15, commencing April 15, 1998.
Conversion Rights ............ Convertible into Common Stock at a conversion price of $ per share,
subject to adjustment under certain circumstances (the "Conversion
Price").
Optional Redemption ......... Redeemable by the Company, in whole or in part, on or after October 15,
2000 at a redemption price of % of par in 2000, declining thereafter
to par in 2003.
Subordination ............... Subordinated to all existing and future Senior Indebtedness.
Maturity ..................... October 15, 2004.
</TABLE>
See "Description of Debentures."
6
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following risk factors
in addition to the other information set forth in this Prospectus before making
any decision to invest in the securities offered hereby.
Quarterly Fluctuations of Results of Operations
The Company has experienced significant variability of revenues from
quarter to quarter depending primarily on new software license signings, which
are typically concentrated in the last month of each quarter. As the Company's
expenses are relatively fixed in the short term, the Company's operating
results for a particular quarter could be adversely affected to the extent that
anticipated license signings in any quarter are not realized as expected. The
Company's revenues may fluctuate as a result of other factors as well,
including seasonal patterns of capital spending by clients, the timing and
receipt of orders, competition, pricing, new product introductions by the
Company or its competitors, levels of market acceptance for new products, and
general economic and political factors.
Fixed Price Contracts
Many OnSite service contracts provide for payment on a multi-year fixed
fee basis. The Company negotiates the fee to be charged based on its estimate
of the total expenses to be incurred in providing the services. In the event
the Company's costs to perform an OnSite services contract become greater than
originally anticipated, the Company's profit on that contract would be reduced
and, in an extreme case, the Company may suffer a loss.
Additionally, shorter term system integration contracts have begun to
constitute a larger portion of the Company's business. These system integration
contracts typically are performed on a fixed fee basis and require the Company
to incur significant software modification, customization and integration costs
in order to add functionality to a client's existing system. Similar to the
OnSite service contracts, if the Company's costs to perform a particular system
integration contract become greater than originally anticipated, the Company's
profit on that contract would be reduced or, in an extreme case, the Company
may suffer a loss. For example, the Company incurred additional costs in its
international utility business in the second half of fiscal year 1997 as a
result of contract delays and overruns.
Revenue is recognized as work is performed on the Company's services
contracts. Since services are typically provided at a greater rate during the
early part of a services contract and at a lesser rate in the later part, while
billings often remain constant, revenues in excess of billings result. Revenues
in excess of billings may also result in connection with software services
contracts where billings are sometimes milestone based. Although the Company's
contracts typically provide for the payment of the amount of revenues accrued
in excess of billings in the event of early terminations of the contract, there
can be no assurance that the Company will be able to recover such amounts from
the client in the event of early terminations.
Certain of the Company's contracts are subject to "fiscal funding"
clauses, which provide that in the event of budgetary constraints, the client
is entitled to reduce the level of services to be provided by the Company with
a corresponding reduction in the fee to be paid by the client, or in certain
circumstances, to terminate the services altogether. While the Company has not
been impacted materially by early terminations or reductions in service from
the use of fiscal funding provisions in the past, there can be no assurance
that such provisions will not give rise to early terminations or reductions of
service in the future. If clients of the Company representing a substantial
portion of the Company's revenues were to invoke the fiscal funding provisions
of their OnSite services contracts, the Company's results of operations would
be adversely affected.
Competition
In each of its markets, SCT has multiple competitors, which compete based
on a variety of factors, including customer size, geographic location, and
computing environment. Many established competitors have greater marketing,
technical and financial resources than the Company, and there can be no
assurance that SCT will be able to continue to compete successfully with
existing or new competitors or that such competitors will not develop products
or offer services that are superior to the Company's products and services or
that achieve greater market acceptance. Further, there can be no assurance that
the Company will be able to maintain and enhance its competitive position.
7
<PAGE>
Technological Change and New Products; Software Protection
The application software industry is characterized by rapid technological
advances, changes in customer requirements, product introductions and evolving
industry standards. The Company believes that its future success will depend on
its ability to continue to develop and market new products and enhancements
cost-effectively, which will necessitate continued investment in research and
development and sales and marketing. There can be no assurance that the
Company's existing products will not be rendered obsolete or non-competitive by
new industry standards or changing technology, that the Company will be able to
develop and market new products successfully or that the Company's new product
offerings will be accepted by its markets. Furthermore, programs as complex as
those offered by the Company may contain undetected errors or bugs when they
are first introduced or as new versions are released. There can be no assurance
that, despite testing by the Company and by third-party test sites, errors will
not be found in new product offerings, with the possible result of
unanticipated costs and delays in market acceptance of these products. The
Company believes that one of the factors that has resulted in the increase in
the demand for its software during fiscal year 1997 has been the year 2000
problem presently being encountered by certain organizations. The Company
anticipates that such increased demand will diminish over time as organizations
resolve the year 2000 problem.
The Company is substantially dependent upon copyright, trade secret laws
and internal non-disclosure safeguards generally incorporated in its software
license agreements to protect its software and to provide it with certain
competitive advantages. Although the Company believes that its functional
expertise in its markets serves to reduce the potential impact to the Company
which might result from misappropriation of intellectual property or trade
secrets, there can be no assurance that its existing or future copyrights and
other measures used by the Company will afford protection against competitors
with similar software or against infringing software.
Dependence on Qualified Technical Personnel
The Company's success depends on its ability to attract and retain
personnel with the technical skills and experience required to meet its
clients' specific needs. The Company must continually identify and recruit
technical personnel in each of its markets to fill new positions and to replace
technical personnel who have departed. The application software industry has
high turnover rates, and the demand for employees has, to date, substantially
exceeded supply. This has resulted in intense competition for technical
personnel and the Company expects such competition to increase in the future.
There can be no assurance that the Company will attract and retain the
personnel required for expanded operations. Failure to attract and retain such
personnel or an increase in the Company's employee turnover rate could have a
material adverse effect on the Company's business, operating results and
financial condition.
Contract Performance and OnSite Services Risks
The Company's OnSite services contracts require the Company to assume a
significant level of responsibility for developing or maintaining systems on
behalf of clients. Many of the Company's OnSite services contracts are critical
to the operations of its clients' businesses. The Company's failure or
inability to complete such engagements to its clients' satisfaction could have
a material adverse effect on its clients' operations and, consequently, may
give rise to claims against the Company for damages or otherwise damage its
reputation, any of which could have a material adverse effect on the Company's
business, operating results and financial condition. Moreover, certain of the
Company's more recent OnSite services contracts provide financial penalties in
the event the Company does not meet stated performance levels.
Management of Growth
The continuation of the growth in Company revenues will depend, in part,
on the success of certain new product offerings including ADAGE. In the event
one or more new product offerings of the Company are unsuccessful, the
Company's financial position or results of operations could be adversely
affected. In addition, the Company may continue to grow through acquisitions.
Future acquisitions will require integration of the acquired operations into
those of the Company. There can be no assurance that the Company will be able
to manage its expansion or successfully integrate acquired operations. The
failure to do so could adversely affect the Company's financial position or
results of operations.
8
<PAGE>
Dependence on Key Management and Sales Personnel
The success of the Company's business is dependent upon certain key
management and sales personnel. In addition, the Company believes that to
succeed in the future it will be required to continue to attract, retain and
motivate additional talented and qualified management and sales personnel, who
are in high demand. There can be no assurance that the Company will be able to
retain its key employees or that it will be able to continue to attract,
assimilate and retain other skilled management and sales personnel. The loss of
certain of its existing key personnel or the inability to attract and retain
additional qualified employees in the future could have a material adverse
effect on the Company.
Subordination
The Debentures will be subordinated in right of payment to all present and
future Senior Indebtedness (as hereafter defined) of the Company. The Indenture
does not prohibit or limit the incurrence of additional Senior Indebtedness.
See "Description of the Debentures - Subordination."
Legal Proceedings
In October 1995, a purported class action lawsuit was filed against the
Company and certain of its officers and directors. The lawsuit alleges
violations of certain disclosure and related provisions of the federal
securities laws and seeks damages in an unspecified amount as well as equitable
relief. A number of the plaintiffs' claims have been dismissed, and the Company
believes that the remaining allegations in the lawsuit are without merit.
Although the Company is defending against the lawsuit vigorously, the ultimate
outcome of the matter cannot presently be determined.
Absence of Public Market for the Debentures; Volatility of Securities Prices
There is currently no public market for the Debentures. The Debentures
will be traded in the over-the-counter market and quoted on Nasdaq, and there
can be no assurance that an active trading market will develop for the
Debentures or, if developed, that such market can be sustained. The Debentures
may trade at a discount from the initial offering price, depending upon
prevailing interest rates and other factors. Furthermore, the market price for
similar securities, announcements of technological innovations, new commercial
products or new contract signings by the Company or its competitors,
developments concerning proprietary technologies, regulatory developments and
general economic and political factors, as well as period-to-period
fluctuations in financial results, may have a significant impact on the market
price of the Debentures and the Common Stock into which the Debentures are
convertible.
Anti-Takeover Provisions; Possible Issuance of Preferred Stock
The Company's Certificate of Incorporation and By-Laws contain provisions
that could have the effect of delaying, deferring or preventing an unsolicited
change in the control of the Company, which may adversely affect the market
price of the Common Stock or the ability of stockholders to participate in a
transaction in which they might otherwise receive a premium for their shares
over the then-current market price. These provisions require a supermajority
vote of the voting stock for removal of directors and a supermajority vote of
the directors to approve a merger, consolidation, sale of substantially all of
the assets of the Company or similar transaction. Additionally, the Company's
Board of Directors is classified, which makes it more difficult for a third
party to change its composition. The Indenture's Change in Control provisions
may, in certain circumstances, make more difficult or discourage a takeover of
the Company and, thus, the removal of incumbent management. Further, the
Company's Certificate of Incorporation authorizes the Board of Directors to
issue Preferred Stock without shareholder approval and on such terms as the
Board of Directors may determine. Although no shares of Preferred Stock are
currently outstanding and the Company has no present plans to issue any such
shares, the rights of the holders of shares of Common Stock will be subject to,
and may be adversely affected by, the rights of holders of any Preferred Stock
that may be issued in the future.
9
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Debentures in this
offering are estimated to be $ ($ if the Underwriters' over-allotment
option is exercised in full), after deducting estimated underwriting discounts
and commissions and estimated offering expenses. The net proceeds of this
offering will be used for working capital and general corporate purposes,
including product development and possible future acquisitions. The Company
currently does not have any commitments or agreements for any acquisition.
Pending application of the net proceeds as described above, the net proceeds of
this offering will be invested in U.S. Treasury securities and other investment
grade, interest-bearing instruments.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of June 30, 1997 and as adjusted to give effect to the sale of the
Debentures hereby and the application of the estimated net proceeds therefrom
as described in "Use of Proceeds."
<TABLE>
<CAPTION>
June 30, 1997
--------------------------
Actual As Adjusted
----------- ------------
(In thousands)
<S> <C> <C>
Current portion of long-term debt .................................... $ 7,385 $ 7,385
======== ========
Long-term debt:
Notes payable ......................................................... $ 750 $ 750
Senior Revolving Credit Agreement .................................... -- --
Convertible Subordinated Debentures due 2004 ........................ -- 60,000
-------- --------
Total long-term debt ............................................. 750 60,750
Stockholders' equity:
Preferred Stock, $.10 par value per share, 3,000,000 shares authorized,
none issued ...................................................... -- --
Common Stock, $.01 par value per share, 24,000,000 shares authorized,
17,317,436 issued (1) ............................................. 173 173
Capital in excess of par value ....................................... 89,408 89,408
Retained Earnings ................................................... 54,202 54,202
Less:
Held in treasury, 1,150,941 common shares at cost .................. (2,959) (2,959)
Notes receivable from stockholders ................................. (610) (610)
-------- --------
Total stockholders' equity ....................................... 140,214 140,214
-------- --------
Total capitalization ................................................ $148,349 $208,349
======== ========
</TABLE>
- ------------
(1) Excludes 2,543,497 shares of Common Stock reserved for issuance under
currently outstanding options at an average exercise price of $14.21 per
share.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of September 30,
1992, 1993, 1994, 1995 and 1996 and for the years then ended are derived from
the consolidated financial statements of the Company which have been audited by
Ernst & Young LLP, independent auditors. The selected consolidated financial
data as of and for the nine months ended June 30, 1996 and 1997 are derived
from unaudited consolidated financial statements which, in management's
opinion, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the Company's financial
position and the results of operations for these periods. The results of
operations for the nine months ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the full year ending
September 30, 1997. The information set forth below should be read in
conjunction with the Consolidated Financial Statements and Notes thereto, and
other financial information incorporated by reference herein.
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------
1992(1)(3) 1993(3) 1994(2)
-------------- --------------- ---------------
(In thousands, except share and per share data)
<S> <C> <C> <C>
Statement of Operations Data:
Revenue:
OnSite services ........................... $ 43,683 $ 53,685 $ 63,979
Software sales ........................... 24,983 27,540 34,540
Maintenance and enhancements ............... 13,088 26,046 30,270
Software services ........................ 8,393 12,439 18,172
Interest and other revenue ............... 736 458 1,253
------------ ------------- -------------
90,883 120,168 148,214
Expenses:
Cost of OnSite services .................. 35,098 42,403 50,095
Cost of software sales and maintenance
and enhancements ........................ 19,987 23,578 27,055
Cost of software services .................. 7,236 10,776 14,606
Selling, general and administrative ...... 22,073 31,172 36,144
Charge for purchased research and
development .............................. 7,693 0 0
Interest expense ........................... 443 1,016 2,520
------------ ------------- -------------
92,530 108,945 130,420
Income (Loss) Before Income Taxes and
Extraordinary Credit ..................... (1,647) 11,223 17,794
Provision for income taxes .................. 803 4,511 6,148
------------ ------------- -------------
Income (Loss) Before Extraordinary Credit (2,450) 6,712 11,646
Extraordinary Credit: Utilization of
operating loss carry forwards ............ 180 2,901 0
------------ ------------- -------------
Net income (loss) ........................ $ (2,270) $ 9,613 $ 11,646
============ ============= =============
Earnings per share:
Primary .................................... $ (0.19) $ 0.75 $ 0.86
Fully diluted .............................. $ -- $ 0.74 $ 0.83
Weighted average common shares and
equivalents outstanding:
Primary .................................... 11,848,423 12,780,223 13,517,146
Fully Diluted .............................. -- 13,195,672 15,817,862
Ratio of earnings to fixed charges(4) ...... -- 8.3 x 6.6 x
Balance Sheet Data:
Working Capital ........................... $ 20,159 $ 50,432 $ 59,239
Total Assets .............................. 72,487 110,082 128,809
Long Term Debt (net of current portion) . 12,610 34,500 34,500
Stockholders Equity ........................ 40,674 51,282 65,481
<PAGE>
<CAPTION>
Nine Months Ended
June 30,
--------------------------------
1995(1) 1996 1996 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
OnSite services ........................... $ 66,904 $ 84,183 $ 62,079 $ 70,149
Software sales ........................... 40,376 46,821 33,382 50,554
Maintenance and enhancements ............... 35,145 42,013 30,923 38,003
Software services ........................ 31,631 41,552 29,917 43,899
Interest and other revenue ............... 2,092 689 590 406
------------- ------------- ------------- -------------
176,148 215,258 156,891 203,011
Expenses:
Cost of OnSite services .................. 51,927 67,852 50,210 57,190
Cost of software sales and maintenance
and enhancements ........................ 31,681 38,546 27,833 33,063
Cost of software services .................. 27,082 36,586 27,116 36,150
Selling, general and administrative ...... 43,746 53,921 39,660 51,064
Charge for purchased research and
development .............................. 8,700 0 0 0
Interest expense ........................... 2,696 2,350 1,724 1,123
------------- ------------- ------------- -------------
165,832 199,255 146,543 178,590
Income (Loss) Before Income Taxes and
Extraordinary Credit ..................... 10,316 16,003 10,348 24,421
Provision for income taxes .................. 7,258 6,884 4,407 9,906
------------- ------------- ------------- -------------
Income (Loss) Before Extraordinary Credit 3,058 9,119 5,941 14,515
Extraordinary Credit: Utilization of
operating loss carry forwards ............ 0 0 0 0
------------- ------------- ------------- -------------
Net income (loss) ........................ $ 3,058 $ 9,119 $ 5,941 $ 14,515
============= ============= ============= =============
Earnings per share:
Primary .................................... $ 0.22 $ 0.62 $ 0.39 $ 0.95
Fully diluted .............................. $ 0.21 $ 0.61 $ 0.39 0.87
Weighted average common shares and
equivalents outstanding:
Primary .................................... 14,029,700 14,696,274 15,095,911 15,270,714
Fully Diluted .............................. 14,399,182 16,781,274 15,095,911 17,293,334
Ratio of earnings to fixed charges(4) ...... 4.1 x 5.8 x 5.2 x 14.1 x
Balance Sheet Data:
Working Capital ........................... $ 63,555 $ 67,389 $ 63,082 $ 76,929
Total Assets .............................. 150,983 163,259 162,828 193,099
Long Term Debt (net of current portion) . 31,790 31,590 31,690 750
Stockholders Equity ........................ 85,565 96,796 91,902 140,214
</TABLE>
- ------------
(1) Includes charges of $7,693 and $8,700 for purchased research and
development in the years ended September 30, 1992 and 1995, respectively.
Results without the charge for purchased research and development would
have been:
<TABLE>
<CAPTION>
1992 1995
-------- --------
<S> <C> <C>
Income before extraordinary credit ........................ $3,628 $11,758
Fully diluted income per share before extraordinary credit $ 0.29 $ 0.80
</TABLE>
(2) Effective October 1, 1993, the Company adopted FAS 109, "Accounting for
Income Taxes," with an immaterial cumulative effect. Prior to 1994, the
benefits of net operating loss and tax credit carryforwards were
classified as extraordinary credits.
(3) The classification of expenses between the cost of software sales and
maintenance and enhancements and the cost of software services has been
estimated for 1992 and 1993 to facilitate comparability with subsequent
years' presentations.
(4) Earnings were inadequate to cover fixed charges for 1992. The coverage
deficiency amounted to $1,647,000. If the charge for purchased research
and development referred to in Note (1) were not included, the ratio for
1992 would have been 8.0x.
11
<PAGE>
DESCRIPTION OF DEBENTURES
The Debentures are to be issued under an Indenture, dated as of October
15, 1997 (the "Indenture"), between the Company and First Union National Bank,
as Trustee (the "Trustee"). A copy of the Indenture substantially in the form
in which it is to be executed has been filed as an exhibit to the Registration
Statement. The following summarizes the material provisions of the Indenture
and is subject to, and qualified in its entirety by reference to, all the
provisions of the Indenture, including the definition therein of certain terms.
Wherever particular articles, sections or defined terms of the Indenture are
referred to, it is intended that such articles, sections or defined terms shall
be incorporated herein by reference.
General
The Debentures will be limited to $60,000,000 aggregate principal amount
(or $69,000,000 aggregate principal amount assuming exercise in full of the
Underwriters' over-allotment option), will be unsecured subordinated
obligations of the Company, and will mature on October 15, 2004. The Debentures
will bear interest from October , 1997 at the rate per annum shown on the
cover page of this Prospectus. Interest will be payable semi-annually on April
15 and October 15 of each year ("Interest Payment Dates"), subject to certain
exceptions, commencing April 15, 1998, to the person in whose name the
Debenture is registered at the close of business on the first day of April or
October, as the case may be ("Regular Record Date"), next preceding such
Interest Payment Date. Principal of, premium, if any, and interest on the
Debentures will be payable, and the Debentures will be convertible and
exchangeable and transfers thereof will be registrable, at the office of the
Trustee or the office or agency of the Company maintained for such purpose in
the City of Philadelphia or New York and at any other office or agency
maintained by the Company for such purpose, provided that at the option of the
Company, payment of interest may be made by check mailed to the address of the
person entitled thereto as it appears in the Debenture Register. All payments
of interest and principal will be made in United States Dollars. (Sections
3.01, 3.05, 3.07, 10.02, 12.02 and 13.01)
The Debentures will be issued only in registered form without coupons in
denominations of $1,000 or any integral multiple thereof. (Section 3.02) No
service charge will be made for any registration of transfer or exchange of
Debentures, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. (Section
3.05)
Conversion Rights
The Debentures will be convertible into Common Stock at any time prior to
redemption (except as set forth in the following sentence) or maturity,
initially at the conversion price stated on the cover page hereof. The right to
convert Debentures called for redemption will terminate at the close of
business on the Business Day immediately preceding a Redemption Date and will
be lost if not exercised prior to that time. (Section 12.01) See "Optional
Redemption."
