<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: October 28, 1995
-----------------------------------------------
Commission File Number: 0-17586
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STAPLES, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2896127
- - ------------------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Pennsylvania Avenue, Framingham, MA 01701-9328
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(Address of principal executive office and zip code)
508-370-8500
-------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
The registrant had 104,932,095 shares of Common Stock, par value $.0006,
outstanding as of November 30, 1995.
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FORM 10-Q
STAPLES, INC.
OCTOBER 28, 1995
<TABLE>
TABLE OF CONTENTS
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<CAPTION>
Page
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<S> <C>
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . 8-10
Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<TABLE>
STAPLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
October 28,
1995 January 28,
(Unaudited) 1995
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................. $ 71,849 $ 41,810
Short-term investments................................................ 20,404 29,204
Merchandise inventories............................................... 702,637 463,493
Receivables, net...................................................... 129,760 75,910
Prepaid expenses and other current assets............................. 35,649 29,316
---------- ----------
TOTAL CURRENT ASSETS............................................... 960,299 639,733
PROPERTY AND EQUIPMENT:
Land and buildings.................................................... 20,201 18,482
Leasehold improvements................................................ 158,567 124,000
Equipment............................................................. 130,215 97,139
Furniture and fixtures................................................ 69,225 53,325
---------- ----------
TOTAL PROPERTY AND EQUIPMENT....................................... 378,208 292,946
Less accumulated depreciation and amortization........................ 115,317 80,301
---------- ----------
NET PROPERTY AND EQUIPMENT......................................... 262,891 212,645
OTHER ASSETS:
Lease acquisition costs, net of amortization.......................... 40,176 41,470
Investment in affiliates.............................................. 26,337 23,733
Goodwill, net of amortization......................................... 78,540 70,144
Other................................................................. 29,872 20,729
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TOTAL OTHER ASSETS................................................. 174,925 156,076
---------- ----------
$1,398,115 $1,008,454
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable...................................................... $ 338,298 $ 212,341
Accrued expenses and other current liabilities........................ 139,054 131,740
Debt maturing within one year......................................... 8,012 6,257
---------- ----------
TOTAL CURRENT LIABILITIES.......................................... 485,364 350,338
LONG-TERM DEBT ......................................................... 20,568 134,387
OTHER LONG-TERM OBLIGATIONS............................................. 26,991 23,739
CONVERTIBLE DEBENTURES.................................................. 300,000 115,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value-authorized
5,000,000 shares; no shares issued ................................... 0 0
Common stock, $.0006 par value-authorized
200,000,000 shares; issued
104,915,729 shares at October 28, 1995 and
94,240,655 shares at January 28, 1995 ................................ 63 54
Additional paid-in capital............................................ 453,466 314,544
Cumulative foreign currency translation adjustments................... (204) (2,205)
Unrealized gain (loss) on short-term investments...................... 43 (93)
Retained earnings .................................................... 112,170 73,036
Less: 24,948 shares of treasury stock, at cost........................ (346) (346)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY..................................... 565,192 384,990
---------- ----------
$1,398,115 $1,008,454
========== ==========
</TABLE>
See notes to consolidated financial statements.
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<TABLE>
STAPLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
(Unaudited) (Unaudited)
13 Weeks Ended 39 Weeks Ended
------------------------------- ----------------------------------
October 28, October 29, October 28, October 29,
1995 1994 1995 1994
------------ ------------ ------------ -----------
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Sales............................................. $ 818,756 $ 552,096 $ 2,092,526 $ 1,335,446
Cost of goods sold and occupancy costs............ 627,293 424,681 1,611,207 1,030,017
------------ ------------ ------------ -----------
GROSS PROFIT.................................. 191,463 127,415 481,319 305,429
Operating expenses:
Operating and selling........................... 118,031 83,296 317,037 210,181
Pre-opening..................................... 2,057 1,891 4,113 3,887
General and administrative...................... 25,648 17,402 72,127 47,928
Amortization of goodwill........................ 548 301 1,392 301
------------ ------------ ------------ -----------
TOTAL OPERATING EXPENSES...................... 146,284 102,890 394,669 262,297
------------ ------------ ------------ -----------
OPERATING INCOME ............................. 45,179 24,525 86,650 43,132
Other income (expense):
Interest expense, net........................... (3,324) (2,481) (12,014) (4,755)
Gain on sale of investment...................... 0 0 0 1,149
Merger related expense ........................ 0 0 0 (2,150)
Other .......................................... 57 396 72 1,928
------------ ------------ ------------ -----------
TOTAL OTHER INCOME (EXPENSE).................. (3,267) (2,085) (11,942) (3,828)
------------ ------------ ------------ -----------
INCOME BEFORE EQUITY IN LOSS OF
AFFILIATES AND INCOME TAXES................. 41,912 22,440 74,708 39,304
Equity in loss of affiliates..................... (6,230) (3,281) (11,554) (9,372)
------------ ------------ ------------ -----------
INCOME BEFORE INCOME TAXES..................... 35,682 19,159 63,154 29,932
Income tax expense ............................... 13,738 7,170 24,314 11,375
------------ ------------ ------------ -----------
NET INCOME .................................... $ 21,944 $ 11,989 $ 38,840 $ 18,557
============ ============ ============ ===========
Net income per common share....................... $ 0.20 $ 0.12 $ 0.36 $ 0.20
============ ============ ============ ===========
Number of shares used in computing net
income per common share...................... 109,322,627 103,748,498 107,812,910 92,417,114
============ ============ ============ ===========
</TABLE>
See notes to consolidated financial statements.
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<TABLE>
STAPLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
(Unaudited)
39 Weeks Ended
-------------------------------
October 28, October 29,
1995 1994
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OPERATING ACTIVITIES:
Net income ..................................................................... $ 38,840 $ 18,557
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization................................................. 36,834 20,610
Equity in loss of affiliates.................................................. 11,554 9,372
Gain on sale of investment.................................................... 0 (1,149)
Increase in assets:
Merchandise inventories .................................................... (234,062) (158,295)
Receivables ................................................................ (49,272) (3,871)
Prepaid expenses and other assets........................................... (5,611) (7,385)
Increase in accounts payable, accrued
expenses and other current liabilities...................................... 120,603 108,526
Increase in other long-term obligations....................................... 2,901 1,676
----------- ---------
(117,053) (30,516)
----------- ---------
NET CASH USED IN OPERATING ACTIVITIES........................................... (78,213) (11,959)
INVESTING ACTIVITIES:
Acquisition of property and equipment........................................... (81,381) (57,185)
Acquisition of businesses, net of cash acquired................................. 0 (45,124)
Proceeds from sales and maturities of short-term investments.................... 9,135 38,984
Purchase of short-term investments.............................................. (349) 0
Proceeds from sale of other investments......................................... 0 1,149
Investment in affiliates........................................................ (13,390) (11,934)
Acquisition of lease rights..................................................... (959) (10,438)
Other .......................................................................... 2,384 (839)
----------- ---------
NET CASH USED IN INVESTING ACTIVITIES........................................... (84,560) (85,387)
FINANCING ACTIVITIES:
Proceeds from sale of capital stock............................................. 13,006 48,920
Proceeds from convertible debentures, net of deferred costs..................... 292,348 0
Proceeds from borrowings........................................................ 1,174,531 462,070
Payments on borrowings.......................................................... (1,287,064) (433,537)
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES....................................... 192,821 77,453
Effect of exchange rate changes on cash......................................... (9) 0
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................. 30,039 (19,893)
Cash and cash equivalents at beginning of period................................. 41,810 37,976
----------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................... $ 71,849 $ 18,083
=========== =========
</TABLE>
See notes to consolidated financial statements.
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STAPLES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation
- - --------------------------------
The accompanying interim unaudited consolidated financial statements include
the accounts of Staples, Inc. and its wholly owned subsidiaries (the
"Company"). All intercompany accounts and transactions are eliminated in
consolidation.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods presented. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year. These
financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes included in the Company's
Annual Report on Form 10-K dated April 27, 1995 for the year ended January 28,
1995.
Note 2 - Computation of Earnings Per Share
- - ------------------------------------------
On June 29, 1995, the Board of Directors approved a three-for-two stock split
of the Company's common stock to be effected in the form of a 50% dividend.
This distribution was made on July 24, 1995 and was payable to shareholders of
record as of July 14, 1995. The consolidated financial statements have been
retroactively restated to give effect to this stock split. The number of shares
used in the earnings per share computation for the three months and nine months
ended October 29, 1994 as previously reported has also been retroactively
adjusted to reflect this stock split.
Average common and common equivalent shares used in computing earnings per
share include approximately 4,552,000 and 2,072,000 shares for the quarters
ended October 28, 1995 and October 29, 1994, respectively, as a result of
applying the treasury stock method to outstanding stock options. In addition,
the number of shares used in the calculation for the quarter ended October 29,
1994 assumed conversion of the $115,000,000 of 5% Convertible Subordinated
Debentures (the "5% Debentures") into 8,625,000 shares of common stock.
Therefore, in calculating earnings per share for that period, the interest
expense and amortization of deferred issuance costs related to the 5%
Debentures, net of tax effect, is added back to net income.
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Note 3 - Conversion of 5% Convertible Debentures
- - ------------------------------------------------
By June 30, 1995, all of the Company's 5% Debentures, other than Debentures in
an aggregate amount of $184,000, were converted into 8,611,200 shares of common
stock at a conversion price of $13.33 per share. The total principal amount
converted was credited to common stock and additional paid-in-capital, net of
unamortized expenses of the original debt issue and accrued but unpaid
interest. The remaining $184,000 of the 5% Debentures were redeemed on July
10, 1995 for a total redemption price of $192,359. The Company sold 13,800
shares pursuant to a standby underwriting agreement to fund the purchase price.
There was no impact on the calculation of earnings per share for the three and
nine months ended October 28, 1995 from the conversion.
Note 4 - Issuance of New Convertible Debentures
- - -----------------------------------------------
On October 5, 1995, the Company issued $300,000,000 of 4 1/2% Convertible
Subordinated Debentures due October 1, 2000 with interest payable semi-annually
(the "4 1/2% Debentures"), which are convertible, at the option of the holder,
into Common Stock at a conversion price of $33 per share. The 4 1/2%
Debentures are redeemable, in whole or in part, at the Company's option at
specified redemption prices on or after October 1, 1998 or in the event of
certain developments involving U.S. withholding taxes or certification
requirements. Costs incurred in connection with the issuance of the 4 1/2%
Debentures are included in Other Assets and are being amortized on the interest
method over the five year period to maturity.
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STAPLES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- - ---------------------
SALES. Sales increased 48% to $818,756,000 in the quarter ended October 28,
1995 from $552,096,000 in the quarter ended October 29, 1994 and increased 57%
to $2,092,526,000 for the nine months ended October 28, 1995 compared to
$1,335,446,000 for the nine months ended October 29, 1994. This growth is
attributable to an increase in the number of open stores, increased sales in
existing stores and increased sales in the delivery and contract stationer
segments. In addition, the three and nine months ended October 28, 1995
include the results of a number of companies acquired by the Company under the
purchase method of accounting, since the beginning of fiscal 1994, including
The Business Depot, Ltd. ("Business Depot"), D.A. MacIsaac, Inc., Philadelphia
Stationers, Inc., and Macauley's Business Resources, Inc. Due to the dates of
acquisition, the results for these companies are not fully included in the
consolidated results for the three and nine months ended October 29, 1994.
Comparable store and delivery hub sales (which represent a comparison of sales
between corresponding full months in the periods compared) for the quarter
ended October 28, 1995 increased 22% over the quarter ended October 29, 1994,
and increased 21% for the nine months ended October 28, 1995 versus the nine
months ended October 29, 1994. Comparable sales for the Company's contract
stationers increased 32% for the three months ended October 28, 1995 versus the
three months ended October 29, 1994 (comparable sales data is not available for
the nine months ended October 28, 1995 versus October 29, 1994 because the
Company first entered this business segment in the first quarter of fiscal
1994). The Company had 417 stores open as of October 28, 1995 compared to 338
stores as of October 29, 1994 and 350 stores open as of January 28, 1995.
GROSS PROFIT. Gross profit as a percentage of sales was 23.4% and 23.0% for
the three and nine month periods ended October 28, 1995, respectively, as
compared to 23.1% and 22.9% for the same periods in the prior year. The
increase in gross profit rate for the three and nine months ended October 28,
1995 was primarily due to the leveraging of fixed occupancy and distribution
center costs over a larger sales base, as well as to improved product costs
from vendors as a result of increased purchase volumes. This was partially
offset by a decrease in merchandise margin rate, as sales of computers and
other capital goods items, which generate a lower margin rate than other
categories, increased as a percentage of total sales for the three and nine
months ended October 28, 1995 versus the prior year. Total computer sales
constituted approximately 8.1% of total store and delivery hub sales during
the three months ended October 28, 1995 versus 5.6% of sales in the same period
of the prior year.
OPERATING AND SELLING EXPENSES. Operating and selling expenses, which consist
of payroll, advertising and other store operating costs, decreased as a
percentage of sales in the three and nine months ended October 28, 1995 to
14.4% and 15.2%, respectively, as compared to 15.1% and 15.7% for the same
periods in the prior year. The decrease is primarily due to the increased
leveraging of fixed store payroll expenses and other fixed store operating
costs as store sales have increased. The improvements in store payroll have
been partially offset by increased advertising and costs incurred for the
Company's store remodel program in which significant investments have been
made in store layouts and signing to improve shopability and enhance customer
service.
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While most store expenses vary proportionately with sales, there is a fixed
cost component. Because new stores typically generate lower sales than the
Company average, the fixed cost component results in higher store operating and
selling expenses as a percentage of sales in these stores. During periods when
new store openings as a percentage of the base are lower, store operating and
selling expenses as a percentage of sales may decrease. In addition, as the
store base matures, the fixed cost component of operating expenses is leveraged
over an increased level of sales, resulting in a decrease in store operating
and selling expenses as a percentage of sales. The Company's strategy of
saturating markets results in some new stores attracting sales away from
existing stores. This also has the effect of detracting from the expected
leveraging of the fixed cost component.
PRE-OPENING EXPENSES. Pre-opening expenses relating to new store openings,
which consist primarily of salaries, supplies, marketing and occupancy costs,
are expensed by the Company as incurred and, therefore, fluctuate from period
to period depending on the timing and number of new store openings.
Pre-opening expenses averaged $51,000 and $53,000 per store for the three and
nine months ended October 28, 1995, as compared to $57,000 and $53,000 per
store for the same periods in the prior year.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
the three and nine months ended October 28, 1995 decreased as a percentage of
sales to 3.1% and 3.4%, respectively, as compared to 3.2% and 3.6% for the same
periods in the prior year. This decrease was primarily due to the Company's
ability to increase sales without proportionately increasing overhead expenses,
and was offset in part by the relatively higher general and administrative
expenses associated with the contract stationer acquisitions during fiscal 1994
and 1995. The Company expects general and administrative expenses to increase
as the Company continues to expand; however, these expenditures are expected to
continue to decrease as a percentage of sales.
INTEREST EXPENSE, NET. Net interest expense for the three and nine months
ended October 28, 1995 was $3,324,000 and $12,014,000, respectively, as
compared to $2,481,000 and $4,755,000 for the same periods in the prior year.
The increase in net interest expense is primarily due to increased borrowings
under the Company's revolving credit facility which funded the planned increase
in store inventories related to new store openings, expanded product
assortments, and improvements in in-stock levels, the acquisition of fixed
assets for new stores opened and remodeled, and additional investments in joint
venture affiliates.
OTHER INCOME. Other income for the three and nine months ended October 29,
1994 primarily relates to fees charged for administrative services performed by
the Company for its joint venture affiliates. The decrease in other income for
the three and nine months ended October 28, 1995 is due to the contractual
reduction of these fees as the affiliates perform more of their own
administrative functions.
EQUITY IN LOSS OF AFFILIATES. The Company's equity in loss of affiliates
increased to $6,230,000 and $11,554,000 for the three and nine months ended
October 28, 1995 as compared to $3,281,000 and $9,372,000 for the same periods
in the prior year, primarily due to a store closure charge of approximately
$2,500,000 taken by the Company's German affiliate, MAXI-Papier-Markt GmbH, in
the three months ended October 28, 1995. This was partially offset by the
results of Business Depot being fully included in the consolidated results in
fiscal 1995 due to the current 100% ownership of Business Depot by the Company;
prior to the acquisition on August 26, 1994, Business Depot was accounted for
under the equity method due to the Company's 42% ownership, which resulted in
the Company's share of losses from operations of Business Depot being included
in Equity in Loss of Affiliates.
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LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
During the nine months ended October 28, 1995, cash, cash equivalents and
short-term investments increased by $21,239,000. This increase was attributable
to cash flow from financing activities of $192,821,000, which primarily
represents proceeds of $292,348,000 from the issuance of the 4 1/2% Convertible
Debentures offset by repayments of the Company's outstanding revolving credit
facility. This was partially offset by $81,381,000 in capital expenditures
primarily incurred in connection with the opening of 67 new stores and the
remodel program, and cash used in operating activities of $78,213,000, which
primarily reflects increases in merchandise inventories related to new store
openings, expanded product assortments, and improvements in in-stock levels.
The Company opened 31 and 67 stores in North America during the three and nine
months ended October 28, 1995, and expects to open over 20 additional stores in
the last quarter of fiscal 1995. Management estimates that the Company's cash
requirements, including pre-opening expenses, will be approximately $1,400,000
for each new store (excluding the cost of any acquisitions of lease rights).
Accordingly, the Company expects to use in excess of $28,000,000 for store
openings during this period. The Company will continue to make investments in
information systems, distribution centers and store remodels to improve
operational efficiencies and customer service, and may expend additional funds
to acquire businesses or lease rights from tenants occupying retail space that
is suitable for a Staples store.
On October 25, 1995, the Company reduced its commitment on its five-year
revolving credit and term loan facility with a syndicate of banks, established
on February 14, 1995, from $300 million to provide for financing of up to
$225,000,000. Borrowings made pursuant to this facility will bear interest at
either the lead bank's prime rate, the federal funds rate plus 0.50%, the LIBOR
rate plus a percentage spread based on certain defined ratios, or a competitive
bid rate. Borrowings outstanding at February 14, 1998 automatically convert
into a term loan, payable in eight installments due on the last day of each
calendar quarter. Term loan borrowings bear interest at either the lead bank's
base rate plus 0.25% or the Eurodollar lending rate plus 0.25%. This
agreement, among other conditions, contains certain restrictive covenants
including net worth maintenance, minimum interest coverage and limitations on
indebtedness, sales of assets, and dividends. As of October 28, 1995,
borrowing availability under the revolving credit facility totaled
$225,000,000; total cash, short-term investments and available revolving credit
amounts totaled $317,253,000.
The Company expects that its current cash and cash equivalents, funds
anticipated to be generated from operations, and funds available under its
revolving credit and term loan facility will be sufficient to fund its planned
store openings and other operating cash needs for at least the next eighteen
months. However, the Company is continually evaluating financing
possibilities, and it may seek to raise additional funds through any one or a
combination of public or private debt offerings dependent upon market
conditions, or through additional commercial bank debt arrangements.
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PART II -- OTHER INFORMATION
Items 1-5 - Not applicable.
- - ------------------------------
Item 6 - Exhibits and Reports on Form 8-K.
- - ------------------------------------------
A. Exhibits.
10.1 Staples, Inc. Indenture dated October 5, 1995 for the $300,000,000
4 1/2% Convertible Subordinated Debentures due October 1, 2000.
B. Reports on Form 8-K.
The Company filed the following report on Form 8-K during the fiscal
quarter ended October 28, 1995:
1. Report on Form 8-K filed September 12, 1995, reporting a proposed
offering of a new issue of $265 million of 4 1/2 % Convertible
Subordinated Debentures due October 1, 2000.
