<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1997
REGISTRATION NO. 333-17143
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
(POST-EFFECTIVE AMENDMENT NO. 1)
TO
REGISTRATION STATEMENT
ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
------------------------
MICROSOFT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
WASHINGTON 91-1144442
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
ONE MICROSOFT WAY
REDMOND, WASHINGTON 98052-6399
(206) 882-8080
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
ROBERT A. ESHELMAN, ESQ.
ONE MICROSOFT WAY
REDMOND, WASHINGTON 98052-6399
(206) 882-8080
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
RICHARD B. DODD, ESQ. ANDREW D. SOUSSLOFF, ESQ.
PRESTON GATES & ELLIS SULLIVAN & CROMWELL
5000 COLUMBIA CENTER 125 BROAD STREET
701 FIFTH AVENUE NEW YORK, NEW YORK 10004-2498
SEATTLE, WASHINGTON 98104-7078
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are 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, 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.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses relating to the distribution will be borne by the registrant.
Such expenses are estimated to be as follows:
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission................... $261,364
NASD Filing Fees and Expenses (Including Legal Fees)..................... 37,500
Nasdaq National Market Listing Fee....................................... 50,000
Transfer Agent and Registrar Fees........................................ 3,000
Legal Fees and Expenses.................................................. 180,000
Printing Expenses........................................................ 85,000
Trustee Fees............................................................. 5,000
Accountant's Fees and Expenses........................................... 51,500
Miscellaneous Expenses................................................... 51,636
--------
Total.......................................................... $725,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XII of the Restated Articles of Incorporation of the Company
authorizes the Company to indemnify any present or former director or officer to
the fullest extent not prohibited by the Washington Business Corporation Act,
public policy or other applicable law. The Washington Business Corporation Act
(Sections 23B.08.510 through .570) authorizes a corporation to indemnify its
directors, officers, employees, or agents in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
provisions permitting advances for expenses incurred) arising under the
Securities Act.
The directors and officers of the Company are entitled to indemnification
by the Underwriters against any cause of action, loss, claim, damage, or
liability to the extent it arises out of or is based upon the failure of each
Underwriter to comply with the Prospectus delivery requirements under the
federal securities laws or any applicable state securities laws or upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in this Registration Statement and the Prospectus contained herein, as the
same shall be amended or supplemented, made in reliance upon and in conformity
with written information furnished to the Company by such Underwriter through
Goldman, Sachs & Co. expressly for use therein.
In addition, the Company maintains directors' and officers' liability
insurance under which the Company's directors and officers are insured against
loss (as defined in the policy) as a result of claims brought against them for
their wrongful acts in such capacities.
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<PAGE> 3
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE OR FOOTNOTE
- ----------- ------------------------------------------------------------------ ----------------
<C> <S> <C>
1.1 Underwriting Agreement............................................ (1)
3.1 Restated Articles of Incorporation................................ (1)
3.2 Bylaws............................................................ (2)
4.1 Registrant's Restated Articles of Incorporation designating the
rights and preferences with respect to the Series A Preferred
Shares............................................................
4.2 Indenture with respect to the 2 3/4% Convertible Subordinated
Preferred Notes Due 1999..........................................
5.1 Opinion of Preston Gates & Ellis.................................. (1)
8.1 Opinion of Preston Gates & Ellis.................................. (1)
12.1 Computation of Ratio of Earnings to Fixed Charges................. (1)
13.1 Quarterly and Market Information Incorporated by Reference to Page
28 of 1996 Annual Report to Shareholders ("1996 Annual Report")... (3)
13.2 (Intentionally Omitted)...........................................
13.3 Management's Discussion and Analysis of Financial Condition and
Results of Operations Incorporated by Reference to Pages 16-19,
22, and 23 of 1996 Annual Report.................................. (3)
13.4 Financial Statements Incorporated by Reference to Pages 1, 15, 20,
21, 24-29, and 31 of 1996 Annual Report........................... (3)
23.1 Consent of Deloitte & Touche LLP.................................. (1)
23.2 Consent of Preston Gates & Ellis.................................. (4)
24.1 Power of Attorney................................................. (1)
25.1 Statement of Eligibility of Trustee............................... (1)
</TABLE>
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(1) Filed previously with the Registrant's Registration Statement on Form S-3
(Commission File No. 333-17143).
(2) Incorporated by reference to Microsoft's Form 10-K for the fiscal year ended
June 30, 1994.
(3) Incorporated by reference to Microsoft's Form 10-K for the fiscal year ended
June 30, 1996.
(4) Contained within Exhibit 5.1.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(2) That the undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the
prospectus is sent or given, the latest annual report to security holders
that is incorporated by reference in the prospectus and furnished pursuant
to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial information
required to be presented by
II-2
<PAGE> 4
Article 3 of Regulation S-X are not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim
financial information.
(3) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
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 a 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 a final
adjudication of such issue.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(5) That, 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.
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<PAGE> 5
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 Amendment No. 3
(Post-Effective Amendment No. 1) to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Redmond,
State of Washington on March 10, 1997.
MICROSOFT CORPORATION
/s/ MICHAEL W. BROWN
--------------------------------------
Michael W. Brown,
Vice President, Finance; Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed below on March 10, 1997 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ----------------------------------------------- -------------------------
<C> <S> <C>
/s/ MICHAEL W. BROWN Vice President, Finance;
- ----------------------------------------------- Chief Financial Officer
Michael W. Brown (Principal Financial
and Accounting Officer)
* Chairman, Chief Executive
- ----------------------------------------------- Officer, Director
William H. Gates (Principal Executive
Officer)
* Director
- -----------------------------------------------
Paul G. Allen
* Director
- -----------------------------------------------
Jill E. Barad
* Director
- -----------------------------------------------
Richard A. Hackborn
* Director
- -----------------------------------------------
David F. Marquardt
* Director
- -----------------------------------------------
Robert D. O'Brien
* Director
- -----------------------------------------------
William G. Reed, Jr.
* Director
- -----------------------------------------------
Jon A. Shirley
</TABLE>
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<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
*By: /s/ MICHAEL W. BROWN
---------------------------------------
Michael W. Brown
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE OR FOOTNOTE
- ----------- ------------------------------------------------------------------ ----------------
<C> <S> <C>
1.1 Underwriting Agreement............................................ (1)
3.1 Restated Articles of Incorporation................................ (1)
3.2 Bylaws............................................................ (2)
4.1 Registrant's Restated Articles of Incorporation designating the
rights and preferences with respect to the Series A Preferred
Shares............................................................
4.2 Indenture with respect to the 2 3/4% Convertible Subordinated
Notes Due 1999....................................................
5.1 Opinion of Preston Gates & Ellis.................................. (1)
8.1 Opinion of Preston Gates & Ellis.................................. (1)
12.1 Computation of Ratio of Earnings to Fixed Charges................. (1)
13.1 Quarterly and Market Information Incorporated by Reference to Page
28 of 1996 Annual Report to Shareholders ("1996 Annual Report")... (3)
13.2 (Intentionally Omitted)...........................................
13.3 Management's Discussion and Analysis of Financial Condition and
Results of Operations Incorporated by Reference to Pages 16-19,
22, and 23 of 1996 Annual Report.................................. (3)
13.4 Financial Statements Incorporated by Reference to Pages 1, 15, 20,
21, 24-29, and 31 of 1996 Annual Report........................... (3)
23.1 Consent of Deloitte & Touche LLP.................................. (1)
23.2 Consent of Preston Gates & Ellis.................................. (4)
24.1 Power of Attorney................................................. (1)
25.1 Statement of Eligibility of Trustee............................... (1)
</TABLE>
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(1) Filed previously with the Registrant's Registration Statement on Form S-3
(Commission File No. 333-17143).
(2) Incorporated by reference to Microsoft's Form 10-K for the fiscal year ended
June 30, 1994.
(3) Incorporated by reference to Microsoft's Form 10-K for the fiscal year ended
June 30, 1996.
(4) Contained within Exhibit 5.1.
<PAGE> 1
EXHIBIT 4.1
RESTATED ARTICLES OF INCORPORATION
OF
MICROSOFT CORPORATION
Pursuant to RCW 23B.10.070, the following Restated Articles of
Incorporation are hereby submitted for filing:
ARTICLE I
NAME
The name of the corporation is Microsoft Corporation.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the registered office of the "Corporation" is 5000 Columbia
Center, 701 Fifth Avenue, Seattle, Washington 98104-7078, and the name of the
registered agent at such address is PTSGE Corp.
ARTICLE III
PURPOSE
The Corporation is organized for the purposes of transacting any and all
lawful business for which a corporation may be incorporated under the Washington
Business Corporation Act, Title 23B of the Revised Code of Washington, now or
hereafter in force (the "Act").
ARTICLE IV
CAPITAL SHARES
4.1 Authorized Shares. The total number of shares of stock which the
Corporation shall have authority to issue is 4,100,000,000 shares, which shall
consist of 4,000,000,000 shares of common stock, $.000025 par value per share
("Common Shares") and 100,000,000 shares of preferred stock , $.01 par value per
share ("Preferred Shares"). Except as otherwise provided in accordance with
these Articles of Incorporation, the Common Shares shall have the unlimited
voting rights, with each share being entitled to
<PAGE> 2
one vote, and the rights to receive the net assets of the Corporation upon
dissolution, with each share participating on a prorata basis.
4.2 Issuance of Preferred Shares. The Board of Directors is hereby
authorized from time to time, without shareholder action, to provide for the
issuance of Preferred Shares in one or more series not exceeding in the
aggregate the number of Preferred Shares authorized by these Articles of
Incorporation, as amended from time to time; and to determine with respect to
each such series the voting powers, if any (which voting powers, if granted, may
be full or limited), designations, preferences, and relative, participating,
option, or other special rights, and the qualifications, limitations, or
restrictions relating thereto, including without limiting the generality of the
foregoing, the voting rights relating to Preferred Shares of any series (which
may be one or more votes per share or a fraction of a vote per share, which may
vary over time, and which may be applicable generally or only upon the happening
and continuance of stated events or conditions), the rate of dividend to which
holders of Preferred Shares of any series may be entitled (which may be
cumulative or noncumulative), the rights of holders of Preferred Shares of any
series in the event of liquidation, dissolution, or winding up of the affairs of
the Corporation, the rights, if any, of holders of Preferred Shares of any
series to convert or exchange such Preferred Shares of such series for shares of
any other class or series of capital stock or for any other securities,
property, or assets of the Corporation or any subsidiary (including the
determination of the price or prices or the rate or rates applicable to such
rights to convert or exchange and the adjustment thereof, the time or times
during which the right to convert or exchange shall be applicable, and the time
or times during which a particular price or rate shall be applicable), whether
or not the shares of that series shall be redeemable, and if so, the terms and
conditions of such redemption, including the date or dates upon or after which
they shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at different
redemption dates, and whether any shares of that series shall be redeemed
pursuant to a retirement or sinking fund or otherwise and the terms and
conditions of such obligation.
4.3 Filings and Effectiveness. Before the Corporation shall issue any
Preferred Shares of any series, Articles of Amendment or Restated Articles of
Incorporation, fixing the voting powers, designations, preferences, the
relative, participating, option, or other rights, if any, and the
qualifications, limitations, and restrictions, if any, relating to the Preferred
Shares of such series, and the number of Preferred Shares of such series
authorized by the Board of Directors to be issued shall be filed with the
secretary of state in accordance with the Washington Business Corporation Act
("WBCA") and shall become effective without any shareholder action. The Board of
Directors is further authorized to increase or decrease (but not below the
number of such shares of such series then outstanding) the number of shares of
any series subsequent to the issuance of shares of that series.