Debentures surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except Debentures called
for redemption on a Redemption Date within such period) must be accompanied by
payment of an amount equal to the interest thereon which the registered Holder
is to receive. No other adjustment for interest or dividends is to be made upon
conversion. (Sections 3.07 and 12.02) Fractional shares of Common Stock will
not be issued upon conversion, but in lieu thereof, the Company will pay a cash
adjustment based upon market price. (Section 12.03)
The Conversion Price is subject to adjustment (under formulae set forth in
the Indenture) under certain circumstances, including: (i) the issuance of
Common Stock as a dividend or distribution on Common Stock; (ii) the issuance
to all holders of Common Stock of rights or warrants entitling them to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price; (iii) certain subdivisions and combinations of Common
Stock; (iv) the issuance as a dividend or distribution to all holders of Common
Stock of shares of capital stock of the Company (other than Common Stock) or
evidences of indebtedness, cash or other assets of the Company (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
12
<PAGE>
Company or paid exclusively in cash); (v) dividends or other distributions
consisting exclusively of cash (excluding any cash portion of distributions
referred to in clause (iv)) to all holders of Common Stock to the extent such
distributions, combined with (A) all such all-cash distributions made within
the preceding 12 months in respect of which no adjustment has been made, plus
(B) any cash and the fair market value of other consideration payable in
respect of any tender offers by the Company or any of its subsidiaries for
Common Stock concluded within the preceding 12 months in respect of which no
adjustment has been made, exceeds 10% of the Company's market capitalization
(being the product of the then current market price of the Common Stock times
the number of shares of Common Stock then outstanding) on the record date for
such distribution; and (vi) the purchase of Common Stock pursuant to a tender
offer made by the Company or any of its subsidiaries to the extent that the
aggregate consideration, together with (X) any cash and the fair market value
of any other consideration payable in any other tender offer expiring within
the 12 months preceding such tender offer in respect of which no adjustment has
been made, plus (Y) the aggregate amount of any such all-cash distributions
referred to in clause (v) above to all holders of Common Stock within the 12
months preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 10% of the Company's market capitalization
on the expiration of such tender offer. (Section 12.04) In the case of certain
consolidations or mergers to which the Company is a party or the conveyance or
transfer of the properties and assets of the Company substantially as an
entirety, each Debenture then outstanding would, without the consent of any
Holders of Debentures, become convertible only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance or transfer by a holder of the number of shares of Common Stock into
which the Debenture might have been converted immediately prior to such
consolidation, merger, conveyance or transfer, assuming such holder of Common
Stock failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon the
consolidation, merger, conveyance or transfer (provided that if the kind or
amount of securities, cash or other property so receivable is not the same for
each non-electing share, the kind and amount so receivable by 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). (Section 12.10)
Subordination of Debentures
The Debentures will be subordinated and subject, to the extent and in the
manner set forth in the Indenture, to the prior payment in full of all Senior
Indebtedness. (Section 13.01) Senior Indebtedness is defined to include the
principal of, premium, if any, interest and other amounts due on any
indebtedness, whether now outstanding or hereafter created, incurred, assumed
or guaranteed by the Company, for money borrowed from others (including
obligations under capitalized leases or purchase money indebtedness) or in
connection with the acquisition by the Company or a Subsidiary of any other
business or entity, or in respect of letters of credit or bid, performance or
surety bonds issued for the account or on the credit of the Company or a
Subsidiary, and, in each case, all renewals, extensions and refundings thereof,
other than (i) any such indebtedness as to which, in the instrument creating or
evidencing the same, it is provided that such indebtedness is not superior in
right of payment to the Debentures, (ii) indebtedness of the Company to any
Affiliate and (iii) the Debentures. (Section 1.01) At September 30, 1997, the
Company had approximately $1,975,000 of outstanding indebtedness that would
have constituted Senior Indebtedness under the Indenture. The Indenture does
not limit the amount of Senior Indebtedness that the Company may incur.
No payments of principal of, premium, if any, or interest on the
Debentures may be made and no Debentures may be redeemed, retired or purchased
if the Company is then in default in the payment of any Senior Indebtedness or
if at the time any other Event of Default under the terms of any Senior
Indebtedness exists permitting acceleration thereof. Upon any payment or
distribution of assets of the Company in the event of any insolvency,
reorganization, liquidation or similar proceeding, all Senior Indebtedness must
be repaid in full (including any interest thereon accruing after the
commencement of any proceeding) before the Holders will be entitled to receive
or retain any payment. If the Debentures are declared due and payable before
their Stated Maturity because of the occurrence of an Event of Default, no
payment may be made in respect of the Debentures unless and until all Senior
Indebtedness shall have been paid in full. (Section 13.02)
By reason of such subordination, in the event of insolvency, creditors of
the Company who are holders of Senior Indebtedness may recover more, ratably,
than Holders, and creditors of the Company who are neither holders of Senior
Indebtedness nor Holders may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than Holders.
13
<PAGE>
Optional Redemption
The Debentures will be redeemable upon not less than 30 nor more than 60
days' notice by mail at any time, as a whole or in part, at the election of the
Company, at a Redemption Price equal to the percentage of the principal amount
set forth below if redeemed in the 12-month period beginning October 15 of the
years indicated:
Redemption Redemption
Year Price Year Price
---- ---------- ---- -----------
2000 2002
2001 2003
and thereafter at a Redemption Price equal to 100% of the principal amount,
with accrued interest to the Redemption Date (subject to the right of Holders
of record on Regular Record Dates to receive interest due on an Interest
Payment Date), provided that the Company may not redeem any Debentures prior to
October 15, 2000. (Sections 2.03, 11.01, 11.04, 11.05 and 11.06)
Certain Rights to Require Repurchase of Debentures by the Company
In the event of any Change in Control (as defined below) of the Company
occurring after the date of issuance of the Debentures and on or prior to
Maturity, each Holder of Debentures will have the right, at the Holder's
option, to require the Company to repurchase all or any part of the Holder's
Debentures on the date (the "Repurchase Date") that is 75 days after the date
the Company gives notice of the Change in Control as described below at a price
(the "Repurchase Price") equal to 100% of the principal amount thereof,
together with accrued and unpaid interest to the Repurchase Date. (Section
14.01) On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or a Paying Agent an amount of money sufficient to pay the Repurchase
Price of the Debentures which are to be repaid on the Repurchase Date. (Section
14.03) Neither the Board of Directors of the Company nor the Trustee, acting
alone or together, can modify or waive this required repurchase of the
Debentures.
Failure by the Company to repurchase the Debentures when required under
the preceding paragraph will result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture. (Section 5.01)
On or before the 15th day after the occurrence of a Change in Control, the
Company is obligated to mail to all Holders a notice of the event constituting
and the date of such Change in Control, the Repurchase Date, the date by which
the repurchase right must be exercised, the Repurchase Price for Debentures,
and the procedures which a Holder must follow to exercise a repurchase right.
To exercise the repurchase right, a Holder of a Debenture must deliver, on or
before the 10th day prior to the Repurchase Date, written notice to the Company
(or an agent designated by the Company for such purpose) and to the Trustee of
the Holder's exercise of such right, together with the certificates evidencing
the Debentures with respect to which the right is being duly exercised, duly
endorsed for transfer. (Section 14.02)
A "Change in Control" shall occur when: (i) all or substantially all of
the Company's assets are sold as an entirety to any person or related group of
persons; (ii) there shall be consummated any consolidation or merger of the
Company (A) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately prior to
the effectiveness thereof are changed into or exchanged for the same
consideration) or (B) pursuant to which the Common Stock is converted into
cash, securities or other property, in each case other than a consolidation or
merger of the Company in which the holders of the Common Stock immediately
prior to the consolidation or merger have, directly or indirectly, at least a
majority of the common stock of the continuing or surviving corporation
immediately after such consolidation or merger, or (iii) any person, or any
persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act, together with any Affiliates thereof, shall
acquire beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
of at least 50% of the total voting power of all classes of capital stock of
the Company entitled to vote generally in the election of directors of the
Company. Notwithstanding clause (iii) of the foregoing definition, a Change in
Control shall not be deemed to have occurred solely by virtue of the Company,
any Subsidiary, any employee stock purchase plan, stock option plan or other
stock incentive plan or program, retirement
14
<PAGE>
plan or automatic dividend reinvestment plan or any substantially similar plan
of the Company or any Subsidiary or any person holding securities of the
Company for or pursuant to the terms of any such employee benefit plan, filing
or becoming obligated to file a report under or in response to Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report) under the Exchange
Act disclosing beneficial ownership by it of shares or securities of the
Company, whether in excess of 50% or otherwise. (Section 14.05) A
recapitalization or a leveraged buyout or similar transaction involving members
of Management or their Affiliates will constitute a Change in Control if it
meets the foregoing definition.
Notwithstanding the foregoing, a Change in Control as described above
shall not be deemed to have occurred if (i) the Current Market Price of the
Common Stock on the date of a Change in Control is at least equal to 105% of
the Conversion Price of the Debentures in effect immediately preceding the time
of such Change in Control, or (ii) all of the consideration (excluding cash
payments for fractional shares) in the transaction giving rise to such Change
in Control to the holders of Common Stock consists of shares of common stock
that are, or immediately upon issuance will be, listed on a national securities
exchange or quoted on the Nasdaq National Market, and as a result of such
transaction the Debentures become convertible solely into such common stock, or
(iii) the consideration in the transaction giving rise to such Change in
Control to the holders of Common Stock consists of cash or securities that are,
or immediately upon issuance will be, listed on a national securities exchange
or quoted on the Nasdaq National Market, or a combination of cash and such
securities, and the aggregate fair market value of such consideration (which,
in the case of such securities, shall be equal to the average of the daily
Closing Price of such securities during the 10 consecutive trading days
commencing with the sixth trading day following consummation of such
transaction) is at least 105% of the Conversion Price of the Debentures in
effect on the date immediately preceding the Closing Date of such transaction.
(Section 14.05)
There is no definition of the phrase "all or substantially all" as applied
to the Company's assets and used in the definition of Change in Control in the
Indenture, and there is no clear definition of such phrase under applicable
law. As a result of the uncertainty of the meaning of this phrase, in the event
the Company were to sell a significant amount of its assets, the Holders and
the Company may disagree over whether the sale gave rise to the right of
Holders to require the Company to repurchase the Debentures. In such case, the
Holders would likely not be able to require the Company to repurchase unless
and until the disagreement were resolved in favor of the Holders.
The right to require the Company to repurchase Debentures as a result of
the occurrence of a Change in Control could create an Event of Default under
Senior Indebtedness, as a result of which any repurchase could, absent a
waiver, be blocked by the subordination provisions of the Debentures. See
"Subordination of Debentures." The Company's ability to pay cash to the Holders
upon a repurchase may be limited by certain financial covenants contained in
the Company's Senior Indebtedness.
In the event a Change in Control occurs and the Holders exercise their
rights to require the Company to repurchase Debentures, the Company intends to
comply with applicable tender offer rules under the Exchange Act, including
Rules 13e-4 and 14e-1, as then in effect, with respect to any such purchase.
The Change in Control purchase feature of the Debentures may in certain
circumstances make more difficult or discourage a takeover of the Company and,
thus, the removal of incumbent Management. The Change in Control purchase
feature, however, is not the result of Management's knowledge of any specific
effort to accumulate shares of Common Stock or to obtain control of the Company
by means of a merger, tender offer, solicitation or otherwise, or part of a
plan by Management to adopt a series of antitakeover provisions. Instead, the
Change in Control purchase feature is a standard term contained in other
similar debt offerings and the specific terms of this feature result from
negotiations between the Company and the Underwriters. Management has no
present intention to engage in a transaction involving a Change in Control.
The foregoing provisions would not necessarily afford Holders protection
in the event of highly leveraged or other transactions involving the Company
that may adversely affect Holders.
Sinking Fund
There will be no sinking fund established for the retirement of the
Debentures.
15
<PAGE>
Modification of the Indenture
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of two-thirds in principal
amount of the Outstanding Debentures provided that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debenture
affected thereby, (i) change the stated maturity date of the principal of, or
any installment of interest on, the Debentures, (ii) reduce the principal
amount of, the rate of interest thereon, or any premium payable on, any
Debentures, (iii) change the place of payment where, or the coin or currency in
which, any Debenture or any payment or the interest thereon is payable, (iv)
impair the right to institute suit for the enforcement of any such payment when
due, (v) adversely affect the conversion rights of the Holders, (vi) modify the
provisions of the Indenture with respect to the subordination of the Debentures
in a manner adverse to the Holders, (vii) adversely affect the right to require
the Company to repurchase Debentures on a Change in Control, or (viii) reduce
the percentage in principal amount of Debentures the consent of whose Holders
is required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. (Section 9.02)
Events of Default; Notice and Waiver
The following are to be Events of Default: (i) default in the payment of
any interest, continued for 30 days; (ii) default in the payment of principal
or premium, if any, when due; (iii) default in the payment of the Repurchase
Price in respect of any Debenture on the Repurchase Date in accordance with the
Indenture; (iv) default in the performance of any other covenant continued for
60 days after written notice to the Company as provided in the Indenture; (v)
default in respect of indebtedness of the Company for money borrowed which
results in acceleration of the maturity of $1 million or more of indebtedness,
if such acceleration is not rescinded or indebtedness discharged within 30 days
after written notice to the Company as provided in the Indenture; and (vi)
certain events in bankruptcy, insolvency or reorganization. (Section 5.01) If
any Event of Default shall happen and be continuing, the Trustee or the Holders
of not less than 25% in principal amount of the Outstanding Debentures may
declare the Debentures due and payable immediately. (Section 5.02) At any time
after a declaration of acceleration with respect to the Debentures has been
made, but before a judgment or decree based on acceleration has been obtained,
the Holders of a majority in principal amount of the Outstanding Debentures
may, under certain circumstances, rescind and annul such acceleration. (Section
5.02)
No Holder will have any right to institute any proceeding with respect to
the Indenture or for any remedy under the Indenture unless (i) the Holder
previously has given to the Trustee written notice of a continuing Event of
Default, (ii) the Holders of not less than 25% in principal amount of the
Outstanding Debentures have made written request, and offered reasonable
indemnity, to the Trustee to institute proceedings as trustee, and (iii) within
60 days after such request, the Trustee has neither instituted such proceeding
nor received from the Holders of a majority in aggregate principal amount of
the Outstanding Debentures a direction inconsistent with the request. (Section
5.07)
The Indenture will provide that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable indemnification. (Section 6.03) Subject
to such provisions for indemnification of the Trustee, the Holders of a
majority in principal amount of the Outstanding Debentures will have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee. (Section 5.12)
The Holders of a majority in principal amount of the Outstanding
Debentures may on behalf of the Holders of all Debentures waive compliance by
the Company with certain restrictive provisions of the Indenture. (Section
10.07) The Holders of a majority in principal amount of the Outstanding
Debentures may on behalf of the Holders of all Debentures waive certain past
defaults except a default in payment of the principal of (or premium, if any)
or interest on any Debenture or in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture affected. (Section 5.13)
16
<PAGE>
Consolidation, Merger, Conveyance or Transfer
The Indenture provides that the Company shall not consolidate with or
merge into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any person, unless (i) any such
successor assumes the Company's obligations under the Debentures and the
Indenture, (ii) after giving effect thereto, no Event of Default shall have
occurred and be continuing, and (iii) certain other conditions under the
Indenture are met. (Section 8.01) Upon any such consolidation or merger, or any
such conveyance or transfer of the properties and assets of the Company
substantially as an entirety, the successor corporation formed by such
consolidation, or into which the Company is merged, or to which such conveyance
or transfer is made, shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture with the same effect
as if such successor corporation had been named as the Company. The Company as
the predecessor corporation shall be relieved of all obligations and covenants
under the Indenture. (Section 8.02)
Governing Law
The Indenture will provide that the Debentures will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law.
The Trustee
First Union National Bank will be the Trustee under the Indenture.
DESCRIPTION OF CAPITAL STOCK
Common Stock
The authorized capital stock of the Company includes 24,000,000 shares of
Common Stock, par value $.01 per share, of which, on June 30, 1997, 16,166,495
were issued and outstanding. Holders of Common Stock have no preemptive rights.
The outstanding shares of Common Stock are fully paid and non-assessable.
Holders of Common Stock are entitled to dividends when, as and if declared by
the Board of Directors of the Company out of any funds legally available to the
Company for that purpose. A holder of Debentures will not be entitled to
receive dividends actually declared and paid, if any, with respect to the
Common Stock unless such holder has first exercised the conversion rights
associated with the Debentures, and then only to the extent such holder has so
converted Debentures into shares of Common Stock.
Holders of Common Stock are entitled to one vote per share held of record
with respect to all matters submitted to a vote of the stockholders. There is
no cumulative voting for the election of directors.
The Company's Board of Directors is divided into three classes, each of
which is elected for a three-year term, with one class being elected each year.
Directors may be removed, only for cause, and only with the approval of 66 2/3%
of the voting power of the stock entitled to vote in the election of directors
(the "voting stock"). The classification of directors has the effect of making
it more difficult for a third party to change the composition of the Board of
Directors without the support of the incumbent Board. At least two annual
stockholder meetings, instead of one, will be required to effect a change in
the control of the Board, unless stockholders controlling at least 66 2/3% of
the voting stock vote to remove directors for cause.
The Company's Certificate of Incorporation provides that unless approved
by two-thirds of the Directors of the Company, the Company cannot engage in (i)
a merger or consolidation, (ii) a sale, lease or exchange of substantially all
of its assets, or (iii) a reclassification, recapitalization or other
transaction designed to decrease the number of holders of the Company's voting
stock (other than repurchases of stock for cancellation or the Company's
treasury and other than redemptions permitted by the terms of the security),
without the affirmative vote of holders of at least 66 2/3% of all stock
entitled to vote thereon.
In connection with a liquidation, dissolution or winding up of the
Company, holders of Common Stock will be entitled to receive pro rata the
assets remaining after creditors of the Company and the holders of any
Preferred Stock have been paid in full.
The Transfer Agent for the Common Stock is Registrar and Transfer Company,
Cranford, New Jersey.
Preferred Stock
The Company is authorized to issue 3,000,000 shares of Preferred Stock,
par value $.10 per share, and to establish and issue shares of Preferred Stock
in series and to fix, determine and vary the voting rights, designations,
preferences, qualifications, privileges, options, conversion rights and other
special rights of each series of Preferred Stock. As of the date of this
Prospectus no shares of Preferred Stock were issued and outstanding.
17
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), have severally agreed,
subject to the terms and conditions set forth in the Underwriting Agreement, to
purchase from the Company the principal amount of Debentures indicated below
opposite their respective names at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters will purchase
all the Debentures offered hereby if any such Debentures are purchased.
Principal Amount
Underwriters of Debentures
------------ ----------------
Unterberg Harris .........................
Janney Montgomery Scott Inc. .............
------------
Total .................................. $60,000,000
============
The Company has been advised that the Underwriters propose initially to
offer the Debentures to the public at the offering price set forth on the cover
page of this Prospectus and to certain selected dealers (who may include the
Underwriters) at such price less a concession not in excess of % of the
principal amount thereof. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % to certain other dealers. After the
initial offering, the offering price and other selling terms may be changed by
the Underwriters. The Debentures are offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part.
The Company has granted an option to the Underwriters, exercisable during
the 30 day period after the date of this Prospectus, to purchase up to a
maximum of $9,000,000 in principal amount of additional Debentures from the
Company at the initial offering price less the underwriting discount shown on
the cover page of this Prospectus. The Underwriters may exercise such option
only to cover over-allotments made in connection with the sale of the
Debentures offered hereby. To the extent the Underwriters exercise the option,
the Underwriters will be committed, subject to certain conditions, to purchase
a principal amount of such additional Debentures in approximately the same
proportion as set forth in the above table.
The Company has agreed to indemnify the Underwriters against certain
liabilities that may be incurred in connection with this offering, including
liabilities under the Securities Act, or to contribute to payments that the
Underwriters may be required to make in respect thereof.
The Company has agreed that it will not sell or dispose of, and the
Company's directors and executive officers have agreed that they will not sell
or dispose of, any shares of Common Stock without the prior written consent of
either of the Underwriters until 90 days after the effective date of the
Registration Statement of which this Prospectus is a part. Such lock-up
restriction does not apply to (i) sales or other transfers of up to 50,000
shares of Common Stock owned by Michael J. Emmi, the Company's Chairman,
President and Chief Executive Officer, and up to 10,000 shares of Common Stock
owned by each of the other executive officers and directors of the Company (an
aggregate of 120,000 shares), (ii) issuances by the Company under employee
stock plans, upon exercise of options outstanding at the commencement of this
offering and upon conversion of the Debentures, or (iii) private sales,
transfers or issuances subject to the lock-up restriction.