Page 11
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 11, 1995 /s/ John B. Wilson
------------------------- ----------------------------
John B. Wilson
Executive Vice President -
Finance and Strategy and
Chief Financial Officer
Page 12
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===============================================================================
STAPLES, INC.
ISSUER
TO
MARINE MIDLAND BANK
TRUSTEE
________________
INDENTURE
Dated as of October 5, 1995
________________
U.S.$300,000,000
4-1/2% Convertible Subordinated Debentures
Due October 1, 2000
===============================================================================
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<TABLE>
TABLE OF CONTENTS
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PARTIES ........................................................ 1
RECITALS OF THE COMPANY ........................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION ...................... 2
SECTION 1.1. Definitions ............................ 2
Act ............................................ 2
Additional Amounts ............................. 2
Affiliate ...................................... 2
Authenticating Agent ........................... 2
Authorized Newspaper ........................... 3
Bearer Additional Amounts ...................... 3
Bearer Security ................................ 3
Board of Directors ............................. 3
Board Resolution ............................... 3
Business Day ................................... 3
CEDEL .......................................... 3
Closing Price Per Share ........................ 4
Code ........................................... 4
Commission ..................................... 4
Common Depositary .............................. 4
Common Stock ................................... 4
common stock ................................... 4
Company ........................................ 4
Company Request ................................ 5
Company Order .................................. 5
Constituent Person ............................. 5
Conversion Agent ............................... 5
Conversion Price ............................... 5
Corporate Trust Office ......................... 5
corporation .................................... 5
coupon ......................................... 5
</TABLE>
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
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<TABLE>
<CAPTION>
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Defaulted Interest ............................ 5
Definitive Security ........................... 5
Determination Notice .......................... 5
Distribution Date ............................. 5
Dollar ........................................ 6
U.S.$ ......................................... 6
EUROCLEAR ..................................... 6
Event of Default .............................. 6
Exchange Act .................................. 6
Exchange Date ................................. 6
Holder ........................................ 6
Indenture ..................................... 6
Interest Payment Date ......................... 6
Maturity ...................................... 6
Non-electing Share ............................ 6
Officers' Certificate ......................... 6
Opinion of Counsel ............................ 7
Outstanding ................................... 7
Paying Agent .................................. 8
Person ........................................ 8
Place of Conversion ........................... 8
Place of Payment .............................. 8
Predecessor Security .......................... 8
Record Date ................................... 8
Redemption Date ............................... 8
Redemption Price .............................. 8
Registered Security ........................... 8
Regular Record Date ........................... 8
Repurchase Date ............................... 9
Repurchase Price .............................. 9
Responsible Officer ........................... 9
Restricted Securities ......................... 9
Rights ........................................ 9
Rule 144A Information ......................... 9
Securities .................................... 9
Securities Act ................................ 9
Security Register and Security Registrar ...... 9
Senior Indebtedness ........................... 9
</TABLE>
Note: This table of contents shall not, for any purpose,
be deemed to be a part of the Indenture.
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<TABLE>
<CAPTION>
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Special Record Date ........................... 9
Stated Maturity ............................... 9
Subsidiary .................................... 10
Tax Affected Security ......................... 10
Tax Law Change ................................ 10
Temporary Global Bearer Security .............. 10
Trading Days .................................. 10
Transfer Agent ................................ 10
Trustee ....................................... 11
United States ................................. 11
United States person .......................... 11
Vice President ................................ 11
Western Europe ................................ 11
SECTION 1.2. Compliance Certificates and
Opinions ............................. 11
SECTION 1.3. Form of Documents Delivered to the
Trustee .............................. 12
SECTION 1.4. Acts of Holders of Securities ........ 12
SECTION 1.5. Notices, Etc., to Trustee and
Company .............................. 14
SECTION 1.6. Notice to Holders of Securities;
Waiver ............................... 15
SECTION 1.7. Effect of Headings and Table of
Contents ............................. 17
SECTION 1.8. Successors and Assigns ............... 17
SECTION 1.9. Separability Clause .................. 17
SECTION 1.10. Benefits of Indenture ................ 17
SECTION 1.11. Governing Law ........................ 17
SECTION 1.12. Legal Holidays ....................... 17
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Forms Generally ...................... 19
SECTION 2.2. Forms of Securities .................. 19
SECTION 2.3. Form of Coupon ....................... 54
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SECTION 2.4. Form of Certificate of
Authentication ....................... 55
SECTION 2.5. Form of Conversion Notice ............ 55
SECTION 2.6. Legend on Restricted Securities ...... 58
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms ...................... 60
SECTION 3.2. Denominations ........................ 61
SECTION 3.3. Execution, Authentication,
Delivery and Dating .................. 61
SECTION 3.4. Temporary Global Security ............ 62
SECTION 3.5. Registration, Registration of
Transfer and Exchange; Restrictions on
Transfer ............................. 66
SECTION 3.6. Mutilated, Destroyed, Lost or
Stolen Securities and Coupons ........ 70
SECTION 3.7. Payment of Interest, Interest
Rights Preserved ..................... 72
SECTION 3.8. Persons Deemed Owners ................ 74
SECTION 3.9. Cancellation ......................... 74
SECTION 3.10. Computation of Interest .............. 75
SECTION 3.11. Form of Certification ................ 75
SECTION 3.12. CUSIP Numbers ........................ 77
SECTION 3.13. Notification of Withholding .......... 77
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of
Indenture ............................ 78
SECTION 4.2. Application of Trust Money ........... 79
ARTICLE FIVE
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SECTION 5.1. Events of Default .................... 81
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment ........................ 83
SECTION 5.3. Collection of Indebtedness and
Suits for Enforcement by Trustee ..... 84
SECTION 5.4. Trustee May File Proofs of Claim ..... 85
SECTION 5.5. Trustee May Enforce
Claims Without
Possession of Securities or Coupons .. 86
SECTION 5.6. Application of Money Collected ....... 86
SECTION 5.7. Limitation on Suits .................. 86
SECTION 5.8. Unconditional Right of Holders to
Receive Principal, Premium and Interest
and to Convert ....................... 87
SECTION 5.9. Restoration of Rights and Remedies ... 88
SECTION 5.10. Rights and Remedies Cumulative ....... 88
SECTION 5.11. Delay or Omission Not Waiver ......... 88
SECTION 5.12. Control by Holders of Securities ..... 88
SECTION 5.13. Waiver of Past Defaults .............. 89
SECTION 5.14. Undertaking for Costs ................ 89
SECTION 5.15. Waiver of Stay or Extension Laws ..... 90
ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and
Responsibilities ..................... 91
SECTION 6.2. Notice of Defaults ................... 92
SECTION 6.3. Certain Rights of Trustee ............ 92
SECTION 6.4. Not Responsible for Recitals or
Issuance of Securities ............... 94
SECTION 6.5. May Hold Securities, Act as Trustee
Under Other Indentures ............... 94
SECTION 6.6. Money Held in Trust .................. 95
SECTION 6.7. Compensation and Reimbursement ....... 95
SECTION 6.8. Corporate Trustee Required;
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Eligibility ......................... 96
SECTION 6.9. Resignation and Removal;
Appointment of Successor ............ 96
SECTION 6.10. Acceptance of Appointment by
Successor ........................... 98
SECTION 6.11. Merger, Conversion, Consolidation
or Succession to Business ........... 98
SECTION 6.12. Authenticating Agents ............... 99
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Consolidate, Etc., Only
on Certain Terms ..................... 101
SECTION 7.2. Successor Substituted ................ 102
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without
Consent of Holders of Securities or
Coupons ............................. 103
SECTION 8.2. Supplemental Indentures with
Consent of Holders of Securities .... 104
SECTION 8.3. Execution of Supplemental
Indentures .......................... 105
SECTION 8.4. Effect of Supplemental Indentures ... 106
SECTION 8.5. Reference in Securities to
Supplemental Indentures ............. 106
SECTION 8.6. Notice of Supplemental Indentures ... 106
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be
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Called ............................... 107
SECTION 9.2. Call, Notice and Place of Meetings ... 107
SECTION 9.3. Persons Entitled to Vote at
Meetings ............................. 107
SECTION 9.4. Quorum; Action ....................... 108
SECTION 9.5. Determination of Voting Rights;
Conduct and Adjournment of Meetings .. 109
SECTION 9.6. Counting Votes and Recording Action
of Meetings .......................... 110
ARTICLE TEN
COVENANT
SECTION 10.1. Payment of Principal, Premium and
Interest ............................. 111
SECTION 10.2. Maintenance of Offices or Agencies ... 111
SECTION 10.3. Money for Security Payments To Be
Held in Trust ........................ 113
SECTION 10.4. Additional Amounts and Bearer
Additional Amounts ................... 114
SECTION 10.5. Existence ............................ 115
SECTION 10.6. Maintenance of Properties ............ 116
SECTION 10.7. Payment of Taxes and Other Claims .... 116
SECTION 10.8. Registration and Listing ............. 116
SECTION 10.9. Statement by Officers as to
Default .............................. 117
SECTION 10.10. Delivery of Certain Information ...... 117
SECTION 10.11. Resale of Certain Securities;
Reporting Issuer ..................... 118
SECTION 10.12. Waiver of Certain Covenants .......... 118
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption .................. 119
SECTION 11.2. Applicability of Article ............. 119
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SECTION 11.3. Election to Redeem; Notice to
Trustee .............................. 119
SECTION 11.4. Selection by Trustee of Securities
to Be Redeemed ....................... 119
SECTION 11.5. Notice of Redemption ................. 120
SECTION 11.6. Deposit of Redemption Price .......... 121
SECTION 11.7. Securities Payable on Redemption
Date ................................. 122
SECTION 11.8. Registered Securities Redeemed in
Part ................................. 123
ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion
Price ................................ 124
SECTION 12.2. Exercise of Conversion Privilege ..... 124
SECTION 12.3. Fractions of Shares .................. 127
SECTION 12.4. Adjustment of Conversion Price ....... 127
SECTION 12.5. Notice of Adjustments of Conversion
Price ................................ 133
SECTION 12.6. Notice of Certain Corporate Action ... 133
SECTION 12.7. Company to Reserve Common Stock ...... 135
SECTION 12.8. Taxes on Conversions ................. 135
SECTION 12.9. Covenant as to Common Stock .......... 135
SECTION 12.10. Cancellation of Converted
Securities ........................... 135
SECTION 12.11. Provision in Case of Consolidation,
Merger or Sale of Assets ............. 135
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior
Indebtedness ......................... 137
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SECTION 13.2. No Payments in Certain
Circumstances; Payment Over of
Proceeds Upon Dissolution, Etc. ........... 138
SECTION 13.3. Notice to Trustee of Specified
Events; Reliance on Certificate of
Liquidating Agent ......................... 140
SECTION 13.4. Trustee to Effectuate
Subordination ............................. 141
SECTION 13.5. Trustee Not Charged with Knowledge
of Prohibition ............................ 141
SECTION 13.6. Trustee Not Fiduciary for Holders
of Senior Indebtedness .................... 142
SECTION 13.7. Rights of Trustee as Holder of
Senior Indebtedness; Preservation of
Trustee's Rights .......................... 142
SECTION 13.8. Article Applicable to Paying Agents ....... 142
SECTION 13.9. Certain Conversions Deemed Payment ........ 143
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase ............... 144
SECTION 14.2. Notices; Method of Exercising
Repurchase Right, Etc ..................... 145
SECTION 14.3. Certain Definitions ....................... 149
ARTICLE FIFTEEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. Company to Furnish Trustee Names
and Addresses of Holders .................. 152
SECTION 15.2. Preservation of Information ............... 152
TESTIMONIUM ........................................................ 153
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SIGNATURES AND SEALS .................................. 153
ACKNOWLEDGEMENTS ...................................... 154
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INDENTURE, dated as of October 5, 1995, between
Staples, Inc., a corporation duly organized and existing
under the laws of the State of Delaware, having its
principal office at 100 Pennsylvania Avenue, P.O. Box 9328,
Framingham, Massachusetts 01701-9328 (herein called the
"Company"), and Marine Midland Bank, a New York banking
corporation and trust company, as Trustee hereunder (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an
issue of its 4-1/2% Convertible Subordinated Debentures due
October 1, 2000 (herein called the "Securities") and the
coupons, if any, thereto appertaining, 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 and
the coupons thereto appertaining, when the Securities are
executed by the Company and authenticated and delivered
hereunder, 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.
Further, all things necessary to duly authorize the issuance
of the Common Stock of the Company issuable upon the
conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon
such conversion, 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 covenanted and agreed, for the equal and pro
portionate benefit of all Holders of the Securities and the
coupons thereto appertaining, as follows:
<PAGE> 13
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. 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 accounting terms not otherwise defined
herein have the meanings assigned to them in accordance
with generally accepted accounting principles in the
United States, 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; and
(3) 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 of a
Security, has the meaning specified in Section 1.4.
"Additional Amounts" has the meaning specified in
Section 2.2(a).
"Affiliate" of any specified Person means any
other Person directly or indirectly controlling or con
trolled by or under direct or indirect common control with
such specified Person. For the purposes of this definition,
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"control", when used with respect to any specified Person,
means the power to direct the management and policies of
such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Authenticating Agent" means any Person authorized
pursuant to Section 6.12 to act on behalf of the Trustee to
authenticate Securities.
"Authorized Newspaper" means a newspaper, in an
official language of the country of publication or in the
English language, customarily published on each Monday,
Tuesday, Wednesday, Thursday and Friday, whether or not
published on Saturdays, Sundays or holidays, and of general
circulation in the place in connection with which the term
is used or in the financial community of such place. Where
successive publications are required to be made in
Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city
meeting the foregoing requirements and in each case on any
Monday, Tuesday, Wednesday, Thursday and Friday. For
purposes of publication in London and Luxembourg, such term
shall mean the Financial Times and the Luxembourger Wort,
respectively, unless such newspapers are not available.
"Bearer Additional Amounts" has the meaning
specified in Section 2.2(a).
"Bearer Security" means any Security issued in
substantially the form set forth in Section 2.2(a).
"Board of Directors" means either the board of
directors of the Company or any committee of that board
empowered to act for it with respect to this Indenture.
"Board Resolution" means a resolution duly adopted
by the Board of Directors, a copy of which, 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
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force and effect on the date of such certification, shall
have been delivered to the Trustee.
"Business Day", when used with respect to any
Place of Payment, Place of Conversion or any other place, as
the case may be, means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in such Place of Payment, Place of Conversion
or other place, as the case may be, are authorized or
obligated by law or executive order to close; PROVIDED,
HOWEVER, that a day on which banking institutions in New
York, New York are authorized or obligated by law or
executive order to close shall not be a Business Day for
purposes of Section 13.5; PROVIDED, FURTHER, that a day on
which banking institutions in New York, New York or London,
England are authorized or obligated by law or executive
order to close shall not be a Business Day for purposes of
Sections 10.1, 10.3 or 11.6.
"CEDEL" has the meaning specified in Section 3.4.
"Closing Price Per Share" means, with respect to
the Common Stock of the Company, for any day, the reported
last sales price regular way per share or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either
case (i) on the Nasdaq National Market or, if the Common
Stock is not listed or admitted to trading on the Nasdaq
National Market, on the principal (as determined by the
Company's Board of Directors) national securities exchange
on which the Common Stock is listed or admitted to trading
or (ii) if not quoted on the Nasdaq National Market or
listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the
Company for that purpose.
"Code" has the meaning specified in Section 2.1.
"Commission" means the United States Securities
and Exchange Commission.
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"Common Depositary" has the meaning specified in
Section 3.4.
"Common Stock" means the Common Stock, par value
$.0006 per share, of the Company authorized at the date of
this instrument as originally executed. Subject to the
provisions of Section 12.11, shares issuable on conversion
of Securities shall include only shares of Common Stock or
shares of any class or classes of common stock resulting
from any reclassification or reclassifications thereof;
PROVIDED, HOWEVER, that if at any time there shall be more
than one such resulting class, the shares so issuable on
conversion of Securities shall include shares of all such
classes, and 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.
"common stock" includes any stock of any class of
capital stock 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 issuer thereof and which is not subject to
redemption by the issuer thereof.
"Company" means the Person named as the "Company"
in the first paragraph of this instrument until a successor
Person shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall
mean such successor Person.
"Company Request" or "Company Order" means a
written request or order signed in the name of the Company
by its Chairman of the Board, its Vice Chairman of the
Board, its Chief Executive Officer, its President or a Vice
President, and by its principal financial officer,
Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
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"Constituent Person" has the meaning specified in
Section 12.11.
"Conversion Agent" means any Person authorized by
the Company to convert Securities in accordance with Article
Twelve. The Company has initially appointed the Trustee as
its Conversion Agent in the Borough of Manhattan, The City
of New York, Midland Bank plc as its Conversion Agent in
London, England, and Banque Internationale # Luxembourg S.A.
as its Conversion Agent in Luxembourg.
"Conversion Price" has the meaning specified in
Section 12.1.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered (which at the
date of this Indenture is located at 140 Broadway, 12th
floor, New York, New York 10005).
"corporation" means a corporation, company,
including, without limitation, a limited liability company,
association, joint-stock company or business trust.
"coupon" means any interest coupon appertaining to
a Bearer Security.
"Defaulted Interest" has the meaning specified in
Section 3.7.
"Definitive Security" means any Security that is a
Bearer Security (other than the Temporary Global Bearer
Security) or a Registered Security.
"Determination Notice" has the meaning specified
in Section 2.2(a).
"Distribution Date" has the meaning specified in
Section 12.4(4).
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"Dollar" or "U.S.$" means a dollar or other
equivalent unit in such coin or currency of the United
States as at the time shall be legal tender for the payment
of public and private debts.
"EUROCLEAR" has the meaning specified in Section
3.4.
"Event of Default" has the meaning specified in
Section 5.1.
"Exchange Act" means the United States Securities
Exchange Act of 1934, as amended from time to time.
"Exchange Date" means the date 40 days after
October 5, 1995.
"Holder", when used with respect to any Registered
Security, means the Person in whose name the Security is
registered in the Security Register, when used with respect
to any Bearer Security or Temporary Global Bearer Security,
means the bearer thereof and, when used with respect to any
coupon, means the bearer thereof.
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity
of an installment of interest on the Securities.
"Interest Period" has the meaning specified in
Section 2.2(b).
"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, call for redemption, exercise of the
repurchase right set forth in Article Fourteen or otherwise.
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"Non-electing Share" has the meaning specified in
Section 12.11.
"Officers' Certificate" means a certificate signed
by the Chairman of the Board, a Vice Chairman of the Board,
its Chief Executive Officer, the President or a Vice
President and by the principal financial officer, the
Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for, or an employee of, the
Company and who shall be reasonably acceptable to the
Trustee.
"Outstanding", when used with respect to Secur
ities, means, as of the date of determination, all
Securities theretofore authenticated and delivered under
this Indenture, EXCEPT:
(i) Securities theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Securities for the payment or redemption of
which money in the necessary amount has been there
tofore deposited with the Trustee or any Paying Agent
(other than the Company) 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
and any coupons thereto appertaining, PROVIDED that if
such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Securities which have been paid pursuant to
Section 3.6 or in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such
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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 Outstanding Securities
are present at a meeting of Holders of Securities for quorum
purposes or have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities
owned by the Company or any other obligor upon the Secur
ities or any Affiliate of the Company or 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 determination as to the
presence of a quorum or upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be
so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other
obligor.
"Paying Agent" means any Person authorized by the
Company to pay the principal of or interest on any
Securities on behalf of the Company and, except as otherwise
specifically set forth herein, such term shall include the
Company if it shall act as its own Paying Agent. The
Company has initially appointed the Trustee as its Paying
Agent in the Borough of Manhattan, The City of New York,
Midland Bank plc, located at Mariner House, Pepys Street,
London EC3N 4DA, England, as its Paying Agent in London,
England, and Banque Internationale # Luxembourg S.A., 69
route d'Esch, L-1470 Luxembourg, as its Paying Agent in
Luxembourg.