4.4 Terms of 2 3/4% Convertible Exchangeable Principal-Protected Preferred
Shares.
4.4.1 Designation and Amount. The shares of such series shall be
designated "2 3/4% Convertible Exchangeable Principal-Protected Preferred
Shares, Series A," and the number of shares constituting such series shall
initially be a maximum of 12,600,000. The shares of such series shall have a
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<PAGE> 3
stated par value of $.01 per share. Such series is herein sometimes referred to
as the "Series A Preferred Shares."
4.4.2 Preferred Dividends.
(a) The holders of Series A Preferred Shares shall be entitled
to receive, when, as and if declared by the Board of Directors, out of funds of
the Corporation legally available therefor, cash dividends ("Preferred
Dividends") at the annual rate of $2.196 per share, payable quarterly in arrears
on each March 15, June 15, September 15 and December 15 in each year (each a
"Dividend Payment Date"), commencing March 15, 1997 (and, in the case of any
accrued but unpaid dividends, at such additional times and for such interim
periods, if any, as determined by the Corporation's Board of Directors). In the
event that any Dividend Payment Date shall fall on any day other than a Business
Day (as defined in paragraph (b) of Section 4.4.3), the Preferred Dividend due
on such Dividend Payment Date shall be paid on the Business Day immediately
following such Dividend Payment Date. Preferred Dividends shall begin to accrue
from the date of initial issuance of the Series A Preferred Shares. Preferred
Dividends will cease to accrue on Series A Preferred Shares on the Conversion
Date (as defined in paragraph (b) of Section 4.4.3) or on the date of their
earlier exchange for Convertible Notes (as defined in paragraph (a) of Section
4.4.5). Preferred Dividends shall accrue on a daily basis whether or not in any
such quarterly period there shall be funds of the Corporation legally available
therefor and whether or not such Preferred Dividends are declared, but Preferred
Dividends accrued for any period less than a full quarterly period between
Dividend Payment Dates (or, in the case of the first Preferred Dividend, from
the date of initial issuance of the Series A Preferred Shares through the first
Dividend Payment Date) shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Accrued but unpaid Preferred Dividends shall
cumulate as of the Dividend Payment Date on which they first become payable, but
no interest shall accrue on accumulated but unpaid Preferred Dividends.
Preferred Dividends shall be payable to holders of record as they appear on the
stock transfer records of the Corporation on such record dates, which shall be
not more than 60 days nor less than 10 days preceding the payment dates, as
shall be fixed by the Board of Directors.
(b) So long as any Series A Preferred Shares are outstanding,
the Corporation may not (i) declare or pay any dividends (other than dividends
payable in Common Shares or other shares of the Corporation ranking junior to
the Series A Preferred Shares) to holders of Common Shares or shares of the
Corporation of any other class ranking on a parity with or junior to the Series
A Preferred Shares, or (ii) make any distributions of assets (directly or
indirectly, by purchase, redemption or otherwise) to the holders of Common
Shares or shares of the Corporation of any other class ranking on a parity with
or junior to the Series A Preferred Shares, unless all accrued and unpaid
Preferred Dividends, including the full dividends for the then quarterly
dividend period, shall have been paid or declared and funds sufficient for
payment thereof set apart.
(c) No dividends may be paid upon or declared or set apart for
any Preferred Shares ranking on a parity with the Series A Preferred Shares for
any quarterly dividend period, unless at the same time a like proportionate
dividend for the same quarterly dividend period, ratably in proportion to
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<PAGE> 4
the respective annual dividend rates fixed therefor, shall be paid upon or
declared or set apart for the Series A Preferred Shares.
4.4.3 Conversion of Series A Preferred Shares.
(a) Automatic Conversion on Conversion Date. On December 15,
1999 (the "Conversion Date"), unless previously exchanged for Convertible Notes,
as described in Section 4.4.5 below, each outstanding Series A Preferred Share
shall automatically convert into that number of Common Shares of the Corporation
determined by multiplying each Series A Preferred Share by the Exchange Rate.
However, in lieu of delivering Common Shares on the Conversion Date, the
Corporation may, at its option, convert each Series A Preferred Share into an
amount of cash (a "Cash Settlement") determined by multiplying the Current
Market Price of the Common Shares by the Exchange Rate. In either event, each
holder of Series A Preferred Shares will receive in cash any unpaid dividends
which have accrued to the Conversion Date. The Exchange Rate is equal to (i) if
the Current Market Price of the Common Shares is greater than or equal to
$102.24 per share (the "Threshold Price"), a ratio equal to the Threshold Price
divided by the Current Market Price, (ii) if the Current Market Price is less
than the Threshold Price but greater than the Initial Price, a ratio of 1.0, and
(iii) if the Current Market Price is less than or equal to the Initial Price, a
ratio equal to the Initial Price divided by the Current Market Price, subject in
each case to adjustments in certain events.
(b) Definitions. As used in this Article:
"Business Day" means any day other than a Saturday, 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.
"Closing Price" of a Common Share on any date of determination means
the closing sale price (or, if no closing price is reported, the last
reported sale price) of such share as reported by The Nasdaq National
Market on such date, or, if it is not so reported, as reported in the
composite transactions for the principal United States securities exchange
on which the Common Shares are so listed, or, if it is not so listed on a
United States national or regional securities exchange, the last quoted
bid price of the Common Shares in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, or, if such bid
price is not available, the market value of a Common Share on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Corporation.
"Current Market Prices" except as used in Section 4.4.3(d)(ii) and
(iii), means the average Closing Price per Common Share of the Corporation
on the 20 Trading Days beginning on the twenty-second Trading Day
immediately prior to, but not including, the Conversion Date and ending on
the second Trading Day immediately prior to, but not including, the
Conversion Date.
"Initial Price" means $79.875 per Common Share.
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<PAGE> 5
"Trading Day" means a day on which the Common Shares (i) are not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (ii)
has traded at least once on the national or regional securities exchange
or association or over-the-counter market that is the primary market for
the trading of such security.
(c) Notice of Election to Settle in Cash; No Fractional
Shares. The Corporation shall mail written notice of its election to settle the
conversion of the Series A Preferred Shares in cash to each holder of record of
Series A Preferred Shares not less than 30 Trading Days nor more than 45 Trading
Days prior to the Conversion Date. Upon surrender of certificates for Series A
Preferred Shares to be converted, as required herein (except in the case of a
Cash Settlement), the Corporation shall issue the number of full Common Shares
issuable upon conversion thereof. No fractional Common Shares will be issued
upon conversion, but in lieu thereof, in the sole discretion of the Board of
Directors, either such fractional interest shall be rounded up to the next whole
share or an amount will be paid in cash by the Corporation for such fractional
interest based upon the Current Market Price.
(d) Exchange Rate Adjustments. The Exchange Rate shall be
subject to adjustment from time to time as provided below in this paragraph (d).
All adjustments to the Exchange Rate shall be calculated to the nearest
1/10,000th of a Common Share.
(i) If the Corporation shall either:
(1) pay a dividend or make a distribution with
respect to Common Shares in Common Shares,
(2) subdivide or split its outstanding Common
Shares,
(3) combine its outstanding Common Shares into a
smaller number of shares, or
(4) issue by reclassification of its Common
Shares any capital shares of the
Corporation,
then, in any such event, the Exchange Rate in effect immediately prior to the
record date for any such dividend or distribution or the effective date of any
such subdivision, split, combination or reclassification, as the case may be,
shall be adjusted so that the holder of a Series A Preferred Share shall be
entitled to receive on the conversion of such Series A Preferred Share, the
number of Common Shares of the Corporation which such holder would have owned or
been entitled to receive upon the happening of any of the events described above
had such Series A Preferred Share been converted at the Exchange Rate in effect
at the time of the record date for any such dividend or distribution or of the
effective date of any such subdivision, split, combination or reclassification,
as the case may be. Such adjustment shall become effective at the opening of
business on the Business Day next following the record date for such dividend or
distribution in the case of a dividend or distribution, and shall become
effective immediately after the
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<PAGE> 6
effective date in the case of a subdivision, split, combination, or
reclassification; and any Common Shares issuable in payment of a dividend shall
be deemed to have been issued immediately prior to the close of business on the
record date for such dividend for purposes of calculating the number of
outstanding Common Shares under clauses (ii) and (iii) below.
(ii) If the Corporation shall, after the date hereof,
issue rights or warrants to all holders of its Common Shares entitling them (for
a period not exceeding 45 days from the date of such issuance) to subscribe for
or purchase Common Shares at a price per share less than the Current Market
Price of the Common Shares (determined pursuant to paragraph (d)(v) of this
Section 4.4.3) on the record date for the determination of Shareholders entitled
to receive such rights or warrants, then in each case the Exchange Rate shall be
adjusted by multiplying the Exchange Rate in effect on such record date by a
fraction of which the numerator shall be the number of Common Shares outstanding
on the date of issuance of such rights or warrants, immediately prior to such
issuance, plus the number of additional Common Shares offered for subscription
or purchase, and of which the denominator shall be the number of Common Shares
outstanding on the date of issuance of such rights or warrants, immediately
prior to such issuance, plus the number of Common Shares which the aggregate
offering price of the total number of Common Shares so offered for subscription
or purchase would purchase at such Current Market Price (determined by
multiplying such total number of shares by the exercise price of such rights or
warrants and dividing the product so obtained by such Current Market Price).
Common Shares owned by the Corporation or by another company of which a majority
of the shares entitled to vote in the election of directors are held, directly
or indirectly, by the Corporation shall not be deemed to be outstanding for
purposes of such computation. Such adjustment shall become effective at the
opening of business on the Business Day next following the record date for such
rights or warrants. To the extent that Common Shares are not delivered after the
expiration of such rights or warrants, the Exchange Rate shall be readjusted to
the Exchange Rate which would then be in effect had the adjustment made upon the
issuance of such rights or warrants been made upon the basis of the issuance of
rights or warrants in respect of only the number of Common Shares actually
delivered.
(iii) If the Corporation shall pay a dividend or make a
distribution to all holders of its Common Shares consisting of evidences of its
indebtedness or other assets (including capital shares of the Corporation other
than Common Shares but excluding any cash dividends or any distributions and
dividends referred to in clause (i) above), or shall issue to all holders of its
Common Shares rights or warrants to subscribe for or purchase any of its
securities (other than those referred to in clause (ii) above), then in each
such case the Exchange Rate shall be adjusted by multiplying the Exchange Rate
in effect on the record date for such dividend or distribution or the
determination of shareholders entitled to receive such rights or warrants, as
the case may be, by a fraction, of which the numerator shall be the Current
Market Price of the Common Shares (determined pursuant to paragraph (d)(v) of
this Section 4.4.3) on such record date, and of which the denominator shall be
such Current Market Price per Common Share less the fair market value (as
determined by the Board of Directors of the Corporation, whose determination
shall be conclusive) as of such record date of the portion of the assets or
evidences of indebtedness so distributed, or of such subscription rights or
warrants, applicable to one Common Share. Such adjustment shall become effective
on the opening of business on the Business Day next following the record date
for
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such dividend or distribution or the determination of shareholders entitled to
receive such rights or warrants, as the case may be.