Thomas I. Unterberg, a Managing Director of Unterberg Harris, also serves
as a director of the Company in his individual capacity. Mr. Unterberg and
other partners of Unterberg Harris beneficially own 188,600 shares of Common
Stock. The Underwriters have provided investment banking services to the
Company and may continue to do so in the future.
In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the Debentures or Common Stock. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M under the
Exchange Act pursuant to which the Underwriters may bid for, or purchase,
Debentures or Common Stock for the purpose of stabilizing the market price. The
Underwriters also may create a short position by selling more Debentures in
connection with this offering than it is committed to purchase from the
Company, and in such case may purchase Debentures in the open market following
completion of this offering to cover all or a portion of such short position.
In addition, the Underwriters may impose "penalty bids" whereby it may reclaim
from a dealer participating in
18
<PAGE>
this offering the selling concession with respect to Debentures that are
distributed in this offering, but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Debentures or the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken, they may be discontinued at any time.
As permitted by Rule 103 under the Exchange Act, the Underwriters or a
market maker (a "passive market maker") in the Common Stock may make bids for
or purchases of Common Stock in the Nasdaq National Market until such time, if
any, when a stabilizing bid for such securities has been made. Rule 103
generally provides that (1) a passive market maker's net daily purchases of the
Common Stock may not exceed 30% of its average daily trading volume in such
securities for the two full consecutive calendar months (or any 60 consecutive
days ending within the 10 days) immediately preceding the filing date of the
registration statement of which this Prospectus forms a part, (2) a passive
market maker may not effect transactions or display bids for the Common Stock
at a price that exceeds the highest independent bid for the Common Stock by
persons who are not passive market makers, and (3) bids made by passive market
makers must be identified as such.
LEGAL MATTERS
The validity of the securities offered hereby is being passed upon for the
Company by Pepper, Hamilton & Scheetz LLP. Certain legal matters relating to
this offering have been passed upon for the Underwriters by Cravath, Swaine &
Moore.
EXPERTS
The consolidated financial statements of Systems & Computer Technology
Corporation appearing in the Company's Annual Report on Form 10-K for the year
ended September 30, 1996 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
19
<PAGE>
===============================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus, and, if given
or made, such information or representations must not be relied upon as having
been authorized. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy any security other than the securities to which
it relates, nor does it constitute an offer to sell or a solicitation of an
offer to buy such securities by anyone in any jurisdiction in which such offer
or solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that information contained herein is correct as of any time subsequent to the
date hereof.
--------------------------------------------
TABLE OF CONTENTS
Page
-----
Available Information ..................... 2
Documents Incorporated by Reference ...... 2
The Company .............................. 4
Summary Terms of the Debentures ............ 6
Risk Factors .............................. 7
Use of Proceeds ........................... 10
Capitalization ........................... 10
Selected Consolidated Financial Data ...... 11
Description of Debentures .................. 12
Description of Capital Stock ............... 17
Underwriting .............................. 18
Legal Matters .............................. 19
Experts .................................... 19
===============================================================================
===============================================================================
$60,000,000
LOGO SCT
SYSTEMS & COMPUTER
TECHNOLOGY
CORPORATION
% Convertible Subordinated
Debentures Due 2004
------------
PROSPECTUS
------------
Unterberg Harris
Janney Montgomery Scott Inc.
, 1997
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
SEC registration fee ........................... $ 20,909.09
NASD Listing Application fee ..................... 4,000.00
NASD Filing fee ................................. 7,400.00
Printing and engraving fees ..................... 30,000.00
Legal fees and expenses ........................ 85,000.00
Accounting fees and expenses ..................... 25,000.00
Trustee/Transfer agent and registrar fees ...... 3,500.00
Miscellaneous .................................... 19,190.91
-------------
TOTAL .......................................... $195,000.00
=============
- ------------
* All amounts are estimated except Securities and Exchange Commission and NASD
fees.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") and the
Company's By-Laws provide for indemnification of the Company's directors and
officers and certain other persons. Under Section 145 of the DGCL and the
Company's By-Laws, directors and officers of the Company may be indemnified by
the Company against all expenses incurred in connection with actions
(including, under certain circumstances, derivative actions) brought against
such director or officer by reason of his or her status as a representative of
the Company, or by reason of the fact that such director or officer serves or
served as a representative of another entity at the Company's request, so long
as the director or officer acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Company.
Reference is made to Item 17 of this Registration Statement for additional
information regarding indemnification of directors and officers.
Item 16. Exhibits.
(a) Exhibits
1 Form of Underwriting Agreement.
4 Form of Indenture relating to _____% Convertible Subordinated
Debentures due 2004 (including Form of Debenture).
5 Opinion and Consent of Pepper, Hamilton & Scheetz LLP.
12 Statement re: Computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Pepper, Hamilton & Scheetz LLP (included in Exhibit 5).
24 Power of Attorney (on Signature page).
25 Statement of Eligibility of Trustee.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that, for purposes of
determining 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.
II-1
<PAGE>
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be a 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") 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 Act 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 Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Malvern, Pennsylvania, on October 9, 1997.
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
By: /s/ Michael J. Emmi
-------------------------------------------
Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Michael J. Emmi, Eric Haskell and
Richard A. Blumenthal, and each or any of them, 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 sign
any and all amendments (including post-effective amendments) to this
Registration Statement and other registration statements and amendments thereto
relating to the offering contemplated by this Registration Statement (including
registration statements under Rule 462 promulgated under the Securities Act of
1933), and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, 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 or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their, his or her
substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
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/ Michael J. Emmi
- -------------------------- Chairman of the Board, President and October 9, 1997
Michael J. Emmi Chief Executive Officer
/s/ Eric Haskell
- -------------------------- Senior Vice President, Finance and October 9, 1997
Eric Haskell Administration, Treasurer and Chief
Financial Officer (Principal Financial and
Accounting Officer)
/s/ Michael D. Chamberlain
- -------------------------- President, SCT Software Group and October 9, 1997
Michael D. Chamberlain Director
/s/ Gabriel A. Battista
- -------------------------- Director October 9, 1997
/s/ Allen R. Freedman
- -------------------------- Director October 9, 1997
Allen R. Freedman
/s/ Thomas I. Unterberg
- -------------------------- Director October 9, 1997
Thomas I. Unterberg
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
Number and
Description
of Exhibit
-----------
1 Form of Underwriting Agreement.
4 Form of Indenture relating to ____% Convertible Subordinated
Debentures due 2004 (including Form of Debenture).
5 Opinion and Consent of Pepper, Hamilton & Scheetz LLP.
12 Statement re: Computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Pepper, Hamilton & Scheetz LLP (included in Exhibit 5).
24 Power of Attorney (on Signature page).
25 Statement of Eligibility of Trustee.
<PAGE>
[Draft--10/7/97]
Systems & Computer Technology Corporation
$60,000,000
[ ]% Convertible Debentures Due 2004
Underwriting Agreement
New York, New York
October [ ], 1997
Unterberg Harris
Janney Montgomery Scott Inc.
As Representatives of the several Underwriters,
c/o Unterberg Harris
Swiss Bank Tower
10 East 50th Street, 22nd Floor
New York, New York 10022
Dear Sirs:
Systems & Computer Technology Corporation, a Delaware
corporation (the "Company"), proposes to sell to the underwriters named in
Schedule I hereto (the "Underwriters"), for whom you (the "Representatives") are
acting as representatives, $60,000,000 principal amount of its [ ]% Convertible
Debentures Due 2004 (the "Underwritten Securities"), to be issued under an
indenture (the "Indenture") to be dated as of October 15, 1997, between the
Company and First Union National Bank, as trustee (the "Trustee"). If the firm
or firms named in Schedule I hereto include only the Representatives, then the
terms "Underwriters" and "Representatives", as used herein, shall each be deemed
to refer to such firm or firms. The Company also proposes to grant to the
Underwriters an option to purchase up to an additional $9,000,000 principal
amount of its [ ]% Convertible Subordinated Debentures Due 2004 (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities"). The Securities are convertible into
shares of Common Stock, $.01 par value, of the Company ("Common Stock").
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each
<PAGE>
2
Underwriter as set forth below in this Section 1. Certain terms used in this
Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number 333-[ ]) on such Form, including a related
preliminary prospectus, for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including the related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment to
such registration statement, including the form of final prospectus,
(ii) a final prospectus in accordance with Rules 430A and 424(b)(1) or
(4), or (iii) a final prospectus in accordance with Rules 415 and
424(b)(2) or (5). In the case of clause (ii), the Company has included
in such registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in the Prospectus with respect to
the Securities and the offering thereof. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, with respect to the Securities and the offering thereof
and, except to the extent the Representatives shall agree in writing to
a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Prospectus
(and any supplements thereto) will, comply in all material respects
with the applicable requirements of the Act, the Securities Exchange
Act of 1934 (the "Exchange Act") and the Trust Indenture Act of 1939
(the "Trust
<PAGE>
3
Indenture Act") and the respective rules thereunder; on the Effective
Date, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date the Indenture did or will comply in all material respects
with the applicable requirements of the Trust Indenture Act and the
rules thereunder; and, on the Effective Date and at the Execution Time,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to
state a material fact neces sary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to (i) that part of the Registration
Statement which shall consti tute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee
or (ii) the information contained in or omitted from the Registration
Statement or the Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished herein or in writing
to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "the Effective Date" shall mean
each date that the Registration Statement and any post-effective
amendment or amendments thereto became or become effective and each
date after the date hereof and during the period when a Prospectus is
required to be delivered on which a document incorporated by
reference in the Registration Statement is filed. "Execution Time"
shall mean the date and time that this Agreement is executed and
delivered by the parties hereto. "Preliminary Prospectus" shall mean
any preliminary prospectus referred to in paragraph (a) above and any
preliminary prospectus included in the Registration Statement at the
Effective Date that omits Rule 430A Information. "Prospectus" shall
mean the prospectus relating to the Securities that is first filed
pursuant to Rule 424(b) after the Execution Time or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final
prospectus
<PAGE>
4
relating to the Securities included in the Registration Statement at
the Effective Date. "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including
incorporated documents, exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date (as hereinafter defined), shall also mean such registration
statement as so amended. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act. "Rule
430A Information" means information with respect to the Securities and
the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A. Any
reference herein to the Registration Statement, a Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary Prospectus
or the Prospectus, as the case may be, deemed to be incorporated
therein by reference.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
[ ]% of the principal amount thereof, plus accrued interest, if any, on the
Securities from October [ ], 1997, to the Closing Date, the principal amount of
the Underwritten Securities set forth opposite such Underwriter's name in
Schedule I hereto.
(b) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set
<PAGE>
5
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to $9,000,000 principal amount of the
Option Securities at the same purchase price per share as the Underwriters shall
pay for the Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the Underwriters.
Said option may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the Prospectus upon written or
telegraphic notice by the Representatives to the Company setting forth the
number of shares of the Option Securities as to which the several Underwriters
are exercising the option and the settlement date. Delivery of Option Securities
by the Company, and payment therefore to the Company, shall be made as provided
in Section 3 hereof. The principal amount of Option Securities to be purchased
by each Underwriter shall be the same percentage of the total principal amount
of Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments among the Underwriters as you in your absolute discretion shall make
to eliminate any fractional amounts.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third business
day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
October [ ], 1997, or such later date not more than three business days after
the foregoing date as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Securities shall be made at such location as the
Representatives shall reasonably designate at least one business day in advance
of the Closing Date and payment for the Securities, in the manner set forth
above, shall be made at the office of Cravath, Swaine & Moore, New York, New
York. Certificates for the Securities shall be registered in such names and in
such denominations as the
<PAGE>
6
Representatives may request not less than three full business days in advance of
the Closing Date.
The Company agrees to have the Securities available for
inspection, checking and packaging by the Representatives in New York, New York,
not later than 1:00 PM on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will deliver
(at the expense of the Company) to the Representatives, at 10 East 50th Street,
22nd Floor, New York, New York, on the date specified by the Representatives
(which shall be not less than two and not more than three business days after
the exercise of said option), the Option Securities in such names and
denominations as the Representatives shall have requested against payment of the
purchase price thereof to or upon the order of the Company by wire transfer
payable in same-day funds to an account specified by the Company. If settlement
for the Option Securities occurs after the Closing Date, the Company will
deliver to the Representatives on the settlement date for the Option Securities,
and the obligation of the Underwriters to purchase the Option Securities shall
be conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement, supplement to the Prospectus unless the
Company has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you
reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under Rule
424(b),
<PAGE>
7
the Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will promptly advise the Representatives (i)
when the Registration State ment, if not effective at the Execution
Time, and any amendment thereto, shall have become effective, (ii) when
the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (iii) when,
prior to termina tion of the offering of the Securities, any amendment
to the Registration Statement shall have been filed or become
effective, (iv) of any request by the Commission or its staff for any
amendment of the Registration Statement or supplement to the Prospectus
or for any additional information, (v) of the issuance by the
Commission of any stop order suspending the effective ness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (vi) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, the Company promptly will (i) prepare and file with
the Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such statement
or omission or effect such compliance and (ii) supply any supplemented
Prospectus to you in such quantities as you may reasonably request, and
you shall notify the Underwriters and all selected dealers (x) not to
sell any Securities unless accompanied or preceded by such
<PAGE>
8
supplemented Prospectus and (y) not to distribute or otherwise use any
Prospectus other than such supplemented Prospectus.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange for, and pay all the costs and
expenses (including reasonable counsel fees) in connection with, the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate, provided that the
Company shall not thereby be required to qualify as a foreign
corporation or file a general consent to service of process or become
subject to termination. The Company will maintain such qualifications
in effect so long as required for the initial distribution of the
Securities, will arrange for the determination of the legality of the
Securities for purchase by institu tional investors and will pay the
fee of the National Association of Securities Dealers, Inc., in
connection with its review of the offering.
(f) The Company and its affiliates, except as provided in
Section 6(g) herein, will not, for a period of 90 days following
the Execution Time, without the prior written consent of Unterberg
Harris, publicly offer, sell or contract to sell, or otherwise dispose
of (or enter into any transaction which is designed to, or could be
expected to result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise) by
the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company),
<PAGE>
9
directly or indirectly, or announce the offering of, any other shares
of Common Stock or any securities convertible into, or exchangeable
for, shares of Common Stock; provided, however, that the Company may
grant, issue and sell securities of the Company pursuant to any
employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the Execution Time and
the Company may issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the Execution
Time.
(g) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, An Act Relating to Disclosure of Doing Business with Cuba, and
the Company further agrees that if it commences engaging in business
with the government of Cuba or with any person or affiliate located in
Cuba after the date the Registration Statement becomes or has become
effective with the Securities and Exchange Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever
date is later, or if the information reported in the Prospectus, if
any, concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time and the Closing Date, to the accuracy
of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time, on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii)
12:00 Noon on the business day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date;
<PAGE>
10
if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives
the opinion of Pepper, Hamilton & Scheetz LLP, counsel for the Company,
dated the Closing Date, to the effect that, subject to customary
qualifications:
(i) each of the Company, SCT Software & Resource
Management Corporation, SCT Government Systems, Inc., SCT
Utility Systems, Inc., SCT Manufacturing & Distribution
Systems, Inc., SCT Financial Corporation and SCT Property,
Inc. (individually a "Subsidiary" and collectively the
"Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and is
duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction specified
in a certificate by the Company as a jurisdiction where such
qualification is required, except where the failure to so
qualify would not have a material adverse effect on the
results of the operations or financial condition of the
Company and the Subsidiaries taken as whole;
(ii) to the knowledge of such counsel: all the
outstanding shares of capital stock of each Subsidiary have
been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the
Subsidiaries (other than directors' qualifying shares) are
owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest
and any other security interests, claims, liens or
encumbrances;
<PAGE>
11
(iii) the Company's authorized equity capitalization
is as set forth in the Prospectus; the Securities and the
Common Stock conform, as to legal matters, in all material
respects to the descriptions thereof contained in the
Prospectus; the Securities and the shares of Common Stock
issuable upon conversion of the Securities have been approved
for quotation, subject to official notice of issuance and, in
the case of the Securities, evidence of satisfactory
distribution, on the Nasdaq SmallCap Market and the Nasdaq
National Market, respectively; the holders of the outstanding
shares of capital stock of the Company are not entitled to any
preemptive or other rights to subscribe for the Securities or
the shares of Common Stock issuable upon the conversion
thereof under applicable law or pursuant to any agreement
known to such counsel; and the shares of Common Stock
initially issuable upon conversion of the Securities have been
duly and validly authorized and reserved for issuance upon
such conversion and, when issued upon conversion, will be
validly issued, fully paid and nonassessable;
(iv) the Indenture has been duly authorized, executed
and delivered, has been duly qualified under the Trust
Indenture Act, and constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with
its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, fraudulent
conveyance, moratorium or other laws affecting creditors'
rights generally from time to time in effect); and the
Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, will constitute legal, valid and
binding obligations of the Company entitled to the benefits of
the Indenture;
(v) to the knowledge of such counsel: there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of the Subsidiaries of
a character required to be disclosed in the Registration
Statement which is not disclosed in the Prospectus, including
the documents incorporated by reference therein; and there is
no
<PAGE>
12
franchise, contract or other document of a character required
to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit, which is not described or filed
as required;
(vi) based on inquiry of the Commission Staff, the
Registration Statement has become effective under the Act; any
required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements and related notes, the
financial statement schedules and other financial and
statistical information contained or incorporated by reference
therein and any other information or documents incorporated by
reference therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
applicable requirements of the Act, the Exchange Act and the
Trust Indenture Act and the respective rules thereunder;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company;
(viii) no consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated herein,
except such as have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the
Securities by the Underwriters and such other approvals
(specified in such opinion) as have been obtained;
(ix) neither the execution and delivery of the
Indenture, the issue and sale of the Securities, nor the
consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under the charter or by-laws of the
Company or the terms of any indenture or
<PAGE>
13
other agreement or instrument known to such counsel and to
which the Company or any of the Subsidiaries is a party or
bound or any judgment, order or decree known to such counsel
to be applicable to the Company or any of the Subsidiaries of
any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the
Company or any of the Subsidiaries; and
(x) to the knowledge of such counsel, no holders of
securities of the Company have rights to the registration of
such securities under the Registration Statement which have
not been waived.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
Commonwealth of Pennsylvania, the Delaware General Corporation Law or
the laws of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date.
Such counsel shall further state, subject to
customary qualifications, that no facts have come to its attention that
lend it to believe that on the Effective Date or at the Execution Time
the Registration Statement contains or contained any untrue statement
of a material fact or omits or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus as of its date and on the
Closing Date includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (such statements shall not relate to
financial and statistical items and information incorporated by
reference in the Registration Statement or Prospectus);
(c) The Representatives shall have received from Cravath,
Swaine & Moore, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with
<PAGE>
14
respect to the issuance and sale of the Securities, the Indenture, the
Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effective ness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and the Subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(e) At the Execution Time and at the Closing Date, Ernst &
Young LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the
<PAGE>
15
respective applicable published rules and regulations
thereunder and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated in
the Registration Statement and the Prospectus and reported on
by them comply in form in all material respects with the
applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; carrying out certain specified
procedures (but not an examina tion in accordance with
generally accepted audit ing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors, compensation and
audit committees of the Company and the Subsidiaries; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events
subsequent to [June 30, 1997], nothing came to their attention
which caused them to believe that:
(1) any unaudited financial statements
included or incorporated in the Registration
Statement and the Prospectus do not comply in form in
all material respects with applicable accounting
requirements and with the published rules and
regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not
in conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited financial
statements included or incorporated in the
Registration Statement and the Prospectus; or
(2) with respect to the period subsequent to
June 30, 1997, there were any changes, at a specified
date not more than
<PAGE>
16
five business days prior to the date of the letter,
in the long-term debt of the Company and its
subsidiaries or capital stock of the Company or
decreases in the stockholders' equity of the Company
as compared with the amounts shown on the June 30,
1997 consolidated balance sheet included or
incorporated in the Registration Statement and the
Prospectus, or for the period from July 1, 1997 to
such specified date there were any decreases, as
compared with the corresponding period in the
preceding year; in net revenues or income before
income taxes or in total or per share amounts of net
income of the Company and its subsidiaries, except in
all instances for changes or decreases set forth in
such letter, in which case the letter shall be
accompanied by an explanation by the Company as to
the significance thereof unless said explanation is
not deemed necessary by the Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus and in Exhibit 12 to the
Registration Statement.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, the business or properties of the Company and the
Subsidiaries, taken as a whole, whether or not arising from
transactions in
<PAGE>
17
the ordinary course of business, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto) the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representatives, so material and reasonably adverse as
to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(g) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each executive officer and director of the Company
addressed to the Representatives, in which each such person agrees not
to offer, sell or contract to sell, pledge or otherwise
dispose of, or file a registration statement with the Commission in
respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act with respect to, any shares of capital
stock of the Company or any securities convertible into, or exercisable
or exchangeable for, such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days
after the date of this Agreement, other than (i) the exercise of any
option or warrant or the conversion of a security, (ii) shares of
Common Stock disposed of as bona fide gifts approved by Unterberg
Harris and (iii) sales or other transfers of up to 50,000 shares of
Common Stock owned by Michael J. Emmi and up to 10,000 shares of Common
Stock owned by each of the other executive officers or the Company.