"Person" means any individual, corporation,
partnership, joint venture, trust, estate, unincorporated
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organization or government or any agency or political
subdivision thereof.
"Place of Conversion" has the meaning specified in
Section 3.1.
"Place of Payment" has the meaning specified in
Section 3.1.
"Predecessor Security" of any particular Security
means every previous Security evidencing all or a portion of
the same debt as that evidenced by such particular Security;
and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 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.
"Record Date" means any Regular Record Date or
Special Record Date.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to
be redeemed pursuant to this Indenture.
"Registered Security" means any Security issued in
substantially the form set forth in Section 2.2(b) and
registered in the Security Register.
"Regular Record Date" for interest payable in
respect of any Registered Security on any Interest Payment
Date means the March 15 or September 15 (whether or not a
Business Day), as the case may be, next preceding such
Interest Payment Date.
"Repurchase Date" has the meaning specified in Sec
tion 14.1.
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"Repurchase Price" has the meaning specified in
Section 14.1.
"Responsible Officer", when used with respect to
the Trustee, means any officer within the Corporate Trust
Services (or any successor group) of the Trustee including
without limitation any vice president, assistant vice
president, assistant secretary, corporate trust officer,
assistant corporate trust officer or other officer of the
Trustee customarily performing functions similar to those
performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of
his knowledge and familiarity with the particular subject.
"Restricted Securities" has the meaning specified
in Section 2.6.
"Rights" has the meaning specified in Section
12.4(4).
"Rule 144A Information" has the meaning specified
in Section 10.10.
"Securities" has the meaning ascribed to it in the
first paragraph under the caption "Recitals of the Company".
"Securities Act" means the United States
Securities Act of 1933, as amended from time to time.
"Security Register" and "Security Registrar" have
the respective meanings specified in Section 3.5.
"Senior Indebtedness" has the meaning specified in
Section 13.1.
"Special Record Date" for the payment of any
Defaulted Interest means a date fixed by the Company
pursuant to Section 3.7.
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"Stated Maturity", when used with respect to any
Security or any installment of interest thereon, means the
date specified in such Security or a coupon representing
such installment of interest as the fixed date on which the
principal of such Security or such installment 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 Subsidi
aries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means
stock or other similar interests in the corporation which
ordinarily has or have voting power for the election of
directors, or persons performing similar functions, whether
at all times or only so long as no senior class of stock or
other interests has or have such voting power by reason of
any contingency.
"Tax Affected Security" means any Security held by
a non-United States person to whom Additional Amounts or
Bearer Additional Amounts have or will become payable.
"Tax Law Change" means any change in, or amendment
to, the laws (including any regulations or rulings
promulgated thereunder) of the United States or any
political subdivision or taxing authority thereof or therein
affecting taxation, or any change in, or amendment to, the
application or official interpretation of such laws,
regulations or rulings.
"Temporary Global Bearer Security" means any Secur
ity issued in substantially the form set forth in Section
2.2(c).
"Trading Days" means (i) if the Common Stock is
quoted on the Nasdaq National Market or any similar system
of automated dissemination of quotations of securities
prices, days on which trades may be effected through such
system, (ii) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which
such national
-12-
<PAGE> 24
securities exchange is open for business or (iii) if the
Common Stock is not quoted on the Nasdaq National Market
or similar system or listed or admitted to trading on any
national securities exchange, days on which the Common Stock
is traded regular way in the over-the-counter market and for
which a closing bid and a closing asked price for the Common
Stock are available.
"Transfer Agent" has the meaning specified in
Section 2.2(a). The Company has initially appointed the
Trustee as its Transfer Agent in the Borough of Manhattan,
The City of New York, Midland Bank plc as its Transfer Agent
in London, England, and Banque Internationale # Luxembourg
S.A. as its Transfer Agent in Luxembourg.
"Trustee" means the Person named as the "Trustee"
in the first paragraph of this instrument until a successor
Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"United States" has the meaning specified in Sec
tion 2.2(a).
"United States person" has the meaning specified
in Section 2.2(a).
"Vice President", when used with respect to the
Company, means any vice president, whether or not designated
by a number or a word or words added before or after the
title "vice president".
"Western Europe" means Austria, Belgium, Denmark,
France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland
and the United Kingdom.
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<PAGE> 25
SECTION 1.2. Compliance Certificates and Opinions.
------------------------------------
(a) Upon any application or request by the
Company to the Trustee or the Paying Agent in London to take
any action under any provision of this Indenture, the
Company shall furnish to the Trustee or the Paying Agent in
London, as the case may be, an Officers' Certificate stating
that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically required by any provision of this
Indenture relating to such particular application or
request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to com
pliance with a condition or covenant provided for in this
Indenture (including certificates provided for in Section
10.9) 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 such indi
vidual, 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.
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<PAGE> 26
SECTION 1.3. Form of Documents Delivered to the 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 cer
tified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion
with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representa
tions by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the cer
tificate or opinion or representations with respect to the
matters upon which such 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.
-15-
<PAGE> 27
SECTION 1.4. Acts of Holders of Securities.
-----------------------------
(a) Any request, demand, authorization, direc
tion, notice, consent, waiver or other action provided or
permitted by this Indenture to be given or taken by Holders
of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by
such Holders in person or by an agent or proxy duly
appointed in writing by such Holders or (2) the record of
Holders of Securities voting in favor thereof, either in
person or by proxies duly appointed in writing, at any
meeting of Holders of Securities duly called and held in
accordance with the provisions of Article Nine. Such action
shall become effective when such instrument or instruments
or record is delivered to the Trustee and, where it is
hereby expressly required, to the Company. The Trustee
shall promptly deliver to the Company copies of all such
instruments and records delivered to the Trustee. Such
instrument or instruments and record (and the action
embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders of Securities
signing such instrument or instruments and so voting at such
meeting. Proof of execution of any such instrument or of a
writing appointing any such agent or proxy, or of the
holding by any Person of a Security, shall be sufficient for
any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company if made
in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the
manner provided in Section 9.6.
(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 cer
tificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the
individual signing such instrument or writing acknowledged
to him the execution thereof. Where such execution is by a
signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.
-16-
<PAGE> 28
(c) The principal amount and serial number of any
Bearer Security held by any Person, and the date of his
holding the same, may be proved by the production of such
Bearer Security or by a certificate executed by any trust
company, bank, broker or other depositary, wherever situ
ated, if such certificate shall be deemed by the Trustee or
the Paying Agent in London to be satisfactory, showing that
at the date therein mentioned such Person had on deposit
with such depositary, or exhibited to it, the Bearer
Security therein described; or such facts may be proved by
the certificate or affidavit of the Person holding such
Bearer Security, if such certificate or affidavit is deemed
by the Trustee or the Paying Agent in London to be
satisfactory. The Trustee, the Paying Agent in London and
the Company may assume that any Bearer Security continues to
be held by such Person until (1) another certificate or
affidavit bearing a later date issued in respect of such
Bearer Security is produced, or (2) such Bearer Security is
produced to the Trustee or the Paying Agent in London by
some other Person, or (3) such Bearer Security is surren
dered in exchange for a Registered Security, or (4) such
Bearer Security is no longer Outstanding.
(d) The principal amount and serial number of any
Registered Security held by any Person, and the date of his
holding the same, shall be proved by the Security Register.
(e) The principal amount and serial numbers of
Bearer Securities held by the Person so executing such
instrument or writing and the date of holding the same may
also be proved in any other manner which the Paying Agent in
London deems sufficient; and the Paying Agent in London may
in any instance require further proof with respect to any of
the matters referred to in this Section 1.4.
(f) The fact and date of execution of any such
instrument or writing and the authority of the Person
executing the same may also be proved in any other manner
which the Trustee or the Paying Agent in London deems
sufficient; and the Trustee or the Paying Agent in London
may
-17-
<PAGE> 29
in any instance require further proof with respect to any of
the matters referred to in this Section 1.4.
(g) Any request, demand, authorization, direc
tion, notice, consent, election, waiver or other Act of the
Holder of any Security shall bind every future Holder of the
same Security and any coupon appertaining thereto and the
Holder of every Security or coupon 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 or coupon.
(h) The provisions of this Section 1.4 are
subject to the provisions of Section 9.5.
SECTION 1.5. Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction,
notice, consent, election, waiver or Act of Holders of
Securities or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed
with,
(1) the Trustee or the Paying Agent in
London by any Holder of Securities or by the Company
shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with
the Trustee and received at at its Corporate Trust
Office, Attention: Corporate Trust Services-Staples,
or to or with the Paying Agent in London and received
at Mariner House, Pepys Street, London ECN3 4DA,
England, Attention: Midland Securities Services, or
(2) the Company by the Trustee or by any
Holder of Securities shall be sufficient for every
purpose hereunder (unless otherwise herein expressly
provided) if in writing, mailed, first-class postage
prepaid, or telecopied and confirmed by mail, first-
class postage prepaid, or delivered by hand or
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<PAGE> 30
overnight courier, addressed to the Company at
100 Pennsylvania Avenue, P.O. Box 9328, Framingham,
Massachusetts 01701-9328, telecopy no.: (508) 370-
7805, Attention: Secretary, or at any other address
previously furnished in writing to the Trustee by the
Company.
Any request, demand, authorization, direction,
notice, consent, election or waiver required or permitted
under this Indenture shall be in the English language,
except that any published notice (other than a notice
published in Luxembourg) may be in an official language of
the country of publication.
SECTION 1.6. Notice to Holders of Securities; Waiver.
---------------------------------------
Except as otherwise expressly provided herein,
where this Indenture provides for notice to Holders of
Securities of any event,
(1) such notice shall be sufficiently given to
Holders of Bearer Securities or any Temporary Global
Bearer Security if published in an Authorized Newspaper
in the City of London, England, and, so long as the
Securities are listed on the Luxembourg Stock Exchange
and such stock exchange shall so require, in Luxembourg
or, if not practicable in either London, England, or
Luxembourg, elsewhere in any country in Western Europe,
on a Business Day at least twice, the first such
publication to be not earlier than the earliest date
and the second such publication to be not later than
the latest date herein prescribed for the giving of
such notice; and
(2) such notice shall be sufficiently given to
Holders of Registered Securities if in writing and
mailed, first-class postage prepaid, to each Holder of
a Registered Security affected by such event, at the
address of such Holder as it appears in the Security
Register, not earlier than the earliest date and not
-19-
<PAGE> 31
later than the latest date prescribed for the giving of
such notice.
Neither the failure to give notice by publication
to Holders of Bearer Securities or any Temporary Global
Bearer Security as provided above, nor any defect in any
notice so published, shall affect the sufficiency of any
notice mailed to Holders of Registered Securities as
provided above. In case by reason of the suspension of
publication of any Authorized Newspaper or Authorized
Newspapers or by reason of any other cause it shall be
impracticable to publish any notice as provided above, then
such notification as shall be given with the approval of the
Trustee, which approval shall not be unreasonably withheld,
shall constitute sufficient notice to such Holders for every
purpose hereunder.
In any case where notice to Holders of Registered
Securities is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any
particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice by
publication to Holders of Bearer Securities or any Temporary
Global Bearer Security given as provided above. 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 to Holders of
Registered Securities as shall be made with the approval of
the Trustee, which approval shall not be unreasonably with
held, shall constitute a sufficient notification to such
Holders for every purpose hereunder.
In the case of paragraph (1) of this section, such
notice shall be deemed to have been given on the date of
such publication or, if published in Authorized Newspapers
on different dates, on the date of the first such
publication.
In the case of paragraph (2) of this section, such
notice shall be deemed to have been given when such notice
is mailed.
-20-
<PAGE> 32
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 of Securities 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.
SECTION 1.7. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 1.8. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by
the Company shall bind its successors and assigns, whether
so expressed or not.
SECTION 1.9. Separability Clause.
-------------------
In case any provision in this Indenture or the
Securities or coupons shall be invalid, illegal or unenforce
able, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.10. Benefits of Indenture.
---------------------
Except as provided in the next sentence, nothing
in this Indenture or in the Securities or coupons, express
or implied, shall give to any Person, other than the parties
hereto and their successors and assigns hereunder and the
Holders of Securities and coupons, any benefit or legal or
equitable right, remedy or claim under this Indenture. The
provisions of Article Thirteen are intended to be for the
benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness.
-21-
<PAGE> 33
SECTION 1.11. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES AND COUPONS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 1.12. Legal Holidays.
--------------
In any case where any Interest Payment Date,
Redemption Date, Repurchase Date or Stated Maturity of any
Security or coupon or the last day on which a Holder of a
Security has a right to convert his Security shall not be a
Business Day at a Place of Payment or Place of Conversion,
as the case may be, then (notwithstanding any other
provision of this Indenture or of the Securities or coupons)
payment of interest or principal and premium, if any, or
delivery for conversion of such Security need not be made at
such Place of Payment or Place of Conversion, as the case
may be, on or by such day, but may be made on or by the next
succeeding Business Day at such Place of Payment or Place of
Conversion, as the case may be, with the same force and
effect as if made on the Interest Payment Date, Redemption
Date or Repurchase Date, or at the Stated Maturity or by
such last day for conversion; PROVIDED, HOWEVER, that in the
case that payment is made on such succeeding Business Day,
no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption
Date, Repurchase Date, Stated Maturity or last day for
conversion, as the case may be.
-22-
<PAGE> 34
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Forms Generally.
---------------
The Securities and the coupons shall be in substan
tially the forms set forth in this Article, with such appro
priate 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, the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations thereunder, or as may,
consistently herewith, be determined by the officers
executing such Securities and coupons, as evidenced by their
execution thereof.
The Trustee's certificates of authentication shall
be in substantially the form set forth in Section 2.4.
Conversion notices shall be in substantially the
form set forth in Section 2.5.
Registered Securities that are Restricted
Securities shall bear the legend required by Section 2.6.
The Temporary Global Security may be printed,
lithographed, typewritten, mimeographed or otherwise
produced, as determined by the officers of the Company
executing such Security, as evidenced by their execution
thereof. The format and spacing of the text of a Definitive
Security may be varied to facilitate such production.
The Definitive Securities and coupons shall be
printed, lithographed or engraved or produced by any combina
tion 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,
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<PAGE> 35
all as determined by the officers executing such Securities
and coupons, as evidenced by their execution thereof.
SECTION 2.2. Forms of Securities.
-------------------
(a) Form of Bearer Security
[FORM OF FACE]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
AND 1287(a) OF THE INTERNAL REVENUE CODE.
STAPLES, INC.
4-1/2% CONVERTIBLE SUBORDINATED DEBENTURE
DUE OCTOBER 1, 2000
No. B-_____________ U.S.$5,000
ISIN No. XS0060364659
STAPLES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein
called the "Company", which term includes any successor
Person under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to
bearer upon presentation and surrender of this Security the
principal sum of Five Thousand United States Dollars on
October 1, 2000 and to pay interest thereon, from October 5,
1995, or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly
provided for, semi-annually in arrears on April 1 and
October 1 in each year (an "Interest Payment Date"),
commencing April 1, 1996, at the rate of 4-1/2% per annum,
until the principal hereof is due, and at the rate of 4-1/2%
per annum on any overdue principal and, to the extent
permitted by law, on any overdue interest. Such payments
shall be made, subject to any laws or regulations applicable
thereto and to the right of the Company (limited as provided
-24-
<PAGE> 36
in the Indenture) to terminate the appointment of any such
Paying Agent, at the option of the Holder at (a) the office
of Midland Bank plc, Mariner House, Pepys Street, London
EC3N 4DA, England and (b) the office of Banque
Internationale # Luxembourg S.A., 69, route d'Esch, L-1470
Luxembourg, or at such other offices or agencies outside the
United States (as defined below) as the Company may
designate, at the option of the Holder by United States
Dollar check drawn on a bank in the Borough of Manhattan,
The City of New York or by transfer of United States Dollars
to an account maintained by the payee with a bank located
outside the United States (such transfers to be made only to
Holders of an aggregate principal amount of Securities in
excess of U.S.$2,000,000 provided that such Holder shall
have furnished wire instructions in writing to the Paying
Agent in London by no later than 15 days prior to the
relevant payment date). Interest on this Security due on or
before Maturity shall be payable only upon presentation and
surrender at such an office or agency of the interest
coupons hereto attached as they severally mature. No
payment of principal of, premium, if any, or interest on,
including Additional Amounts and Bearer Additional Amounts
(in each case, as defined below) with respect to, this
Security shall be made at the Corporate Trust Office of the
Trustee under the Indenture referred to on the reverse
hereof or at any other office or agency of the Company in
the United States or by check mailed to any address in the
United States or by transfer to an account maintained with a
bank located in the United States; PROVIDED, HOWEVER, that
payment of principal of, premium, if any, or interest on
this Security and payment of any such Additional Amounts or
Bearer Additional Amounts may be made at the office of the
Paying Agent in the Borough of Manhattan, The City of New
York, if (but only if) payment of the full amount of such
principal, premium, if any, interest, Additional Amounts or
Bearer Additional Amounts, as the case may be, at all
offices outside the United States maintained for such
purpose by the Company in accordance with the Indenture is
illegal or effectively precluded by exchange controls or
other similar restrictions on the full payment or receipt of
such amounts in United States Dollars, as determined by the
Company.
-25-
<PAGE> 37
The Company will pay to the Holder of this
Security or any coupon appertaining hereto who is not a
United States person (as defined below) such additional
amounts ("Additional Amounts") as may be necessary in order
that every net payment of the principal of, premium, if any,
and interest on this Security (including payment on
redemption or repurchase), after deduction or withholding
for or on account of any present or future tax, assessment
or governmental charge imposed upon or as a result of such
payment by the United States or any political subdivision or
taxing authority thereof or therein, will not be less than
the amount provided for in this Security or in such coupon
to be then due and payable; PROVIDED, HOWEVER, that the
foregoing obligation to pay Additional Amounts will not
apply to:
(a) any tax, assessment or other governmental
charge which would not have been so imposed but for
(i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor,
beneficiary, member, shareholder of or possessor of a
power over such Holder, if such Holder is an estate, a
trust, a partnership or a corporation) and the United
States or any political subdivision or taxing authority
thereof or therein, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) being or having been
a citizen or resident of the United States or treated
as a resident thereof, or being or having been engaged
in trade or business or present therein, or having or
having had a permanent establishment therein, or (ii)
such Holder's present or former status as a personal
holding company, a foreign personal holding company
with respect to the United States, a controlled foreign
corporation, a passive foreign investment company, or a
foreign private foundation or foreign tax exempt entity
for United States tax purposes, or a corporation which
accumulates earnings to avoid United States Federal
income tax;
-26-
<PAGE> 38
(b) any tax, assessment or other governmental
charge which would not have been so imposed but for the
presentation by the Holder of this Security or any
coupon appertaining hereto for payment on a date more
than 15 days after the date on which such payment
became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales,
transfer, personal property or similar tax, assessment
or governmental charge;
(d) any tax, assessment or other governmental
charge which would not have been imposed but for the
failure to comply with any certification,
identification or other reporting requirements
concerning the nationality, residence, identity or
connection with the United States of the Holder or
beneficial owner of this Security or any coupon
appertaining hereto, if compliance is required by
statute or by regulation or ruling of the United States
Treasury Department as a precondition to exemption from
such tax, assessment or other governmental charge;
(e) any tax, assessment or other governmental
charge which is payable otherwise than by deduction or
withholding from payments of principal of, premium, if
any, or interest on this Security;
(f) any tax, assessment or other governmental
charge imposed as a result of a Person's past or
present actual or constructive ownership, including by
virtue of the right to convert Securities, of 10% or
more of the total combined voting power of all classes
of stock of the Company entitled to vote;
(g) any tax, assessment or other governmental
charge required to be withheld by any Paying Agent from
any payment of the principal of, premium, if any, or
interest on this Security, if such payment can be made
-27-
<PAGE> 39
without such withholding by any other Paying Agent in
Western Europe;
(h) any tax, assessment or other governmental
charge imposed on a Holder that is a partnership or a
fiduciary, but only to the extent that any beneficial
owner or member of the partnership or beneficiary or
settlor with respect to the fiduciary would not have
been entitled to the payment of Additional Amounts had
the beneficial owner, member, beneficiary or settlor
directly received its beneficial or distributive share
of payments on this Security;
(i) any tax, assessment or other governmental
charge which would not have been imposed but for the
fact that this Security constitutes a "United States
real property interest", as defined in Section
897(c)(1) of the United States Internal Revenue Code of
1986, as amended, and the regulations thereunder, with
respect to the beneficial owner of this Security; or
(j) any combination of items (a), (b), (c), (d),
(e), (f), (g), (h) and (i).