(iv) Anything in this paragraph (d) notwithstanding, the
Corporation shall be entitled to make such upward adjustments in the Exchange
Rate, in addition to those required by this paragraph (d), as the Corporation in
its sole discretion shall determine to be advisable, in order that any share
dividends, subdivision of shares, distribution of rights to purchase shares or
securities, or distribution of securities convertible into or exchangeable for
shares (or any transaction which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as
amended) hereafter made by the Corporation to its shareholders shall not be
taxable.
(v) As used in this paragraph (d), the "Current Market
Price" of the Common Shares on any date shall be the average Closing Price per
Common Share of the Corporation on the 20 Trading Days immediately prior to, but
not including, the date of determination.
(vi) In any case in which this paragraph (d) shall
require that an adjustment as a result of any event become effective at the
opening of business on the Business Day next following a record date and the
date fixed for conversion pursuant to paragraph (a) of this Section 4.4.3 occurs
after such record date, but before the occurrence of such event, the Corporation
may in its sole discretion elect to defer the following until after the
occurrence of such event: (A) issuing to the holder of any Series A Preferred
Shares surrendered for conversion the additional Common Shares issuable upon
conversion before giving effect to such adjustment; and (B) paying to such
holder any amount in cash in lieu of a fractional Common Share pursuant to
paragraph (c) of this Section 4.4.3.
(e) Notice of Adjustments. Whenever the Exchange Rate is
adjusted as provided in paragraph (d) hereof, the Corporation will file with the
transfer agent for the Series A Preferred Shares a certificate with respect to
such adjustment, make a prompt public announcement thereof and mail a notice to
holders of the Series A Preferred Shares setting forth the adjusted Exchange
Rate, the method of calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment is based.
(f) Reservation of Common Shares. The Corporation shall
reserve and at all times keep available, free from preemptive rights, out of its
authorized but unissued Shares, for the purpose of effecting the conversion of
the Series A Preferred Shares, such number of shares of its duly authorized
Common Shares as will from time to time be sufficient to effect the conversion
of all outstanding Series A Preferred Shares; provided, however, that the
Corporation shall not be obligated to keep such shares available with respect to
any Series A Preferred Shares during any time that the conversion of such Series
A Preferred Shares is prohibited under a contract or other agreement between the
holder of such Series A Preferred Shares and the Corporation.
(g) Payment of Taxes. The Corporation will pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of Common Shares on
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the conversion of Series A Preferred Shares pursuant to this Section 4.4.3;
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any registration of transfer involved in the
issue or delivery of Common Shares in a name other than that of the registered
holder of Series A Preferred Shares redeemed or converted or to be redeemed or
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax or has established, to the satisfaction of the Corporation, that such tax
has been paid.
4.4.4 Adjustment For Certain Consolidations or Mergers. In case of
any consolidation or merger to which the Corporation is a party (other than a
merger or consolidation in which the Corporation is the continuing corporation
and in which the Common Shares outstanding immediately prior to the merger or
consolidation remain unchanged), or in case of any sale or transfer to another
entity of the property of the Corporation as an entirety or substantially as an
entirety, or in case of any statutory share exchange with another entity (other
than in connection with an acquisition in which the Common Shares outstanding
immediately prior to the share exchange remain unchanged), each Series A
Preferred Share shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash, or other property receivable upon consummation of such transaction by a
holder of the number of Common Shares into which such Series A Preferred Shares
might have been converted immediately prior to consummation of such transaction
and (ii) conversion on the Conversion Date into the kind and amount of
securities, cash, or other property receivable upon consummation of such
transaction by a holder of the number of Common Shares into which such Series A
Preferred Shares would have been converted if the conversion on the Conversion
Date had occurred immediately prior to the date of consummation of such
transaction assuming in each case that such holder of Common Shares failed to
exercise rights of election, if any, as to the kind or amount of securities,
cash, or other property receivable upon consummation of such transaction
(provided that if the kind or amount of securities, cash, or other property
receivable upon consummation of such transaction is not the same for each
nonelecting share, then the kind and amount of securities, cash, or other
property receivable upon consummation of such transaction for each nonelecting
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares). The kind and amount of securities into
which the Series A Preferred Shares shall be convertible after consummation of
such transaction shall be subject to adjustment as described above under
paragraph (d) of Section 4.4.3 following the date of consummation of such
transaction. The Corporation may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing.
4.4.5 Exchangeability.
(a) The Series A Preferred Shares are exchangeable in whole,
or in part, at the option of the Corporation, for the Corporation's 2 3/4%
Convertible Subordinated Notes due 1999 (the "Convertible Notes") on any
dividend payment date beginning on March 15, 1997 at the rate of $79.875
principal amount of Convertible Notes for each Series A Preferred Share
outstanding at the time of exchange. The Corporation may effect such exchange
only if accrued and unpaid dividends on the Series A Preferred Shares have been
paid in full. An exchange of less than all of the outstanding Series A Preferred
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Shares is permitted only if, immediately after giving effect to such
exchange, (i) the aggregate outstanding principal amount of the Convertible
Notes is not less than $250,000,000, (ii) accrued and unpaid interest on the
outstanding Convertible Notes has been paid in full and certain other
requirements as specified in the related indenture for the Convertible Notes
have been satisfied, and (iii) the aggregate liquidating distribution amount for
the outstanding Series A Preferred Shares is not less than $250,000,000. The
Corporation will mail written notice of its intention to exchange to each holder
of record of the Series A Preferred Shares not less than 30 Trading Days or more
than 45 Trading Days prior to the date fixed for exchange.
(b) Upon the date fixed for exchange of Series A Preferred
Shares for Convertible Notes (the "Exchange Date"), if the Corporation has taken
all action required to authorize the issuance of the Convertible Notes in
exchange for Series A Preferred Shares, Series A Preferred Shares so exchanged
will no longer be deemed outstanding and all rights relating to such shares will
terminate, except only the right to receive dividends accrued and unpaid to and
including the Exchange Date and the right to receive the Convertible Notes upon
surrender of certificates representing the Series A Preferred Shares.
(c) In the event that Series A Preferred Shares have been
exchanged for Convertible Notes pursuant to this Section 4.4.5, the provisions
set forth under paragraphs (d), (f) and (g) of Section 4.4.3 hereof shall apply
with respect to the Convertible Notes to the same extent and to the same effect
as they would have applied to the Series A Preferred Shares.
4.4.6 Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of Series A Preferred Shares are entitled to receive out of the
assets of the Corporation, whether such assets are stated capital or surplus of
any nature, before any payment is made or any assets are distributed to holders
of Common Shares and of any other class of shares of the Corporation ranking
junior to the Series A Preferred Shares, liquidating distributions in the amount
of $79.875 per Series A Preferred Share plus accrued and unpaid dividends,
whether or not declared, without interest. If upon any liquidation, dissolution
or winding up of the Corporation, the amounts payable with respect to the Series
A Preferred Shares and any other preferred shares ranking as to any such
distribution on a parity with the Series A Preferred Shares are not paid in
full, the holders of the Series A Preferred Shares and of such other preferred
shares shall share ratably in any such distribution of assets in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of Series A Preferred Shares shall not be entitled to any
further participation in any distribution of assets by the Corporation. Neither
a consolidation nor merger of the Corporation with another corporation nor a
sale or transfer of all or part of the Corporation's assets for cash, securities
or other property shall be considered a liquidation, dissolution or winding up
of the Corporation for these purposes.
4.4.7 Voting Rights. Except as indicated below or otherwise required
by law, holders of Series A Preferred Shares will have no voting rights. If (i)
at any time the equivalent of six quarterly dividends payable on the Series A
Preferred Shares are accrued and unpaid or (ii) the Corporation fails to
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make any payment upon mandatory redemption of the Series A Preferred Shares, the
number of directors of the Corporation shall be increased by two and the holders
of all outstanding Series A Preferred Shares, voting separately as a class,
shall be entitled to elect the additional two directors to serve until all
dividends accrued and unpaid have been paid or declared and funds set aside to
provide for payment in full or the Corporation fulfills its mandatory redemption
obligation, as the case may be.
In addition, without the vote or consent of the holders of at least
two-thirds of the Series A Preferred Shares then outstanding, the Corporation
may not (a) create or issue or increase the authorized number of shares of any
class or series of shares ranking prior to the Series A Preferred Shares either
as to dividends or upon liquidation, dissolution or winding up, or any security
convertible into or exercisable or exchangeable for such Shares, (b) purchase or
redeem less than all of the Series A Preferred Shares then outstanding when any
dividends on the Series A Preferred Shares are in arrears, or (c) amend, alter
or repeal any of the provisions of the Articles of Incorporation so as to affect
any right, preference, privilege or voting power of the Series A Preferred
Shares or the holders thereof; provided, however, that any increase in the
amount of authorized Preferred Shares or the creation and issuance of any other
class of Preferred Shares, or any increase in the amount of authorized shares of
such class or of any other class of Preferred Shares, in each case ranking on a
parity with or junior to the Series A Preferred Shares with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to affect such rights,
preferences or voting powers.
ARTICLE V
NO PREEMPTIVE RIGHT'S
Shareholders of the Corporation have no preemptive rights to acquire
additional shares of stock or securities convertible into shares of stock issued
by the Corporation.
ARTICLE VI
DIRECTORS
6.1 Number. The number of directors of the Corporation shall be fixed in
the manner specified by the bylaws of the Corporation.
6.2 Vacancies. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors shall be filled only by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director, unless for any reason there are no directors in office
in which case they shall be filled by a special election by shareholders.
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ARTICLE VII
ELECTION OF DIRECTORS
Shareholders of the Corporation shall not have the right to cumulate votes
in the election of directors.
ARTICLE VIII
SPECIAL SHAREHOLDER MEETINGS
Special meetings of the shareholders of the Corporation for any purpose or
purposes may be called at any time by the Board of Directors, or by a committee
of the Board of Directors which has been duly designated by the Board of
Directors and whose powers and authority, as provided in a resolution of the
Board of Directors or in the bylaws of the Corporation, include the power to
call such meetings, but such special meetings may not be called by any other
person or persons.
ARTICLE IX
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, adopt, repeal, alter,
amend, and rescind the bylaws of the Corporation by a resolution adopted by a
majority of the directors.
ARTICLE X
LIMITATION OF DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for conduct as a director,
except for:
(a) Acts or omissions involving intentional misconduct by the director
or a knowing violation of law by the director;
(b) Conduct violating Section 23B.08.310 of the Act (which involves
distributions by the Corporation);
(c) Any transaction from which the director will personally receive a
benefit in money, property, or services to which the director is not
legally entitled.
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If the Washington Business Corporation Act is amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent not prohibited by the Washington Business Corporation Act, as
so amended. The provisions of this Article shall be deemed to be a contract with
each Director of the Corporation who serves as such at any time while such
provisions are in effect, and each such Directors shall be deemed to be serving
as such in reliance on the provisions of this Article. Any repeal or
modification of the foregoing paragraph by the shareholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation with respect to any acts or omissions of such director occurring
prior to such repeal or modification.
ARTICLE XI
MERGERS, SHARE EXCHANGES, AND OTHER TRANSACTIONS
A merger, share exchange, sale of substantially all of the Corporation's
assets, or dissolution must be approved by the affirmative vote of a majority of
the Corporation's outstanding shares entitled to vote, or if separate voting by
voting groups is required then by not less than a majority of all the votes
entitled to be cast by that voting group.