(h) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancelation
<PAGE>
18
shall be given to the Company in writing or by telephone or facsimile confirmed
in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cravath, Swaine & Moore, counsel for the
Underwriters, at Worldwide Plaza, 825 Eighth Avenue, New York, New York, on the
Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been reasonably incurred by them
in connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim,
<PAGE>
19
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representa tives
specifically for inclusion therein, provided further that the indemnification
contained in this paragraph with respect to, based on, or arising out of, an
untrue statement or omission or alleged untrue statement or omission in a
Preliminary Prospectus shall not inure to the benefit of any Underwriter or
other person indemnified under this Section 8(a) with respect to a claim made by
a third party if (i) a copy of the Prospectus, as amended or supplemented, shall
not have been delivered or sent to such third party making claims or seeking
damages or to impose liabilities or losses within the time required by the Act
and the regulations thereunder, (ii) the untrue statement or omission or the
alleged untrue statement or omission was correct in the Prospectus, as amended
or supplemented, and (iii) the delivery of such Prospectus would have
constituted a complete defense to the claim asserted by such person. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in [the last paragraph of the cover page and under the heading
"Underwriting"] in any Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the Prospectus, and
you, as the Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in
<PAGE>
20
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a) or
(b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to repre sent the indemnified party in an action,
the indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemni fied party from all liability arising out of such claim, action,
suit or proceeding.
<PAGE>
21
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and by the Underwriters from the
offering of the Securities; provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and of the Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses), and
benefits received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or the Underwriters. The Company and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company
<PAGE>
22
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate principal amount of Securities set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five business days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the National Association of Securities Dealers Automated
Quotation ("Nasdaq") National Market System or trading in securities generally
on the New York Stock Exchange or the Nasdaq National Market System shall have
been suspended or materially limited or minimum prices shall have been
established on such Exchange or Market System, (ii) a banking moratorium shall
have been
<PAGE>
23
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the reasonable
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancelation of this
Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, care of Unterberg
Harris, at Swiss Bank Tower, 10 East 50th Street, 22nd Floor, New York, New
York, 10022; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 4 Country View Road, Malvern, Pennsylvania,
19355, attention of the General Counsel.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
<PAGE>
24
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
Systems & Computer Technology
Corporation
By: ..........................
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Unterberg Harris
Janney Montgomery Scott Inc.
By: Unterberg Harris
By: ............................
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE>
SCHEDULE I
Principal Amount
Underwriters of Securities to
be Purchased
-----------------
Unterberg Harris...................................... $
Janney Montgomery Scott Inc...........................
-----------
Total............................... $60,000,000
===========
<PAGE>
EXHIBIT A
[Letterhead of executive officer or director of
Systems & Computer Technology Corporation]
Systems & Computer Technology Corporation
Public Offering of Convertible Subordinated Debentures Due
2004
October , 1997
Unterberg Harris
Janney Montgomery Scott Inc.
c/o Unterberg Harris
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), among Systems &
Computer Technology Corporation, a Delaware corporation (the "Company"), and
each of you as the representatives of the Underwriters, relating to an
underwritten public offering of Convertible Subordinated Debentures Due 2004,
(the "Underwritten Securities"), of the Company.
In order to induce you to enter into the Underwriting
Agreement, the undersigned will not, without the prior written consent of
Unterberg Harris, offer, sell, contract to sell, pledge or otherwise dispose of,
or file a registration statement with the Commission in respect of, or establish
or increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act with respect to,
any shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for, such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of this Agreement, other than (i) the exercise of any option or warrant or the
conversion of a security, (ii) shares of Common Stock disposed of as bona fide
gifts approved by Unterberg Harris and (iii) sales or other transfers of up to
10,000 [50,000, in the case of Mr. Emmi] shares of Common Stock.
<PAGE>
2
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
[Signature of executive
officer or director]
[Name and address of executive
officer or director]
<PAGE>
[Draft--10/7/97]
================================================================================
INDENTURE
Between
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
and
FIRST UNION NATIONAL BANK
Trustee
Dated as of October 15, 1997
[ ]% Convertible Subordinated Debentures Due 2004
================================================================================
<PAGE>
TABLE OF CONTENTS(1)
Page
PARTIES.................................................................... 1
RECITALS OF THE COMPANY.................................................... 1
ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01 Definitions:
Act........................................................... 2
Affiliate..................................................... 2
Authenticating Agent.......................................... 2
Board of Directors............................................ 2
Board Resolution.............................................. 2
Business Day.................................................. 2
Change in Control............................................. 2
Closing Price................................................. 2
Commission.................................................... 3
Common Stock.................................................. 3
Company....................................................... 3
Company Request; Company Order................................ 3
Corporate Trust Office........................................ 3
Corporation................................................... 4
Current Market Price.......................................... 4
Debenture Register; Debenture
Registrar................................................ 4
Defaulted Interest............................................ 4
Event of Default.............................................. 4
Holder........................................................ 4
Indenture..................................................... 4
Interest Payment Date......................................... 4
Maturity...................................................... 4
Officers' Certificate......................................... 4
Opinion of Counsel............................................ 4
Outstanding................................................... 4
Paying Agent.................................................. 5
Person........................................................ 5
Predecessor Debenture......................................... 5
Redemption Date............................................... 6
- --------
(1)Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
Contents, P.2
Redemption Price.......................................... 6
Regular Record Date....................................... 6
Repurchase Date........................................... 6
Repurchase Price.......................................... 6
Responsible Officer....................................... 6
Senior Indebtedness....................................... 6
Special Record Date....................................... 7
Stated Maturity........................................... 7
Subsidiary................................................ 7
Trading Date.............................................. 7
Trigger Event............................................. 7
Trust Indenture Act....................................... 7
Trustee................................................... 7
Vice President............................................ 7
SECTION 1.02. Compliance Certificates and
Opinions................................................ 8
SECTION 1.03. Form of Documents Delivered to
Trustee................................................. 8
SECTION 1.04. Acts of Holders........................................... 9
SECTION 1.05. Notices, Etc. to Trustee and
Company................................................. 10
SECTION 1.06. Notice to Holders; Waiver................................. 11
SECTION 1.07. Conflict with Trust Indenture Act......................... 11
SECTION 1.08. Effect of Headings and Table of
Contents............................................. 11
SECTION 1.09. Successors and Assigns.................................... 11
SECTION 1.10. Separability Clause....................................... 11
SECTION 1.11. Benefits of Indenture..................................... 12
SECTION 1.12. Governing Law............................................. 12
SECTION 1.13. Legal Holidays............................................ 12
ARTICLE II
Debenture Forms
SECTION 2.01. Forms Generally........................................... 12
SECTION 2.02. Form of Face of Debenture................................. 13
SECTION 2.03. Form of Reverse of Debenture.............................. 15
SECTION 2.04. Form of Trustee's Certificate of
Authentication....................................... 19
<PAGE>
Contents, P.3
ARTICLE III
The Debentures
SECTION 3.01. Title and Terms............................................. 20
SECTION 3.02. Denominations............................................... 21
SECTION 3.03. Execution, Authentication, Delivery
and Dating............................................. 21
SECTION 3.04. Temporary Debentures........................................ 21
SECTION 3.05. Registration, Registration of Transfer
and Exchange........................................... 22
SECTION 3.06. Multilated, Destroyed, Lost and Stolen
Debentures............................................. 23
SECTION 3.07. Payment of Interest; Interest Rights
Preserved.............................................. 24
SECTION 3.08. Persons Deemed Owners....................................... 26
SECTION 3.09. Cancelation................................................. 26
SECTION 3.10. Computation of Interest..................................... 27
SECTION 3.11. CUSIP Number................................................ 27
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of
Indenture.............................................. 27
SECTION 4.02. Application of Trust Money.................................. 28
ARTICLE V
Remedies
SECTION 5.01. Events of Default........................................... 29
SECTION 5.02. Acceleration of Maturity; Rescission
and Annulment.......................................... 31
SECTION 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee............................. 32
SECTION 5.04. Trustee May File Proofs of Claim............................ 33
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Debentures............................... 34
SECTION 5.06. Application of Money Collected.............................. 34
SECTION 5.07. Limitation on Suits......................................... 35
SECTION 5.08. Right of Holders To Receive Principal,
Premium and Interest and To
Convert................................................ 35
SECTION 5.09. Restoration of Rights and Remedies.......................... 36
<PAGE>
Contents, P.4
SECTION 5.10. Rights and Remedies Cumulative............................ 36
SECTION 5.11. Delay or Omission Not Waiver.............................. 36
SECTION 5.12. Control by Holders........................................ 36
SECTION 5.13. Waiver of Past Defaults................................... 37
SECTION 5.14. Undertaking for Costs..................................... 37
SECTION 5.15. Waiver of Stay, Usury or Extension
Laws................................................. 38
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities....................... 38
SECTION 6.02. Notice of Defaults........................................ 39
SECTION 6.03. Certain Rights of Trustee................................. 40
SECTION 6.04. Not Responsible for Recitals or
Issuance of Debentures............................... 41
SECTION 6.05. May Hold Debentures....................................... 41
SECTION 6.06. Money Held in Trust....................................... 42
SECTION 6.07. Compensation and Reimbursement............................ 42
SECTION 6.08. Corporate Trustee Required;
Eligibility.......................................... 43
SECTION 6.09. Resignation and Removal; Appointment
of Successor......................................... 43
SECTION 6.10. Acceptance of Appointment by Successor 45
SECTION 6.11. Merger, Conversion, Consolidation or
Succession to Business............................... 45
SECTION 6.12. Preferential Collection of Claims
Against Company...................................... 46
SECTION 6.13. Appointment of Authenticating Agent....................... 46
ARTICLE VII
Holders' List and Reports by Trustee and Company
SECTION 7.01. Company to furnish Trustee Names and
Addresses and Company................................ 49
SECTION 7.02. Preservation of Information
Communications to Holders............................ 49
SECTION 7.03. Reports by Trustee........................................ 51
SECTION 7.04. Reports by Company........................................ 52
<PAGE>
Contents, P.5
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 8.01. Company May Consolidate, Etc., Only on
Certain Terms....................................... 53
SECTION 8.02. Successor Corporation Substituted........................ 54
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without
Consent of Holders.................................. 54
SECTION 9.02. Supplemental Indentures with Consent
of Holders.......................................... 55
SECTION 9.03. Execution of Supplemental Indentures..................... 56
SECTION 9.04. Effect of Supplemental Indentures........................ 56
SECTION 9.05. Conformity with Trust Indenture Act...................... 57
SECTION 9.06. Reference in Debentures to
Supplemental Indentures............................. 57
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and
Interest............................................ 57
SECTION 10.02. Maintenance of Office or Agency.......................... 57
SECTION 10.03. Money for Debenture Payments To Be
Held in Trust....................................... 58
SECTION 10.04. Corporate Existence...................................... 59
SECTION 10.05. Maintenance of Properties................................ 60
SECTION 10.06. Payment of Taxes and Other Claims........................ 60
SECTION 10.07. Waiver of Certain Covenants.............................. 60
ARTICLE XI
Redemption of Debentures
SECTION 11.01. Right of Redemption...................................... 61
SECTION 11.02. Applicability of Article................................. 61
SECTION 11.03. Election To Redeem; Notice to Trustee.................... 61
SECTION 11.04. Selection by Trustee of Debentures To
Be Redeemed......................................... 61
<PAGE>
Contents, P.6
SECTION 11.05. Notice of Redemption..................................... 62
SECTION 11.06. Deposit of Redemption Price.............................. 63
SECTION 11.07. Debentures Payable on Redemption Date.................... 63
SECTION 11.08. Debentures Redeemed in Part.............................. 63
ARTICLE XII
Conversion of Debentures
SECTION 12.01. Conversion Privilege and Conversion
Price............................................... 64
SECTION 12.02. Exercise of Conversion Privilege......................... 64
SECTION 12.03. Fractions of Shares...................................... 65
SECTION 12.04. Adjustment of Conversion Price........................... 66
SECTION 12.05. Notice of Adjustment of Conversion
Price............................................... 79
SECTION 12.06. Notice of Certain Corporate Action....................... 79
SECTION 12.07. Company To Reserve Common Stock.......................... 80
SECTION 12.08. Taxes on Conversions..................................... 80
SECTION 12.09. Covenant as to Common Stock.............................. 81
SECTION 12.10. Provisions in Case of Consolidation,
Merger or Conveyance or Transfer of
Properties and Assets............................... 81
SECTION 12.11. Responsibility of Trustee................................ 82
ARTICLE XIII
Subordination of Debentures
SECTION 13.01. Debentures Subordinate to Senior
Indebtedness........................................ 82
SECTION 13.02. No Payment When Senior Indebtedness in
Default; Payment Over of Proceeds
Upon Dissolution, Etc............................... 82
SECTION 13.03. Trustee To Effectuate Subordination...................... 86
SECTION 13.04. Trustee Not Charged with Knowledge of
Prohibition......................................... 86
SECTION 13.05. Rights of Trustee as Holder of Senior
Indebtedness........................................ 86
SECTION 13.06. Article Applicable to Paying Agent....................... 87
<PAGE>
Contents, P.7
ARTICLE XIV
Right To Require Repurchase
SECTION 14.01. Right To Require Repurchase.............................. 87
SECTION 14.02. Notice; Method of Exercising
Repurchase Right.................................... 87
SECTION 14.03. Deposit of Repurchase Price.............................. 89
SECTION 14.04. Debentures Not Repurchased on
Repurchase Date..................................... 89
SECTION 14.05. "Change in Control" Defined.............................. 89
SIGNATURES AND SEALS.................................................... 92
<PAGE>
Contents, P.8
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION1
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of October 15, 1997
Trust Indenture
Act Section Indenture Section
----------- -----------------
ss. 310(a)(1)............................................... 6.08
(a)(2)............................................... 6.08
(a)(3)............................................... Not Applicable
(a)(4)............................................... Not Applicable
(a)(5)............................................... 6.08
(b).................................................. 6.08
6.09
ss. 311(a).................................................. 6.12
(b).................................................. 6.12
(b)(2)............................................... 7.03(a)(2)
7.03(b)
ss. 312(a).................................................. 7.01
7.02(a)
(b).................................................. 7.02(b)
(c).................................................. 7.02(c)
ss. 313(a).................................................. 7.03(a)
(b).................................................. 7.03(b)
(c).................................................. 7.03(a)
(d).................................................. 7.03(c)
ss. 314(a).................................................. 7.04
(b).................................................. Not Applicable
(c)(1)............................................... 1.02
(c)(2)............................................... 1.02
(c)(3)............................................... Not Applicable
(d).................................................. Not Applicable
(e).................................................. 1.02
ss. 315(a).................................................. 6.01(a)
(b).................................................. 6.02
7.03(a)(6)
(c).................................................. 6.01(b)
(d).................................................. 6.01(c)
(d)(1)............................................... 6.01(a)(1)
(d)(2)............................................... 6.01(c)(2)
(d)(3)............................................... 6.01(c)(3)
(e).................................................. 5.14
ss. 316(a).................................................. 1.01
(a)(1)(A)............................................ 5.02
5.12
(a)(1)(B)............................................ 5.13
- --------
(1)Note: This reconciliation and the shall not, for any purpose, be deemed to be
apart of the Indenture.
<PAGE>
Contents, P.9
(a)(2)............................................... Not Applicable
(b).................................................. 5.08
ss. 317(a)(1)............................................... 5.03
(a)(2)............................................... 5.04
(b)................................................. 10.03
ss. 318(a).................................................. 1.07
<PAGE>
INDENTURE dated as of October 15, 1997,
between SYSTEMS & COMPUTER TECHNOLOGY CORPORATION, a
corporation duly organized and existing under the
laws of the State of Delaware (herein called the
"Company"), having its principal office at Four
Country View Road, Malvern, Pennsylvania 19355, and
FIRST UNION NATIONAL BANK, a national banking
association organized and existing under the laws of
the United States of America, as Trustee (herein
called the "Trustee").
The Company has duly authorized the creation of an issue of
its Debentures (herein called the "Debentures") of substantially the tenor and
amount hereinafter set forth and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Debentures, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Debentures by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Debentures, as
follows:
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act (as hereinafter defined),
<PAGE>
2
either directly or by reference therein, have the meanings assigned to
them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act" when used with respect to any Holder has the
meaning specified in Section 1.04.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate Debentures.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the City of New
York or Philadelphia are authorized or obligated by law or executive order to be
closed.
"Change in Control" has the meaning specified in Section
14.05.
"Closing Price" has the meaning specified in Section 14.05.
<PAGE>
3
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock", as applied to the capital stock of any
corporation, shall mean the capital stock of any class which has no preference
in respect of dividends or other distributions of assets or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of such corporation and which is not subject to redemption by such
corporation; provided, however, that, subject to the provisions of Section
12.10, shares issuable on conversion of Debentures shall include only shares of
the class designated as Common Stock of the Company at the date of the execution
of this instrument or shares of any class or classes resulting from any
reclassification or reclassifications thereof which have no preference in
respect of dividends or other distributions of assets 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
further 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" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the
Trustee in the City of Philadelphia at which at any particular time its
corporate trust business shall be administered, which office at the time of the
execution of this indenture is located at First Union National Bank, PA 1249,
123 S. Broad Street, Philadelphia, PA 19109, Attention of Corporate Trust
Administration.
<PAGE>
4
"Corporation" includes corporations, associations, companies
and business trusts.
"Current Market Price" has the meaning specified in Section
14.05, except for purposes of Section 12.04 where it has the meaning set forth
in such Section.
"Debenture Register" and "Debenture Registrar" have the
respective meanings specified in Section 3.05.
"Defaulted Interest" has the meaning specified in Section
3.07.
"Event of Default" has the meaning specified in Section 5.01.
"Holder" means a Person in whose name a Debenture is
registered in the Debenture Register.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Debentures.
"Maturity" when used with respect to any Debenture means the
date on which the principal of such Debenture becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President or a Vice President and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel
acceptable to the Trustee, who may be counsel for, or employed by, the Company.
"Outstanding" when used with respect to Debentures means, as
of the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancelation;
<PAGE>
5
(ii) Debentures for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Debentures; provided that, if
such Debentures are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Debentures in exchange for or in lieu of which other
Debentures have been authenticated and delivered pursuant to this
Indenture;
provided, however, that, in determining whether the Holders of the requisite
principal amount of the Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver or taken any other action
hereunder, Debentures owned by the Company or any other obligor upon the
Debentures or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, waiver or other action, only
Debentures which the Trustee has actual knowledge of being so owned shall be so
disregarded. Debentures so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debentures and that
the pledgee is not the Company or any other obligor upon the Debentures or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Debentures on
behalf of the Company, which may include the Company or any Affiliate.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Debenture" of any particular Debenture means
every previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under
<PAGE>
6
Section 3.06 in exchange for or in lieu of all or a portion of a mutilated,
destroyed, lost or stolen Debenture shall be deemed to evidence the same debt as
such mutilated, destroyed, lost or stolen Debenture or portion thereof.
"Redemption Date", when used with respect to any Debenture to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debenture to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1 or October 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in Section 14.01.