For purposes of this Security, "United States"
means the United States of America (including the States and
the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction (its
"possessions" including Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands), and "United States person" is a Person
that is, for United States Federal income tax purposes,
(a) a citizen or resident of the United States, (b) a
corporation, partnership or other entity created or
organized in or under the laws of the United States or any
political subdivision thereof or (c) an estate or trust the
income of which is subject to United States Federal income
taxation regardless of source.
Notwithstanding the foregoing, if and so long as a
certification, identification or other information reporting
requirement referred to in the fourth paragraph of the
-28-
<PAGE> 40
reverse hereof would be fully satisfied by payment of a
backup withholding tax or similar charge, the Company may
elect, by so stating in the Determination Notice (as defined
on the reverse hereof), to have the provisions of this
paragraph apply in lieu of redeeming this Security pursuant
to such fourth paragraph. In such event, the Company will
pay as additional amounts ("Bearer Additional Amounts") such
amounts as may be necessary so that every net payment made,
following the effective date of such requirements, outside
the United States by the Company or any Paying Agent of
principal and premium, if any, due in respect of this
Security, or interest represented by any coupon, the benefi
cial owner of which is not a United States person (but
without any requirement that the nationality, residence or
identity of such beneficial owner be disclosed to the
Company, any Paying Agent or any governmental authority),
after deduction or withholding for or on account of such
backup withholding tax or similar charge, other than a
backup withholding tax or similar charge which is (a) the
result of a certification, identification or information
reporting requirement described in the first parenthetical
clause of such fourth paragraph, (b) imposed as a result of
the fact that the Company or any Paying Agent has actual
knowledge that the beneficial owner of this Security or such
coupon is within the category of Persons described in
clause (a) of the second preceding paragraph or (c) imposed
as a result of presentation of this Security or such coupon
for payment more than 15 days after the date on which such
payment becomes due and payable or on which payment thereof
is duly provided for, whichever occurs later, will not be
less than the amount provided for in this Security or such
coupon to be then due and payable.
Except as specifically provided herein and in the
Indenture, the Company shall not be required to make any pay
ment with respect to any tax, assessment or other govern
mental charge imposed by any government or any political
subdivision or taxing authority thereof or therein.
Whenever in this Security there is a reference, in any
context, to the payment of the principal of, premium, if
any, or interest on, or in respect of, any Security or any
coupon appertaining
-29-
<PAGE> 41
thereto, such mention shall be deemed to include mention of
the payment of Additional Amounts and Bearer Additional
Amounts payable pursuant to the first and third preceding
paragraphs, respectively, to the extent that, in such
context, such Additional Amounts or Bearer Additional
Amounts, as the case may be, are, were or would be payable
in respect of this Security pursuant to such para graphs,
and express mention of the payment of such Additional
Amounts or Bearer Additional Amounts (if applicable), as the
case may be, in any provisions of this Security shall not be
construed as excluding such Additional Amounts or Bearer
Additional Amounts, as the case may be, in those provisions
of this Security where such express mention is not made.
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.
-30-
<PAGE> 42
Unless the certificate of authentication hereon
has been executed by the Trustee referred to on the reverse
hereof or its Authenticating Agent by the manual signature
of one of its authorized signatories, neither this Security,
nor any coupon appertaining hereto, shall be entitled to any
benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
Security to be duly executed under its corporate seal and
coupons bearing the facsimile signature of its Treasurer to
be annexed hereto.
Dated as of October 5, 1995
STAPLES, INC.
[Corporate Seal]
By:__________________________
Name:
Title:
Attest:
________________________
Name:
Title:
[FORM OF REVERSE]
This Security is one of a duly authorized issue of
securities of the Company designated as its "4-1/2% Conver
tible Subordinated Debentures due October 1, 2000" (herein
called the "Securities"), limited in aggregate principal
amount to U.S.$300,000,000, issued and to be issued under an
-31-
<PAGE> 43
Indenture, dated as of October 5, 1995 (herein called the
"Indenture"), between the Company and Marine Midland Bank,
as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Indebtedness
and the Holders of the Securities and any coupons
appertaining thereto and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Securities are issuable as Bearer Securities, with
interest coupons attached, in the denomination of U.S.$5,000
and as Registered Securities, without coupons, in
denominations of (a) U.S.$100,000 and integral multiples of
U.S.$1,000 in excess thereof if such Registered Securities
are Restricted Securities; and (b) U.S.$5,000 and integral
multiples of U.S.$1,000 in excess thereof if such Registered
Securities are not Restricted Securities. As provided in
the Indenture and subject to certain limitations therein set
forth, Bearer Securities are exchangeable for a like
aggregate principal amount of Registered Securities of any
authorized denominations as requested by the Holder
surrendering the same upon surrender of the Security or
Securities to be exchanged, with all unmatured coupons and
all matured coupons in default thereto appertaining, except
as provided below, (a) at the Corporate Trust Office of the
Trustee or at such other office or agency of the Company as
may be designated by it for such purpose in The City of New
York or (b) subject to any laws or regulations applicable
thereto and to the right of the Company to terminate the
appointment of any Transfer Agent (as defined below),
(i) the office of Midland Bank plc, Mariner House, Pepys
Street, London EC3N 4DA, England or (ii) the office of
Banque Internationale # Luxembourg S.A., 69, route d'Esch, L-
1470 Luxembourg, or at such other offices or agencies
outside the United States as the Company may designate (each
a "Transfer Agent"); PROVIDED, HOWEVER, that such surrender
may be made at the Corporate Trust Office of the Trustee in
the Borough of Manhattan, The City of New York, if (but only
if) such surrender at all offices outside the United States
maintained for such purpose by the Company
-32-
<PAGE> 44
in accordance with the Indenture is illegal or effectively
precluded by exchange controls or other similar restrictions.
Bearer Securities surrendered in exchange for Registered
Securities between a Record Date and the relevant Interest
Payment Date or date for payment of Defaulted Interest will
not be required to be surrendered with the coupon relating to
such Interest Payment Date or date for payment of Defaulted
Interest. Bearer Securities may not be issued in exchange
for Registered Securities.
No sinking fund is provided for the Securities.
The Securities are subject to redemption at the option of the
Company at any time on or after October 1, 1998, in whole or
in part, upon not less than 20 nor more than 60 days' notice
to the Holders prior to the Redemption Date, at the following
Redemption Prices (expressed as percentages of the principal
amount): If redeemed during the 12-month period beginning
October 1 of the years indicated,
-33-
<PAGE> 45
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----
<S> <C>
1998 101.8%
1999 100.9%
</TABLE>
together, in each case, with accrued interest to the
Redemption Date, and Securities held by non-United States
persons and Bearer Securities are also redeemable in whole
but not in part, under the circumstances described in the
next two succeeding paragraphs, respectively, at a Redemption
Price equal to 100% of the principal amount thereof plus
interest accrued to the Redemption Date; PROVIDED, HOWEVER,
that interest installments on Bearer Securities whose Stated
Maturity is on or prior to such Redemption Date will be
payable only upon presentation and surrender of coupons for
such interest (at an office or agency outside the United
States except as herein provided otherwise).
-34-
<PAGE> 46
If as a result of a Tax Law Change, the Company has
or will become obligated to pay to the Holder of any Security
or coupon Additional Amounts, as described in the second
paragraph of the face of this Security, and such obligation
cannot be avoided by the Company taking reasonable measures
available to it, then the Company may, at its option, redeem
the Tax Affected Securities as a whole, but not in part, upon
not less than 20 nor more than 60 days' notice to the Holders
prior to the Redemption Date, at a Redemption Price equal to
100% of the principal amount plus interest accrued to the
Redemption Date, and any Additional Amounts then payable;
PROVIDED, that (i) no such notice of redemption shall be
given earlier than 90 days prior to the earliest date on
which the Company would be obligated to pay any such Addi
tional Amounts were a payment in respect of the Tax Affected
Securities then due and (ii) at the time such notice of
redemption is given, such obligation to pay such Additional
Amounts remains in effect. Prior to the publication of any
notice of redemption pursuant to this paragraph, the Company
shall deliver to the Trustee (a) an Officers' Certificate
stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing
that the conditions precedent to the right of the Company so
to redeem have occurred and (b) an Opinion of Counsel
selected by the Company to the effect that the Company has or
will become obligated to pay such Additional Amounts as a
result of such Tax Law Change. The Company's right to redeem
the Tax Affected Securities shall continue as long as the
Company is obligated to pay such Additional Amounts, notwith
standing that the Company shall have made payments of
Additional Amounts specified in such second paragraph.
-35-
<PAGE> 47
In addition, if the Company determines, based upon
an Opinion of Counsel, which counsel shall be reasonably
acceptable to the Trustee, that, as a result of a Tax Law
Change, any payment made outside the United States by the
Company or any of its Paying Agents of the full amount of
principal, premium, if any, or interest due with respect to
any Bearer Security or coupon appertaining thereto would be
subject to any certification, identification or other
information reporting requirement of any kind, the effect of
which requirement is the disclosure to the Company, any
Paying Agent or any governmental authority of the
nationality, residence or identity of a beneficial owner of
such Bearer Security or coupon who is not a United
States person (other than such a requirement (a) which would
not be applicable to a payment made by the Company or any one
of its Paying Agents (i) directly to the beneficial owner or
(ii) to any custodian, nominee or other agent of the
beneficial owner, (b) which can be satisfied by the
custodian, nominee or other agent certifying that such
beneficial owner is not a United States person, PROVIDED
that, in each case referred to in clauses (a)(ii) and (b),
payment by such custodian, nominee or agent to such
beneficial owner is not otherwise subject to any such
requirement, or (c) which would not be applicable but for the
fact that such Bearer Security constitutes a "United States
real property interest," as defined in Section 897(c)(1) of
the United States Internal Revenue Code of 1986, as amended,
with respect to the beneficial owner of such Bearer
Security), the Company at its election will either (x) redeem
the Bearer Securities, as a whole but not in part, upon not
less than 20 nor more than 60 days' notice prior to the
Redemption Date, at a Redemption Price equal to 100% of the
principal amount thereof plus interest accrued to the
Redemption Date, or (y) if and so long as the conditions of
the fourth paragraph on the face hereof are satisfied, pay
the Bearer Additional Amounts specified in such paragraph.
The Company will make such determination and election and
notify the Trustee and the Paying Agent in London, England,
thereof in writing as soon as practicable, and the Trustee
will promptly give notice of such determination in the manner
provided in the second following paragraph (the
"Determination Notice"), in each case stating the effective
date of such certification, identification or
-36-
<PAGE> 48
information reporting requirement, whether the Company will
redeem the Bearer Securities or will pay the Bearer
Additional Amounts specified in the fourth paragraph on the
face hereof and (if applicable) the last date by which the
redemption of the Bearer Securities must take place. If the
Company elects to redeem the Bearer Securities pursuant to
clause (x) above, such redemption shall take place on a date,
not later than one year after the publication of the
Determination Notice, as the Company elects by notice
in writing to the Trustee and the Paying Agent in London at
least 75 days before the Redemp tion Date, unless shorter
notice is acceptable to the Trustee. Notwithstanding the
foregoing, the Company will not so redeem the Bearer
Securities if the Company, based upon an Opinion of Counsel
which counsel shall be reasonably acceptable to the Trustee,
subsequently determines, not less than 30 days prior to the
Redemption Date, that subsequent payments would not be
subject to any such requirement, in which case the Company
will notify the Trustee in writing of its determination not
to so redeem the Securities, and the Trustee will promptly
give notice to the Holders of the Bearer Securities of that
determination and any earlier redemption notice will
thereupon be revoked and of no further effect. If the
Company elects as provided in clause (y) above to pay Bearer
Additional Amounts, the Company may, as long as the Company
is obligated to pay such Bearer Additional Amounts,
subsequently redeem the Bearer Securi ties, at any time, as
a whole but not in part, upon not less than 20 nor more than
60 days' notice prior to the Redemption Date, at a
Redemption Price equal to 100% of the principal amount
thereof plus interest accrued to the Redemption Date, and
any Additional Amounts or Bearer Additional Amounts.
-37-
<PAGE> 49
In the event of a redemption of less than all of
the Securities, the Company will not be required (a) to
register the transfer or exchange of Registered Securities or
to exchange Bearer Securities for Registered Securities for a
period of 15 days immediately preceding the date notice is
given identifying the serial numbers of the Securities called
for such redemption, (b) to register the transfer or exchange
of any Registered Security, or portion thereof, called for
redemption, or (c) to exchange any Bearer Security called for
redemption; PROVIDED, HOWEVER, that a Bearer Security called
for redemption may be exchanged for a Registered Security
which is simultaneously surrendered to the Registrar or
Transfer Agent making such exchange with written instructions
for conversion consistent with the provisions described in
Sections 2.5 and 12.2 of the Indenture.
Notice of redemption will be given by publication
in Authorized Newspapers in the City of London, England, and,
so long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such stock exchange shall so
require, in Luxembourg, or, if not practicable in either
London, England, or Luxembourg, elsewhere in any country in
Western Europe. Notice to the Holders will be given at least
twice not less than 20 nor more than 60 days prior to the
Redemption Date as provided in the Indenture.
-38-
<PAGE> 50
In any case where the due date for the payment of
the principal, premium, if any, of or interest, including
Additional Amounts and Bearer Additional Amounts, on any
Security or the last day on which a Holder of a Security has
a right to convert his Security shall be, at any Place of
Payment or Place of Conversion, as the case may be, a day on
which banking institutions at such Place of Payment or Place
of Conversion are authorized or obligated by law or executive
order to close, then payment of principal, premium, if any,
or interest, including Additional Amounts and Bearer
Additional Amounts, or delivery for conversion of such
Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such
place which is not a day on which banking institutions are
authorized or obligated by law or executive order to close,
with the same force and effect as if made on the date for
such payment or the date fixed for redemption or repurchase,
or by such last day for conversion, and no interest shall
accrue on the amount so payable for the period after such
date.
-39-
<PAGE> 51
Subject to and upon compliance with the provisions
of the Indenture, the Holder of this Security is entitled, at
his option, at any time on or after January 3, 1996 and on or
before the close of business on October 1, 2000, or in case
this Security is called for redemption or the Holder hereof
has exercised his right to require the Company to repurchase
this Security, then in respect of this Security until and
including, but (unless the Company defaults in making the
payment due upon redemption or repurchase, as the case may
be) not after, the close of business on the fifth Trading Day
prior to the Redemption Date or the second Trading Day prior
to the Repurchase Date, as the case may be, to convert this
Security into fully paid and nonassessable shares of Common
Stock of the Company at an initial Conversion Price of
U.S. $33 for each share of Common Stock (or at the current
adjusted Conversion Price if an adjustment has been made as
provided in the Indenture) by surrender of this Security,
together with all coupons appertaining hereto that mature
after the date of conversion, and also the conversion notice
hereon, duly executed to the Company, subject to any laws or
regulations applicable thereto and subject to the right of
the Company to terminate the appointment of any Conversion
Agent (as defined below), at (a) the office of Midland Bank
plc, Mariner House, Pepys Street, London EC3N 4DA, England
and (b) the office of Banque Internationale a Luxembourg
S.A., 69 route d 'Esch, L-1470 Luxembourg, or at such other
offices or agencies outside the United States as the Company
may designate (each a "Conversion Agent"); PROVIDED, HOWEVER,
that such surrender for conversion may be made at the
Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York, if (but only if) such
surrender for conversion at all offices outside the United
States maintained for such purpose by the Company in
accordance with the Indenture is illegal or effectively
precluded by exchange controls or other similar restrictions.
Subject to the aforesaid requirement to surrender coupons and
except as provided in the Indenture, no cash payment or
adjustment is to be made on conversion, if the date of
conversion is not an Interest Payment Date, for interest
accrued hereon from the Interest Payment Date next preceding
the date of conversion, or for dividends on the Common Stock
issued on conversion
-40-
<PAGE> 52
hereof. The Company shall thereafter deliver to the Holder
the fixed number of shares of Common Stock (together with
any cash adjustment, as provided in the Indenture) into
which this Security is convertible and such delivery will
be deemed to satisfy the Company's obligation to pay the
principal amount of this Security. No fractions of shares
or scrip representing fractions of shares will be issued
on conversion, but instead of any fractional interest
(calculated to the nearest 1/100th of a share) the Company
shall pay a cash adjustment as provided in the Indenture.
The Conversion Price is subject to adjustment as provided in
the Indenture. In addition, the Indenture provides that in
case of certain consolidations or mergers to which the
Company is a party or the transfer of all or substantially
all of the assets of the Company, the Indenture shall be
amended, without the consent of any Holders of Securities, so
that this Security, if then Outstanding, will be convertible
thereafter, during the period this Security shall be
convertible as specified above, only into the kind and amount
of securities, cash and other property receivable upon such
consolidation, merger or transfer by a holder of the number
of shares of Common Stock of the Company into which this
Security could have been converted immediately prior to such
consolidation, merger or transfer (assuming such holder of
Common Stock is not a Constituent Person, failed to exercise
any rights of election and received per share the kind and
amount received per share by a plurality of Non-electing
Shares and further assuming, if such consolidation, merger or
transfer occurs prior to the later of January 3, 1996 and the
receipt of Securities in definitive form (in the case of
Securities initially represented by a Temporary Global Bearer
Security), that the Security was convertible at the time of
such occurrence at the Conversion Price specified above as
adjusted from the issue date of such Security to such time as
provided in the Indenture). No adjustment in the Conversion
Price will be made until such adjustment would require an
increase or decrease of at least one percent of such price,
PROVIDED that any adjustment that would otherwise be made
will be carried forward and taken into account in the
computation of any subsequent adjustment.
-41-
<PAGE> 53
Subject to certain limitations in the Indenture, at
any time when the Company is not subject to Section 13 or
15(d) of the United States Securities Exchange Act of 1934,
as amended, upon the request of a Holder of a Restricted
Security or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or
cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such holder
of shares of Common Stock issued upon conversion of
Restricted Securities, or to a prospective purchaser of any
such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by
any such Holder or holder with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities
Act"), in connection with the resale of any such security.
"Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto).
-42-
<PAGE> 54
If a Change in Control occurs, the Holder of this
Security shall have the right, in accordance with the
provisions of the Indenture, to require the Company to
repurchase this Security at a Repurchase Price equal to 100%
of the principal amount plus accrued interest to the
Repurchase Date; PROVIDED, HOWEVER, that interest
installments on Bearer Securities whose Stated Maturity is on
or prior to such Repurchase Date will be payable only upon
presentation and surrender of coupons for such interest (at
an office or agency outside the United States except as
herein provided otherwise). At the option of the Company,
the Repurchase Price may be paid in cash or, except as
otherwise provided in the Indenture, by delivery of shares of
Common Stock having a fair market value equal to the
Repurchase Price; PROVIDED that payment may not be made in
Common Stock unless at the time of payment such stock is
listed on a national securities exchange or quoted on the
Nasdaq National Market. For purposes of this paragraph, the
fair market value of shares of Common Stock shall be equal to
95% of the average of the Closing Prices Per Share for the
five consecutive Trading Days ending on and including the
third Trading Day immediately preceding the Repurchase Date.