ARTICLE XII
INDEMNIFICATION
12.1 Definitions. As used in this Article:
a. "Agent" means an individual who is or was an agent of the Corporation
or an individual who, while an agent of the Corporation, is or was serving at
the Corporation's request as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise. "Agent" includes, unless the
context requires otherwise, the spouse, heirs, estate and personal
representative of an agent.
b. "Corporation" means the Corporation, and any domestic or foreign
predecessor entity which, in a merger or other transaction, ceased to exist.
c. "Director" means an individual who is or was a director of the
Corporation or an individual who, while a director of the Corporation, is or was
serving at the Corporation's request as a director officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise. "Director"
includes, unless the context requires otherwise, the spouse, heirs, estate and
personal representative of a director.
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d. "Employee" means an individual who is or was an employee of the
Corporation or an individual, while an employee of the Corporation, is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise- "Employee"
includes, unless the context requires otherwise, the spouse, heirs, estate and
personal representative of an employee.
e. "Expenses" include counsel fees.
f. "Indemnitee" means an individual made a party to a proceeding because
the individual is or was a Director, Officer, Employee, or Agent of the
Corporation, and who possesses indemnification rights pursuant to these Articles
or other corporate action. "Indemnitee" includes, unless the context requires
otherwise, the spouse, heirs, estate, and personal representative of such
individuals.
g. "Liability" means the obligation to pay a judgment, settlement penalty,
fine, including an excise tax with respect to an employee benefit plan, or
reasonable Expenses incurred with respect to a proceeding.
h. "Officer" means an individual who is or was an officer of the
Corporation (regardless of whether or not such individual was also a Director)
or an individual who, while an officer of the Corporation, is or was serving at
the Corporation's request as a director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise. "Officer" includes, unless
the context requires otherwise, the spouse, heirs, estate and personal
representative of an officer.
i. "Party" includes an individual who was, is, or is threatened to be
named a defendant, respondent or witness in a proceeding.
j. "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, derivative, criminal, administrative, or
investigative, and whether formal or informal.
12.2 Indemnification Rights of Directors and Officers. The Corporation
shall indemnify its Directors and Officers to the full extent not prohibited by
applicable law now or hereafter in force against liability arising out of a
Proceeding to which such individual was made a Party because the individual is
or was a Director or an Officer. However, such indemnity shall not apply on
account of:
(a) Acts or omissions of a Director or Officer finally adjudged to be
intentional misconduct or a knowing violation of law;
(b) Conduct of a Director or Officer finally adjudged to be in violation
of Section 23B.08.310 of the Act relating to distributions by the
Corporation; or
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(c) Any transaction with respect to which it was finally adjudged that
such Director or Officer personally received a benefit in money,
property, or services to which the Director or Officer was not
legally entitled.
Subject to the foregoing, it is specifically intended that Proceedings covered
by indemnification shall include Proceedings brought by the Corporation
(including derivative actions) Proceedings by government entities and
governmental officials or other third party actions.
12.3 Indemnification of Employees and Agents of the Corporation. The
Corporation may, by action of its Board of Directors from time to time, provide
indemnification and pay Expenses in advance of the final disposition of a
Proceeding to Employees and Agents of the Corporation who are not also
Directors, in each case to the same extent as to a Director with respect to the
indemnification and advancement of Expenses pursuant to rights granted under, or
provided by, the Act or otherwise.
12.4 Partial Indemnification. If an Indemnitee is entitled to
indemnification by the Corporation for some or a portion of Expenses,
liabilities, or losses actually and reasonably incurred by Indemnitee in an
investigation, defense, appeal or settlement but not, however, for the total
amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the
portion of such Expenses, liabilities or losses to which Indemnitee is entitled.
12.5 Procedure for Seeking Indemnification and/or Advancement of Expenses.
The following procedures shall apply in the absence of (or at the option of the
Indemnitee, in lieu thereof), specific procedures otherwise applicable to an
Indemnitee pursuant to a contract, trust agreement, or general or specific
action of the Board of Directors:
12.5.1 Notification and Defense of Claim. Indemnitee shall promptly
notify the Corporation in writing of any proceeding for which
indemnification could be sought under this Article. In addition,
Indemnitee shall give the Corporation such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
With respect to any such proceeding as to which Indemnitee has
notified the Corporation:
(a) The Corporation will be entitled to participate therein
at its own expense; and
(b) Except as otherwise provided below, to the extent that
it may wish, the Corporation, jointly with any other
indemnifying party similarly notified, will be entitled
to assume the defense thereof, with counsel satisfactory
to Indemnitee. Indemnitee's consent to such counsel may
not be unreasonably withheld.
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After notice from the Corporation to Indemnitee of its election to
assume the defense, the Corporation will not be liable to Indemnitee under
this Article for any legal or other Expenses subsequently incurred by
Indemnitee in connection with such defense. However, Indemnitee shall
continue to have the right to employ its counsel in such proceeding, at
Indemnitee's expense; and if:
(i) The employment of counsel by Indemnitee has been authorized by
the Corporation;
(ii) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Corporation and Indemnitee in
the conduct of such defense; or
(iii) The Corporation shall not in fact have employed counsel to
assume the defense of such proceeding,
the fees and Expenses of Indemnitee's counsel shall be at the expense of the
Corporation.
The Corporation shall not be entitled to assume the defense of any
proceeding brought by or on behalf of the Corporation or as to which Indemnitee
shall reasonably have made the conclusion that a conflict of interest may exist
between the Corporation and the Indemnitee in the conduct of the defense.
12.5.2 Information to be Submitted and Method of Determination and
Authorization of Indemnification. For the purpose of pursuing rights to
indemnification under this Article, the Indemnitee shall submit to the Board a
sworn statement requesting indemnification and reasonable evidence of all
amounts for which such indemnification is requested (together, the sworn
statement and the evidence constitute an "Indemnification Statement").
Submission of an Indemnification Statement to the Board shall create a
presumption that the Indemnitee is entitled to indemnification hereunder, and
the Corporation shall, within sixty (60) calendar days thereafter, make the
payments requested in the Indemnification Statement to or for the benefit of the
Indemnitee, unless: (1) within such sixty (60) calendar day period it shall be
determined by the Corporation that the Indemnitee is not entitled to
indemnification under this Article; (2) such determination shall be based upon
clear and convincing evidence (sufficient to rebut the foregoing presumption);
and (3) the Indemnitee shall receive notice in writing of such determination,
which notice shall disclose with particularity the evidence upon which the
determination is based.
The foregoing determination may be made: (1) by the Board of Directors by
majority vote of a quorum of Directors who are not at the time parties to the
proceedings; (2) if a quorum cannot be obtained, by majority vote of a committee
duly designated by the Board of Directors (in which designation Directors who
are parties may participate) consisting solely of two (2) or more Directors not
at the time parties to the proceeding; (3) by special legal counsel; or (4) by
the shareholders as provided by Section 23B.08.550 of the Act.
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Any determination that the Indemnitee is not entitled to indemnification,
and any failure to make the payments requested in the Indemnification Statement,
shall be subject to judicial review by any court of competent jurisdiction.
12.5.3 Special Procedure Regarding Advance for Expenses. An
Indemnitee seeking payment of Expenses in advance of a final disposition of the
proceeding must furnish the Corporation, as part of the Indemnification
Statement:
(a) A written affirmation of the Indemnitee's good faith belief
that the Indemnitee has met the standard of conduct required
to be eligible for indemnification; and
(b) A written undertaking, constituting an unlimited general
obligation of the Indemnitee, to repay the advance if it is
ultimately determined that the Indemnitee did not meet the
required standard of conduct.
Upon satisfaction of the foregoing the Indemnitee shall have a contractual
right to the payment of such Expenses.
12.5.4 Settlement. The Corporation is not liable to indemnify
Indemnitee for any amounts paid in settlement of any proceeding without the
Corporation's written consent. The Corporation shall not settle any proceeding
in any manner which would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. Neither the Corporation nor Indemnitee may
unreasonably withhold its consent to a proposed settlement.
12.6. Contract and related rights.
12.6.1 Contract Rights. The right of an Indemnitee to
indemnification and advancement of Expenses is a contract right upon which
the Indemnitee shall be presumed to have relied in determining to serve or
to continue to serve in his or her capacity with the Corporation. Such
right shall continue as long as the Indemnitee shall be subject to any
possible proceeding. Any amendment to or repeal of this Article shall not
adversely affect any right or protection of an Indemnitee with respect to
any acts or omissions of such Indemnitee occurring prior to such amendment
or repeal.
12.6.2 Optional Insurance, Contracts, and Funding. The Corporation
may:
(a) Maintain insurance, at its expense, to protect itself
and any Indemnitee against any liability, whether or not
the Corporation would have power to indemnify the
individual against the same liability under Section
23B.08.5 10 or .520 of the Act;
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(b) Enter into contracts with any Indemnitee in furtherance
of this Article and consistent with the Act; and
(c) Create a trust fund, grant a security interest, or use
other means (including without limitation a letter of
credit) to ensure the payment of such amounts as may be
necessary to effect indemnification as provided in this
Article.
12.6.3 Severability. If any provision or application of this Article
shall be invalid or unenforceable, the remainder of this Article and its
remaining applications shall not be affected thereby, and shall continue in full
force and effect.
12.6.4 Right of Indemnitee to Bring Suit. If (1) a claim under this
Article for indemnification is not paid in full by the Corporation within sixty
(60) days after a written claim has been received by the Corporation; or (2) a
claim under this Article for advancement of Expenses is not paid in full by the
Corporation within twenty (20) days after a written claim has been received by
the Corporation, then the Indemnitee may, but need not, at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim. To
the extent successful in whole or in part, the Indemnitee shall be entitled to
also be paid the expense (to be proportionately prorated if the Indemnitee is
only partially successful) of prosecuting such claim. Neither (1) the failure of
the Corporation (including its Board of Directors, its shareholders, or
independent legal counsel) to have made a determination prior to the
commencement of such proceeding that indemnification or reimbursement or
advancement of Expenses to the Indemnitee is proper in the circumstances; nor
(2) an actual determination by the Corporation (including its Board of
Directors, its shareholders, or independent legal counsel that the Indemnitee is
not entitled to indemnification or to the reimbursement or advancement of
Expenses, shall be a defense to the proceeding or create a presumption that the
Indemnitee is not so entitled.
12.6.5 Nonexclusivity of Rights. The right to indemnification and
the payment of Expenses incurred in defending a Proceeding in advance of its
final disposition granted in this Article shall not be exclusive of any other
right which any Indemnitee may have or hereafter acquire under any statute,
provision of this Article or the Bylaws, agreement, vote of shareholders or
disinterested directors, or otherwise. The Corporation shall have the express
right to grant additional indemnity without seeking further approval or
satisfaction by the shareholders. All applicable indemnity provisions and any
applicable law shall be interpreted and applied so as to provide an Indemnitee
with the broadest but nonduplicative indemnity to which he or she is entitled.
12.7 Contribution. If the indemnification provided in Section 12.2 of this
Article is not available to be paid to Indemnitee for any reason other than
those set forth in subparagraphs 12.2(a), 12.2(b), and 12.2(c) of Section 12.2
of this Article (for example, because indemnification is held to be against
public policy even though otherwise permitted under Section 12.2) then in
respect of any proceeding in which the Corporation is jointly liable with
Indemnitee (or would be if joined in such proceeding), the Corporation shall
contribute to the amount of loss paid or payable by Indemnitee in such
proportion as is appropriate to reflect:
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The relative benefits received by the Corporation on the one hand and the
Indemnitee on the other hand from the transaction from which such
proceeding arose, and
The relative fault of the Corporation on the one hand and the Indemnitee
on the other hand in connection with the events which resulted in such
loss, as well as any other relevant equitable consideration.