"Repurchase Price" has the meaning specified in Section 14.01.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the Corporate Trust Administration (or any successor
department) of the Trustee, including, without limitation, any Vice President,
any Assistant Vice President, any Assistant Secretary or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Senior Indebtedness" means the principal of (and premium, if
any) and interest on and other amounts due on any indebtedness, whether
outstanding on the date of execution of this Indenture or thereafter created,
incurred, assumed or guaranteed by the Company, for money borrowed from others
(including, for this purpose, all obligations under, respecting or constituting
capitalized leases or purchase money indebtedness) or in connection with the
acquisition by the Company or a Subsidiary of any other business or entity, or
in respect of letters of credit or bid, performance or surety bonds issued for
the account or on the credit of the Company or a Subsidiary, and, in each case,
all renewals, extensions and refundings thereof, other than (a) any such
indebtedness as to which, in the instrument creating or evidencing the same, it
is provided
<PAGE>
7
that such indebtedness is not superior in right of payment to the Debentures,
(b) indebtedness of the Company to any Affiliate and (c) the Debentures.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Debenture or
any installment of interest thereon, means the date specified in such Debenture
as the fixed date on which the principal of such Debenture or such installment
of interest is due and payable; provided, however, that, if such date shall not
be a Business Day, then the Stated Maturity shall be the next Business Day.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"Trading Day" has the meaning specified in Section 14.05.
"Trigger Event" has the meaning specified in Section 12.04.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990 and as in force at the date
as of which this instrument was executed, except as provided in Section 9.05.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
<PAGE>
8
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate 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, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
delivered pursuant to Section 7.04(d)) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
<PAGE>
9
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.04. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also
<PAGE>
10
constitute sufficient proof of his authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Debentures shall be proved by the
Debenture Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Debenture shall bind every
future Holder of the same Debenture and the Holder of every Debenture issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Debenture.
SECTION 1.05. Notices, Etc, to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing and mailed, first-class, postage prepaid, to the
Trustee at its Corporate Trust Office, Attention of Corporate Trust
Administration, or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company, or
(c) the Company by the Trustee or the Trustee by the Company
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if transmitted by facsimile transmission to
the Company at (610) 725-7457 or to the Trustee at (215) 985-7290 (or
to such other facsimile transmission number previously furnished in
writing to the Company by the Trustee or to the Trustee by the Company)
and in each case confirmed by a copy sent to the Company or to the
<PAGE>
11
Trustee, as the case may be, by guaranteed overnight courier.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Debenture Register, not later than the latest date
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Conflict with Trust Indenture Act. If and to the
extent that any provision hereof limits, qualifies or conflicts with the duties
imposed by, or with another provision (an "incorporated provision") included in
this Indenture by operation of, any of Sections 3.10 to 3.18, inclusive, of the
Trust Indenture Act, such imposed duties or incorporated provision shall
control.
SECTION 1.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 1.10. Separability Clause. In case any provision in
this Indenture or in the Debentures shall be
<PAGE>
12
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture
or in the Debentures, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, the holders of Senior
Indebtedness and the Holders of Debentures, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law. This Indenture and the Debentures
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 1.13. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Repurchase Date or Stated Maturity of any
Debenture or the last date on which a Holder has the right to convert his
Debentures shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Debentures) payment of interest or
principal (and premium, if any) or Repurchase Price or conversion of the
Debentures need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date or Repurchase Date or at the Stated Maturity or on such
last day for conversion; provided that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date, Repurchase Date or
Stated Maturity or such last day for conversion, as the case may be.
ARTICLE II
Debenture Forms
SECTION 2.01. Forms Generally. The Debentures and the
Trustee's certificates of authentication shall be in substantially the forms set
forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, including forms of conversion and forms of assignment, if requested
by the Company, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Debentures,
as evidenced by their execution
<PAGE>
13
of the Debentures. The Company shall furnish any such legends or endorsements to
the Trustee in writing.
The definitive Debentures shall be printed, lithographed or
engraved or produced by any combination of these methods on steel-engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Debentures may be listed, all as determined by
the officers executing such Debentures, as evidenced by their execution of such
Debentures.
SECTION 2.02. Form of Face of Debenture.
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
[ ]% Convertible Subordinated Debenture Due 2004
No. $
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION, a Delaware
corporation (hereinafter called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to [ ] or registered assigns the principal sum of
[ ]dollars on October 15, 2004, and to pay interest thereon from October [ ],
1997, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually on April 15 and October 15 in each year,
commencing April 15, 1998, at the rate of [ ]% per annum, until the principal
hereof is paid or made available for payment. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Debenture
(or one or more Predecessor Debentures) is registered at the close of business
on the Regular Record Date for such interest, which shall be the April 1 or
October 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for on the due date for such payment will forthwith cease to be payable
to the Holder on such Interest Payment Date and may either be paid to the Person
in whose name this Debenture (or one or more Predecessor Debentures) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice of which shall be
given to the Holders of Debentures not less than 10 days
<PAGE>
14
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture. Payment of the
principal of (and premium, if any) and interest on this Debenture will be made
at the office or agency of the Company maintained for that purpose in the City
of Philadelphia or the City of New York and at any other office or agency
maintained by the Company for such purpose in such currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Debenture Register.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Debenture shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated:
SYSTEMS & COMPUTER TECHNOLOGY
CORPORATION,
by
--------------------------------
President
Attest:
- ----------------------
Secretary
<PAGE>
15
SECTION 2.03. Form of Reverse of Debenture. This Debenture is
one of a duly authorized issue of Debentures of the Company designated as its
[ ]% Convertible Subordinated Debentures Due 2004 (herein called the
"Debentures"), limited in aggregate principal amount to $60,000,000 (subject to
increase as provided in the Indenture of up to $69,000,000 aggregate principal
amount), issued and to be issued under an Indenture dated as of October 15, 1997
(herein called the "Indenture"), between the Company and First Union National
Bank, as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Debentures
and of the terms upon which the Debentures are, and are to be, authenticated and
delivered.
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Debenture is entitled, at his option, at any time
on or before the close of business on October 15, 2004, or, in case this
Debenture or a portion hereof is called for redemption, then in respect of this
Debenture or such portion hereof until and including, but (unless the Company
defaults in making the payment due upon redemption) not after, the close of
business on the Business Day prior to the Redemption Date, to convert this
Debenture (or any portion of the principal amount hereof which is $1,000 or any
integral multiple thereof), at the principal amount hereof, or of such portion,
into fully paid and nonassessable shares (calculated as to each conversion to
the nearest 1/100 of a share) of Common Stock of the Company at a conversion
price equal to $[ ] aggregate principal amount of Debentures for each share of
Common Stock (or at the current adjusted conversion price if an adjustment has
been made as provided in the Indenture) by surrender of this Debenture, duly
endorsed or assigned to the Company or in blank, at the office or agency of the
Company maintained for that purpose in the City of Philadelphia or the City of
New York and at any other office or agency maintained by the Company for such
purpose, accompanied by written notice to the Company that the Holder hereof
elects to convert this Debenture or, if less than the entire principal amount
hereof is to be converted the portion hereof to be converted, and, in case such
surrender shall be made during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (unless this Debenture or the portion
hereof being converted has been called for redemption on a
<PAGE>
16
Redemption Date within such period), also accompanied by payment in New York
Clearing House or other funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Debenture then being converted. Subject to the aforesaid requirement for
payment and, in the case of a conversion after the Regular Record Date next
preceding any Interest Payment Date and on or before such Interest Payment Date,
to the right of the Holder of this Debenture (or any Predecessor Debenture) of
record at such Regular Record Date to receive an installment of interest (with
certain exceptions provided in the Indenture), no payment or adjustment is to be
made on conversion for interest accrued hereon or for dividends on the Common
Stock issued on conversion. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest the Company shall pay a cash adjustment as provided in the indenture.
The conversion price is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that, in case of certain consolidations or
mergers to which the Company is a party or the conveyance or transfer of the
properties and assets of the Company substantially as an entirety, the Indenture
shall be amended, without the consent of any Holders of Debentures, so that this
Debenture, if then outstanding, will be convertible thereafter, during the
period this Debenture shall be convertible as specified above, only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger, conveyance or transfer by a holder of the number of
shares of Common Stock of the Company into which this Debenture might have been
converted immediately prior to such consolidation, merger, conveyance or
transfer, assuming such holder of Common Stock of the Company failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that, if the kind or amount of securities, cash and other
property so receivable is not the same for each nonelecting share of Common
Stock of the Company, then the kind and amount of securities, cash and other
property so receivable by each nonelecting share shall be deemed to be the kind
and amount so receivable per share by a plurality of the nonelecting shares).
The Debentures are subject to redemption upon not less than 30
nor more than 60 days' notice by mail at any time, as a whole or in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount) if redeemed during the 12-month period
beginning October 15 of the years indicated:
<PAGE>
17
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
---- ----- ---- -----
<S> <C> <C> <C>
2000....................... [ ]% 2002.......................... [ ]%
2001....................... [ ]% 2003.......................... [ ]%
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Debentures, or
one or more Predecessor Debentures, of record at the close of business on the
relevant Regular Record Dates referred to on the face hereof, all as provided in
the Indenture. The Company may not redeem any Debentures prior to October 15,
2000.
In certain circumstances involving the occurrence of a Change
in Control (as defined in the Indenture), the Holder hereof shall have the right
to require the Company to repurchase this Debenture at 100% of the principal
amount hereof, together with accrued interest to the Repurchase Date, but
interest installments whose Stated Maturity is on or prior to such Repurchase
Date will be payable to the Holders of such Debentures, or one or more
Predecessor Debentures, of record at the close of business on the relevant
Regular Record Dates referred to on the face hereof, all as provided in the
Indenture. In connection with the exercise of the repurchase right by a Holder
prior to a Redemption Date, a Holder's right to exercise such repurchase right
shall terminate at the close of business on the Business Day prior to the
Redemption Date.
In the event of redemption, repurchase or conversion of this
Debenture in part only, a new Debenture or Debentures for the unredeemed,
unrepurchased or unconverted portion hereof will be issued in the name of the
Holder hereof upon the cancelation hereof.
The indebtedness evidenced by the Debentures is, to the extent
and in the manner set forth in the Indenture, expressly subordinated and subject
in right of payment to the prior payment in full of all Senior Indebtedness, as
defined in the Indenture, and this Debenture is issued subject to such
provisions of the Indenture, and each Holder of this Debenture, by accepting the
same, agrees to and shall be bound by such provisions and authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to acknowledge or effectuate the
<PAGE>
18
subordination as provided in the Indenture and appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the
principal of all the Debentures may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Debentures under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than two-thirds in aggregate principal amount of the
Debentures at the time Outstanding. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding, on behalf of the Holders of all the
Debentures, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debenture shall be conclusive
and binding upon such Holder and upon all future Holders of this Debenture and
of any Debenture issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.
Except with respect to the rights of the holders of Senior
Indebtedness set forth in the Indenture and in this Debenture, no reference
herein to the Indenture and no provision of this Debenture or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Debenture at the times, place and rate, and in the currency, herein
prescribed or to convert this Debenture as provided in the Indenture.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Debenture is registrable in
the Debenture Register, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company maintained for that purpose in
the City of Philadelphia or the City of New York and at any other office or
agency maintained by the Company for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company, the Trustee and the Debenture Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Debentures, of authorized
<PAGE>
19
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Debentures are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Debentures are exchangeable for a like aggregate principal amount of Debentures
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Debenture is registered as the owner
hereof for all purposes, whether or not this Debenture be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
SECTION 2.04. Form of Trustee's Certificate of Authentication.
This is one of the Debentures referred to in the within-mentioned Indenture.
Dated:
FIRST UNION NATIONAL BANK, as
Trustee,
by ________________________________
Authorized Signatory
<PAGE>
20
ARTICLE III
The Debentures
SECTION 3.01. Title and Terms. The aggregate principal amount
of Debentures which may be authenticated and delivered under this Indenture is
limited to (a) $60,000,000 plus (b) such aggregate principal amount (which may
not exceed $9,000,000 principal amount) of Debentures as shall be purchased by
the underwriters pursuant to the overallotment option provided in the
Underwriting Agreement dated as of October [ ], 1997, between the Company and
Unterberg Harris and Janney Montgomery Scott Inc., as representatives of the
underwriters, except for Debentures authenticated and delivered upon
registration of, transfer of, or in exchange for, or in lieu of, other
Debentures pursuant to Section 3.04, 3.05, 3.06, 9.06, 11.08, 12.02 or 14.02(c).
The Debentures shall be known and designated as the "[ ]%
Convertible Subordinated Debentures Due 2004" of the Company. Their Stated
Maturity shall be October 15, 2004, and they shall bear interest at the rate of
[ ]% per annum, from October [ ], 1997, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, as the case may be,
payable semiannually on April 15 and October 15, commencing April 15, 1998,
until the principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the
Debentures shall be payable at the office or agency of the Company maintained
for such purpose in the City of Philadelphia or the City of New York and at any
other office or agency maintained by the Company for such purpose, in such
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Debenture Register.
The Debentures shall be redeemable as provided in Article XI.
The Debentures shall be convertible into Common Stock of the
Company as provided in Article XII.
The Debentures shall be subordinated in right of payment to
Senior Indebtedness as provided in Article XIII.
<PAGE>
21
The Debentures shall become subject to a Holder's right of
repurchase in the event of a Change in Control as provided in Article XIV.
SECTION 3.02. Denominations. The Debentures shall be issuable
only in registered form without coupons and only in denominations of $1,000 and
any integral multiple thereof.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Debentures shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Debentures may be
manual or facsimile.
Debentures bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debentures or
did not hold such offices at the date of such Debentures.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Debentures; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Debentures as in
this Indenture provided and not otherwise.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Debenture a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder.
SECTION 3.04. Temporary Debentures. Pending the preparation of
definitive Debentures, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Debentures which are printed,
lithographed, typewritten, mimeographed or
<PAGE>
22
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Debentures in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Debentures may determine, as evidenced by their
execution of such Debentures.
If temporary Debentures are issued, the Company will cause
definitive Debentures to be prepared without unreasonable delay. After the
preparation of definitive Debentures, the temporary Debentures shall be
exchangeable for definitive Debentures upon surrender of the temporary
Debentures, at any office or agency of the Company designated pursuant to
Section 10.02, without charge to the Holder. Upon surrender for cancelation of
any one or more temporary Debentures, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Debentures of authorized denominations. Until so exchanged, the
temporary Debentures shall in all respects be entitled to the same benefits
under this Indenture as definitive Debentures.
SECTION 3.05. Registration, Registration of Transfer and
Exchange. The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office being herein
sometimes referred to as the "Debenture Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Debentures and of transfers of Debentures. The Trustee is hereby
appointed "Debenture Registrar" for the purpose of registering Debentures and
transfers of Debentures as herein provided.
Upon surrender for registration of transfer of any Debenture
at an office or agency of the Company, the Company shall execute, and the
Trustee shall register on the Debenture Register and shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Debentures of any authorized denominations, of a like aggregate principal
amount.
At the option of the Holder, Debentures may be exchanged for
other Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office or
agency. Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debentures
which the Holder making the exchange is entitled to receive.
<PAGE>
23
All Debentures issued upon any registration of transfer or
exchange of Debentures shall be the valid obligations of the Company, evidencing
the same debt and entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee and the Debenture Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Debentures, other
than exchanges pursuant to Section 3.04, 9.06, 11.08, 12.02 or 14.02(c) not
involving any transfer.
Neither the Company nor the Trustee or Debenture Registrar
shall be required (a) to issue, authenticate or register the transfer of or
exchange any Debenture during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Debentures
selected for redemption under Section 11.04 and ending at the close of business
on the day of such mailing or (b) to register the transfer of or exchange any
Debenture so selected for redemption in whole or in part, except the unredeemed
portion of any Debenture being redeemed in part.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Debentures. If any mutilated Debenture is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Debenture of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (b) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Debenture has been acquired by a
bona fide purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture, a new Debenture of like
<PAGE>
24
tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen
Debenture has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of
any destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Debenture which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Debenture (or one or more Predecessor Debentures) is registered at the
close of business on the Regular Record Date for such interest. The Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such interest in immediately available funds
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 interest as in this clause
provided.
Any interest on any Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the
<PAGE>
25
Company, at its election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Debentures (or their
respective Predecessor Debentures) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as
it appears in the Debenture Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Debentures (or their respective Predecessor Debentures) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon
such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
<PAGE>
26
Subject to the foregoing provisions of this Section, each
Debenture delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
In the case of any Debenture which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment Date
(other than any Debenture whose Maturity is prior to such Interest Payment
Date), interest whose Stated Maturity is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name the Debenture (or one or more Predecessor Debentures)
is registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Debenture which is converted, interest whose Stated Maturity is after the
date of conversion of such Debenture shall not be payable.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment
of a Debenture for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Debenture is registered as the owner of such Debenture for the purpose of
receiving payment of principal of (and premium, if any) and (subject to Section
3.07) interest on such Debenture and for all other purposes whatsoever, whether
or not such Debenture be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
SECTION 3.09. Cancelation. All Debentures surrendered for
payment, redemption, registration of transfer or exchange or conversion shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancelation any Debentures previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Debentures so delivered shall be promptly canceled by the Trustee. No Debentures
shall be authenticated in lieu of or in exchange for any Debentures canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled Debentures held by the Trustee shall be destroyed and a certificate of
destruction shall be delivered to the Company by the Trustee.
<PAGE>
27
SECTION 3.10. Computation of Interest. Interest on the
Debentures shall be computed on the basis of a 360 day year of twelve 30-day
months.
SECTION 3.11. CUSIP Number. The Company in issuing Debentures
may use a "CUSIP" number, and if so, the Trustee may use the CUSIP number in
notices of redemption or exchange as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Debentures, and
that reliance may be placed only on the other identification numbers printed on
the Debentures.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any surviving rights
of conversion, registration of transfer or exchange of Debentures herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(i) all Debentures theretofore authenticated and
delivered (other than (A) Debentures which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 3.06 and (B) Debentures for whose
payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as
provided in Section 10.03) have been delivered to the Trustee
for cancelation; or
(ii) all such Debentures not theretofore delivered to
the Trustee for cancelation
(A) have become due and payable, or
(B) will become due and payable at their
Stated Maturity within one year, or
(C) are to be called for redemption within
one year under arrangements
<PAGE>
28
satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for that purpose funds sufficient to pay and
discharge the entire indebtedness on such Debentures not
theretofore delivered to the Trustee for cancelation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Debentures which have become due
and payable) or to the Stated Maturity or Redemption Date, as
the case may be and, in the case of (B) or (C) above, has
delivered to the Trustee an Opinion of Counsel stating that
(1) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (2) since the
date of the Indenture, there has been a change in the
applicable United States Federal income tax law, in either
case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the Debentures will
not recognize income, gain or loss for United States Federal
income tax purposes as a result of such satisfaction and
discharge and will be subject to United States Federal income
tax on the same amounts, in the same manner and at the same
times as would have been the case if such satisfaction and
discharge had not occurred;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and the obligations
of the Trustee to any Authenticating Agent under Section 6.13 shall survive.
SECTION 4.02. Application of Trust Money. All money deposited
with the Trustee pursuant to Section 4.01 shall be held in trust and applied by
it, in accordance with the provisions of the Debentures and this Indenture, to
the payment, either directly or through any Paying Agent
<PAGE>
29
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee. All moneys deposited with the Trustee pursuant to Section 4.01 (and
held by it or any Paying Agent) for the payment of Debentures subsequently
converted shall be returned to the Company upon receipt by the Trustee of an
Officers' Certificate.
ARTICLE V
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XIII or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Debenture
when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of the principal of (or premium, if
any, on) any Debenture at its Maturity; or
(c) default in the payment of the Repurchase Price in respect
of any Debenture on the Repurchase Date therefor in accordance with the
provisions of Article XIV; or
(d) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default
or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Debentures a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
<PAGE>
30
(e) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money
borrowed by the Company, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in $1,000,000
or more of such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or
acceleration having been rescinded or annulled, within a period of 30
days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Debentures a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" hereunder; provided, however, that, subject to
the provisions of Sections 6.01 and 6.02, the Trustee shall not be
deemed to have knowledge of such default unless either (i) a
Responsible Officer of the Trustee shall have actual knowledge of such
default or (ii) the Trustee shall have received written notice thereof
from the Company, from any Holder, from the holder of any such
indebtedness or from the trustee under any such mortgage, indenture or
other instrument; or
(f) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (ii) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(g) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or
<PAGE>
31
State bankruptcy, insolvency, reorganization or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent,
or the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the filing
of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debentures may declare the principal of all the Debentures to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal shall
become immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Debentures, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequence if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue installments of interest on
all Debentures;
(ii) the principal of (and premium, if any, on) any
Debentures which have become due otherwise than by such
declaration of acceleration and
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interest thereon at the rate borne by the Debentures;
(iii) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at the
rate borne by the Debentures; and
(iv) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(b) all Events of Default, other than the non-payment of the
principal of Debentures which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if:
(a) default is made in the payment of any installment of
interest on any Debenture when such interest becomes due and payable
and such default continues for a period of 30 days;
(b) default is made in the payment of the principal of (or
premium, if any, on) any Debenture at the Maturity thereof; or
(c) default is made in the payment of the Repurchase Price in
respect of any Debenture on the Repurchase Date therefor in accordance
with the provisions of Article XIV;
the Company will upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debentures, the whole amount then due and payable on such
Debentures for principal (and premium, if any) and interest, with interest upon
the overdue principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Debentures; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable
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33
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of sums so due and unpaid,
may prosecute such proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon the Debentures and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon the Debentures,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Debentures or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Debentures 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 on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Debentures and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same
after deduction of its charges and expenses;
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34
and any receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan or reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Debentures. All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Trustee without the possession
of any of the Debentures or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
SECTION 5.06. Application of Money Collected. Subject to
Article XIII, any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Debentures and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
(a) to the payment of all amounts due the Trustee under
Section 6.07;
(b) to the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debentures in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such
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35
Debentures for principal (and premium, if any) and interest,
respectively; and
(c) to the payment of the remainder, if any, to the Company,
its successors or assigns, or to whomsoever may be lawfully entitled to
the same, or as a court of competent jurisdiction may determine.