Whenever in this Security there is a reference, in any
context, to the principal of any Security as of any time,
such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase
Price in any provision of this Security shall not be
construed as excluding the Repurchase Price in those
provisions of this Security when such express mention is not
made.
-43-
<PAGE> 55
The indebtedness evidenced by this Security and any
coupons appertaining hereto is, to the extent and in the
manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of all Senior
Indebtedness of the Company, and this Security is issued
subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security or any coupon apper
taining to 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 contin
uing, the principal of all the Securities, together with
accrued interest to the date of declaration, may be declared
due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal
so declared due and payable, together with accrued interest
to the date of declaration, and (ii) of interest on any
overdue principal and overdue interest, all of the Company's
obligations in respect of the payment of the principal of and
interest on the Securities shall terminate.
-44-
<PAGE> 56
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 and coupons under the
Indenture at any time by the Company and the Trustee with
either (a) the written consent of the Holders of a majority
in principal amount of the Securities at the time Out
standing, or (b) by the adoption of a resolution, at a
meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of 66-2/3% in principal
amount of the Outstanding Securities represented and entitled
to vote at such meeting. The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the Securities at the time Outstanding,
on behalf of the Holders of all the Securities and coupons,
to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and
any coupon appertaining hereto and of any Security issued in
exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security or such
other Security.
-45-
<PAGE> 57
As provided in and subject to the provisions of the
Indenture, the Holder of this Security or any coupon apper
taining hereto shall not have the right to institute any
proceeding with respect to the Indenture or for the appoint
ment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default,
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 as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of the Securities
Outstanding a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Security or any coupon apper
taining hereto for the enforcement of any payment of
principal hereof, premium, if any, or interest hereon
(including any Additional Amounts and Bearer Additional
Amounts) on or after the respective due dates expressed
herein or for the enforcement of the right to convert this
Security as provided in the Indenture.
No reference herein to the Indenture and no provi
sion 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, premium, if any, and
interest on (including Additional Amounts and Bearer
Additional Amounts, as described in the second and fourth
paragraph, respectively, on the face hereof) this Security at
the times, places and rate, and in the coin or currency,
herein prescribed or to convert this Security as provided in
the Indenture.
-46-
<PAGE> 58
Title to this Security and the coupons appertaining
hereto shall pass by delivery. The Company, the Trustee and
any agent of the Company or the Trustee may treat the bearer
of this Security and any coupon appertaining thereto as the
owner thereof for all purposes, whether or not this Security
or such coupon be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the
contrary.
THE INDENTURE, THE SECURITIES AND ANY COUPONS
APPERTAINING THERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED
STATES OF AMERICA, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
All terms used in this Security which are defined
in the Indenture shall have the meanings assigned to them in
the Indenture.
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the
undersigned hereby elects to have this Security repurchased
by the Company.
2. The undersigned hereby directs the Paying Agent
in London to pay bearer an amount in cash or, at the
Company's election, shares of Common Stock equal to 100% of
the principal amount hereof, plus interest accrued to the
Repurchase Date, as provided in the Indenture.
Dated: _______________________ ________________________
Signature
(b) Form of Registered Security
[FORM OF FACE]
-47-
<PAGE> 59
[THE FOLLOWING LEGENDS (THE "RULE 144A LEGEND") SHALL APPEAR
ON THE FACE OF EACH RESTRICTED SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURI
TIES ACT"), AND THIS SECURITY AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON ITS CONVERSION MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLI
CABLE EXEMPTION THEREFROM. THIS SECURITY MAY ONLY BE SOLD IN
ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE
FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT
OF STAPLES, INC. (THE "COMPANY") THAT (A) THIS SECURITY AND
ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE
PROVISIONS OF RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (III) IN THE CASE OF ANY PURCHASER OTHER THAN A
PURCHASER WHO HAS OTHERWISE AGREED WITH THE COMPANY IN
WRITING, TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(A) UNDER THE SECURITIES ACT IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, OR (IV) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), AND IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE
STATES AND OTHER JURISDICTIONS OF THE UNITED STATES, AND THAT
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY AND ANY COMMON
STOCK ISSUABLE UPON ITS CONVERSION FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
-48-
<PAGE> 60
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE
UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE
RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER
TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY
CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION
THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER
OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS
SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE
ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE
AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]
STAPLES, INC.
4-1/2% CONVERTIBLE SUBORDINATED DEBENTURE
DUE OCTOBER 1, 2000
No. R-_____________ U.S.$_____
CUSIP No. ____________
STAPLES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein
called the "Company", which term includes any successor
Person under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to
_______________, or registered assigns, the principal sum of
_____________ United States Dollars on October 1, 2000 and to
pay interest thereon, from October 5, 1995, or from the most
recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, semi-annually in
arrears on April 1 and October 1 in each year (the "Interest
Payment Date"), commencing April 1, 1996, at the rate of
4-1/2% per annum, until the principal hereof is due, and at
the rate of 4-1/2% per annum on any overdue principal and
premium, if any, and, to the extent permitted by law, on any
overdue interest. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will,
as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is
registered at the
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close of business on the Regular Record Date for such
interest, which shall be the March 15 or September 15
(whether or not a Business Day) next preceding such
Interest Payment Date. Except as otherwise provided in the
Indenture, 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 Registered 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 the
Indenture. Payments of principal shall be made upon the
surrender of this Security at the option of the Holder at
the Corporate Trust Office of the Trustee, or at such other
office or agency of the Company as may be designated
by it for such purpose in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for
the payment of public and private debts, or at such other
offices or agencies as the Company may designate, by
United States Dollar check drawn on, or transfer to
a United States Dollar account (such transfers to be made
only to Holders of an aggregate principal amount of Securities in
excess of U.S.$2,000,000, PROVIDED that such Holder shall have
furnished wire instructions in writing to the Trustee no
later than 15 days prior to the relevant payment date)
maintained by the payee with, a bank in the Borough of Manhattan,
The City of New York. Payment of interest on this Security may be
made by United States Dollar check drawn on a bank in the
Borough of Manhattan, The City of New York mailed to the address
of the Person entitled thereto as such address shall appear in
the Security Register, or, upon written application by the Holder
to the Security Registrar setting forth wire instructions not
later than the relevant Record Date, by transfer to a United
States Dollar account (such transfers to be made only to
Holders of an aggregate principal
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amount of Securities in excess of U.S.$2,000,000 provided
that such Holder shall have furnished wire instructions in
writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the payee with a bank
in the Borough of Manhattan, The City of New York.
The Company will pay to the Holder of this Security
who is not a United States person (as defined below) such
additional amounts ("Additional Amounts") as may be necessary
in order that every net payment of the principal of, premium,
if any, and interest on this Security (including payment on
redemption or repurchase), after deduction or withholding for
or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such
payment by the United States or any political subdivision or
taxing authority thereof or therein, will not be less than
the amount provided for in this Security to be then due and
payable; PROVIDED, HOWEVER, that the foregoing obligation to
pay Additional Amounts will not apply to:
(a) any tax, assessment or other governmental
charge which would not have been so imposed but for
(i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor,
beneficiary, member, shareholder of or possessor of a
power over such Holder, if such Holder is an estate, a
trust, a partnership or a corporation) and the United
States or any political subdivision or taxing authority
thereof or therein, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen
or resident of the United States or treated as a
resident thereof, or being or having been engaged in
trade or business or present therein, or having or
having had a permanent establishment therein, or (ii)
such Holder's present or former status as a personal
holding company, a foreign personal holding company with
respect to the United States, a controlled foreign
corporation, a passive foreign investment company, or a
foreign private foundation or foreign tax exempt entity
for United States tax purposes, or a corporation which
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<PAGE> 63
accumulates earnings to avoid United States Federal
income tax;
(b) any tax, assessment or other governmental
charge which would not have been so imposed but for the
presentation by the Holder of this Security for payment
on a date more than 15 days after the date on which such
payment became due and payable or the date on which pay
ment thereof is duly provided for, whichever occurs
later;
(c) any estate, inheritance, gift, sales,
transfer, personal property or similar tax, assessment
or governmental charge;
(d) any tax, assessment or other governmental
charge which would not have been imposed but for the
failure to comply with any certification, identification
or other reporting requirements concerning the national
ity, residence, identity or connection with the United
States of the Holder or beneficial owner of this
Security, if compliance is required by statute or by
regulation or ruling of the United States Treasury
Department as a precondition to exemption from such tax,
assessment or other governmental charge;
(e) any tax, assessment or other governmental
charge which is payable otherwise than by deduction or
withholding from payments of principal of, premium, if
any, or interest on this Security;
(f) any tax, assessment or other governmental
charge imposed as a result of a Person's past or present
actual or constructive ownership, including by virtue of
the right to convert Securities, of 10% or more of the
total combined voting power of all classes of stock of
the Company entitled to vote;
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<PAGE> 64
(g) any tax, assessment or other governmental
charge required to be withheld by any Paying Agent from
any payment of the principal of, premium, if any, or
interest on this Security, if such payment can be made
without such withholding by any other Paying Agent in
Western Europe;
(h) any tax, assessment or other governmental
charge imposed on a Holder that is a partnership or a
fiduciary, but only to the extent that any beneficial
owner or member of the partnership or beneficiary or
settlor with respect to the fiduciary would not have
been entitled to the payment of Additional Amounts had
the beneficial owner, member, beneficiary or settlor
directly received its beneficial or distributive share
of payments on this Security;
(i) any tax, assessment or other governmental
charge which would not have been imposed but for the
fact that this Security constitutes a "United States
real property interest", as defined in Section 897(c)(1)
of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder, with respect to
the beneficial owner of this Security; or
(j) any combination of items (a), (b), (c), (d),
(e), (f), (g), (h) and (i).
For purposes of this Security, "United States"
means the United States of America (including the States and
the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction (its
"possessions" including Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana
Islands), and "United States person" is a Person that is, for
United States Federal income tax purposes, (a) a citizen or
resident of the United States, (b) a corporation, partnership
or other entity created or organized in or under the laws of
the United States or any political subdivision thereof or (c)
an estate or trust
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<PAGE> 65
the income of which is subject to United States Federal
income taxation regardless of source.
Except as specifically provided herein and in the
Indenture, the Company shall not be required to make any pay
ment with respect to any tax, assessment or other govern
mental charge imposed by any government or any political
subdivision or taxing authority thereof or therein. Whenever
in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on,
or in respect of, any Security such mention shall be deemed
to include mention of the payment of Additional Amounts
payable as described in the second preceding paragraph to the
extent that, in such context, Additional Amounts are, were or
would be payable in respect of such Security and express
mention of the payment of Additional Amounts (if applicable)
in any provisions of this Security shall not be construed as
excluding Additional Amounts in those provisions of this
Security where such express mention is not made.
Reference is hereby made to the further provisions
of this Security set forth on the reverse hereof, which
further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse
hereof or an Authenticating Agent by the manual signature of
one of their respective authorized signatories, 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
Security to be duly executed under its corporate seal.
Dated:
STAPLES, INC.
[Corporate Seal]
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<PAGE> 66
By:__________________________
Name:
Title:
Attest:
________________________
Name:
Title:
[FORM OF REVERSE]
This Security is one of a duly authorized issue of
securities of the Company designated as its "4-1/2% Conver
tible Subordinated Debentures due October 1, 2000" (herein
called the "Securities"), limited in aggregate principal
amount to U.S.$300,000,000, issued and to be issued under an
Indenture, dated as of October 5, 1995 (herein called the
"Indenture"), between the Company and Marine Midland Bank, as
Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders
of the Securities and any coupons appertaining thereto and of
the terms upon which the Securities are, and are to be,
authenticated and delivered. The Securities are issuable as
Bearer Securities, with interest coupons attached, in the
denomination of U.S.$5,000, and as Registered Securities,
without coupons, in denominations of (a) U.S.$100,000 and
integral multiples of U.S.$1,000 in excess thereof if such
Registered Securities are Restricted Securities; and (b)
U.S.$5,000 and integral multiples of U.S.$1,000 in excess
thereof if such Registered Securities are not Restricted
Securities. As provided in the Indenture and subject to
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<PAGE> 67
certain limitations therein set forth, Registered Securities
are exchangeable for a like aggregate principal amount of
Registered Securities of any authorized denominations as
requested by the Holder surrendering the same upon surrender
of the Registered Security or Securities to be exchanged, at
the Corporate Trust Office of the Trustee or at such other
office or agency of the Company as may be designated by it
for such purpose in the Borough of Manhattan, The City of New
York or at such other offices or agencies as the Company may
designate (each a "Transfer Agent"). The Transfer Agent will
then forward such surrendered Registered Securities (together
with any payment surrendered therewith) to the Trustee who in
turn will issue the new Registered Securities. Bearer
Securities may not be issued in exchange for Registered
Securities.
No sinking fund is provided for the Securities.
The Securities are subject to redemption at the option of the
Company at any time on or after October 1, 1998, in whole or
in part, upon not less than 20 nor more than 60 days' notice
to the Holders prior to the Redemption Date, at the following
Redemption Prices (expressed as percentages of the principal
amount): If redeemed during the 12-month period beginning
October 1 of the years indicated,
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----
<S> <C>
1998 101.8%
1999 100.9%
</TABLE>
together, in each case, with accrued interest to the
Redemption Date, and Securities held by non-United States
persons are also redeemable, in whole but not in part, in the
circumstances described in the next succeeding paragraph, at
a Redemption Price equal to 100% of the principal amount plus
interest accrued to the Redemption Date; PROVIDED, HOWEVER,
that interest installments on Registered Securities whose
Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on
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<PAGE> 68
the relevant Record Dates referred to on the face hereof, all
as provided in the Indenture.
If as a result of a Tax Law Change, the Company has
or will become obligated to pay to the Holder of any Security
or coupon Additional Amounts, as described in the second
paragraph of the face of this Security, and such obligation
cannot be avoided by the Company taking reasonable measures
available to it, then the Company may, at its option, redeem
the Tax Affected Securities as a whole, but not in part, upon
not less than 20 nor more than 60 days' notice to the Holders
prior to the Redemption Date, at a Redemption Price equal to
100% of the principal amount plus interest accrued to the
Redemption Date, and any Additional Amounts then payable;
PROVIDED, that (i) no such notice of redemption shall be
given earlier than 90 days prior to the earliest date on
which the Company would be obligated to pay any such Addi
tional Amounts were a payment in respect of the Tax Affected
Securities then due and (ii) at the time such notice of
redemption is given, such obligation to pay such Additional
Amounts remains in effect. Prior to the publication of any
notice of redemption pursuant to this paragraph, the Company
shall deliver to the Trustee (a) an Officers' Certificate
stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing
that the conditions precedent to the right of the Company so
to redeem have occurred and (b) an Opinion of Counsel
selected by the Company to the effect that the Company has or
will become obligated to pay such Additional Amounts as a
result of such Tax Law Change. The Company's right to redeem
the Tax Affected Securities shall continue as long as the
Company is obligated to pay such Additional Amounts, notwith
standing that the Company shall have made payments of
Additional Amounts specified in such second paragraph.
In the event of a redemption of the Securities as
provided in the two preceding paragraphs, the Company will
not be required (a) to register the transfer or exchange of
Registered Securities or to exchange Bearer Securities for
Registered Securities for a period of 15 days immediately
preceding the date notice is given identifying the serial
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<PAGE> 69
numbers of the Securities called for such redemption, (b) to
register the transfer or exchange of any Registered Security,
or portion thereof, called for redemption, or (c) to exchange
any Bearer Security called for redemption; provided, however,
that a Bearer Security called for redemption may be exchanged
for a Registered Security which is simultaneously surrendered
to the Registrar or Transfer Agent making such exchange with
written instructions for conversion consistent with the
provisions described in Sections 2.5 and 12.2 of the
Indenture.
Notice of redemption will be given by publication
in Authorized Newspapers in the City of London, England, and,
so long as the Securities are listed on the Luxembourg Stock
Exchange and the rules of such stock exchange shall so
require, in Luxembourg, or, if not practicable in either
London, England, or Luxembourg, elsewhere in any country in
Western Europe, and by mail to Holders of Registered
Securities. Notice to the Holders will be given at least
twice not less than 20 nor more than 60 days prior to the
Redemption Date as provided in the Indenture.
In any case where the due date for the payment of
the principal of, premium, if any, or interest, including
Additional Amounts, on any Security or the last day on which
a Holder of a Security has a right to convert his Security
shall be, at any Place of Payment or Place of Conversion, as
the case may be, a day on which banking institutions at such
Place of Payment or Place of Conversion are authorized or
obligated by law or executive order to close, then payment of
principal, premium, if any, or interest, including Additional
Amounts, or delivery for conversion of such Security need not
be made on or by such date at such place but may be made on
or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated
by law or executive order to close, with the same force and
effect as if made on the date for such payment or the date
fixed for redemption, or by such last day for conversion, and
no interest shall accrue on the amount so payable for the
period after such date.
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<PAGE> 70
Subject to and upon compliance with the provisions
of the Indenture, the Holder of this Security is entitled, at
his option, at any time on or after January 3, 1996, and on
or before the close of business on October 1, 2000, or in
case this Security or a portion hereof is called for
redemption or the Holder hereof has exercised his right to
require the Company to repurchase this Security or such
portion hereof, then in respect of this Security until and
including, but (unless the Company defaults in making the
payment due upon redemption or repurchase, as the case may
be) not after, the close of business on the fifth Trading Day
prior to Redemption Date or the second Trading Day prior to
the Repurchase Date, as the case may be, to convert this
Security (or any portion of the principal amount hereof that
is an integral multiple of U.S.$1,000, PROVIDED that the
unconverted portion of such principal amount is also
U.S.$5,000 or any integral multiple of U.S.$1,000 in excess
thereof) into fully paid and nonassessable shares of Common
Stock of the Company at an initial Conversion Price of
U.S.$33 for each share of Common Stock (or at the current
adjusted Conversion Price if an adjustment has been made as
provided in the Indenture) by surrender of this Security,
duly endorsed or assigned to the Company or in blank and, in
case such surrender shall be made during the period from the
close of business of any Regular Record Date next preceding
any Interest Payment Date to the opening of business on such
Interest Payment Date ("Interest Period"), also accompanied
by payment in New York Clearing House or other funds
acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount
of this Security then being converted (or, if this Security
was issued in exchange for a Bearer Security after the close
of business on such Regular Record Date, by surrender of one
or more coupons relating to such Interest Payment Date or by
both payment in such funds and surrender of such coupon or
coupons, in either case, in an amount equal to the interest
payable on such Interest Payment Date on the principal amount
of this Security then being converted), and also the
conversion notice hereon duly executed, to the Company at the
Corporate Trust Office of the Trustee, or at such other
office or agency of the Company as may be designated by it
for such purpose in the Borough of
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<PAGE> 71
Manhattan, The City of New York, or at such other offices
or agencies as the Company may designate (each a "Conversion
Agent"); except that if this Security or any portion hereof
has been called for redemption and, pursuant to Section
12.1 of the Indenture, as a result of such redemption the
right to convert this Security or such portion terminates
during an Interest Period, then if this Security or such
portion is surrendered for conversion during such Interest
Period, this Security or such portion shall be accompanied
by payment in New York Clearing House Funds or other funds
acceptable to the Company of an amount equal to the
difference between (i) the interest on the principal
amount of this Security or such portion hereof payable on
such Interest Payment Date and (ii) the amount of accrued
interest on the principal amount of this Security or portion
hereof to but not including the date of conversion. Subject
to the aforesaid requirement for payment and, in the case of
a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment
Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date
to receive an installment of interest (with certain
exceptions provided in the Indenture), no payment or
adjustment is to be made on conversion, if the date of
conversion is not an Interest Payment Date, for interest
accrued hereon from the Interest Payment Date next preceding
the date of conversion, or for dividends on the Common Stock
issued on conversion hereof. The Company shall thereafter
deliver to the Holder the fixed number of shares of Common
Stock (together with any cash adjustment, as provided in the
Indenture) into which this Security is convertible and such
delivery will be deemed to satisfy the Company's obligation
to pay the principal amount of this Security. No fractions
of shares or scrip representing fractions of shares will be
issued on conversion, but instead of any fractional interest
(calculated to the nearest 1/100th of a share) the Company
shall pay a cash adjustment as provided in the Indenture.