The relative benefits received by and fault of the Corporation on the one
hand and the Indemnitee on the other shall be determined by a court of
appropriate jurisdiction (which may be the same court in which the
proceeding took place) with reference to, among other things, the parties'
relative intent, knowledge, access to information, and opportunity to
correct or prevent the circumstances resulting in such loss. The
Corporation agrees that it would not be just and equitable if a
contribution pursuant to this Article was determined by pro rata
allocation or any other method of allocation which does not take account
of the foregoing equitable considerations.
12.8 Exceptions. Any other provision herein to the contrary
notwithstanding, the Corporation shall not be obligated pursuant to the terms of
these Articles to indemnify or advance Expenses to Indemnitee with respect to
any proceeding.
12.8.1 Claims Initiated by Indemnitee. Initiated or brought
voluntarily by Indemnitee and not by way of defense, but such
indemnification or advancement of Expenses may be provided by the
Corporation in specific cases if the Board of Directors finds it to be
appropriate. Notwithstanding the foregoing, the Corporation shall provide
indemnification including the advancement of Expenses with respect to
Proceedings brought to establish or enforce a right to indemnification
under these Articles or any other statute or law or as otherwise required
under the statute.
12.8.2 Lack of Good Faith. Instituted by Indemnitee to enforce or
interpret this Article, if a court of competent jurisdiction determines
that each of the material assertions made by Indemnitee in such proceeding
was not made in good faith or was frivolous.
12.8.3 Insured Claims. For which any of the Expenses or liabilities
for indemnification is being sought have been paid directly to Indemnitee
by an insurance carrier under a policy of officers' and directors'
liability insurance maintained by the Corporation.
12.8.4 Prohibited by Law. If the Corporation is prohibited by the
Act or other applicable law as then in effect from paying such
indemnification and/or advancement of Expenses. For example, the
Corporation and Indemnitee acknowledge that the Securities and Exchange
Commission ("SEC") has taken the position that indemnification is not
possible for liabilities arising under certain federal securities laws.
Indemnitee understands and acknowledges that the
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<PAGE> 19
Corporation has undertaken or may be required in the future to undertake
with the SEC to submit the question of indemnification to a court in
certain circumstances for a determination of the Corporation's right to
indemnify Indemnitee.
12.9 Successors and Assigns. All obligations of the Corporation to
indemnify any Director or Officer shall be binding upon all successors and
assigns of the Corporation (including any transferee of all or substantially all
of its assets and any successor by merger or other-wise by operation of law).
The Corporation shall not effect any sale of substantially all of its assets,
merger, consolidation, or other reorganization, in which it is not the surviving
entity, unless the surviving entity agrees in writing to assume all such
obligations of the Corporation.
ARTICLE XIII
CORPORATION'S ACQUISITION OF ITS OWN SHARES
The Corporation may purchase, redeem, receive, take or otherwise acquire,
own and hold, sell, lend, exchange, transfer or otherwise dispose of, pledge,
use and otherwise deal with and in its own shares. As a specific modification of
Section 23B.06.310 of the Act, pursuant to the authority in Section
23B.02.020(5)(c) of the Act, to include provisions related to the management of
the business and the regulation of the affairs of the Corporation, shares of the
Corporation's stock acquired by it pursuant to this Article shall be considered
"Treasury Stock" and so held by the Corporation. The shares so acquired by the
Corporation shall not be considered as authorized and unissued but rather as
authorized, issued, and held by the Corporation. The shares, so acquired shall
not be regarded as cancelled or as a reduction to the authorized capital of the
Corporation unless specifically so designated by the Board of Directors in an
amendment to these Articles of Incorporation. The provisions of this Article do
not alter or effect the status of the Corporation's acquisition of its shares as
a "distribution" by the Corporation as defined in Section 23B.01.400(6) of the
Act, nor alter or effect the limitations on distributions by the Corporation as
set forth in Section 23B.06.400 of the Act. Any shares so acquired by the
Corporation, unless otherwise specifically designated by the Board of Directors,
at the time of acquisition, shall be considered on subsequent disposition, as
transferred rather than reissued. Nothing in this Article limits or restricts
the right of the Corporation to resell or otherwise dispose of any of its shares
previously acquired for such consideration and according to such procedures as
established by the Board of Directors.
The undersigned has signed these Restated Articles of Incorporation as of
December 19, 1996.
/s/ Robert A. Eshelman
----------------------------------
ROBERT A. ESHELMAN
Assistant Secretary
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<PAGE> 20
RESTATEMENT CERTIFICATE
The undersigned officer of Microsoft Corporation (the "Corporation")
hereby certifies as follows:
1. The name of the Corporation is Microsoft Corporation.
2. The attached Restated Articles of Incorporation of Microsoft
Corporation includes new Section 4.4 which designates the preferences,
limitations and relative rights of "2 3/4% Convertible Exchangeable
Principal-Protected Preferred Shares, Series A" which have been authorized
pursuant to the authority of the Board of Director as provided in Article IV
"Capital Shares" and otherwise restates the Articles of Incorporation in their
entirety.
3. The amendment does not provide for an exchange, reclassification or
cancellation of issued shares.
4. The amendment was duly adopted by the Board of Directors as of December
2, 1996 in accordance with the provisions of Sections 23B.06.020 and 23B.10.070
of the Washington Business Corporation Act and does not require approval of the
shareholders of the Corporation.
MICROSOFT CORPORATION
By /s/ Robert A. Eshelma
---------------------------------
Robert A. Eshelman
Secretary
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<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
MICROSOFT CORPORATION
TO
CITIBANK, N.A.
Trustee
----------------------
Indenture
Dated as of ...........
----------------------
$............
2 3/4% Convertible Subordinated Notes Due 1999
- --------------------------------------------------------------------------------
<PAGE> 2
MICROSOFT CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ------------
<S> <C> <C>
Section 310(a)(1) .................................... 609
(a)(2) .................................... 609
(a)(3) .................................... Not
Applicable
(a)(4) .................................... Not
Applicable
(b) .................................... 608
610
Section 311(a) .................................... 613
(b) .................................... 613
Section 312(a) .................................... 701
.................................... 702(a)
(b) .................................... 702(b)
(c) .................................... 702(c)
Section 313(a) .................................... 703(a)
(a)(4) .................................... 101
1004
(b) .................................... 703(a)
(c) .................................... 703(a)
(d) .................................... 703(b)
Section 314(a) .................................... 704
(b) .................................... Not
Applicable
(c)(1) .................................... 102
(c)(2) .................................... 102
(c)(3) .................................... Not
Applicable
(d) .................................... Not
Applicable
(e) .................................... 102
Section 315(a) .................................... 601
(b) .................................... 602
(c) .................................... 601
(d) .................................... 601
(e) .................................... 514
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ------------
<S> <C> <C>
Section 316(a) .................................... 101
(a)(1)(A) .................................... 502
.................................... 512
(a)(1)(B) .................................... 513
(a)(2) .................................... Not
Applicable
(b) .................................... 508
(c) .................................... 104(c)
Section 317(a)(1) .................................... 503
(a)(2) .................................... 504
(b) .................................... 1003
Section 318(a) .................................... 107
</TABLE>
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Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
-ii-
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Parties........................................................................ 1
Recitals of the Company........................................................ 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions................................................... 1
Act........................................................... 2
Affiliate..................................................... 2
Agent Member.................................................. 2
Authenticating Agent.......................................... 2
Board of Directors............................................ 2
Board Resolution.............................................. 2
Business Day.................................................. 3
Commission.................................................... 3
Common Stock.................................................. 3
Company....................................................... 3
Company Request or Company Order.............................. 3
Conversion Amount............................................. 3
Conversion Date............................................... 4
Conversion Election........................................... 4
Corporate Trust Office........................................ 4
Closing Price................................................. 4
corporation................................................... 4
Current Market Price.......................................... 4
Defaulted Interest............................................ 4
Depositary.................................................... 4
Event of Default.............................................. 4
Global Security............................................... 5
Holder........................................................ 5
Indenture..................................................... 5
Initial Price................................................. 5
Interest Payment Date......................................... 5
Maturity...................................................... 5
Officers' Certificate......................................... 5
Opinion of Counsel............................................ 5
Outstanding................................................... 5
Paying Agent.................................................. 6
Person........................................................ 6
Predecessor Security.......................................... 7
</TABLE>
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part of the Indenture.
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<PAGE> 5
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Regular Record Date........................................... 7
Security Register and Security
Registrar..................................................... 7
Senior Indebtedness........................................... 7
Series A Preferred Shares..................................... 7
Special Record Date........................................... 7
Stated Maturity............................................... 7
Subsidiary.................................................... 7
Trading Day................................................... 8
Trustee....................................................... 8
Trust Indenture Act........................................... 8
Vice President................................................ 8
SECTION 102. Compliance Certificates and Opinions.......................... 8
SECTION 103. Form of Documents Delivered to Trustee........................ 9
SECTION 104. Acts of Holders; Record Dates................................. 10
SECTION 105. Notices, Etc., to Trustee and Company......................... 11
SECTION 106. Notice to Holders; Waiver..................................... 11
SECTION 107. Conflict with Trust Indenture Act............................. 12
SECTION 108. Effect of Headings and Table of Contents...................... 12
SECTION 109. Successors and Assigns........................................ 12
SECTION 110. Separability Clause........................................... 12
SECTION 111. Benefits of Indenture......................................... 13
SECTION 112. Governing Law................................................. 13
SECTION 113. Legal Holidays................................................ 13
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally............................................... 13
SECTION 202. Form of Face of Security...................................... 14
</TABLE>
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part of the Indenture.
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<PAGE> 6
<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 203. Form of Reverse of Security................................... 18
SECTION 204. Form of Trustee's Certificate of Authentication............... 20
ARTICLE THREE
The Securities
SECTION 301. Title and Terms............................................... 20
SECTION 302. Denominations................................................. 21
SECTION 303. Execution, Authentication, Delivery and Dating................ 21
SECTION 304. Temporary Securities.......................................... 22
SECTION 305. Registration, Registration of Transfer and Exchange........... 22
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.............. 25
SECTION 307. Payment of Interest; Interest Rights Preserved................ 26
SECTION 308. Persons Deemed Owners......................................... 28
SECTION 309. Cancellation.................................................. 28
SECTION 310. Computation of Interest....................................... 28
SECTION 311. Listing of Securities......................................... 28
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture....................... 29
SECTION 402. Application of Trust Money.................................... 30
</TABLE>
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part of the Indenture.
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<PAGE> 7
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE FIVE
Remedies
SECTION 501. Events of Default............................................. 30
SECTION 502. Acceleration of Maturity; Rescission and Annulment............ 32
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee........................................ 33
SECTION 504. Trustee May File Proofs of Claim.............................. 34
SECTION 505. Trustee May Enforce Claims Without Possession of Securities... 34
SECTION 506. Application of Money Collected................................ 35
SECTION 507. Limitation on Suits........................................... 35
SECTION 508. Unconditional Right of Holders to Receive Principal
and Interest and to Convert................................... 36
SECTION 509. Restoration of Rights and Remedies............................ 36
SECTION 510. Rights and Remedies Cumulative................................ 36
SECTION 511. Delay or Omission Not Waiver.................................. 37
SECTION 512. Control by Holders............................................ 37
SECTION 513. Waiver of Past Defaults....................................... 37
SECTION 514. Undertaking for Costs......................................... 38
SECTION 515. Waiver of Stay or Extension Laws.............................. 38
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities........................... 38
</TABLE>
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part of the Indenture.