SECTION 5.07. Limitation on Suits. No Holder of any Debenture
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the Outstanding Debentures shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the outstanding Debentures;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.08. Right of Holders To Receive Principal, Premium
and Interest and To Convert. Notwithstanding any other provision in this
Indenture, but subject to Article XIII, the Holder of any Debenture shall have
the right to receive payment of the principal of (and
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36
premium, if any) and (subject to Section 3.07) interest on such Debenture on the
Stated Maturity expressed in such Debenture (or, in the case of redemption or
repurchase, on the Redemption Date or Repurchase Date) and to convert such
Debenture in accordance with Article XII and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Debenture to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Debentures shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee;
provided that:
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37
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) such direction is not unduly prejudicial to the other
security holders or may involve the Trustee in personal liability or if
the Trustee determines that it does not have sufficient indemnity
against any loss or expense connected to such action; and
(c) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Outstanding Debentures may on behalf
of the Holders of all the Debentures waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal of (or premium, if any)
or interest on any Debenture; or
(b) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Debenture by such Holder's 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, suffered 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; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Debentures or to any suit instituted by any
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38
Holder for the enforcement of the payment of the principal of (or premium, if
any) or interest on any Debenture on or after the Stated Maturity expressed in
such Debenture (or, in the case of redemption or repurchase, on or after the
Redemption Date or Repurchase Date) or for the enforcement of the right to
convert any Debenture in accordance with Article XII.
SECTION 5.15. Waiver of Stay, Usury or Extension Laws. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, usury or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of wilful misconduct on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, but, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights
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39
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.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(i) this subsection shall not be construed to limit the effect
of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Debentures 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
(iv) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.02. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder, the Trustee shall transmit by mail to all
Holders, as their names and addresses appear in the Debenture Register, notice
of such default hereunder known to the Trustee, unless such default shall have
been cured or waived; provided, however, that, except in the case of a default
in the payment of the principal of (or premium, if any) or interest on any
Debenture, the Trustee shall be protected in withholding such notice if and so
long as a trust committee of
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Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders; provided further
that, in the case of any default of the character specified in Section 5.01(d),
no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default. The Trustee shall not be deemed to have knowledge of any
default other than those described in Sections 5.01(a), (b) and (c) unless a
Responsible Officer of the Trustee has actual knowledge of such default.
SECTION 6.03. Certain Rights of Trustee. Except as otherwise
provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party
or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and
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41
liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 6.04. Not Responsible for Recitals or Issuance of
Debentures. The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debentures. The Trustee shall not be accountable for the use
or application by the Company or any Paying Agent other than the Trustee of
Debentures or the proceeds thereof.
SECTION 6.05. May Hold Debentures. The Trustee, any
Authenticating Agent, any Paying Agent, any Debenture Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Debentures and, subject to Section 6.12 and to Section
310(b) of the Trust Indenture Act, may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Debenture Registrar or such other agent.
Subject to Section 310(b) of the Trust Indenture Act, the
Trustee may become and act as trustee under other indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding in the same manner as if it were not Trustee.
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SECTION 6.06. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed on with the Company.
SECTION 6.07. Compensation and Reimbursement. The Company
agrees:
(a) to pay to the Trustee from time to time such compensation
as may be agreed upon by the Trustee and the Company from time to time
for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including
the reasonable compensation and the expenses and disbursements of its
agents, counsel and other persons not regularly in its employ), except
to the extent any such expense, disbursement or advance may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee (in its individual capacity and
as Trustee), its officers, directors, attorneys-in-fact and agents for,
and to hold each such person harmless against, any loss, claim, damage,
liability or expense, incurred without negligence or bad faith on such
person's part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder. The obligations of the Company under this Section
6.07 to compensate and indemnify the Trustee and to pay or reimburse
the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture. To secure the Company's payment
obligations in this Section 6.07, the Trustee shall have a lien prior
to the Debentures on all money or property held or collected by the
Trustee except money or property held in trust to pay principal of (and
premium, if any) or interest on particular Debentures and such lien
shall survive the satisfaction and discharge of the Indenture and any
other
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43
termination of the Indenture including any termination under any
bankruptcy law. When the Trustee incurs expenses or renders services in
connection with an Event of Default of Section 5.01(b) or 501(g), the
Holders by their acceptance of the Debentures hereby agree that such
expenses and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law.
"Trustee" for the purposes of this Section 6.07 shall include any
predecessor Trustee, but the negligence or willful misconduct of any
Trustee shall not affect the indemnification of any other Trustee.
SECTION 6.08. Corporate Trustee Required; Eligibility. The
Trustee shall at all times satisfy the eligibility requirements of Section 310
of the Trust Indenture Act and together with its immediate parent maintain a
combined capital and surplus of at least $50,000,000, be subject to supervision
or examination by Federal or State authority and have its Corporate Trust Office
in the City of Philadelphia. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.10.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Debentures,
delivered to the Trustee and to the Company.
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(d) If at any time:
(i) the Trustee shall cease to be eligible under Section 6.08
and shall fail to resign after written request therefor by the Company
or by any Holder; or
(ii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Debentures delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner hereinafter
provided, the Trustee or any Holder who has been a bona fide Holder of a
Debenture for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Debenture Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
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SECTION 6.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges pursuant to
Section 6.07, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts. Any retiring trustee shall, nevertheless, retain a lien on
all property or funds held or collected by such trustee to secure any amounts
then due pursuant to the provisions of Section 6.07.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Company shall cause such successor Trustee to mail
notice of succession of such Trustee hereunder to all Holders of Debentures as
the names and addresses of such Holders appear on the Debenture Register.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be eligible under this
Article and qualified under Section 310(b) of the Trust Indenture Act.
SECTION 6.11. Merger, Conversion, Consolidation or Succession
to Business. Any corporation or national banking association into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder; provided such
corporation or national banking association shall be otherwise eligible under
this Article and qualified under Section 310(b) of the Trust Indenture Act,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debentures shall have been authenticated,
but not delivered, by the
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46
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Debentures so authenticated with the same effect as if such successor Trustee
had itself authenticated such Debentures.
SECTION 6.12. Preferential Collection of Claims Against
Company. The Trustee is subject to Section 311(a) and (b) of the Trust Indenture
Act. Any Trustee that has resigned or been removed shall be subject to Section
311(a) and (b) of the Trust Indenture Act to the extent indicated therein.
SECTION 6.13. Appointment of Authenticating Agent. The Trustee
may appoint an Authenticating Agent or Agents which shall be authorized to act
on behalf of the Trustee to authenticate Debentures issued upon exchange,
registration of transfer or partial redemption or repurchase thereof or pursuant
to Section 3.06, and Debentures so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Debentures by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation or national banking association into which an
Authenticating Agent may be merged or converted or with which it may be
consolidated or any
<PAGE>
47
corporation or national banking association resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a party,
or any corporation succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an Authenticating
Agent; provided such corporation or national banking association shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Debenture Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent herein. No
successor Authenticating Agent shall be appointed unless eligible under the
provisions of his Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the
Debentures may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternate certificate of authentication in the following
form:
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48
This is one of the Debentures referred to in the
within-mentioned Indenture.
Dated:
FIRST UNION NATIONAL BANK, as
Trustee
by
--------------------------
As Authenticating Agent
by
--------------------------
Authorized Signatory
<PAGE>
49
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
SECTION 7.01. Company To Furnish Trustee Names and Addresses
of Holders. The Company will furnish or cause to be furnished to the Trustee:
(a) semiannually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such Regular
Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Debenture Registrar.
SECTION 7.02. Preservation of Information Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Debenture
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Debenture for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders with respect
to their rights under this Indenture or under the Debentures and is accompanied
by a copy of the form of proxy or other communication which such applicants
propose to transmit, then the Trustee shall, within five business days after the
receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 7.02(a), or
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50
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 7.02(a), and as
to the approximate cost of mailing to such Holders the form of proxy or
other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 7.02(a) a copy
of the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Debentures, 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
the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 7.02(b), regardless of the source from which
such information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under Section
7.02(b).
<PAGE>
51
SECTION 7.03. Reports by Trustee. (a) Within 60 days after
June 15 of each year commencing with the year 1998, the Trustee shall transmit
by mail to all Holders, as their names and addresses appear in the Debenture
Register, a brief report dated as of such June 15 with respect to any of the
following events which may have occurred during the twelve months preceding the
date of such report (but if no such event has occurred within such period, no
report need be transmitted):
(i) any change to its eligibility under Section 6.08 and its
qualifications under Section 310(b) of the Trust Indenture Act;
(ii) the creation of or any material change to a relationship
specified in Section 310(b)(1) through 310(b)(10) of the Trust
Indenture Act;
(iii) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Debentures, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances
if such advances so remaining unpaid aggregate not more than 1/2 of 1%
of the principal amount of the Debentures Outstanding on the date of
such report;
(iv) any change to the amount, interest rate and maturity date
of all other indebtedness owing by the Company (or by any other obligor
on the Debentures) to the Trustee in its individual capacity, on the
date of such report, with a brief description of any property held as
collateral security therefor except an indebtedness based upon a
creditor relationship arising in any manner described in paragraph (2),
(3), (4) or (6) of Section 311 of the Trust Indenture Act;
(v) any change to the property and funds, if any, physically
in the possession of the Trustee as such on the date of such report;
(vi) any additional issue of Debentures which the Trustee has
not previously reported; and
(vii) any action taken by the Trustee in the performance of
its duties hereunder which it has not previously reported and which in
its opinion materially
<PAGE>
52
affects the Debentures, except action in respect of a default, notice
of which has been or is to be withheld by the Trustee in accordance
with Section 6.02.
(b) The Trustee shall transmit by mail to all Holders, as
their names and address appear in the Debenture Register, a brief report with
respect to the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee (as such) since the date of the last report transmitted pursuant to
Subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
the Debentures, on property or funds held or collected by it as Trustee and
which it has not previously reported pursuant to this Subsection, except that
the Trustee shall not be required (but may elect) to report such advances if
such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Debentures Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Debentures are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Debentures are listed on any stock
exchange.
SECTION 7.04. Reports by Company. The Company shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Securities Exchange Act of
1934 in respect of a security listed and registered on a
<PAGE>
53
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(b) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations;
(c) transmit by mail to all Holders, as their names and
addresses appear in the Debenture Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission; and
(d) file with the Trustee a certificate of the principal
executive officer, the principal financial officer or the principal
accounting officer of the Company on or before October 15 in each year,
commencing with the year 1998 stating whether or not, to the knowledge
of the signer, the Company has complied with all conditions and
covenants on its part contained in this Indenture, and, if the signer
has obtained knowledge of any default by the Company in the
performance, observance or fulfillment of any such condition or
covenant, specifying each such default and the nature thereof. For the
purpose this Section 7.04, compliance shall be determined without
regard to any grace period or requirement of notice provided pursuant
to the terms of this Indenture.
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 8.01. Company May Consolidate, Etc., Only on Certain
Terms. The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the
<PAGE>
54
laws of the United States of America, any State thereof or the District
of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the Debentures and the performance
of every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Section 12.10;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
SECTION 8.02. Successor Corporation Substituted. Upon any
consolidation or merger or any conveyance or transfer of the properties and
assets of the Company substantially as an entirety in accordance with Section
8.01, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance or transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter the predecessor
corporation shall be relieved of all obligations and covenants under this
Indenture and the Debentures.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form
<PAGE>
55
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Debentures; or
(b) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(c) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Section 12.10; or
(d) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; provided such action shall not
adversely affect the interests of the Holders in any material respect;
or
(e) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect or maintain
the qualification of this Indenture under the Trust Indenture Act, or
under any similar Federal statute hereafter enacted.
SECTION 9.02. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than two-thirds in principal amount
of the Outstanding Debentures, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Debenture
affected thereby,
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Debenture, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or
the currency in which, any Debenture or any premium or the interest
thereon is payable, or
<PAGE>
56
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or adversely affect the
right to convert any Debenture as provided in Article XII, or adversely
affect the right to require the Company to repurchase the Debentures as
provided in Article XIV or modify the provisions of this Indenture with
respect to the subordination of the Debentures in a manner adverse to
the Holders, or
(b) reduce the percentage in principal amount of the
Outstanding Debentures the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(c) modify any of the provisions of this Section or Section
5.13, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Debenture affected
thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be, and shall be deemed to be, modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Debentures theretofore or
<PAGE>
57
thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 9.06. Reference in Debentures to Supplemental
Indentures. Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee shall
so determine, new Debentures so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debentures.
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and Interest. The
Company will duly and punctually pay or cause to be paid by no later than one
Business Day prior to the date such payment is due the principal of (and
premium, if any) and interest on the Debentures in accordance with the terms of
the Debentures and this Indenture.
SECTION 10.02. Maintenance of Office or Agency. The Company
will maintain in the City of Philadelphia or in the City of New York an office
or agency where Debentures may be presented or surrendered for payment or
repurchase where Debentures may be surrendered for registration of transfer or
exchange, where Debentures may be surrendered for conversion and where notices
and demands to or upon the Company in respect of the Debentures and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
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58
The Company may also from time to time designate one or more
other offices or agencies (in or outside the City of Philadelphia or the City of
New York) where the Debentures may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the City of
Philadelphia or the City of New York for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
SECTION 10.03. Money for Debenture Payments to be Held in
Trust. If the Company shall at any time act as its own Paying Agent it will, on
or before each due date of the principal of (and premium, if any) or interest on
any of the Debentures, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will prior to each due date of the principal of (and premium if any) or interest
on any Debentures, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Debentures in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or
any other obligor upon the Debentures) in the making of any payment of
principal (and premium, if any) or interest; and
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59
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Debenture and remaining unclaimed for two
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Debenture
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 10.04. Corporate Existence. Subject to Article VIII,
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights (charter and
statutory) and franchises; provided, however, that the Company shall not be
required to preserve any such right or franchise if the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.
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60
SECTION 10.05. Maintenance of Properties. The Company will
cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business and not disadvantageous in any material respect to the Holders.
SECTION 10.06. Payment of Taxes and Other Claims. The Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the Company,
and (b) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Company; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 10.07. Waiver of Certain Covenants. The Company may
omit in any particular instance to comply with any covenant or condition set
forth in Sections 10.04 to 10.06, inclusive, if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Debentures shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
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61
ARTICLE XI
Redemption of Debentures
SECTION 11.01. Right of Redemption. The Debentures may be
redeemed at the election of the Company, as a whole or from time to time in
part, at any time, at the Redemption prices specified in the form of Debenture
hereinbefore set forth for redemptions, together with accrued interest to the
Redemption Date; provided, however, that the Company may not redeem any of the
Debentures pursuant to such option prior to October 15, 2000.
SECTION 11.02. Applicability of Article. Redemption of
Debentures at the election of the Company or otherwise as permitted or required
by any provision of this Indenture, shall be made in accordance with such
provision and this Article.
SECTION 11.03. Election To Redeem; Notice to Trustee. The
election of the Company to redeem any Debentures pursuant to Section 11.01 shall
be evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Debentures, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee) notify the Trustee of such Redemption Date and
of the principal amount of Debentures to be redeemed.
SECTION 11.04. Selection by Trustee of Debentures To Be
Redeemed. If less than all the Debentures are to be redeemed the particular
Debentures to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Debentures not previously
called for redemption, pro rata or by lot or by such other method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to $1,000 or any integral multiple thereof) of the
principal amount of Debentures of a denomination larger than $1,000.
If any Debenture selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Debenture so selected, the converted portion of such Debenture shall be
deemed (so far as may be) to be the portion selected for redemption. Debentures
which have been converted during a selection of Debentures to be redeemed shall
be treated by the Trustee as Outstanding for the purpose of such selection.
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The Trustee shall promptly notify the Company and the
Debenture Registrar in writing of the Debentures selected for redemption and, in
the case of any Debentures selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Debentures
shall relate, in the case of any Debentures redeemed or to be redeemed only in
part, to the portion of the principal amount of such Debenture which has been or
is to be redeemed.
SECTION 11.05. Notice of Redemption. Notice of redemption
shall be given by first-class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the Redemption Date, to each Holder of Debentures to
be redeemed, at his address appearing in the Debenture Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Debentures are to be
redeemed the identification (and, in the case of partial redemption,
the principal amounts) of the particular Debentures to be redeemed;
(4) that on the Redemption Date, the Redemption Price,
together with (unless the Redemption Date shall be an Interest Payment
Date) interest accrued and unpaid to the Redemption Date, will become
due and payable upon each such Debenture to be redeemed and that
interest thereon will cease to accrue on and after said date;
(5) the conversion price, the date on which the right to
convert the principal of the Debentures to be redeemed will terminate
and the place or places where such Debentures may be surrendered for
conversion; and
(6) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Debentures to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request by the Trustee in the name and at the expense of the Company.
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SECTION 11.06. Deposit of Redemption Price. Prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust) an amount of money sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on all the Debentures which are to be redeemed on that date other than
any Debentures called for redemption on that date which have been converted
prior to the date of such deposit.
If any Debenture called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Debenture shall (subject to any right of the
Holder of such Debenture or any Predecessor Debenture to receive interest as
provided in the last paragraph of Section 3.07) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 11.07. Debentures Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Debentures so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Debentures shall cease to bear interest. Upon surrender of any such Debenture
for redemption in accordance with said notice, such Debenture shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Debentures, or one or more Predecessor Debentures, registered as such at
the close of business on the relevant Regular Record Dates according to their
terms and the provisions of Section 3.07.
If any Debenture called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne by
the Debenture.
SECTION 11.08. Debentures Redeemed in Part. Any Debenture
which is to be redeemed only in part shall be surrendered at any office or
agency of the Company designated for that purpose (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company,
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the Trustee and the Debenture Registrar 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 Debenture without
service charge, a new Debenture or Debentures, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Debenture so surrendered.
ARTICLE XII
Conversion of Debentures
SECTION 12.01. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Debenture or any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000 may be
converted at the principal amount thereof, or of such portion thereof, into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company, at the conversion
price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall expire at the close of business on October 15, 2004.
In case a Debenture or portion thereof is called for redemption, such conversion
right in respect of the Debenture or portion so called shall expire at the close
of business on the Business Day preceding the Redemption Date, unless the
Company defaults in making the payment due upon redemption.
The price at which shares of Common Stock shall be delivered
upon conversion (herein called the "conversion price") shall be initially $[ ]
per share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in paragraphs (a), (b), (c), (d), (e), (f) and (h) of
Section 12.04.
SECTION 12.02. Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the Holder of any Debenture to be converted
shall surrender such Debenture, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
Holder elects to convert such Debenture or, if less than the entire principal
amount thereof is to be converted, the portion thereof to be converted. In
connection with the exercise of the
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conversion privilege by a Holder prior to a Redemption Date, a Holder's right to
exercise his conversion privilege shall terminate at the close of business on
the Business Day prior to the Redemption Date. Debentures surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date shall (except in the case of Debentures or portions
thereof which have been called for redemption on a Redemption Date within such
period) be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of Debentures being
surrendered for conversion. Except as provided in the preceding sentence and
subject to the last paragraph of Section 3.07, no payment or adjustment shall be
made upon any conversion on account of any interest accrued on the Debentures
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Debentures shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Debentures for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Debentures as Holders shall cease, and the person
or persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 12.03.
In the case of any Debenture which is converted in part only,
upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Debenture or Debentures of authorized denominations in aggregate principal
amount equal to the unconverted portion of the principal amount of such
Debenture.