The Conversion Price is subject to adjustment as provided in
the Indenture. In addition, the Indenture provides that in
case of certain consolidations or mergers to which the
Company is a party or the transfer of all or substantially
all of the property and assets of the Company, the Indenture
shall be
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<PAGE> 72
amended, without the consent of any Holders of Securities,
so that this Security, if then Outstanding, will be
convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind
and amount of securities, cash and other property receivable
upon such consolidation, merger or transfer by a holder of
the number of shares of Common Stock of the Company into
which this Security could have been converted immediately
prior to such consolidation, merger or transfer (assuming
such holder of Common Stock is not a Constituent Person,
failed to exercise any rights of election and received per
share the kind and amount received per share by a plurality
of Non-electing Shares and further assuming, if such
consolidation, merger or transfer occurs prior to the later
of January 3, 1996 and the receipt of Securities in
definitive form (in the case of Securities initially
represented by a Temporary Global Bearer Security), that the
Security was convertible at the time of such occurrence at
the Conversion Price specified above as adjusted from the
issue date of such Security to such time as provided in the
Indenture). No adjustment in the Conversion Price will be
made until such adjustment would require an increase or
decrease of at least one percent of such rate, PROVIDED that
any adjustment that would otherwise be made will be carried
forward and taken into account in the computation of any
subsequent adjustment.
Subject to certain limitations in the Indenture, at
any time when the Company is not subject to Section 13 or
15(d) of the United States Securities Exchange Act of 1934,
as amended, upon the request of a Holder of a Restricted
Security or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or
cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such holder
of shares of Common Stock issued upon conversion of
Restricted Securities, or to a prospective purchaser of any
such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by
such Holder or holder with Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act"), in connection
with the resale of any such security. "Rule 144A
information" shall be such
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<PAGE> 73
information as is specified pursuant to Rule 144A(d)(4)
under the Securities Act (or any successor provision
thereto).
If a Change in Control occurs, the Holder of this
Security shall have the right, in accordance with the
provisions of the Indenture, to require the Company to
repurchase this Security (or any portion of the principal
amount hereof that is an integral multiple of $1,000) for
cash at a Repurchase Price equal to 100% of the principal
amount thereof plus interest accrued to the Repurchase Date.
At the option of the Company, the Repurchase Price may be
paid in cash or, except as otherwise PROVIDED in the
Indenture, by delivery of shares of Common Stock having a
fair market value equal to the Repurchase Price; provided
that payment may not be made in Common Stock unless at the
time of payment such stock is listed on a national securities
exchange or quoted on the Nasdaq National Market. For
purposes of this paragraph, the fair market value of shares
of Common Stock shall be equal to 95% of the average of the
Closing Prices Per Share for the five consecutive Trading
Days ending on and including the third Trading Day
immediately preceding the Repurchase Date. Whenever in this
Security there is a reference, in any context, to the
principal of any Security as of any time, such reference
shall be deemed to include reference to the Repurchase Price
payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision
of this Security shall not be construed as excluding the
Repurchase Price in those provisions of this Security when
such express mention is not made.
In the event of redemption, repurchase or
conversion of this Security in part only, a new Registered
Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the
Holder hereof.
The indebtedness evidenced by this Security is, to
the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness of the Company,
and
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<PAGE> 74
this Security is issued subject to such 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 contin
uing, the principal of all the Securities, together with
accrued interest to the date of declaration, may be declared
due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal
so declared due and payable, together with accrued interest
to the date of declaration, and (ii) of interest on any
overdue principal and overdue interest, all of the Company's
obligations in respect of the payment of the principal of and
interest on the Securities shall terminate.
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 and coupons under the
Indenture at any time by the Company and the Trustee with
either (a) the written consent of the Holders of a majority
in principal amount of the Securities at the time Out
standing, or (b) by the adoption of a resolution, at a
meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of 66-2/3% in principal
amount of the Outstanding Securities represented, and
entitled to vote at such meeting. The Indenture also
contains provisions permitting the Holders of specified
percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities
and coupons, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this
Security and of any Security issued in exchange herefor or in
lieu hereof, whether or not notation of
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<PAGE> 75
such consent or waiver is made upon this Security or such
other Security.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the
right to institute any proceeding with respect to the Inden
ture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing
Event of Default, the Holders of not less than 25% in princi
pal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount
of the Securities Outstanding a direction inconsistent with
such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof, premium, if
any, or interest hereon (including any Additional Amounts) on
or after the respective due dates expressed herein or for the
enforcement of the right to convert this Security as provided
in the Indenture.
No reference herein to the Indenture and no provi
sion 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, premium, if any, and
interest on (including Additional Amounts, as described on
the face hereof) this Security at the times, places 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 Registered
Securities is registrable on the Security Register upon sur
render of a Registered Security for registration of transfer
(a) at the Corporate Trust Office of the Trustee or at such
other office or agency of the Company as may be designated by
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<PAGE> 76
it for such purpose in the Borough of Manhattan, The City of
New York, or (b) subject to any laws or regulations
applicable thereto and to the right of the Company to
terminate the appointment of any Transfer Agent, at the
offices of the Transfer Agents described herein or at such
other offices or agencies as the Company may designate, 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 thereof or his
attorney duly authorized in writing, and thereupon one or
more new Registered Securities, of authorized denominations
and for the same aggregate principal amount, will be issued
to the designated transferee or transferees by the Registrar.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of
a sum sufficient to recover any tax or other governmental
charge payable in connection therewith.
Prior to due presentation of a Registered 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 Registered Security is registered, as the
owner thereof for all purposes, whether or not such Security
be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, UNITED STATES OF AMERICA, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined
in the Indenture shall have the meanings assigned to them in
the Indenture.
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<PAGE> 77
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the
undersigned hereby elects to have this Security repurchased
by the Company.
2. The undersigned hereby directs the Trustee or
Paying Agent to pay it or __________________ an amount in
cash or, at the Company's election, Common Stock, equal to
100% of the principal amount hereof, plus interest accrued to
the Repurchase Date, as provided in the Indenture.
Dated: _______________________ ________________________
Signature
________________________
Signature Guaranteed
Principal amount to be repurchased: ______________________
Remaining principal amount following such repurchase:
______________
NOTICE: The signature to the foregoing Election must
correspond to the Name as written upon the face of this
Security in every particular, without alteration or any
change whatsoever.
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<PAGE> 78
(c) Form of Temporary Global Bearer Security
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
and 1287(a) OF THE INTERNAL REVENUE CODE.
STAPLES, INC.
4-1/2% CONVERTIBLE SUBORDINATED DEBENTURES
DUE OCTOBER 1, 2000
TEMPORARY GLOBAL BEARER SECURITY
ISIN No. XS0060364659
STAPLES, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein
called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to bearer upon
presentation and surrender of this Temporary Global Bearer
Security the principal sum of _________________,
______________________ United States Dollars
(U.S.$__________) on October 1, 2000, and to pay interest
thereon, from October 5, 1995, or from the most recent
Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, semi-annually in arrears
on April 1 and October 1 in each year (each an "Interest
Payment Date"), commencing April 1, 1996, at the rate of 4-
1/2% per annum, until the principal hereof is due and at the
rate of 4-1/2% per annum on any overdue principal and, to the
extent permitted by law, on any overdue interest; PROVIDED,
HOWEVER, that interest on this Temporary Global Bearer
Security shall be payable only after the issuance of the
Definitive Securities in bearer form for which this Temporary
Global Bearer Security is exchangeable and, in the case of
Definitive Securities in bearer form, only upon presentation
and surrender (at an office or agency outside the United
States, except as otherwise provided in the Indenture)
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<PAGE> 79
of the interest coupons thereto attached as they severally
mature.
This Temporary Global Bearer Security is one of a
duly authorized issue of Securities of the Company designated
as specified in the title hereof, issued and to be issued
under the Indenture, dated as of October 5, 1995 (herein
called the "Indenture"), between the Company and Marine
Midland Bank, as Trustee. This Temporary Global Bearer
Security is a temporary security and is exchangeable in whole
or from time to time in part without charge upon request of
the holder hereof for definitive Securities in bearer form,
with interest coupons attached, of authorized denominations,
(a) not earlier than 40 days after October 5, 1995 and (b) as
promptly as practicable following presentation of
certification, in one of the forms set forth in the Indenture
for such purpose, that the beneficial owner or owners of this
Temporary Global Bearer Security (or, if such exchange is
only for a part of this Temporary Global Bearer Security, of
such part) are not United States persons, are persons
described in Section 1.163-5(c)(2)(i)(D)(6) of the United
States Treasury Regulations or are financial institutions
that are holding such Security for resale during the
restricted period (as defined in Section 1.163-
5(c)(2)(i)(D)(7) of the United States Treasury Regulations)
and that have not acquired such Securities for purposes of
resale directly or indirectly to a United States person or
within the United States. Definitive Securities in bearer
form to be delivered in exchange for any part of this
Temporary Global Bearer Security shall be delivered only
outside the United States. Upon any exchange of a part of
this Temporary Global Bearer Security for definitive
Securities, the portion of the principal amount hereof so
exchanged shall be endorsed by the Paying Agent in London or
its agent on the Schedule hereto, and the principal amount
hereof shall be reduced for all purposes by the amount so
exchanged.
Until exchanged in full for definitive Securities,
this Temporary Global Bearer Security shall in all respects
be entitled to the same benefits under, and subject to the
same terms and conditions of, the Indenture as Bearer
Securities
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<PAGE> 80
authenticated and delivered thereunder, except that
neither the Holder hereof nor the beneficial owners of
this Temporary Global Bearer Security shall be entitled to
receive payment of interest or other payments hereon or to
convert this Temporary Global Bearer Security into Common
Stock of the Company or any other security, cash or other
property.
THE INDENTURE AND THIS TEMPORARY GLOBAL BEARER
SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF
AMERICA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS.
All terms used in this Temporary Global Bearer
Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has
been executed by the Trustee or an Authenticating Agent by
the manual signature of one of their respective authorized
signatories, this Temporary Global Bearer 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
Temporary Global Bearer Security to be duly executed under
its corporate seal.
Dated as of October 5, 1995
STAPLES, INC.
[Corporate Seal]
By:___________________________
Name:
Title:
Attest:
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<PAGE> 81
____________________________
Name:
Title:
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<PAGE> 82
<TABLE>
SCHEDULE OF EXCHANGES
<CAPTION>
Principal Amount Remaining Notation Made
Exchanged for Principal on Behalf of
Date Bearer Amount Following Paying Agent
Made Securities Such Exchange in London,
---- ---------- ------------- England
-------
<S> <C> <C> <C>
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
</TABLE>
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<PAGE> 83
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
______ _________________ ________________ _____________
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<PAGE> 84
SECTION 2.3. Form of Coupon.
--------------
[FORM OF FACE]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
and 1287(a) OF THE INTERNAL REVENUE CODE.
No.- _______________
ISIN No. XS0060364659
STAPLES, INC. U.S.$ _______
Due ________ __, ____
4-1/2% CONVERTIBLE SUBORDINATED DEBENTURE
DUE OCTOBER 1, 2000
Unless the Security to which this coupon
appertains shall have been redeemed, repurchased or
converted prior to the date set forth hereon, Staples, Inc.
(the "Company") shall, subject to and in accordance with the
terms and conditions of such Security and the Indenture
referred to therein, pay to the bearer on the date set forth
hereon, upon surrender hereof, the amount shown hereon
(together with any Additional Amounts and any Bearer
Additional Amounts payable in respect thereof which the
Company may be required to pay according to the terms of
said Security) at the paying agencies set out on the reverse
hereof or at such other places outside the United States of
America (including the States and the District of Columbia),
its territories, its possessions and other areas subject to
its jurisdiction as the Company may determine from time to
time.
-73-
<PAGE> 85
[REVERSE OF COUPON]
TRANSFER, PAYING AND CONVERSION AGENTS
Midland Bank plc, Banque Internationale #
Mariner House, Luxembourg S.A.
Pepys Street, 69, route d'Esch,
London, EC3N 4DA L-1470 Luxembourg
England
SECTION 2.4. Form of Certificate of
Authentication.
----------------------
The Trustee's certificates of authentication shall
be in substantially the following form:
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: _______________*
MARINE MIDLAND BANK,
as Trustee
[By Authenticating Agent,
as Authenticating Agent]**
By:___________________________
Authorized Signatory
* For Registered Securities only.
**For the Temporary Global Bearer Security or Bearer
Securities in definitive form.
SECTION 2.5. Form of Conversion Notice.
-------------------------
CONVERSION NOTICE
(a) For Bearer Securities:
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<PAGE> 86
The undersigned Holder of this Security hereby
irrevocably exercises the option to convert this Security
into shares of Common Stock in accordance with the terms of
the Indenture referred to in this Security and directs that
such shares be registered in the name of and delivered,
together with a check in payment for any fractional share,
to the undersigned unless a different name has been
indicated below. The address for payment of any such check
must be outside the United States. If shares are to be
registered in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes
payable with respect thereto.
Dated: ___________________ _________________________
Signature
If shares are to be registered HOLDER
in the name of and delivered
to a Person other than the
Holder, please print such Please print name and
Person's name and address: address of Holder:
___________________________ _________________________
Name Name
___________________________ _________________________
Address Address
___________________________ _________________________
___________________________ _________________________
Social Security or other Social Security or other
Taxpayer Identification Taxpayer Identification
Number, if any Number, if any
Name and address (outside the
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<PAGE> 87
United States) to where any
check referred to in the first
paragraph of this Conversion
Notice should be mailed:
___________________________
Name
___________________________
Address
___________________________
Social Security or other
Taxpayer Identification
Number, if any
(b) For Registered Securities:
The undersigned Holder of this Security hereby
irrevocably exercises the option to convert this Security,
or any portion of the principal amount hereof (which is an
integral multiple of U.S.$1,000, PROVIDED that the
unconverted portion of such principal amount is U.S.$5,000
or any integral multiple of U.S.$1,000 in excess thereof)
below designated, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this
Security, and directs that such shares, together with a
check in payment for any fractional share and any Securities
representing any unconverted principal amount hereof, be
delivered to and be registered in the name of the
undersigned unless a different name has been indicated
below. If shares of Common Stock or Securities are to be
registered in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be
paid by the undersigned on account of interest accompanies
this Security.
Dated: _____________________
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<PAGE> 88
______________________
Signature
If shares or Registered If only a portion of the
Securities are to be Securities is to be
registered in the name of a converted, please indicate:
Person other than the
Holder, please print such
Person's name and address: 1. Principal amount to be
converted:
_________________________ U.S.$___________
Name
2. Principal amount and
denomination of
Registered Securities
representing uncon
_________________________ verted principal amount
Address to be issued:
_________________________ Amount: U.S.$________
Social Security or other
Taxpayer Identification Denominations:
Number, if any U.S.$______
(any integral multiple of
U.S.$1,000, PROVIDED that
the unconverted portion of
such principal amount is
U.S.$5,000 or any integral
multiple of U.S.$1,000 in
excess thereof)
___________________________ [Signature Guaranteed]
SECTION 2.6. Legend on Restricted Securities.
-------------------------------
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<PAGE> 89
During the period beginning on October 5, 1995 and
ending on the date three years from such date (or such
shorter period as the Company may direct in an Officers'
Certificate), any Security originally issued otherwise than
in reliance on Regulation S under the Securities Act,
including any Security issued in exchange therefor or in
lieu thereof, shall be a Registered Security, shall be
deemed a "Restricted Security" and shall be subject to the
restrictions on transfer provided in the legends set forth
on the face of the form of Registered Security in
Section 2.2(b); PROVIDED, HOWEVER, that the term "Restricted
Securities" shall not include Registered Securities as to
which restrictions have been terminated in accordance with
Section 3.5. All Restricted Securities shall bear the
applicable legends set forth on the face of the form of
Registered Security in Section 2.2(b). Securities which are
not Restricted Securities shall not bear such legend. The
Trustee shall not issue any unlegended Registered Security
until it has received an Officers' Certificate from the
Company directing it to do so.
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<PAGE> 90
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms.
---------------
The aggregate principal amount of Securities which
may be authenticated and delivered under this Indenture is
limited to U.S.$300,000,000, except for Securities authenti
cated and delivered in exchange for, or in lieu of, other
Securities pursuant to Section 3.4, 3.5, 3.6, 11.8 or
14.2(f).
The Securities shall be known and designated as
the "4-1/2% Convertible Subordinated Debentures due
October 1, 2000" of the Company. Their Stated Maturity
shall be October 1, 2000 and they shall bear interest on
their principal amount from October 5, 1995, payable semi-
annually in arrears on April 1 and October 1 in each year,
commencing April 1, 1996, at the rate of 4-1/2% per annum
until the principal thereof is due and at the rate of 4-1/2%
per annum on any overdue principal and, to the extent
permitted by law, on any overdue interest; PROVIDED,
HOWEVER, that payments shall only be made on Business Days
as provided in Section 1.12.
The principal of, premium, if any, and interest on
the Securities shall be payable as provided in the forms of
Securities and coupon set forth in Sections 2.2 and 2.3 (any
city in which any Paying Agent is located being herein
called a "Place of Payment").
The Securities shall be redeemable at the option
of the Company at any time after October 1, 1998, in whole
or in part, and at the Company's option or otherwise in the
event of certain developments, including developments with
respect to changes in U.S. withholding taxes or
certification requirements, as provided in Article Eleven
and in the forms of Securities set forth in Section 2.2.
-79-
<PAGE> 91
The Securities shall be convertible as provided in
Article Twelve (any city in which any Conversion Agent is
located being herein called a "Place of Conversion").
The Securities shall be subordinated in right of
payment to Senior Indebtedness of the Company as provided in
Article Thirteen.
The Securities shall be subject to repurchase by
the Company at the option of the Holders as provided in
Article Fourteen.
SECTION 3.2. Denominations.
-------------
The Definitive Securities shall be issuable (i) in
bearer form, with interest coupons attached, in the denomi
nation of U.S.$5,000 and (ii) as Registered Securities,
without coupons, in denominations of U.S.$5,000 and integral
multiples of U.S.$1,000 in excess thereof (U.S.$100,000 and
integral multiples of U.S.$1,000 in excess thereof if such
Registered Security is a Restricted Security (other than a
Restricted Security issued in connection with a partial
conversion, redemption or repurchase of a Restricted
Security)).
SECTION 3.3. Execution, Authentication,
Delivery and Dating.
-------------------------
The Securities shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of
the Board, its Chief Executive Officer, its President or one
of its Vice Presidents, under a facsimile of its corporate
seal reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. Any such signature may be manual
or facsimile.
Securities bearing the manual or facsimile
signature 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
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<PAGE> 92
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 or
to its order for authentication (or to the Paying Agent in
London, in the case of Bearer Securities or the Temporary
Global Bearer Security), together with a Company Order for
the authentication and delivery of such Securities, and the
Trustee or an Authenticating Agent in accordance with such
Company Order shall authenticate and make available for
delivery such Securities as in this Indenture provided and
not otherwise. In connection with any Company Order for
authentication, an Officers' Certificate and Opinion of
Counsel pursuant to Section 1.2 shall not be required.