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<PAGE> 8
<TABLE>
<CAPTION>
Page
-----
<S> <C>
SECTION 602. Notice of Defaults............................................ 39
SECTION 603. Certain Rights of Trustee..................................... 39
SECTION 604. Not Responsible for Recitals or Issuance of Securities........ 40
SECTION 605. May Hold Securities........................................... 40
SECTION 606. Money Held in Trust........................................... 41
SECTION 607. Compensation and Reimbursement................................ 41
SECTION 608. Disqualification; Conflicting Interests....................... 42
SECTION 609. Corporate Trustee Required; Eligibility....................... 42
SECTION 610. Resignation and Removal; Appointment of Successor............. 42
SECTION 611. Acceptance of Appointment by Successor........................ 44
SECTION 612. Merger, Conversion, Consolidation or Succession to Business... 44
SECTION 613. Preferential Collection of Claims Against Company............. 45
SECTION 614. Appointment of Authenticating Agent........................... 45
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders..... 47
SECTION 702. Preservation of Information; Communications to Holders........ 47
SECTION 703. Reports by Trustee............................................ 48
SECTION 704. Reports by Company............................................ 48
</TABLE>
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part of the Indenture.
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<PAGE> 9
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.......... 49
SECTION 802. Successor Substituted......................................... 49
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders............ 50
SECTION 902. Supplemental Indentures with Consent of Holders............... 51
SECTION 903. Execution of Supplemental Indentures.......................... 52
SECTION 904. Effect of Supplemental Indentures............................. 52
SECTION 905. Conformity with Trust Indenture Act........................... 52
SECTION 906. Reference in Securities to Supplemental Indentures............ 52
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal and Interest............................. 53
SECTION 1002. Maintenance of Office or Agency............................... 53
SECTION 1003. Money for Security Payments to Be Held in Trust............... 53
SECTION 1004. Statement by Officers as to Default........................... 55
SECTION 1005. Existence..................................................... 55
</TABLE>
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part of the Indenture.
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<PAGE> 10
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior Indebtedness................. 55
SECTION 1102. Payment Over of Proceeds Upon Dissolution, Etc................ 56
SECTION 1103. Prior Payment to Senior Indebtedness Upon Acceleration
of Securities................................................. 57
SECTION 1104. No Payment When Senior Indebtedness in Default................ 58
SECTION 1105. Payment Permitted If No Default............................... 58
SECTION 1106. Subrogation to Rights of Holders of Senior Indebtedness....... 59
SECTION 1107. Provisions Solely to Define Relative Rights................... 59
SECTION 1108. Trustee to Effectuate Subordination........................... 60
SECTION 1109. No Waiver of Subordination Provisions......................... 60
SECTION 1110. Notice to Trustee............................................. 61
SECTION 1111. Reliance on Judicial Order or Certificate of
Liquidating Agent............................................. 62
SECTION 1112. Trustee Not Fiduciary for Holders of Senior Indebtedness...... 62
SECTION 1113. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.............................. 62
SECTION 1114. Article Applicable to Paying Agents........................... 63
</TABLE>
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part of the Indenture.
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<PAGE> 11
<TABLE>
<CAPTION>
Page
-----
<S> <C>
ARTICLE TWELVE
Conversion of Securities
SECTION 1201. Terms of Conversion and Settlement............................ 63
SECTION 1202. Merger Adjustments............................................ 65
SECTION 1203. Responsibility of Trustee..................................... 66
</TABLE>
- -----------
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-viii-
<PAGE> 12
INDENTURE, dated as of __________________, between MICROSOFT
CORPORATION, a corporation duly organized and existing under the laws of the
State of Washington (herein called the "Company"), having its principal office
at One Microsoft Way, Redmond, Washington 98052-6399, and CITIBANK, N.A., a
national banking association duly organized and existing under the laws of the
United States, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 2
3/4% Convertible Subordinated Notes due 1999 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor, the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
<PAGE> 13
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted--at the date of
this instrument--at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning
specified in Section 104.
"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.
"Agent Member" means any member of, or participant in, the
Depositary.
"Authenticating Agent" means any Person autho-rized by the
Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
"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
-2-
<PAGE> 14
banking institutions in the Borough of Manhattan, the City of New York, New York
are authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the 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" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 1201, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at [the date of this instrument] or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order Request" or "Company Order"
means a written request or order signed in the name of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Conversion Amount" has the meaning specified in Section 1201.
"Conversion Date" has the meaning specified in
-3-
<PAGE> 15
Section 1201.
"Conversion Election" has the meaning specified in Section 1201.
"Corporate Trust Office" means the principal office of the
Trustee in the Borough of Manhattan, The City of New York, at which at any
particular time its corporate trust business shall be administered, which office
at the date of initial execution of this Indenture is 120 Wall Street, New York,
New York 10043, Attention: Corporate Trust Administration; except that with
respect to the presentation of the Securities for payment or for registration of
transfer or exchange, such term shall mean the office or agency of the Trustee
in said Borough at which at any particular time its corporate agency business
shall be conducted, which office at the date of initial execution of this
Indenture is 111 Wall Street, New York, New York 10043, Attention: Corporate
Trust Services.
"Closing Price" of a share of Common Stock on any date of
determination means the closing sale price (or, if no closing price is reported,
the last reported sale price) of such share as reported by the NASDAQ National
Market on such date, or, if it is not so reported, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or, if it is not so listed on a United States
national or regional securities exchange, the last quoted bid price of the
Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of a share of Common Stock on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Current Market Price" means the average Closing Price per share
of the Common Stock of the Company on the 20 Trading Days beginning on the 22nd
Trading Day immediately prior to, but not including, the Conversion Date and
ending on the second Trading Day immediately prior to, but not including, the
Conversion Date.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in the form of one or
-4-
<PAGE> 16
more Global Securities, The Depository Trust Company for so long as it shall be
a clearing agency registered under the Securities Exchange Act of 1934, or such
successor as the Company shall designate from time to time in an Officers'
Certificate delivered to the Trustee.
"Event of Default" has the meaning specified in Section 501.
"Global Security" means a global certificate that evidences all
or part of the Securities and bears the legend set forth in Section 202.
"Holder" means a Person in whose name a Security is registered in
the Security Register or a Person who is the beneficial owner of a beneficial
interest in a Global Security.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Price" means $79.875 per share of Common Stock of the
Company.
"Interest Payment Date" means the Stated Maturity of an
instalment of interest on the Securities.
"Maturity," when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, or otherwise.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice 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. One of the
officers signing an Officers' Certificate given pursuant to Section 1004 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, and who shall
-5-
<PAGE> 17
be acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust
by the Company (if the Company shall act as its own Paying Agent) for
the Holders of such Securities;
(iii) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities with respect to which the Trustee has
received an officers certificate stating that such securities are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
-6-
<PAGE> 18
"Paying Agent" means any Person authorized by the Company to pay
the principal of or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the March 1, June 1, September 1 or December 1 (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date.
"Security Register" and "Security Registrar" and "Security
Registrar" have the respective meanings specified in Section 305.
"Senior Indebtedness" means the principal of and interest on (a)
all indebtedness of the Company (including indebtedness of others guaranteed by
the Company) other than the Securities whether outstanding on the date of this
Indenture or thereafter created, incurred or assumed, which is (i) for money
borrowed or (ii) evidenced by a note or similar instrument given in connection
with the acquisition of any businesses, properties or assets of any kind and (b)
amendments, renewals, extensions, modifications and refund-ings of any such
indebtedness, unless in any case in the instrument creating or evidencing any
such indebtedness or pursuant to which the same is outstanding it is provided
that such indebtedness is not superior in right of payment to the Securities.
"Series A Preferred Shares" means 2 3/4% Convertible Exchangeable
Principal-Protected Preferred Shares, Series A, par value $0.01 per share, of
the Company, which are subject to conversion into Common Shares or exchange into
Securities.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
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<PAGE> 19
"Stated Maturity," when used with respect to any Security
or any instalment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such instalment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsid-iaries, 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" means a day on which the Common Stock (a) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (b) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of such security.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Vice President", when used with respect to the 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".
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<PAGE> 20
SECTION 102. Compliance Certificates and Opinions
Upon any application or request by the Company to the Trustee to
take any action or to refrain from taking any action under any provision of this
Indenture, the Company shall furnish to the Trustee such certificates and
opinions as may be required under the Trust Indenture Act. Each such certificate
or opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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<PAGE> 21
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a
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<PAGE> 22
signer acting in a capacity other than his individual capacity, such certificate
or affidavit shall also constitute sufficient proof of his authority. The fact
and date of the execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register or in the case of Global Securities by an official proxy of The
Depository Trust Company ("DTC").
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
SECTION 105. Notices, Etc., to Trustee and Company
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with
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<PAGE> 23
the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administrator, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, 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.
Notices from the Company to the Trustee and from the Trustee to
the Company shall be sufficiently given for every purpose hereunder (unless
otherwise herein expressly provided) if given by facsimile transmission with
receipt confirmed by telephone (with an original to follow by overnight
courier).
SECTION 106. Notice to Holders; Waiver
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing 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.
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<PAGE> 24
SECTION 107. Conflict with Trust Indenture Act
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of Indenture
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness and the Holders of
Securities, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 112. Governing Law
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 113. Legal Holidays
In any case where any Interest Payment Date or Stated Maturity of
any Security shall not be a Business Day,
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<PAGE> 25
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal 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 or at the Stated Maturity, provided that
no interest shall accrue for the period from and after such Interest Payment
Date or Stated Maturity, as the case may be.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally
The Securities and the Trustee's certificates of authentication
shall be in substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
Upon their original issuance, the Securities shall be issued in
the form of one or more Global Securities registered in the name of the
Depositary or its nominee and deposited with the Trustee, as custodian for the
Depositary, for credit by the Depositary to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct).
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 202. Form of Face of Security
[If a Global Security, then insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGEABLE IN WHOLE OR IN PART FOR A SECURITY
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<PAGE> 26
REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If a Global Security to be held by The Depository Trust Company,
then insert -UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
MICROSOFT CORPORATION
2 3/4% Convertible Subordinated Notes due 1999
No. __________
Cusip No. _________ $________
Microsoft Corporation, a corporation duly organized and existing
under the laws of Washington (herein called the "Company", which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________________, or registered assigns,
the principal sum of _____________________ Dollars [if this Security is a Global
Security, then insert: (which principal amount may from time to time be
increased or decreased to such other principal amounts (which, taken together
with the principal amounts of all other Outstanding Securities, shall not exceed
$__________ in the aggregate at any time) by adjustments made on the records of
the Trustee hereinafter referred to in accordance with the Indenture)] on
December 15, 1999, (the "Conversion Date"); provided, however, that at any time
not more than 20 Trading Days nor fewer than two Trading Days immediately prior
to, but not including, the Conversion Date, the holder of a beneficial interest
in this [Global] Security representing such holder's interest in a 2 3/4%
Convertible Subordinated Note due 1999 (a "Security" or "Convertible Note") may
elect (a "Conversion Election"), by written notice to the Trustee, to convert
such interest, on the Conversion Date, into the right to receive in respect of
each Convertible Note the sum of (i) the Conversion Amount (as defined below)
payable at the Company's option in either
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<PAGE> 27
(as defined below) payable at the Company's option in either Common Stock or in
cash, plus (ii) the Additional Amount (as defined below) payable in cash. In the
event that such holder does not make a timely Conversion Election, such holder
shall receive on the Conversion Date, in lieu of the Conversion Amount and the
Additional Amount and in full satisfaction of such Convertible Note, the
principal sum of $79.875 in cash for each Convertible Note. The "Conversion
Amount" means an amount (payable in either Common Stock or cash) for each
Convertible Note equal to the Current Market Price of Common Stock multiplied by
the product of (x) .995% and (y) the Convertible Note Exchange Rate. The
Convertible Note Exchange Rate is equal to (a) if the Current Market Price of
the Common Stock is greater than or equal to $102.24 per share (the "Threshold
Price"), a fractional share of Common Stock per Convertible Note equal to the
Threshold Price divided by the Current Market Price, (b) if the Current Market
Price is less than the Threshold Price but greater than the Initial Price, one
Common Share per Convertible Note, and (c) if the Current Market Price is less
than or equal to the Initial Price, Common Shares per Convertible Note having a
value (determined at the Current Market Price) equal to the Initial Price,
subject in each case to adjustments in certain events. The Convertible Note
Exchange Rate is subject to adjustment as provided in the Indenture. The
"Additional Amount" means an amount (payable in cash) in respect of each
Convertible Note equal to $0.40. In addition, the Company hereby promises to
pay interest hereon from _____________* or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, quarterly in arrears
on March 15, June 15, September 15 and December 15 in each year, commencing
___________, at the rate of 2 3/4% per annum, until the principal hereof is paid
or made available for payment. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to
- ---------------
* Insert date on which the Convertible Notes are issued in exchange for Series A
Preferred Shares.