SECTION 12.03. Fractions of Shares. No fractional shares of
Common Stock shall be issued upon the conversion of Debentures. If more than one
Debenture shall be surrendered for conversion at one time by the same Holder,
the number of full shares which shall be issuable upon conversion thereof shall
be computed on the basis of the aggregate principal amount of Debentures (or
specified
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portions thereof) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any Debenture or
Debentures (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
of the closing price per share of Common Stock at the close of business on the
Business Day prior to the day of conversion (determined as provided in paragraph
(g)(i) of Section 12.04).
SECTION 12.04. Adjustment of Conversion Price. The Conversion
Price shall be adjusted from time to time by the Company as follows:
(a) If 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 Record Date (as defined in
Section 12.04(g)) 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 Record Date. If any dividend or distribution of the
type described in this Section 12.04(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) If the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price (as defined in Section 12.04(g)) on
the Record Date fixed for the 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 at the opening of business on the date after
such Record Date by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business
on the Record Date
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plus the number of shares of Common Stock which the aggregate offering
price of the total number of shares so offered would purchase at such
Current Market Price and of which the denominator shall be the number
of shares of Common Stock outstanding at the close of business on the
Record Date plus the total number of additional shares of Common Stock
so offered for subscription or purchase. Such adjustment shall become
effective immediately after the opening of business on the day
following the Record Date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares
of Common Stock are not delivered pursuant to such rights or warrants,
upon the expiration or termination of such rights or warrants the
Conversion Price shall again be adjusted to be 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. If
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 for such rights or warrants, with the value of
such consideration, if other than cash, to be determined by the Board
of Directors.
(c) If the 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, if the 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.
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(d) If 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 12.04(a) applies) or evidences of its indebtedness, cash or
other assets (including securities, but excluding any rights or
warrants of a type referred to in Section 12.04(b) and dividends and
distributions paid exclusively in cash and excluding any capital stock,
evidences of indebtedness, cash or assets distributed upon a merger or
consolidation to which Section 12.10 applies) (the foregoing
hereinafter in this Section 12.04(d) called the "Securities"), then, in
each such case, the Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the
Record Date with respect to such distribution by a fraction of which
the numerator shall be the Current Market Price (determined as provided
in Section 12.04(g)) on such 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
such date of the portion of the Securities so distributed applicable to
one share of Common Stock and the denominator shall be such Current
Market Price, such reduction to become effective immediately prior to
the opening of business on the day following the 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 on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of Debentures
shall have the right to receive upon conversion of a Debenture (or any
portion thereof) the amount of Securities such holder would have
received had such holder converted such Debenture (or portion thereof)
immediately prior to such Record Date. If 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 12.04(d) by reference to the actual or when issued trading
market for any securities comprising all or part of such distribution,
it must in doing so consider the prices in such market over the same
period used in
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computing the Current Market Price pursuant to Section 12.04(g) to the
extent possible.
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 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 12.04(d) (and no adjustment to the Conversion
Price under this Section 12.04(d) shall 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 to the Conversion Price under this Section 12.04(d) shall be
made. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the date of this Indenture, are
subject to subsequent events, upon the occurrence of each of which such
rights or warrants shall become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the
occurrence of each such event shall be deemed to be such date of
issuance and record date with respect to new rights or warrants (and a
termination or expiration of the existing rights or warrants without
exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any
Trigger Event with respect thereto, that was counted for purposes of
calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 12.04 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
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readjusted as if such rights and warrants had not been issued.
Notwithstanding any other provision of this Section 12.04(d)
to the contrary, rights, warrants, evidences of indebtedness, other
securities, cash or other assets (including, without limitation, any
rights distributed pursuant to any stockholder rights plan) shall be
deemed not to have been distributed for purposes of this Section
12.04(d) if the Company makes proper provision so that each holder of
Debentures who converts a Debenture (or any portion thereof) after the
date fixed for determination of stockholders entitled to receive such
distribution shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion,
the amount and kind of such distributions that such holder would have
been entitled to receive if such holder had, immediately prior to such
determination date, converted such Debenture into Common Stock.
For purposes of this Section 12.04(d) and Sections 12.04(a)
and (b), any dividend or distribution to which this Section 12.04(d) is
applicable that also includes shares of Common Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock to which
Section 12.04(b) applies (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets,
shares of capital stock, rights or warrants other than such shares of
Common Stock or rights or warrants to which Section 12.04(b) applies
(and any Conversion Price reduction required by this Section 12.04(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 12.04(a) and (b) with respect to
such dividend or distribution shall then be made), except that (a) the
Record 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", "Record Date fixed for
such determination" and "Record Date" within the meaning of Section
12.04(a) and as "the date fixed for the determination of stockholders
entitled to receive such rights or warrants", "the Record Date fixed
for the determination of the stockholders entitled to receive such
rights or warrants" and "such Record Date" within the meaning of
Section 12.04(b), and (b) any shares of Common Stock included in such
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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 12.04(a).
(e) If the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 12.10
applies or as part of a distribution referred to in Section 12.04(d))
in an aggregate amount that, combined together with (1) the aggregate
amount of any other such distributions to all holders of its Common
Stock made exclusively in cash within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment
pursuant to this Section 12.04(e) has been made, and (2) the aggregate
of any cash plus 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) of consideration payable in
respect of any tender offer by the Company or any of its subsidiaries
for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to Section 12.04(f) has been
made, exceeds 10% of the product of the Current Market Price
(determined as provided in Section 12.04(g)) on the Record Date with
respect to such distribution times the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately
after the close of business on such date, 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 (i) the numerator
of which shall be equal to the Current Market Price on the Record Date
less an amount equal to the quotient of (x) the excess of such combined
amount over such 10% and (y) the number of shares of Common Stock
outstanding on the Record Date and (ii) the denominator of which shall
be equal to the Current Market Price on such Record Date; provided,
however, that, if 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
holder of Debentures shall have the right to receive upon conversion of
a Debenture (or any portion thereof) the amount of cash such holder
would
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have received had such holder converted such Debenture (or portion
thereof) immediately prior to such Record Date. If 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. Any cash
distribution to all holders of Common Stock as to which the Company
makes the election permitted by Section 12.04(m) and as to which the
Company has complied with the requirements of such Section shall be
treated as not having been made for all purposes of this Section
12.04(e).
(f) If a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock expires and
such tender offer (as amended upon the expiration thereof) requires the
payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration 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 of
Directors) that, combined together with (1) the aggregate of the cash
plus 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), as of the expiration of such tender offer,
of consideration payable in respect of any other tender offers, by the
Company or any of its subsidiaries for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to this
Section 12.04(f) has been made and (2) the aggregate amount of any
distributions to all holders of the Common Stock made exclusively in
cash within 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to Section 12.04(e) has been
made, exceeds 10% of the product of the Current Market Price
(determined as provided in Section 12.04(g)) as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender
offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration Time,
then, and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately
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prior to the close of business on the date of the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding (including any tendered shares) at 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 stockholders based on the
acceptance (up to any maximum specified in the terms of the tender
offer) of all shares validly tendered 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) at the Expiration Time and the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time,
such reduction (if any) to become effective immediately prior to the
opening of business on the day following the Expiration Time. If the
Company is obligated to purchase shares pursuant to any such tender
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 offer had not been made.
If the application of this Section 12.04(f) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 12.04(f).
(g) For purposes of this Section 12.04, the following terms
shall have the meaning indicated:
(i) "closing price" with respect to any securities on
any day means the closing price on such day or, if no such
sale takes place on such day, the average of the reported high
and low prices on such day, in each case on The Nasdaq
National Market or the New York Stock Exchange, as applicable,
or, if such security is not listed or admitted to trading on
such national market or exchange, on the principal national
securities 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 high and low
prices of such security on the over-the-counter
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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,
whose determination shall be conclusive and described in a
resolution of the Board of Directors.
(ii) "Current Market Price" means the average of the
daily closing prices per share of Common Stock for the 10
consecutive trading days immediately prior to the date in
question; provided, however, that (A) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section
12.04(a), (b), (c), (d), (e) or (f) occurs during such 10
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, (B) if the "ex" date
for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 12.04(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 (C) if the "ex"
date for the issuance or distribution requiring such
computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (A) or (B)
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 in a manner consistent with any
determination of such value for purposes of Section 12.04(d)
or (f), whose determination shall be conclusive and
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described in a resolution of the Board of Directors) 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 12.04(f), the
Current Market Price 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 days;
provided, however, that, if the "ex" date for any event (other
than the tender offer requiring such computation) that
requires an adjustment to the Conversion Price pursuant to
Section 12.04(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 (I) 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, (II) 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 (III) 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. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion
Price are called for pursuant to this Section 12.04, such
adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this
Section 12.04 and to avoid unjust or inequitable results, as
determined in good faith by the Board of Directors.
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(iii) "fair market value" shall mean the amount which
a willing buyer would pay a willing seller in an arm's-length
transaction.
(iv) "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 stockholders
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).
(v) "trading day" shall mean (A) if the applicable
security is listed or admitted for trading on the New York
Stock Exchange or another national securities exchange, a day
on which the New York Stock Exchange or another national
securities exchange is open for business, (B) if the
applicable security is quoted on The Nasdaq National Market, a
day on which trades may be made thereon or (C) 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.
(h) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 12.04(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 20 days, the reduction is
irrevocable during the period and the Board of Directors has made a
determination that such reduction would be in the Company's best
interests, which determination shall be conclusive and described in a
resolution of the Board of Directors. Whenever the
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Conversion Price is reduced pursuant to the preceding sentence, the
Company shall mail to the holders of Debentures at their last addresses
appearing on the register of holders maintained for that purpose a
notice of the reduction at least 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 12.04(i) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 12 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 a change in the par value or no
par value of the Common Stock.
(j) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with 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 each holder of Debentures at such
holder's last address appearing on the register of holders maintained
for that purpose within 20 days of the effective date of such
adjustment. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
(k) In any case in which this Section 12.04 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
issuing to the holder of any Debenture 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
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issuable upon such conversion before giving effect to such adjustment.
(l) For purposes of this Section 12.04, 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 shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(m) In lieu of making any adjustment to the Conversion Price
pursuant to Section 12.04(e), the Company may elect to reserve an
amount of cash for distribution to the holders of Debentures upon the
conversion of the Debentures so that any such holder converting
Debentures will receive upon such conversion, in addition to the shares
of Common Stock and other items to which such holder is entitled, the
full amount of cash which such holder would have received if such
holder had, immediately prior to the Record Date for such distribution
of cash, converted its Debentures into Common Stock, together with any
interest accrued with respect to such amount, in accordance with this
Section 12.04(m). The Company may make such election by providing an
Officers' Certificate to the Trustee to such effect on or prior to the
payment date for any such distribution and depositing with the Trustee
on or prior to such date an amount of cash equal to the aggregate
amount that the holders of Debentures would have received if such
holders had, immediately prior to the Record Date for such
distribution, converted all the Debentures into Common Stock. Any such
funds so deposited by the Company with the Trustee shall be invested by
the Trustee in U.S. Government Obligations with a maturity not more
than three months from the date of issuance. Upon conversion of
Debentures by a holder thereof, such holder shall be entitled to
receive, in addition to the Common Stock issuable upon conversion, an
amount of cash equal to the amount such holder would have received if
such holder had, immediately prior to the Record Date for such
distribution, converted its Debentures into Common Stock, along with
such holder's pro rata share of any accrued interest earned as a
consequence of the investment of such funds. Promptly after making an
election pursuant to this Section 12.04(m), the Company shall give or
shall cause to be given notice to all holders of Debentures of such
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79
election, which notice shall state the amount of cash per $1,000
principal amount of Debentures such holders shall be entitled to
receive (excluding interest) upon conversion of the Debentures as a
consequence of the Company having made such election.
SECTION 12.05. Notice of Adjustment of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price
in accordance with Section 12.04 and shall prepare a certificate signed
by any Vice President or the Treasurer of the Company setting forth the
adjusted conversion price and showing in reasonable detail the facts
upon which such adjustment is based and the effective date of such
adjustment, and such certificate shall forthwith be filed at each
office or agency maintained for the purpose of conversion of
Debentures; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall, as soon
as practicable, be mailed by the Company to all Holders at their last
addresses as they shall appear in the Debenture Register.
SECTION 12.06. Notice of Certain Corporate Action. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of
its earned surplus; or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or 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;
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then the Company shall cause to be filed with the Trustee and at each office or
agency maintained for the purpose of conversion of Debentures, and shall cause
to be mailed to all Holders at their last addresses as they shall appear in the
Debenture Register, at least 20 days (or 10 days in any case specified in clause
(a) or (b) above) 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, 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, rights or warrants 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, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Failure to give the notice
requested by this Section or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or the vote upon any such action.
SECTION 12.07. Company To Reserve Common Stock. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, for the purpose of effecting the
conversion of Debentures, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding Debentures.
SECTION 12.08. Taxes on Conversions. The Company will pay any
and all taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of Debentures pursuant hereto. 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 shares of Common Stock in a name
other than that of the Holder of the Debenture or Debentures to be converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.
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SECTION 12.09. Covenant as to Common Stock. The Company
covenants that all shares of Common Stock which may be issued upon conversion of
Debentures will upon issue be duly and validly issued and fully paid and
nonassessable and, except as provided in Section 12.08, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
SECTION 12.10. Provisions in Case of Consolidation, Merger or
Conveyance or Transfer of Properties and Assets. In case of any consolidation of
the Company with, or merger of the Company into, any other corporation, or in
case of any merger of another corporation into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), or in case
of any conveyance or transfer of the properties and assets of the Company
substantially as an entirety, the corporation formed by such consolidation or
resulting from such merger or which acquires by conveyance or transfer such
properties and assets as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Debenture
then outstanding shall have the right thereafter, during the period such
Debenture shall be convertible as specified in Section 12.01, to convert such
Debenture only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by a holder
of the number of shares of Common Stock of the Company into which such Debenture
might have been converted immediately prior to such consolidation, merger,
conveyance or transfer, assuming such holder of Common Stock of the Company
failed to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance or transfer (provided that if the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, conveyance or
transfer is not the same for each share of Common Stock of the Company in
respect of which such rights of election shall not have been exercised
("nonelecting share"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, conveyance or transfer by each nonelecting share shall be deemed to be
the kind and amount so receivable per share by a plurality of the nonelecting
shares). Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article. The above provisions of this
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Section shall similarly apply to successive consolidations, mergers, conveyance
or transfers.
SECTION 12.11. Responsibility of Trustee. The Trustee, subject
to the provisions of Section 6.01, and any conversion agent shall not at any
time be under any duty or responsibility to any Holder to determine whether any
facts exist which may require any adjustment of the conversion price, or with
respect to the nature or extent 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. Neither the Trustee nor any
conversion agent shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any other securities or
property, which may at any time be issued or delivered upon the conversion of
any Debenture; and it or they do not make any representation with respect
thereto. Neither the Trustee nor any conversion agent shall be responsible for
any failure of the Company to make any cash payment or to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property upon the surrender of any Debenture for the purpose of conversion; and
the Trustee, subject to the provisions of Section 6.01, and any conversion agent
shall not be responsible for any failure of the Company to comply with any of
the covenants of the Company contained in this Article.
ARTICLE XIII
Subordination of Debentures
SECTION 13.01. Debentures Subordinate to Senior Indebtedness.
The Company, for itself, its successors and assigns, covenants and agrees, and
each Holder of Debentures, by his acceptance thereof likewise covenants and
agrees, that all Debentures issued hereunder shall be subordinated and subject,
to the extent and in the manner herein set forth, in right of payment to the
prior payment in full of all Senior Indebtedness.
SECTION 13.02. No Payments When Senior Indebtedness in
Default; Payment Over of Proceeds upon Dissolution, Etc. In the event the
Company shall default in the payment of any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise, then, unless and until such default shall have
been cured or waived or shall have ceased to exist, no direct or indirect
payment (in cash, property, securities, by setoff or otherwise) shall be
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83
made or agreed to be made on account of the principal of (or premium, if any) or
interest on the Debentures, or in respect of any redemption, retirement,
purchase or other acquisition (except through the conversion thereof) of any of
the Debentures.
Upon the happening of an event of default with respect to any
Senior Indebtedness, as defined therein or in the instrument under which the
same is outstanding, permitting the holders thereof to accelerate the maturity
thereof (under circumstances when the terms of the preceding paragraph are not
applicable), unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by setoff or otherwise) shall be made or agreed to be made
on account of the principal of (or premium, if any) or interest on the
Debentures, or in respect of any redemption, retirement, purchase or other
acquisition (except through the conversion thereof) of any of the Debentures.
In the event of:
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company or its property;
(b) any proceeding for the liquidation, dissolution or other
winding-up of the Company or its property;
(c) any assignment by the Company for the benefit of
creditors; or
(d) any other marshalling of the assets of the Company;
all Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) shall first be paid in full before any
payment or distribution (direct or indirect), whether in cash, property or
securities, by setoff or otherwise, shall be made to any Holder on account of
any Debentures, and to that end any payment or distribution, whether in cash,
property or securities (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article with
respect to the Debentures, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect
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thereof under any such plan of reorganization or readjustment) which would
otherwise (but for the subordination provisions contained in this Article) be
payable or deliverable in respect of the Debentures shall be paid or delivered
directly to the holders of Senior Indebtedness, as their respective interests
may appear, until all Senior Indebtedness (including any interest thereon
accruing after the commencement of any such proceedings) shall have been paid in
full.
If the Debentures are declared due and payable before their
Stated Maturity because of the occurrence of an Event of Default (under
circumstances where the preceding paragraph is not applicable), no payment
(direct or indirect) shall be made in respect of any Debenture unless and until
all Senior Indebtedness has been paid in full or such declaration and its
consequence shall have been rescinded and all such defaults shall have been
remedied or waived.
If any payment or distribution (other than securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article with respect to the Debentures, to the payment of all
Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment) shall be
received by the Trustee or the Holders in contravention of any of the terms of
this Article and before all the Senior Indebtedness has been paid in full, such
payment or distribution shall be held in trust for the benefit of, and shall be
paid over or delivered and transferred to, the holders of such Senior
Indebtedness at the time outstanding as their respective interests may appear
for application to the payment of Senior Indebtedness until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceeding referred to in paragraph (a), (b), (c) or (d) above) shall
have been paid in full. If the Trustee or any such Holder fails to endorse or
assign any such payment or distribution as required by this Section, the Trustee
and the Holder of each Debenture by his acceptance thereof authorizes each
holder of Senior Indebtedness, any representative or representatives of holders
of Senior Indebtedness and the trustee or trustees under any indenture pursuant
to which any instrument evidencing such Senior Indebtedness may have been issued
to so endorse or assign the same.
No holder of Senior Indebtedness shall be prejudiced in the
right to enforce subordination of the
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Debentures by any act or failure to act on the part of the Company.
Subject to the payment in full of all Senior Indebtedness, the
Holders shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which ranks on a parity with the Debentures and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to the Senior
Indebtedness until the Debentures shall be paid in full, and no such payments or
distributions shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the Holders of the Debentures, be deemed to
be a payment by the Company to or on account of the Debentures. The provisions
of this Article are and are intended solely for the purpose of defining the
relative rights of the Holders of the Debentures, on the one hand, and the
holders of Senior Indebtedness, on the other hand, and nothing contained in this
Article or elsewhere in this Indenture or in the Debentures is intended to or
shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness and the Holders of the Debentures, the obligation of the
Company to pay the Holders the principal of (and premium, if any) and interest
on the Debentures as and when the same shall become due and payable in
accordance with the terms thereof, or prevent the Trustee or the Holders from
exercising all rights, powers and remedies otherwise permitted by applicable law
or under this Indenture, upon a default or Event of Default hereunder, all
subject to the rights of the holders of Senior Indebtedness to receive cash,
property or securities otherwise payable or deliverable to the Trustee or the
Holders.
Upon any payment or distribution pursuant to this Section, the
Trustee shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred to in
this Section are pending, and the Trustee, subject as between the Trustee and
the Holders to the provisions of Section 6.01, shall be entitled to rely upon a
certificate of the liquidating trustee or agent or other person making such
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Section.