Each Bearer Security and the Temporary Global
Bearer Security shall be dated as of October 5, 1995. Each
Registered Security shall be dated the date of its
authentication.
No Security (or coupon attached thereto) 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 or an
Authenticating Agent by manual signature of an authorized
signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered
hereunder. Except as permitted by Section 3.4 or 3.6,
neither the Trustee nor an Authenticating Agent shall
authenticate and make available for delivery any Bearer
Security unless all coupons appurtenant thereto for interest
then matured have been detached and canceled.
SECTION 3.4. Temporary Global Security.
-------------------------
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<PAGE> 93
(a) The Securities (other than the Registered
Securities) shall be issued initially in the form of one
Temporary Global Bearer Security, which Temporary Global
Bearer Security shall be deposited on behalf of the
subscribers for the Securities represented thereby with
Midland Bank plc, London Office, as common depositary (the
"Common Depositary"), for credit to their respective
accounts (or to such other accounts as they may direct) at
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE,
as operator of the EUROCLEAR CLEARANCE SYSTEM ("EUROCLEAR"),
or CEDEL BANK, SOCI#T# ANONYME ("CEDEL").
On or before the Exchange Date, the Company shall
deliver to the Paying Agent in London at its principal
London office located at Mariner House, Pepys Street,
London, EC3N 4DA, England, or its designated agent, Bearer
Securities executed by the Company. On or after the
Exchange Date, the Temporary Global Bearer Security shall be
surrendered by the Common Depositary to the Trustee or its
agent, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for Bearer
Securities without charge to Holders, and the Trustee or the
Paying Agent in London or other Paying Agent outside the
United States shall authenticate and deliver (at an office
or agency outside the United States), in exchange for the
Temporary Global Bearer Security or the portions thereof to
be exchanged, an equal aggregate principal amount of Bearer
Securities, as shall be specified by the beneficial owners
thereof; PROVIDED, HOWEVER, that upon such presentation by
the Common Depositary, the Temporary Global Bearer Security
is accompanied by a certificate dated the Exchange Date or a
subsequent date and signed by EUROCLEAR as to the portion of
the Temporary Global Bearer Security held for its account
then to be exchanged and a certificate dated the Exchange
Date or a subsequent date and signed by CEDEL as to the
portion of the Temporary Global Bearer Security held for its
account then to be exchanged, each to the effect hereinafter
provided. The Company hereby appoints the principal office
of the Paying Agent in London, England, or its designated
agent, as its agent outside the United States where Bearer
Securities may be delivered in exchange for the Temporary
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<PAGE> 94
Global Bearer Security or portions thereof. Each beneficial
owner of any portion of the Temporary Global Bearer Security
shall be entitled to take delivery of Bearer Securities only
at such office. Notwithstanding any other provision hereof
or of the Securities, no Security initially represented by
the Temporary Global Bearer Security will be mailed to or
otherwise delivered in connection with its original issuance
to any location within the United States. The Trustee
agrees that it will cause the Paying Agent in London to
retain each certificate provided by EUROCLEAR or CEDEL for a
period of four calendar years following the year in which
the certificate is received and not to destroy or otherwise
dispose of any such certificate without first offering to
deliver it to the Company.
Each certificate to be provided by EUROCLEAR and
CEDEL shall be substantially to the following effect or with
such changes therein as shall be approved by the Company and
Goldman Sachs International and be satisfactory to the
Trustee:
"CERTIFICATE
STAPLES, INC.
4-1/2% CONVERTIBLE SUBORDINATED DEBENTURES
DUE OCTOBER 1, 2000
This is to certify that, based on certificates we
have received from our member organizations substantially in
the form set out in Section 3.11 of the Indenture relating
to the above-captioned Securities, as of the date hereof,
U.S.$_____________ principal amount of the above-captioned
Securities acquired from Staples, Inc. (i) is owned by
persons that are not United States persons (as defined
below), (ii) is owned by United States persons that are (a)
foreign branches of United States financial institutions (as
defined in United States Treasury Regulations Section 1.165-
12(c)(1)(v) ("financial institutions")) purchasing for their
own account or for resale or (b) United States persons who
acquired the Securities through foreign branches of United
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<PAGE> 95
States financial institutions and who hold the Securities
through such financial institutions on the date hereof (and
in the case of either clause (a) or (b), each financial
institution has agreed for the benefit of Staples, Inc. to
comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder) or (iii) is owned
by financial institutions for purposes of resale during the
restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)). Financial
institutions described in clause (iii) of the preceding
sentence (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the
Securities for purposes of resale directly or indirectly to
United States persons or to persons within the United
States.
As used in this Certificate, "United States
person" is a person that is, for United States federal
income tax purposes, (a) a citizen or resident of the United
States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United
States or any political subdivision thereof, or (c) an
estate or trust the income of which is subject to United
States Federal income taxation regardless of the source;
"United States" means the United States of America
(including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and
the Northern Mariana Islands).
We further certify that (i) we are not making
available herewith for exchange any portion of the Temporary
Global Bearer Security excepted in such certificates and
(ii) as of the date hereof, we have not received any
notification from any of our member organizations to the
effect that the statements made by such member organizations
with respect to any portion of the part submitted herewith
for exchange are no longer true and cannot be relied upon as
of the date hereof.
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<PAGE> 96
We understand that this certificate is required in
connection with certain tax laws of the United States. In
connection therewith, if administrative or legal proceedings
are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably
authorize you to produce this certificate to any interested
party in such proceedings. We agree to retain each
statement provided by a member organization for a period of
four calendar years following the year in which the
statement is received.
Dated: ________, 19__*
*To be dated no
earlier than the
Exchange Date.
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE,
AS OPERATOR OF THE EUROCLEAR
CLEARANCE SYSTEM]
[CEDEL BANK SOCIETE ANONYME]
By __________________________"
Each certificate received by EUROCLEAR and CEDEL
from Persons appearing in their records as Persons entitled
to a portion of the Temporary Global Bearer Security shall
be substantially to the effect set forth in Section 3.11.
Upon any such exchange of a portion of the
Temporary Global Bearer Security for Bearer Securities, the
Temporary Global Bearer Security shall be endorsed to
reflect the reduction of the principal amount evidenced
thereby. Until so exchanged in full, the Temporary Global
Bearer Security shall in all respects be entitled to the
same benefits under, and subject to the same terms and
conditions of, this Indenture as Bearer Securities
authenticated and delivered hereunder, except that none of
EUROCLEAR, CEDEL or the beneficial owners of the Temporary
Global Bearer Security
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<PAGE> 97
shall be entitled to receive payment of interest or other
payments thereon or to convert the Temporary Global Bearer
Security, or any portion thereof, into Common Stock of the
Company or any other security, cash or other property.
Bearer Securities shall be exchangeable for
Registered Securities as provided in Section 3.5.
(b) Registered Securities shall be issued in
definitive, fully registered form, without interest coupons,
shall be registered in such names and be in such authorized
denominations as Goldman Sachs International shall designate
and shall bear the legends required hereunder. The Company
will make available to the Trustee a reasonable supply of
Registered Securities in definitive form.
Pending the preparation of definitive Registered
Securities, the Company may execute, and upon Company Order
the Trustee shall authenticate and make available for deli
very, temporary Registered Securities which are printed,
lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of
the tenor of the definitive Registered 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 Registered Securities are issued, the
Company will cause definitive Registered Securities to be
prepared without unreasonable delay. After the preparation
of definitive Registered Securities, the temporary
Registered Securities shall be exchangeable for definitive
Registered Securities upon surrender of the temporary
Registered Securities at any office or agency of the Company
designated pursuant to Section 10.2, without charge to the
Holder. Upon surrender for cancellation of any one or more
temporary Registered Securities the Company shall execute
and the Trustee shall authenticate and make available for
delivery in exchange therefor a like principal amount of
definitive Registered Securities of authorized
denominations. Until so exchanged the temporary Registered
Securities shall in all
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respects be entitled to the same benefits under this
Indenture as definitive Registered Securities.
SECTION 3.5. Registration, Registration of Transfer and
Exchange; Restrictions on Transfer.
------------------------------------------
(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 of the Company designated pursuant to Section 10.2
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 Registered Securities and of
transfers of Registered Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of
registering Registered Securities and transfers and
exchanges of Registered Securities as herein provided.
Upon surrender for registration of transfer of any
Registered Security at an office or agency of the Company
designated pursuant to Section 10.2 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 Registered Securities of any
authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be
required by this Indenture (including Section 2.6).
At the option of the Holder, and subject to the
other provisions of this Section 3.5, Registered Securities
may be exchanged for other Registered Securities of any
authorized denomination and of a like aggregate principal
amount, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any
Registered Securities are so surrendered for exchange, and
subject to the other provisions of this Section 3.5, the
Company shall execute, and the Trustee shall authenticate
and deliver, the Securities which the Holder making the
exchange is entitled to receive. Every Registered Security
presented or surrendered for registration of transfer or for
exchange
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shall (if so required by the Company or the Security
Registrar) 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.
Bearer Securities may not be issued in exchange
for Registered Securities.
At the option of the Holder, upon written request,
Bearer Securities may be exchanged for Registered
Securities, of any authorized denomination and of a like
aggregate principal amount, upon surrender of the Bearer
Securities to be exchanged at any office or agency outside
the United States designated pursuant to Section 10.2, with
all unmatured coupons and all matured coupons in default
thereto appertaining. If the Holder of a Bearer Security is
unable to produce any such unmatured coupon or coupons or
matured coupon or coupons in default, such exchange may be
effected if such Bearer Security is accompanied by payment
in funds acceptable to the Company in an amount equal to the
face amount of such missing coupon or coupons or the
surrender of such missing coupon or coupons may be waived by
the Company, the Trustee, and the Paying Agent in London, if
there is furnished to them such security or indemnity as
they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent outside the United
States any such missing coupon in respect of which such a
payment shall have been made, such Holder shall be entitled
to receive the amount of such payment; PROVIDED, HOWEVER,
that, except as otherwise provided in the form of Bearer
Security set forth in Section 2.2(a), interest represented
by coupons shall be payable only upon presentation and
surrender of such coupons at an office or agency of the
Company outside the United States. Notwithstanding the
foregoing, in case a Bearer Security is surrendered in
exchange for a Registered Security at an office or agency of
the Company outside the United States designated pursuant to
Section 10.2 after the close of business at such office or
agency on (i) any Regular Record Date and before the opening
of business at such office or
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agency on the next succeeding Interest Payment Date, or
(ii) any Special Record Date and before the opening of
business at such office or agency on the related date for
payment of Defaulted Interest, such Bearer Security shall
be surrendered without the coupon relating to such
Interest Payment Date or proposed date of payment, as the
case may be, and interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment
Date or such related date for payment of Defaulted
Interest, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due
in accordance with the provisions of this Indenture.
Whenever any Bearer Securities are so surrendered
for exchange, subject to the other provisions of this Sec
tion 3.5, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered 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
subject to the other provisions of this Section 3.5,
entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or
exchange.
No service charge shall be made for any registra
tion of transfer or exchange of Securities, but the Company
may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 3.4, 8.5, 11.8 or
12.2 (other than, in the case of Registered Securities,
where the shares of Common Stock are to be issued or
delivered in a name other than that of the Holder of the
Registered Security) not involving any transfer and other
than any stamp and other duties, if any, which may be
imposed in connection with any such transfer or exchange by
the United States or the United Kingdom or any political
subdivision thereof or therein, which shall be paid by the
Company.
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In the event of a redemption of the Securities in
part (other than, in the cases of the Registered Securities,
a redemption pursuant to the fourth paragraph on the reverse
of the Form of Bearer Security set forth in Section 2.2(a)),
the Company will not be required (a) to register the
transfer of or exchange Registered Securities or to exchange
Bearer Securities for Registered Securities for a period of
15 days immediately preceding the date notice is given
identifying the serial numbers of the Securities called for
such redemption, (b) to register the transfer of or exchange
any Registered Security, or portion thereof, called for
redemption, or (c) to exchange any Bearer Security called
for redemption; PROVIDED, HOWEVER, that a Bearer Security
called for redemption may be exchanged for a Registered
Security which is simultaneously surrendered to the
Registrar or Transfer Agent making such exchange with
written instructions for conversion consistent with the
provisions described in Sections 2.5 and 12.2.
(b) Beneficial ownership of every Restricted
Security shall be subject to the restrictions on transfer
provided in the legends required to be set forth on the face
of each Restricted Security pursuant to Section 2.6, unless
such restrictions on transfer shall be waived by the written
consent of the Company, and the Holder of each Restricted
Security, by such Holder's acceptance thereof, agrees to be
bound by such restrictions on transfer.
The restrictions imposed by this Section 3.5 and
Section 2.6 upon the transferability of any particular
Restricted Security shall cease and terminate upon delivery
by the Company to the Trustee of an Officers' Certificate
stating that such Restricted Security has been sold pursuant
to an effective registration statement under the Securities
Act or transferred in compliance with Rule 144 under the
Securities Act (or any successor provision thereto). Any
Restricted Security as to which the Company has delivered to
the Trustee an Officers' Certificate that such restrictions
on transfer shall have expired in accordance with their
terms or shall have terminated may, upon surrender of such
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Restricted Security for exchange to the Security Registrar
or any Transfer Agent in accordance with the provisions of
this Section 3.5 be exchanged for a new Registered Security,
of like tenor and aggregate principal amount, which shall
not bear the restrictive legends required by Section 2.6.
The Company shall inform the Trustee in writing of the
effective date of any registration statement registering the
Securities under the Securities Act. The Trustee shall not
be liable for any action taken or omitted to be taken by it
in good faith in accordance with the aforementioned
registration statement.
As used in the preceding two paragraphs of this
Section 3.5, the term "transfer" encompasses any sale,
pledge, transfer or other disposition of any Restricted
Security.
(c) Neither the Trustee, the Paying Agent in
London nor any of their agents shall (1) have any duty to
monitor compliance with or with respect to any federal or
state or other securities or tax laws or (2) have any duty
to obtain documentation on any transfers or exchanges other
than as specifically required hereunder.
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SECTION 3.6. Mutilated, Destroyed, Lost or Stolen
Securities and Coupons.
------------------------------------
If any mutilated Security or a Security with a
mutilated coupon appertaining to it is surrendered to the
Trustee or to a Transfer Agent outside the United States,
the Company shall execute, the Trustee or an Authenticating
Agent shall authenticate and the Trustee or Transfer Agent
shall deliver in exchange therefor a new Security of like
tenor and principal amount and bearing a number not
contemporaneously outstanding, with coupons corresponding to
the coupons, if any, appertaining to the surrendered
Security; PROVIDED, HOWEVER, that any Bearer Security or any
coupon shall be delivered only outside the United States
and, so long as the Securities are listed on the Luxembourg
Stock Exchange and the rules of the Luxembourg Stock
Exchange so require, such delivery shall occur at the
Transfer Agent in Luxembourg; and PROVIDED, FURTHER, that
all Bearer Securities shall be delivered and received in
person.
If there be delivered to the Company and either to
the Trustee or to a Transfer Agent outside the United
States:
(1) evidence to their satisfaction of the
destruction, loss or theft of any Security or
coupon, and
(2) such security or indemnity as may be
satisfactory to the Company and the Trustee and
such Transfer Agent to save each of them and any
agent of either of them harmless,
then, in the absence of actual notice to the Company, the
Trustee or the Transfer Agent that such Security or coupon
has been acquired by a bona fide purchaser, the Company
shall execute, the Trustee or an Authenticating Agent shall
authenticate and the Trustee or Transfer Agent shall
deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which such
coupon appertains (together with all appurtenant coupons not
destroyed, lost or stolen), a new Security of like tenor and
principal amount
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and bearing a number not contemporaneously outstanding,
with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security
or appertaining to the Security to which such destroyed,
lost or stolen coupon appertains; PROVIDED, HOWEVER, that
any Bearer Security or any coupon shall be delivered only
outside the United States and, so long as the Securities are
listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange so require, such delivery shall
occur at the Transfer Agent in Luxembourg; and PROVIDED,
FURTHER, that all Bearer Securities shall be delivered and
received in person.
In case any such mutilated, destroyed, lost or
stolen Security or coupon has become or is about to become
due and payable, the Company in its discretion, but subject
to any conversion rights, may, instead of issuing a new
Security, pay such Security or coupon, upon satisfaction of
the conditions set forth in the preceding paragraph;
PROVIDED, HOWEVER, that, except as otherwise provided in the
form of Securities set forth in Section 2.2(a), the
principal of and interest on Bearer Securities shall be
payable only at an office or agency outside the United
States and, in the case of interest, only upon presentation
and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this
Section 3.6, 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 (other than any
stamp and other duties, if any, which may be imposed in
connection therewith by the United States or the United
Kingdom or any political subdivision thereof or therein,
which shall be paid by the Company) and any other expenses
(including the fees and expenses of the Trustee, the Paying
Agent in London and the Transfer Agent) connected therewith.
Every new Security with its coupons, if any,
issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security or in exchange
for a Security to which a mutilated, destroyed, lost or
stolen coupon appertains, shall constitute an original
additional
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contractual obligation of the Company, whether or not
the mutilated, destroyed, lost or stolen Security and
its coupons, if any, or the mutilated, destroyed, lost or
stolen coupon shall be at any time enforceable by anyone,
and such new Security and coupons, if any, shall be entitled
to all the benefits of this Indenture equally and
proportionately with any and all other Securities and
coupons duly issued hereunder.
The provisions of this Section 3.6 are exclusive
and shall preclude (to the extent lawful) all other rights
and remedies of any Holder with respect to the replacement
or payment of mutilated, destroyed, lost or stolen
Securities or coupons.
SECTION 3.7. Payment of Interest, Interest Rights Preserved.
----------------------------------------------
Interest on any Registered 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. In case a Bearer Security is
surrendered in exchange for a Registered Security at an
office or agency of the Company designated pursuant to
Section 10.2 for the purpose after the close of business (at
such office or agency) on any Regular Record Date and before
the opening of business (at such office or agency) on the
next succeeding Interest Payment Date, such Bearer Security
shall be surrendered without the coupon relating to such
Interest Payment Date and interest will not be payable on
such Interest Payment Date in respect of the Registered
Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due.
Interest on the Temporary Global Bearer Security
shall be payable only after the issuance of the Bearer
Securities for which it is exchangeable as provided in the
form of Temporary Global Bearer Security set forth in
Section 2.2(c).
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Any interest on any Registered 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
Registered 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 Registered Security, the date of the proposed
payment and the Special Record Date, 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. The Special
Record Date for the payment of such Defaulted Interest
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, 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 of
Registered Securities at such Holder's 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,
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such Defaulted Interest shall be paid to the Persons in
whose names the Registered 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). In case a Bearer Security is surrendered
in exchange for a Registered Security at an office or
agency of the Company designated pursuant to
Section 10.2 for such purpose after the close of
business (at such office or agency) on any Special
Record Date and before the opening of business (at such
office or agency) on the related proposed date for
payment of Defaulted Interest, such Bearer Security
shall be surrendered outside the United States without
the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such
proposed date of payment in respect of the Registered
Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon
upon surrender thereof.
(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 and Section 3.5, each Security delivered under this
Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
In the case of any Registered Security which is
converted after any Regular Record Date and on or prior to
the next succeeding Interest Payment Date (other than any
Registered Security whose Maturity is prior to such Interest
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Payment Date), interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided
for) shall be paid to the Person in whose name such
Registered Security (or one or more Predecessor Securities)
is registered at the close of business on such Regular
Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is after
the date of conversion of such Security shall not be
payable.
SECTION 3.8. Persons Deemed Owners.