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<PAGE> 28
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the March 1, June 1, September 1 or December 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 will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Company, notice whereof shall be given to holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities 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 interest on this Security will be made at the office or agency
of the Company maintained for that purpose in The City of New York, New York, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
at the option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register.
The Company will mail written notice of its election to pay the
Conversion Amount in either Common Stock or cash to each holder of record of
Securities not less than 30 Trading Days nor more than 45 Trading Days prior to
the Conversion Date. In the case of election by the Company to pay the
Conversion Amount in Common Stock the Company will issue the number of full
shares of Common Stock issuable in payment thereof. No fractional shares of
Common Stock will be issued on payment of the Conversion Amount, but in lieu
thereof, such fractional interest shall be rounded down to the next whole share
or an amount will be paid in cash by the Company for such fractional interest
based upon the Current Market Price.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
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<PAGE> 29
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
-------------------------
By
-------------------------
Attest:
- ------------------------------
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<PAGE> 30
SECTION 203. Form of Reverse of Security
This [Global] Security is one of a duly authorized issue of
Securities of the Company designated as its 2 3/4% Convertible Subordinated
Notes Due 1999 (herein called the "Securities"), limited in aggregate principal
amount to $______, issued and to be issued under an Indenture, dated as of
_______ (herein called the "Indenture"), between the Company and Citibank, N.A.,
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 Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) 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 Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
holders of 66 2/3% in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the holders of the Securities shall be conclusive and binding upon
such holders and upon all future holders of the Securities and of any Security
issued upon the registra-
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<PAGE> 31
tion of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
[If a Global Security insert -- In the event of a deposit or
withdrawal of an interest in this Security (including upon an exchange,
transfer, redemption or repurchase of this Security in part only) effected in
accordance with the Applicable Procedures, the Security Registrar, upon receipt
of notice of such event from the Depositary's custodian for this Security, shall
make an adjustment on its records to reflect an increase or decrease of the
Outstanding principal amount of this Security resulting from such deposit or
withdrawal, as the case may be.]
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, the City of New
York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities will be evidenced by a global security, in fully
registered form without coupons, deposited with a custodian for and registered
in the name of a nominee of the Depositary. The Securities will be in
denominations of $79.875.
No service charge shall be made for any such registration of
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any
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<PAGE> 32
agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication
This is one of the Securities referred to in the within-mentioned
Indenture.
Citibank, N.A.,
as Trustee
By
---------------------------------
Authorized Signatory
ARTICLE THREE
The Securities
SECTION 301. Title and Terms
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $___________,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Sections
304, 305, 306, 906 or 1201.
The Securities shall be known and designated as the "2 3/4%
Convertible Subordinated Notes due 1999" of the Company. Their Stated Maturity
shall be December 15, 1999, and they shall bear interest at the rate of 2 3/4%
per annum, from __________ or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
quarterly in arrears on March 15, June 15, September 15 and December 15,
commencing ___________, until the principal thereof is paid or made available
for payment.
The principal of and interest on the Securities shall be payable
at the office or agency of the Company in the
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<PAGE> 33
The principal of and interest on the Securities shall be payable at the office
or agency of the Company in the Borough of Manhattan, the City of New York, New
York, maintained for such purpose and at any other office or agency maintained
by the Company for such purpose; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.
The Securities shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Eleven.
The Securities shall be convertible as provided in Article
Twelve.
SECTION 302. Denominations
The Securities will be evidenced by one or more Global
Securities, in fully registered form without coupons, deposited with a custodian
or delivered to DTC for and registered in the name of a nominee of the
Depositary. The Securities will be in denominations of $79.875.
SECTION 303. Execution, Authentication, Delivery
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice 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 Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture
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<PAGE> 34
provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, if any, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
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SECTION 305. Registration, Registration of Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
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with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1201 not involving any transfer.
(b) The provisions of Clauses (1), (2), (3), (4) and (5) below shall
apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary or a nominee thereof and
delivered to the Depositary or a nominee thereof or custodian therefor,
and each such Global Security shall constitute a single Security for all
purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depositary or a
nominee thereof unless (A) the Depositary (i) has notified the Company
that it is unwilling or unable to continue as Depositary for such Global
Security and the Company thereupon fails to appoint a successor Depository
or (ii) has ceased to be a clearing agency registered under the Exchange
Act, (B) the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of the Securities in definitive registered
certificated form or (C) there shall have occurred and be continuing an
Event of Default or any event which after notice or lapse of time or both
would be an Event of Default with respect to the Securities evidenced by
such Global Security.
(3) If any Global Security is to be exchanged for other Securities
or cancelled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for
exchange or cancellation as provided in this Article Three. If any Global
Security is to be exchanged for other Securities or cancelled in part, or
if another Security is to be exchanged in whole or in part for a
beneficial interest in any Global Security, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as provided
in this Article Three or (ii) the principal amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the principal amount of such other
Security to be so exchanged for a beneficial interest therein, as the case
may be, by means of an appropriate adjustment made
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on the records of the Trustee, as Security Registrar, whereupon the
Trustee, in accordance with the Applicable Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding
adjustment to its records. Upon any such surrender or adjustment of a
Global Security, the Trustee shall, subject to Section 305(b)(2) and as
otherwise provided in this Article Three, authenticate and deliver any
Securities issuable in exchange for such Global Security (or any portion
thereof) to or upon the order of, and registered in such names as may be
directed by, the Depositary or its authorized representative. Upon the
request of the Trustee in connection with the occurrence of any of the
events specified in the preceding paragraph, the Company shall promptly
make available to the Trustee a reasonable supply of Securities that are
not in the form of Global Securities. The Trustee shall be entitled to
rely upon any order, direction or request of the Depositary or its
authorized representative which is given or made pursuant to this Article
Three if such order, direction or request is given or made in accordance
with the Applicable Procedures.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906,
or 1115 or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Security, unless such Security is registered in the
name of a Person other than the Depositary or a nominee thereof.
(5) None of the Company, the Trustee, any agent of the Trustee, any
Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the Depository's records (or the records of
the participant of such Depository) relating to or payments made on
account of beneficial ownership interests of a Global Security or for
maintaining, supervising or reviewing any records of the Depository
relating to such beneficial ownership interests.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security
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of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
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Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder at his address as
it appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
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(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 307) interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, registration of transfer or
exchange or conversion shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The
Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. The Trustee shall cancel and
destroy all Securities surrendered for transfer, exchange, payment or
cancellation and deliver a certificate of destruction to the Company unless the
Company sends the Trustee a prior written notice to deliver the Securities to
the Company.
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SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 311. Listing of Securities.
An Application will be made to have the Securities quoted on the
NASDAQ National Market under the symbol " ."
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. 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
Securities 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
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided in
Section 306 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust
by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation have become due and payable at their stated
maturity and the Company has deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge all amounts due and payable in
respect of such
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Securities not theretofore delivered to the Trustee for
cancellation.
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an 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 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest
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upon any Security when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal (which for purposes of
this Indenture shall be deemed to include the Conversion Amount with
respect to any Security for which a Conversion Amount is applicable
pursuant to Section 1201) of any Security at its Maturity; or
(3) 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 10% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(4) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable 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
(5) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a
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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 other
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 502. 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 Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such 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 Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal (which for purposes of this Indenture
shall be deemed to include
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the Conversion Amount with respect to any Security for which a
Conversion Amount is applicable pursuant to Section 1201) of any
Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the
Securities, and
(D) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal (which for
purposes of this Indenture shall be deemed to include the Conversion
Amount with respect to any Security for which a Conversion Amount is
applicable pursuant to Section 1201) of any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal
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and interest, and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and on any overdue interest, at
the rate borne by the Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
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SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Eleven any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Securities for principal and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
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(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more 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 508. Unconditional Right of Holders to Receive Principal
and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest on
such Security on the respective Stated Maturities expressed in such Security and
to convert such Security in accordance with Article Twelve 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.
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SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
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 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
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(1) such direction shall not be in conflict with any
rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of or interest
on any Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to convert any Security in accordance with Article
Twelve.
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SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder
as and to the extent provided by the Trust Indenture Act; provided, however,
that in the case of any default of the character specified in Section 501(3), no
such notice to Holders shall be given until at least 30 days after the Trustee
receives written notice 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.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors 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 and an opinion
of counsel;
(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 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,
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direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities and the
Prospectus, dated December 17, 1996, relating to the Series A Preferred Shares,
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 Securities. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
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SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel) of defending itself against 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 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 or any other
termination of this Indenture including any termination under any bankruptcy
law. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Securities, and the Securities are hereby subordinated to such senior claim.
When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 501(4) or (5) occurs, the expenses and the compensation for
such services are intended to constitute expenses of administration under any
bankruptcy law.
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SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in New York. If such Person 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 Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(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 Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the
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Company or by any Holder who has been a bona fide Holder of a Security for
at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee 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 Securities
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, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
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SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which
shall be authorized to act on behalf of the Trustee to authenticate Securities
issued upon original issue and upon exchange, registration of transfer or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenti-
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cating Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a 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 Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
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This is one of the Securities described in the within-mentioned
Indenture.
-----------------------------,
As Trustee
By
--------------------------,
As Authenticating Agent
By
--------------------------,
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and 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 Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses
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of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 704. Reports by Company.
Upon the issuance of any Securities hereunder, the Company shall
file with the Trustee and the Commission, and transmit to Holders, such
information, documents and other reports, and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant to such Act; provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 shall be filed with the Trustee within 15
days after the same is so required to be filed with the Commission.
The Company's fiscal year ends on June 30.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only
on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation,
partnership or trust, shall be organized and validly existing under the
laws of 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 interest on
all the Securities and the performance or observance of every covenant of
this Indenture on the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance with Section 1201;
(2) 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
(3) 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, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture
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comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with; and provided
further that such Opinion of Counsel shall state that such supplemental
indenture constitutes the legal, valid and binding obligation of either the
Company or the successor Person, as the case may be, subject to the
customary exceptions.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without
Consent of Holders.