In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of
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Senior Indebtedness to participate in any payment or distribution pursuant to
this Section, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, as to the extent to which such Person is entitled to
participate in such payment or distribution, and as to other facts pertinent to
the rights of such Person under this Section, 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 13.03. Trustee To Effectuate Subordination. The
Holder of each Debenture by his acceptance thereof authorizes and directs the
Trustee in his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination as provided in this Article and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 13.04. Trustee Not Charged with Knowledge of
Prohibition. Notwithstanding the provisions of this Article or any other
provision of this Indenture, but subject as between the Trustee and the Holders
to the provisions of Section 6.01, the Trustee shall not be charged with
knowledge of the existence of any Senior Indebtedness, or of any default in the
payment of any Senior Indebtedness, or of any facts which would prohibit the
making of any payment of moneys to or by the Trustee, unless and until three
Business Days after the Trustee shall have received written notice thereof from
the Company or any holder of Senior Indebtedness or the representative or
representatives of such holder, and the Trustee may conclusively rely on any
writing purporting to be from a holder of Senior Indebtedness, or a
representative of such holder, as being genuine; nor shall the Trustee be
charged with knowledge of the curing of any such default or of the elimination
of the act or condition preventing any such payment unless and until the Trustee
shall have received an Officers' Certificate to such effect. The provisions of
this Section shall not limit any rights of holders of Senior Indebtedness under
this Article XIII to recover from the Holders of Debentures any payment made to
any such Holder.
SECTION 13.05. Rights of Trustee as Holder of Senior
Indebtedness. The Trustee shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness; and nothing
in Section 6.12, or elsewhere in this Indenture,
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shall deprive the Trustee of any of its rights as such holder.
SECTION 13.06. Article Applicable to Paying Agent. In case at
any time any Paying Agent other than the Trustee shall have been appointed by
the Company and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context shall otherwise require) 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
Sections 13.04 and 13.05 shall not apply to the Company or any Affiliate of the
Company if the Company or such Affiliate acts as Paying Agent.
ARTICLE XIV
Right To Require Repurchase
SECTION 14.01. Right To Require Repurchase. In the event that
there shall occur a Change in Control (as defined in Section 14.05), each Holder
shall have the right, at such Holder's option to require the Company to
purchase, and upon the exercise of such right, the Company shall, subject to the
provisions of Article XIII, purchase, all or any part of such Holder's
Debentures on the date (the "Repurchase Date") that is 75 days after the date
the Company gives notice of the Change in Control as contemplated in Section
14.02(a) at a price (the "Repurchase Price") equal to 100% of the principal
amount thereof, together with accrued and unpaid interest to the Repurchase
Date. In connection with the exercise of the repurchase right by a Holder prior
to a Redemption Date, a Holder's right to exercise his repurchase right shall
terminate at the close of business on the Business Day prior to the Redemption
Date.
SECTION 14.02. Notice; Method of Exercising Repurchase Right.
(a) On or before the 15th day after the Change in Control, the Company, or at
the request of the Company, the Trustee (in the name and at the expense of the
Company), shall give notice of the occurrence of the Change in Control and of
the repurchase right set forth herein arising as a result thereof by first-class
mail, postage prepaid, to each Holder of the Debentures at such Holder's address
appearing in the Debenture Register. The Company shall also deliver a copy of
such notice of a repurchase right to the Trustee.
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Each notice of a repurchase right shall state:
(i) the event constituting the Change in Control
and the date thereof;
(ii) the Repurchase Date;
(iii) the date by which the repurchase right must be
exercised;
(iv) the Repurchase Price; and
(v) the instructions a Holder must follow to exercise a
repurchase right.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise a repurchase right. The Trustee shall have
no affirmative obligation to determine if there shall have occurred a Change in
Control.
(b) To exercise a repurchase right, a Holder shall deliver to
the Company (or an agent designated by the Company for such purpose in the
notice referred to in (a) above) and to the Trustee on or before the 10th day
prior to the Repurchase Date (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 Debenture or Debentures (or portion of a Debenture) to be repurchased,
and a statement that an election to exercise the repurchase right is being made
thereby, and (ii) the Debenture or Debentures with respect to which the
repurchase right is being exercised, duly endorsed for transfer to the Company.
Such written notice shall be irrevocable. If the Repurchase Date falls between
any Regular Record Date and the next succeeding Interest Payment Date,
Debentures to be repurchased must be accompanied by payment from the Holder of
an amount equal to the interest thereon which the registered Holder thereof is
to receive on such Interest Payment Date. A Holder that fails to exercise a
repurchase right in accordance with the terms hereof shall waive such repurchase
right but the rights of such Holder to receive principal of and interest on the
Debentures and all other rights of such Holder under this Indenture shall not be
affected thereby.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall on the Repurchase Date pay
or cause to be paid in cash to the Holder thereof the Repurchase Price of the
Debenture or Debentures as to which the repurchase right has been
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exercised. In the event that a repurchase right is exercised with respect to
less than the entire principal amount of a surrendered Debenture, the Company
shall execute and deliver to the Trustee and the Trustee shall authenticate for
issuance in the name of the Holder a new Debenture or Debentures in the
aggregate principal amount of the unrepurchased portion of such surrendered
Debenture.
SECTION 14.03. Deposit of Repurchase Price. On or prior to the
Repurchase Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) an amount of money sufficient to pay the
Repurchase Price of the Debentures which are to be repaid on the Repurchase
Date.
SECTION 14.04. Debentures Not Repurchased on Repurchase Date.
If any Debenture surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at a rate per annum borne
by such Debenture.
SECTION 14.05. "Change in Control" Defined. For purposes of
this Article, "Change in Control" means any of the following events that occur
after the date of this Indenture and on or prior to October 15, 2004:
(a) all or substantially all of the Company's assets are sold
as an entirety to any person or related group of persons;
(b) there shall be consummated any consolidation or merger of
the Company (i) in which the Company is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly owned
subsidiary of the Company in which all shares of Common Stock
outstanding immediately prior to the effectiveness thereof are changed
into or exchanged for the same consideration) or (ii) pursuant to which
the Common Stock is converted into cash, securities or other property,
in each case other than a consolidation or merger of the Company in
which the holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a
majority of the common stock of the continuing or surviving corporation
immediately after such consolidation or merger; or
(c) any person, or any persons acting together which would
constitute a "group" for purposes of
<PAGE>
90
Section 13(d) of the Securities Exchange Act of 1934 (a "Group"),
together with any Affiliates thereof, shall acquire beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of at least 50% of the total voting power of all classes of
capital stock of the Company entitled to vote generally in the election
of directors of the Company.
Notwithstanding anything to the contrary set forth in this
definition, a Change in Control shall not be deemed to have occurred:
(A) under paragraph (c) above, solely by virtue of the
Company, any Subsidiary, any employee stock purchase plan, stock option
plan or other stock incentive plan or program, retirement plan or
automatic dividend reinvestment plan or any substantially similar plan
of the Company or any Subsidiary or any person holding securities of
the Company for or pursuant to the terms of any such employee benefit
plan, filing or becoming obligated to file a report under or in
response to Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report) under the Exchange Act disclosing beneficial ownership
by it of shares or securities of the Company, whether in excess of 50%
or otherwise; or
(B) under paragraphs (a), (b) or (c) above if:
(1) the Current Market Price of the Common Stock on
the date the Change in Control shall have occurred is at least
equal to 105% of the Conversion Price in effect immediately
preceding the time of such Change in Control; or
(2) all of the consideration (excluding cash payments
for fractional shares) in the transaction giving rise to such
Change in Control to the holders of Common Stock consists of
shares of common stock that are, or immediately upon issuance
will be, listed on a national securities exchange or quoted on
The Nasdaq National Market, and as a result of such
transaction the Debentures become convertible solely into such
common stock; or
(3) the consideration in the transaction giving rise
to such Change in Control to the holders of Common Stock
consists of cash, securities that are, or immediately upon
issuance
<PAGE>
91
will be, listed on a national securities exchange or quoted on
The Nasdaq National Market, or a combination of cash and such
securities, and the aggregate fair market value of such
consideration (which, in the case of such securities, shall be
equal to the average of the daily Closing Prices of such
securities during the 10 consecutive Trading Days commencing
with the sixth Trading Day following consummation of such
transaction) is at least 105% of the Conversion Price in
effect on the date immediately preceding the closing date of
such transaction.
If a Change in Control shall have occurred under paragraph (b)
above, the Company shall deliver the Officer's Certificate and Opinion of
Counsel called for under Section 8.01(c) as well as the Notices called for under
Section 14.02(a).
For purposes of this definition of Change of Control, "Current
Market Price" on any date means the average daily Closing Prices for the 5
consecutive Trading Days selected by the Company commencing not more than 10
Trading Days before, and ending not later than, the date in question; "Closing
Price" for any Trading Day means the last reported sale price (or, if none on
any day, the mean between the bid and asked quotations on such day) of the
securities in question for such date, in either case on the New York Stock
Exchange or, if the securities are not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such securities
are listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on The Nasdaq National Market or, if the
securities are not listed or admitted to trading on any national securities
exchange or quoted on such National Market, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected by the Company for such purpose; and "Trading
Day", with respect to any stock exchange or securities market, means any Monday,
Tuesday, Wednesday, Thursday or Friday on which such stock exchange or
securities market is open for business.
* * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
<PAGE>
92
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
SYSTEMS & COMPUTER TECHNOLOGY
CORPORATION,
by
--------------------------
Name:
Title:
[Seal]
Attest:
_____________________________
Title:
FIRST UNION NATIONAL BANK,
by
--------------------------
Name:
Title:
[Seal]
Attest:
______________________________
Title:
<PAGE>
EXHIBIT 5
October 9, 1997
Systems & Computer Technology Corporation
4 Country View Road
Malvern, PA 19355
Gentlemen:
We have been engaged as counsel to Systems & Computer
Technology Corporation (the "Company") in connection with the (i) the proposed
sale by the Company of up to $69,000,000 principal amount of % Convertible
Subordinated Debentures due 2004 (the "Debentures"), including up to $9,000,000
principal amount of the Debentures which may be sold upon the exercise of an
over-allotment option, and (ii) the possible issuance of the shares of Common
Stock, $0.01 par value, of the Company into which the Debentures are convertible
(the "Common Stock"). The Debentures are intended to be issued pursuant to an
Indenture (the "Indenture") to be entered into by the Company with First Union
National Bank as Trustee (the "Trustee"), in substantially the form attached as
Exhibit 4 to a Registration Statement on Form S- 3 filed with the Securities and
Exchange Commission ("Registration Statement"), and sold pursuant to an
Underwriting Agreement in substantially in the form attached as Exhibit 1 to the
Registration Statement (the "Underwriting Agreement").
We, as counsel for the Company, have examined such corporate
records and certificates, the Indenture, the Underwriting Agreement and such
other documents and considered questions of law as we considered necessary or
appropriate for purposes of this opinion.
The Indenture and the Underwriting Agreement each contain a
provision in which the parties to such agreements agree that New York law will
govern such agreements. The opinions set forth below are limited to the federal
laws of the United States and the laws of the State of New York and the General
Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we advise you that,
in our opinion:
(1) Such of the Debentures as are sold, issued and paid for as
contemplated by the Registration Statement will be duly and validly issued and
will constitute legal, valid and binding obligations of the Company, subject to
any limitations imposed by bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance, moratorium or other laws relating to or affecting the
rights of creditors generally; and
<PAGE>
(2) Such of the shares of Common Stock into which the
Debentures are convertible have been duly authorized and reserved for issuance
upon conversion of the Debentures pursuant to the terms and conditions of the
Indenture, and such shares, when and if issued upon conversion of the Debentures
in accordance with the terms of the Indenture, will be validly issued, fully
paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus forming a part of such Registration Statement.
In giving this consent, we do not hereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations thereunder.
Very truly yours,
/s/ PEPPER, HAMILTON & SCHEETZ LLP
-----------------------------------
<PAGE>
EXHIBIT 12
Computation of Ratios of Earnings to Fixed Charges
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Year Ended September 30,
1992 1993 1994 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) before income taxes and
extraordinary credit ..................... $ (1,647) $ 11,223 $ 17,794 $ 10,316 $ 16,003
Interest .................................... 408 902 2,359 2,422 2,199
Portion of rent expense attributable to the
interest factor ........................... 418 514 665 681 970
Amortization of debt issuance expense ...... 35 114 161 274 151
-------- -------- -------- -------- --------
Earnings available for fixed charges ...... $ (786) $ 12,753 $ 20,979 $ 13,693 $ 19,323
======== ======== ======== ======== ========
Fixed Charges:
Interest .................................... $ 408 $ 902 $ 2,359 $ 2,422 $ 2,199
Portion of rent expense attributable to the
interest factor ........................... 418 514 665 681 970
Amortization of debt issuance expense ...... 35 114 161 274 151
-------- -------- -------- -------- --------
Total Fixed Charges ..................... $ 861 $ 1,530 $ 3,185 $ 3,377 $ 3,320
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges ......... -- 8.3x 6.6x 4.1x 5.8x
Deficiency of earnings to cover fixed
charges .................................... 1,647 -- -- -- --
<CAPTION>
Nine Months Ended June 30,
1996 1997
------------ ------------
<S> <C> <C>
Earnings:
Income (loss) before income taxes and
extraordinary credit ..................... $ 10,348 $ 24,421
Interest .................................... 1,611 1,035
Portion of rent expense attributable to the
interest factor ........................... 727 746
Amortization of debt issuance expense ...... 114 88
-------- --------
Earnings available for fixed charges ...... $ 12,800 $ 26,290
======== ========
Fixed Charges:
Interest .................................... $ 1,611 $ 1,035
Portion of rent expense attributable to the
interest factor ........................... 727 746
Amortization of debt issuance expense ...... 114 88
-------- --------
Total Fixed Charges ..................... $ 2,452 $ 1,869
======== ========
Ratio of Earnings to Fixed Charges ......... 5.2x 14.1x
Deficiency of earnings to cover fixed
charges .................................... -- --
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data" in the Registration Statement (Form S-3)
and related Prospectus of Systems & Computer Technology Corporation for the
registration of $60,000,000 of Convertible Subordinated Debentures Due 2004 and
to the incorporation by reference therein of our report dated October 28, 1996,
with respect to the consolidated financial statements and financial statement
schedule of Systems & Computer Technology Corporation included in its Annual
Report (Form 10-K) for the year ended September 30, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
October 8, 1997
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)_____
FIRST UNION NATIONAL BANK
(Name of Trustee)
22-1147033
(I.R.S. Employer Identification No.)
102 PENNSYLVANIA AVENUE, AVONDALE, PENNSYLVANIA
(Address of Principal Executive Offices)
19311
(Zip Code)
SYSTEMS AND COMPUTER TECHNOLOGY CORPORATION
(Exact name of registrants as specified in their charters)
DELAWARE
(State of Incorporation)
23-1701520
(I.R.S. Employer Identification No.)
4 COUNTRY VIEW ROAD
MALVERN, PA 193558195-1501
(610) 647-5930
(Address of Principal Executive Offices)
CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
(Title of Indenture Securities)
<PAGE>
1. General information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank (3rd District)
Philadelphia, Pennsylvania 19106
Federal Deposit Insurance Corporation
Washington, D.C. 20429
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting securities of the trustee.
Furnish the following information as to each class of voting securities
of the trustee:
Not applicable - see answer to item 13.
4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
Not applicable - see answer to item 13.
5. Interlocking directorates and similar relationships with the obligor
or underwriters.
2
<PAGE>
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or representative
of the obligor or of any underwriter for the obligor, identify each such person
having any such connection and state the nature of each such connection.
Not applicable - see answer to item 13.
6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor:
Not applicable - see answer to item 13.
7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
Not applicable - see answer to item 13.
8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee:
Not applicable - see answer to item 13.
9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee:
Not applicable - see answer to item 13.
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting stock of the
3
<PAGE>
obligor or (2) is an affiliate, other than a subsidiary, of the obligor, furnish
the following information as to the voting securities of such person:
Not applicable - see answer to item 13.
11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee:
Not applicable - see answer to item 13.
12. Indebtedness of the obligor to the trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
Not applicable - see answer to item 13.
13. Defaults by the obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
None
14. Affiliations with the underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable - see answer to item 13.
4
<PAGE>
15. Foreign trustee.
Identify the order or rule pursuant to which the trustee is authorized
to act as sole trustee under indentures qualified or to be qualified under the
Act.
Not applicable - trustee is a national banking association organized
under the laws of the United States.
16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
_____ 1. Copy of Articles of Association of the trustee as now in effect.**
_____ 2. Copy of the Certificate of the Comptroller of the Currency dated
January 11, 1994, evidencing the authority of the trustee to
transact business.*
_____ 3. Copy of the authorization of the trustee to exercise fiduciary
powers.*
_____ 4. Copy of existing by-laws of the trustee.**
_____ 5. Copy of each indenture referred to in Item 4, if the obligor is in
default, not applicable.
__X__ 6. Consent of the trustee required by Section 321(b) of the Act.
__X__ 7. Copy of report of condition of the trustee at the close of
business on June 30, 1997, published pursuant to the requirements
of its supervising authority.
_____ 8. Copy of any order pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to
be qualified under the Act, not applicable.
_____ 9. Consent to service of process required of foreign trustees
pursuant to Rule 10a-4 under the Act, not applicable.
5
<PAGE>
*Previously filed with the Securities and Exchange Commission on February 11,
1994 as an exhibit to Form T-1 in connection with Registration Statement No.
22-73340 and ** previously filed with the Securities and Exchange Commission on
May 5, 1997 as an exhibit to Form T-1 in connection with Registration Statement
No. 333-23791 and incorporated herein by reference.
NOTE
The trustee disclaims responsibility for the accuracy or completeness
of information contained in this Statement of Eligibility and Qualification not
known to the trustee and not obtainable by it through reasonable investigation
and as to which information it has obtained from the obligor and has had to rely
or will obtain from the principal underwriters and will have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Union National Bank, a national banking association organized and
existing under the laws of the United States of America, has duly caused this
Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Philadelphia and Commonwealth of
Pennsylvania, on the 8th day of October, 1997.
FIRST UNION NATIONAL BANK
By: s/Alan G. Finn
----------------------------
Alan G. Finn
Assistant Vice President
6
<PAGE>
EXHIBIT 4
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, and in connection with the proposed issue of Systems and Computer
Technology Corporation we hereby consent that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FIRST UNION NATIONAL BANK
By: s/Alan G. Finn
-------------------------------
Alan G. Finn
Assistant Vice President
Philadelphia, PA
October 8, 1997
<PAGE>
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union National
Bank, Avondale, Pennsylvania, at the close of business on June 30, 1997,
published in response to call made by Comptroller of the Currency, under title
12, United States Code, Section 161. Charter Number 33869 Comptroller of the
Currency Northeastern District.
Statement of Resources and Liabilities
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin......... 1,679,295
Interest-bearing balances.................................. 108,513
Securities................................................... /////////
Hold-to-maturity securities................................ 382,254
Available-for-sale securities.............................. 3,006,412
Federal funds sold and securities purchased under agreements //////////
to resell ......................................... 1,311,506
Loans and lease financing receivables:
Loan and leases, net of unearned income......................19,594,861
LESS: Allowance for loan and lease losses.................... 231,011
LESS: Allocated transfer risk reserve........................ 0
Loans and leases, net of unearned income, allowance, and
reserve....................................................19,363,850
Assets held in trading accounts.............................. 0
Premises and fixed assets (including capitalized leases)..... 415,290
Other real estate owned...................................... 45,964
Investment in unconsolidated subsidiaries and associated //////////
companies.................................................... 33,621
Customer's liability to this bank on acceptances outstanding. 53,824
Intangible assets............................................ 400,661
Other assets................................................. 775,903
Total assets.................................................27,577,093
LIABILITIES
Deposits:
In domestic offices.....................................21,060,904
Noninterest-bearing................................... 4,550,428
interest-bearing......................................16,510,476
In foreign offices, Edge and Agreement subsidiaries,
and IBFs.............................................. 588,131
Noninterest-bearing................................... 76
Interest-bearing...................................... 588,055
Federal funds purchased and securities sold under agreements
to repurchase.............................................. 2,288,783
Demand notes issued to the U.S. Treasury..................... 74,952
Trading liabilities.......................................... 0
Other borrowed money:........................................ /////////
With original maturity of one year or less................... 106
With original maturity of more than one year through.... 7,859
three years
With original maturity of more than three years......... 6,066
Bank's liability on acceptances executed and outstanding..... 53,824
Subordinated notes and debentures............................ 450,000
Other liabilities............................................ 779,197
Total liabilities............................................25,309,822
Limited-life preferred stock and related surplus............. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus................ 160,540
Common Stock................................................. 452,156
Surplus...................................................... 1,300,080
Undivided profits and capital reserves....................... 353,445
Net unrealized holding gains (losses) on available-for-sale /////////
securities.................................................. 1,050
Cumulative foreign currency translation adjustments.......... 0
Total equity capital......................................... 2,267,271
Total liabilities, limited-life preferred stock and equity... /////////
capital....................................................27,577,093