Without the consent of any Holders, the Company, 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 satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities pursuant to the requirements of Section
1003 or otherwise; or
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(4) 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 which shall not be inconsistent with the provisions
of this Indenture, provided that such action pursuant to this Clause (4)
shall not adversely affect the interests of the Holders in any material
respect.
SECTION 902. Supplemental Indentures with
Consent of Holders.
With the consent of the Holders of not less than 66 2/3% in
principal amount of the Outstanding Securities, 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 Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon, or change the place of payment
where, or the coin or currency in which, any Security or interest thereon
is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof, or adversely
affect the right to convert any Security as provided in Article Twelve, or
modify the provisions of this Indenture with respect to the subordination
of the Securities in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
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(3) modify any of the provisions of this *Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and constitutes the legal, valid and
binding obligation of the Company subject to customary exceptions. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
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SECTION 906. Reference in Securities to
Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the City of
New York, New York an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange, where Securities may be surrendered for conversion and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, the City of New
York, New York) where the Securities may be presented or surrendered for any or
all such purposes and may from time to time rescind such
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designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, the City of New York, 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 1003. Money for Security Payments to Be
Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal 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 or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent 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 (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
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.
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Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest on
any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, 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, 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 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
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ARTICLE ELEVEN
Subordination of Securities
SECTION 1101. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the indebtedness
represented by the Securities and the payment of the principal of and interest
on each and all of the Securities are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior
Indebtedness.
SECTION 1102. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment in cash, before
the Holders of the Securities are entitled to receive any payment on account of
principal of or interest on the Securities, and to that end the holders of
Senior Indebtedness shall be entitled to receive, for application to the payment
thereof, any payment or distribution of any kind or character, whether in cash,
property or securities, which may be payable or deliverable in respect of the
Securities in any such case, proceeding, dissolution, liquidation or other
winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, before all Senior Indebtedness
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is paid in full or payment thereof provided for, and if such fact shall, at or
prior to the time of such payment or distribution, have been made known to the
Trustee or, as the case may be, such Holder, then and in such event such payment
or distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or which acquires by conveyance or transfer
such properties and assets substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article Eight.
SECTION 1103. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of all Senior Indebtedness, or provision shall be made for such
payment in cash, before the Holders of the Securities are entitled to receive
any
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payment [(including any payment which may be payable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities)]* by the Company on account of the principal of or interest on the
Securities or on account of the purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1102 would be applicable.
SECTION 1104. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default in the
payment of principal of or interest on any Senior Indebtedness beyond any
applicable grace period with respect thereto, or in the event that any event of
default with respect to any Senior Indebtedness shall have occurred and be
continuing permitting the holders of such Senior Indebtedness (or a trustee on
behalf of the holders thereof) to declare such Senior Indebtedness due and
payable prior to the date on which it would otherwise have become due and
payable, unless and until such event of default shall have been cured or waived
or shall have ceased to exist and such acceleration shall have been rescinded or
annulled, or (b) in the event any judicial proceeding shall be pending with
respect to any such default in payment or event of default, then no payment
shall be made by the Company on account of principal of or interest on the
Securities or on account of the purchase or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing
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* This provision should be included if the Company may have a class or
classes of debt which are subordinated to the Securities.
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provisions of this Section, and if such fact shall, at or prior to the time of
such payment, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment shall be paid over and delivered
forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1102 would be applicable.
SECTION 1105. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Securities shall prevent [(a)] the Company, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section 1102 or under the
conditions described in Section 1103 or 1104, from making payments at any time
of principal of or interest on the Securities [, or (b) the application by the
Trustee of any money deposited with it hereunder to the payment of or on account
of the principal of or interest on the Securities or the retention of such
payment by the Holders, if, at the time of such application by the Trustee, it
did not have knowledge that such payment would have been prohibited by the
provisions of this Article].
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SECTION 1106. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the
Holders of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
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SECTION 1107. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional (and which, subject to the
rights under this Article of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with their terms; or
(b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 1108. Trustee to Effectuate Subordination.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1109. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
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Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 1110. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Section 601, shall be entitled in all respects to assume that no
such facts exist [; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least [to be discussed with
the Trustee] Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within [to be discussed with the Trustee] Business
Days prior to such date].
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Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, 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 1111. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee, subject to the provisions of Section 601, and
the Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
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 Article.
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SECTION 1112. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
SECTION 1113. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 607.
SECTION 1114. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1313 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
ARTICLE TWELVE
Conversion of Securities
SECTION 1201. Terms of Conversion and Settlement.
At any time not more than 20 Trading Days nor fewer than two Trading
Days immediately prior to, but not
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including, the Conversion Date, any Holder may elect (a "Conversion Election"),
by written notice to the Trustee, to convert a Security on the Conversion Date,
into the right to receive in respect of each Security the sum of (i) the
Conversion Amount (as defined below) payable at the Company's option in either
Common Stock or in cash, plus (ii) the Additional Amount (as defined below)
payable in cash. Any Holder who does not make a timely Conversion Election shall
receive on the Conversion Date, in lieu of the Conversion Amount and the
Additional Amount and in full satisfaction of the Holder's Securities, the
principal sum of $79.875 dollars in cash for each Security. The "Conversion
Amount" means an amount (payable in either Common Stock or cash) for each
Security equal to the Current Market Price of Common Stock multiplied by the
product of (x) .995% and (y) the Convertible Note Exchange Rate. The Convertible
Note Exchange Rate is equal to (a) if the Current Market Price of the Common
Stock is greater than or equal to $102.24 per share (the "Threshold Price"), a
fractional share of Common Stock per Security equal to the Threshold Price
divided by the Current Market Price, (b) if the Current Market Price is less
than the Threshold Price but greater than the Initial Price, one share of Common
Stock per Security, and (c) if the Current Market Price is less than or equal to
the Initial Price, shares or fractional shares of Common Stock per Security
having a value (determined at the Current Market Price) equal to the Initial
Price, subject in each case to adjustments in certain events. The "Additional
Amount" means an amount (payable in cash) in respect of each Security equal to
$0.40.
Prior to any conversion, the Company will deliver a notice to the
Trustee setting forth the name of the conversion agent and the relevant contact
information therefor.
The Convertible Note Exchange Rate is subject to adjustment as
appropriate in certain circumstances, including if the Company (a) pays a stock
dividend or makes a distribution with respect to its Common Stock in shares of
Common Stock, (b) subdivides or splits its outstanding Common Stock, (c)
combines its outstanding Common Stock into a smaller number of shares, (d)
issues by reclassification of its shares of Common Stock any shares of Common
Stock, (e) issues certain rights or warrants to all holders of its Common Stock
or (f) pays a dividend or distributes to all holders of its Common Stock
evidences of its indebtedness or other assets (including capital stock of the
Company but excluding any cash dividends or distributions and dividends referred
to in clause (a) above). In addition, the Company
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will be entitled to make such upward adjustments in the Convertible Note
Exchange Rate as the Company, in its discretion, determines to be advisable, in
order that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction which could be treated as any of the
foregoing transactions pursuant to Section 305 of the Internal Revenue Code of
1986, as amended) hereafter made by the Company to its shareholders will not be
taxable. All adjustments to the Convertible Note Exchange Rate will be
calculated to the nearest 1/10,000th of a share of Common Stock. No adjustment
in the Convertible Note Exchange Rate will be required unless such adjustment
would require an increase or decrease of at least one percent in the Convertible
Note Exchange Rate, provided that any adjustments which, by reason of the
foregoing, are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All adjustments will be made successively.
All adjustments to the Convertible Note Exchange Rate shall be made consistent
with the provisions of paragraphs (d) and (f) of Section 4.4.3 of the Restated
Articles of Incorporation of the Company dated December 19, 1996, treating the
Securities in the same manner as the Series A Preferred Shares for which they
were exchanged.
Whenever the Convertible Note Exchange Rate is adjusted as provided in the
preceding paragraph, the Company will file with the Trustee a certificate with
respect to such adjustment, make a prompt public announcement thereof and mail a
notice to Holders providing specified information with respect to such
adjustment.
At least 10 days prior to taking any action which could result in an
adjustment in the Convertible Note Exchange Rate, the Company will notify each
Holder concerning such proposed action.
The Company will reserve and at all times keep available, free from
preemptive rights, out of its authorized but unissued stock, for the purpose of
effecting the conversion of the Securities, such number of shares of its duly
authorized Common Stock as will from time to time be sufficient to effect the
conversion of all outstanding Securities; provided, however, that the Company
shall not be obligated to keep such shares available with respect to any
Securities during any time that the conversion of such Securities is prohibited
under a contract or other agreement between the holder of such Securities and
the Company.
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The Company will mail written notice of its election to pay the
Conversion Amount in either Common Stock or cash to each Holder of record of
Securities not less than 30 Trading Days nor more than 45 Trading Days prior to
the Conversion Date. In the case of election by the Company to pay the
Conversion Amount in Common Stock the Company will issue the number of full
shares of Common Stock issuable in payment thereof. No fractional shares of
Common Stock will be issued on payment of the Conversion Amount, but in lieu
thereof, such fractional interest shall be rounded down to the next whole share
and an amount will be paid in cash by the Company for such fractional interest
based upon the Current Market Price.
SECTION 1202. Merger.
In case of any consolidation or merger to which the Company is a
party (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Shares outstanding immediately
prior to the merger or consolidation remain unchanged), or in case of any sale
or transfer to another entity of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another entity (other than in connection with a merger or acquisition),
each Security shall, after consummation of such transaction, be subject to (i)
conversion at the option of the holder into the kind and amount of securities,
cash, or other property receivable upon consummation of such transaction by a
holder of the number of Common Shares into which such Securities might have been
converted immediately prior to consummation of such transaction and (ii)
conversion on the Conversion Date into the kind and amount of securities, cash,
or other property receivable upon consummation of such transaction by a holder
of the number of Common Shares into which such Security would have been
converted if the conversion on the Conversion Date had occurred immediately
prior to the date of consummation of such transaction assuming in each case that
such holder of Common Shares failed to exercise rights of election if any, as to
the kind or amount of securities, cash, or other property receivable upon
consummation of such transaction (provided that if the kind or amount of
securities, cash, or other property receivable upon consummation of such
transaction is not the same for each nonelecting share, then the kind and amount
of securities, cash, or other property receivable upon consummation of such
transaction for each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares). The kind and
amount of securities into which the
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Securities shall be convertible after consummation of such transaction shall be
subject to adjustment as described above under the caption "Conversion
Adjustments" following the date of consummation of such transaction. The Company
may not become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
SECTION 1203. Responsibility of Trustee.
The Trustee, subject to the provisions of Section 601, 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. The Trustee shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any 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 601, 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.
---------------------------
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.
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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.
-----------------------------
By
--------------------------
Attest:
- --------------------------
-----------------------------
By
---------------------------
Attest:
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STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )
On the _____ day of __________, 19__, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that [he --she] is ________________________________ of
___________________________, one of the corporations described in and which
executed the foregoing instrument; that [he -- she] knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that [he -- she] signed [his -- her] name thereto by like
authority.
------------------------------
STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )
On the _____ day of __________, 19__, before me personally came
___________________________, to me known, who, being by me duly sworn, did
depose and say that [he --she] is _____________________________ of
___________________________, one of the corporations described in and which
executed the foregoing instrument; that [he -- she] knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that [he -- she] signed [his -- her] name thereto by like
authority.
------------------------------
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