---------------------
Title to any Bearer Security or coupon shall pass
by delivery. The Company, the Trustee, the Paying Agent in
London and any other agent of the Company or the Trustee may
treat the bearer of any Bearer Security or the Temporary
Global Bearer Security and the bearer of any coupon as the
absolute owner of such Security or coupon, as the case may
be, for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever,
whether or not such Security or coupon be overdue, and
neither the Company, the Trustee, the Paying Agent in London
nor any other agent of the Company or the Trustee shall be
affected by notice to the contrary. Prior to due present
ment of a Registered 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 Registered
Security is registered as the owner of such Registered Secur
ity for the purpose of receiving payment of principal of,
premium, if any, and (subject to Sections 3.5 and 3.7) inter
est 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 3.9. Cancellation.
------------
All Securities and coupons surrendered for
payment, redemption, repurchase, registration of transfer or
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exchange or conversion shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee. All
Bearer Securities and coupons so surrendered shall be
immediately cancelled by such Person upon receipt prior to
being forwarded to the Trustee. All Registered Securities so
delivered to the Trustee shall be canceled promptly by the
Trustee. No Securities shall be authenticated in lieu of or
in exchange for any Securities canceled as provided in this
Section 3.9. Unless otherwise requested by the Company and
confirmed in writing, the Trustee shall, from time to time
but not less than once annually, destroy all cancelled
Securities and coupons and deliver to the Company a
certificate of destruction, which certificate shall specify
the number, principal amount and, in the case of Securities,
the form of each cancelled Security and coupon so destroyed.
SECTION 3.10. Computation of Interest.
-----------------------
Interest on the Securities shall be computed on
the basis of a 360-day year of twelve 30-day months.
SECTION 3.11. Form of Certification.
---------------------
Whenever any provision of this Indenture or the
form of Temporary Global Bearer Security contemplates that
certification be given by a beneficial owner of a portion of
the Temporary Global Bearer Security, such certification
shall be provided substantially in the form of the following
certificate, with only such changes as shall be approved by
the Company and Goldman Sachs International:
"CERTIFICATE
STAPLES, INC.
4-1/2% CONVERTIBLE SUBORDINATED DEBENTURES
DUE OCTOBER 1, 2000
This is to certify that as of the date hereof and
except as provided in the fourth paragraph hereof, the above-
captioned Securities held by you for our account (i) are
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owned by a person that is not a United States person (as
defined below), (ii) are owned by a United States person
that is (A) a foreign branch of a United States financial
institution (as defined in United States Treasury
Regulations Section 1.165-12(c)(1)(v) (a "financial
institution")) purchasing for its own account or for resale
or (B) a United States person who acquired the Securities
through a foreign branch of a United States financial
institution and who holds the Securities through such
financial institution on the date hereof (and in the case of
either clause (A) or (B), the financial institution hereby
agrees for the benefit of Staples, Inc. to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the
United States Internal Revenue Code of 1986, as amended, and
the regulations thereunder) or (iii) are owned by a
financial institution for purposes of resale during the
restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)). In addition, a
financial institution described in clause (iii) of the
preceding sentence (whether or not also described in clause
(i) or (ii)) certifies that it has not acquired the
Securities for purposes of resale directly or indirectly to
a United States person or to a person within the United
States.
As used in this certificate, "United States
person" is a Person that is, for United States federal
income tax purposes, (a) a citizen or resident of the United
States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United
States or any political subdivision thereof or (c) an estate
or trust the income of which is subject to United States
Federal income taxation regardless of the source; "United
States" means the United States of America (including the
States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction (its
"possessions" including Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands).
We undertake to advise you by telecopy, on or
before the date on which you intend to submit your certifi-
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cation relating to the above-captioned Securities then
appearing in your books as being held for our account, if
the above statement as to beneficial ownership is not
correct on such date as to all such Securities.
This certificate excepts and does not relate to
U.S.$________ principal amount of the above-captioned
Securities appearing on your books as being held for our
account as to which we are not yet able to certify and as to
which we understand that exchange and delivery of definitive
Securities cannot be made until we are able so to certify.
We understand that this certificate is required in
connection with certain tax regulations in the United
States. If administrative or legal proceedings are
commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably
authorize you to produce this certificate or a copy hereof
to any interested party in such proceedings.
Dated: ___________________, 19__*
*To be dated on or after
the 15th day before the
Exchange Date.
[Name of Account Holder]
________________________
(Authorized Signatory)
Name:
Title: "
SECTION 3.12. CUSIP Numbers.
-------------
The Company in issuing Registered Securities may
use "CUSIP" numbers (if then generally in use) in addition
to
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<PAGE> 112
serial numbers, and in issuing Bearer Securities may use
"ISIN" numbers (if then generally in use); if so, the
Trustee shall use such "CUSIP" and "ISIN" numbers in
addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; PROVIDED that any
such notice may state that no representation is made as to
the correctness of such CUSIP and ISIN numbers either as
printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed
only on the serial or other identification numbers printed
on the Securities, and any such redemption or repurchase
shall not be affected by any defect in or omission of such
CUSIP or ISIN numbers.
SECTION 3.13. Notification of Withholding.
---------------------------
The Company shall notify the Trustee in writing of
the necessity, if any, to withhold any amounts from payments
to Holders (and the amount of any such withholding) arising
from the delivery by a Holder of any certificate pursuant to
Section 2.5 or 3.11.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to
be of further effect (except as to any surviving rights of
conversion, or registration of transfer or exchange, or
replacement of Securities herein expressly provided for and
any right to receive Additional Amounts and Bearer
Additional Amounts as provided in the forms of Securities
set forth in Section 2.2 and the Company's obligations to
the Trustee pursuant to Section 6.7), and the Trustee, at
the expense of the Company, shall execute proper instruments
in form and substance satisfactory to the Trustee
acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore authen
ticated and delivered and all coupons appertaining
thereto (other than (i) Securities and coupons
which have been destroyed, lost or stolen and
which have been replaced or paid as provided in
Section 3.6, (ii) coupons appertaining to
Securities called for redemption or repurchased
and maturing after the relevant Redemption Date or
Repurchase Date, as the case may be, whose
surrender has been waived as provided in Section
11.6 and (iii) Securities and coupons for whose
payment money has theretofore been deposited in
trust or segregated and held in trust by the
Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section
10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities and all
coupons appertaining thereto not theretofore
delivered to
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<PAGE> 114
the Trustee or the Paying Agent in London or its
agent for cancellation (other than Securities or
coupons referred to in clauses (i) through (iii)
of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at
their Stated Maturity within one year, or
(iii) are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of clause (i),
(ii) or (iii) above, has deposited or caused to be
deposited with the Trustee as trust funds
(immediately available to the Holders in the case
of clause (i)) in trust for the purpose an amount
sufficient to pay and discharge the entire
indebtedness on such Securities and coupons not
theretofore delivered to the Trustee for cancella
tion, for principal, premium, if any, and interest
(including any applicable Additional Amounts and
Bearer Additional Amounts) to the date of such
deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(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.
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<PAGE> 115
Notwithstanding the satisfaction and discharge of
this Indenture, the obligations of the Company to the
Trustee under Section 6.7, the obligations of the Company to
any Authenticating Agent under Section 6.12, the obligation
of the Company to pay Additional Amounts and Bearer
Additional Amounts and, if money shall have been deposited
with the Trustee pursuant to clause (1)(B) of this Section
4.1, the obligations of the Trustee under Section 4.2 and
the last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of
Section 10.3, all money deposited with the Trustee pursuant
to Section 4.1 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the
coupons and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as
its own Paying Agent), to the Persons entitled thereto, of
the principal, premium, if any, and interest for whose
payment such money has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to
Section 4.1 (and held by it or any Paying Agent) for the
payment of Securities subsequently converted shall be
returned to the Company upon Company Request.
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ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default.
-----------------
"Event of Default", wherever used herein, means
any one of the following events (whatever the reason for
such Event of Default and whether it shall be occasioned by
the provisions of Article Thirteen or be voluntary or invol
untary 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
(including any Additional Amount or Bearer Additional
Amount) 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 of or
premium, if any, on 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 the
performance or breach of which is specifically dealt
with elsewhere in this Section), 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) a default under any bond, debenture, note or
other evidence of indebtedness for money borrowed by
the Company or under any mortgage, indenture or
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instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for
money borrowed by the Company, whether such
indebtedness now exists or shall hereafter be created,
which default shall have resulted in indebtedness in an
amount in excess of U.S.$15,000,000 becoming or being
declared due and payable prior to the date on which it
would otherwise have become due and payable, without
such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within
a period of 30 days after there shall have been given,
by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the
Outstanding Securities a written notice specifying such
default and requiring the Company to cause such
indebtedness to be discharged or cause such default to
be cured or waived or such acceleration to be rescinded
or annulled and stating that such notice is a "Notice
of Default" hereunder; or
(5) the entry by a court having jurisdiction in
the premises of (A) a decree or order for relief in
respect of the Company in an involuntary case or
proceeding under any applicable 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
unstayed and in effect for a period of 60 consecutive
days; or
(6) the commencement by the Company of a
voluntary case or proceeding under any applicable
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Federal or State bankruptcy, insolvency, reorganization
or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for
relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any bankruptcy or
insolvency proceedings against it, or the filing by it
of a petition or answer or consent seeking
reorganization or similar 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 5.2. Acceleration of Maturity; Rescission
and Annulment.
------------------------------------
If an Event of Default occurs and is continuing,
then in every such case the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding
Securities may declare the principal 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 the Holders),
and upon any such declaration such principal and all accrued
interest thereon shall become immediately due and payable.
At any time after such 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 herein
after in this Article Five 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
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(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all
Securities,
(B) the principal of and premium, if
any, on any Securities which have become due
otherwise than by such declaration of acceleration
and any 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 a rate of 4-1/2% per annum, 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, and any interest on,
Securities which have become due solely by such
declaration of acceleration, have been cured or waived
as provided in Section 5.13.
No rescission or annulment referred to above shall
affect any subsequent default or impair any right consequent
thereon.
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee.
------------------------------------
The Company covenants that if
(1) default is made in the payment of any
interest (including any Additional Amounts and Bearer
Additional Amounts) on any Security when it becomes due
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and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the
principal of or premium, if any, on 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 and any
coupons appertaining thereto, the whole amount then due and
payable on such Securities and coupons for principal and
interest (including any Additional Amounts and Bearer
Additional Amounts) and interest on any overdue principal
and premium, if any, and on any overdue interest (including
any Additional Amounts and Bearer Additional Amounts), at a
rate of 4-1/2% per annum, and in addition thereto, such
further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid,
may prosecute such proceeding to judgment or final decree
and may enforce the same against the Company or any other
obligor upon the Securities and collect the moneys adjudged
or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing,
the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of
Securities and coupons 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.
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SECTION 5.4. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon
the Securities or coupons or the property of the Company or
of such other obligor or either of their creditors, the
Trustee (irrespective of whether the principal of, and any
interest on, the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any
demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole
amount of principal, premium, if any, and interest
owing and unpaid in respect of the Securities and take
such other actions, including participating as a
member, voting or otherwise, of any official committee
of creditors appointed in such matter, and to file such
other papers or documents, in each of the foregoing
cases, as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel)
and of the Holders of Securities and coupons allowed in
such judicial proceeding, and
(2) to collect and receive any moneys or other
property payable or deliverable on any such claim and
to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder of Securities
and coupons 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 of Securities and coupons,
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to pay to the Trustee any amount due to it for the reason
able compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any other amounts
due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to autho
rize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder of a Security or coupon any
plan of reorganization, arrangement, adjustment or compo
sition affecting the Securities or the coupons or the rights
of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder of a Security or coupon
in any such proceeding; PROVIDED, HOWEVER, that the Trustee
may, on behalf of such Holders, vote for the election of a
trustee in bankruptcy or similar official.
SECTION 5.5. Trustee May Enforce Claims Without Possession
of Securities or Coupons.
---------------------------------------------
All rights of action and claims under this
Indenture or the Securities or coupons may be prosecuted and
enforced by the Trustee without the possession of any of the
Securities or coupons 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 and coupons in respect of
which judgment has been recovered.
SECTION 5.6. Application of Money Collected.
------------------------------
Subject to Article Thirteen, any money collected
by the Trustee pursuant to this Article Five 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, premium, if any, or interest,
upon presentation of the Securities or coupons, or both, as
the
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case may be, 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 6.7;
SECOND: To the payment of the amounts then due
and unpaid for principal, premium, if any, or interest
on the Securities and coupons 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 and coupons for principal, premium, if any,
and interest, respectively; and
THIRD: Any remaining amounts shall be repaid to
the Company.
SECTION 5.7. Limitation on Suits.
-------------------
No Holder of any Security or coupon shall have any
right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder,
unless:
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance
with such request;
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(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed
to institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-
day period by the Holders of a majority in principal
amount of the Outstanding Securities;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or seek to obtain
priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all
such Holders.
SECTION 5.8. Unconditional Right of Holders to
Receive Principal, Premium and Interest
and to Convert.
---------------------------------------
Notwithstanding any other provision in this
Indenture, the Holder of any Security or coupon shall have
the right, which is absolute and unconditional, to receive
payment of the principal of, premium, if any, and (subject
to Section 3.7) interest on such Security or payment of such
coupon on the respective Stated Maturities expressed in such
Security or coupon (or, in the case of redemption or
repurchase, on the Redemption Date or Repurchase Date, as
the case may be), 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.
SECTION 5.9. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder of a Security or
coupon has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been
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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 of
Securities and coupons shall be restored severally and
respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and such
Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or
stolen Securities or coupons in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Securities or
coupons is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of
any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any
Holder of any Security or coupon 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 any acquiescence therein. Every right
and remedy given by this Article Five or by law to the
Trustee or to the Holders of Securities or coupons may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or (subject to the limitations
contained in this Indenture) by the Holders of Securities or
coupons, as the case may be.
SECTION 5.12. Control by Holders of Securities.
--------------------------------
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The Holders of a majority in principal amount of
the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with
such direction.
SECTION 5.13. Waiver of Past Defaults.
-----------------------
The Holders, either (a) through the written
consent of not less than a majority in principal amount of
the Outstanding Securities, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of
at least 66-2/3% in principal amount of the Outstanding
Securities represented at such meeting, may on behalf of the
Holders of all the Securities and coupons waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of, premium, if any, or
interest on any Security, or (2) in respect of a covenant or
provision hereof which under Article Eight 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 5.14. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each
Holder of any Security or coupon by his acceptance thereof
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shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it
as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 5.14 shall not
apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder of any Security or
coupon for the enforcement of the payment of the principal
of, premium, if any, or interest on any Security or the
payment of any coupon on or after the respective Stated
Maturity or Maturities expressed in such Security or coupon
(or, in the case of redemption or repurchase, on or after
the Redemption Date or Repurchase Date, as the case may be)
or for the enforcement of the right to convert any Security
in accordance with Article Twelve.
SECTION 5.15. 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.
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ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any
such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Indenture, but not to verify
the contents thereof.
(b) In case an Event of Default has occurred and
is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its
own wilful misconduct, EXCEPT that
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(1) this paragraph (c) shall not be construed to
limit the effect of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the
Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;
and
(4) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or other
wise 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 reason
able grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
------------------
Within 90 days after the occurrence of any default
hereunder as to which the Trustee has received written
notice, the Trustee shall give to all Holders of Securities,
in the manner provided in Section 1.6, notice of such
default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a
default in the payment of the principal of, premium, if any,
or interest
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on any Security or coupon, the Trustee shall be protected
in withholding such notice if and so long as the board
of directors, the executive committee or a trust committee
of directors or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice
is in the interest of the Holders; and PROVIDED, FURTHER,
that in the case of any default of the character specified
in Section 5.1(3), no such notice to Holders of Securities
shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
SECTION 6.3. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6.1:
(1) the Trustee may rely and shall be protected
in acting or refraining from acting upon any resolu
tion, Officers' Certificate, other certificate,
statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture,
note, coupon, other evidence of indebtedness or other
paper or document believed by it to be genuine and to
have been signed or presented by the proper party or
parties;
(2) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of
the Board of Directors shall be sufficiently evidenced
by a Board Resolution;
(3) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a
matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically pre
scribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
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(4) the Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of
the Holders of Securities or coupons 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;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon, other evidence of
indebtedness or other paper or document, but the
Trustee 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;
(7) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(8) the permissive right of the Trustee to take
or refrain from taking any actions enumerated in this
Indenture shall not be construed as a duty and the
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Trustee shall not be answerable in such actions other
than for its own negligence or willful misconduct; and
(9) the Trustee shall not be liable for any
action taken, suffered or omitted to be taken by it in
good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by the Indenture.
SECTION 6.4. Not Responsible for Recitals or Issuance
of Securities.
----------------------------------------
The recitals contained herein and in the
Securities (except the Trustee's certificates of authen
tication) and in the coupons 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, of the Securities or coupons, or of the Common
Stock issuable upon the conversion of the Securities. The
Trustee shall not be accountable for the use or application
by the Company of Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities, Act as Trustee
Under Other Indentures.
-----------------------------------
The Trustee, any Authenticating Agent, any Paying
Agent, any Conversion Agent or any other agent of the
Company or the Trustee, in its individual or any other capa
city, may become the owner or pledgee of Securities and
coupons and may otherwise deal with the Company with the
same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Conversion Agent or such
other agent.
The Trustee may become and act as trustee under
other indentures under which other securities, or certifi
cates of interest or participation in other securities, of
the Company are outstanding in the same manner as if it were
not Trustee hereunder.
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SECTION 6.6. 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 in writing with the Company.
SECTION 6.7. Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time
such compensation as the Company and the Trustee
shall from time to time agree in writing 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, expenses and reasonable
attorneys' fees of defending itself against any
claim or liability in connection with the exercise
or performance of any of its powers or duties
hereunder.
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When the Trustee incurs expenses or renders
services in connection with an Event of Default specified in
Section 5.1(5) or Section 5.1(6), the expenses (including
the reasonable charges of its counsel) and the compensation
for the services are intended to constitute expenses of the
administration under any applicable Federal or state
bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the
termination of this Indenture.
SECTION 6.8. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder
which shall 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 exercise corporate trust powers, having a combined
capital and surplus of at least U.S.$50,000,000, subject to
supervision or examination by federal or state authority, in
good standing and having an established place of business in
the Borough of Manhattan, The City of New York, and the City
of London, England. If such corporation publishes reports
of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority,
then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this
Article and a successor shall be appointed pursuant to
Section 6.9.
SECTION 6.9. 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
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appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 6.10
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 the
Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been
delivered to the Trustee within 30 days after the giving of
such notice of removal, the removed Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
(d) If at any time:
(1) the Trustee shall cease to be eligible under
Section 6.8 and shall fail to resign after written
request therefor by the Company or by any Holder of a
Security who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case (i) the Company by a Board Resolution
may remove the Trustee, or (ii) subject to Section 5.14, any
Holder of a Security who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself
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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 and
shall comply with the applicable requirements of this
Section and Section 6.10. 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 in
accordance with the applicable requirements of Section 6.10,
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
of Securities and accepted appointment in the manner
required by this Section and Section 6.10, any Holder of a
Security 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 of
Securities in the manner provided in Section 1.6. Each
notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
SECTION 6.10. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee,
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without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument trans
ferring 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 eligible under this Article.
SECTION 6.11. 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 of the
corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, PROVIDED such corpora
tion shall be otherwise 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 6.12. Authenticating Agents.
---------------------
The Paying Agent in London may authenticate the
Temporary Global Bearer Security and Bearer Securities, and
Banque Internationale # Luxembourg S.A. may authenticate
Bearer Securities, in each case as the Trustee's
Authenticating Agent. The Trustee may, with the consent of
the Company, appoint an additional Authenticating Agent or
Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon exchange or
substitution pursuant to this Indenture.
Securities authenticated by an Authenticating
Agent 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, and every reference
in this Indenture to the authentication and delivery of
Securities by the Trustee or the Trustee's certificate of
authentication 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 subject to acceptance by 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, the District of Columbia, England and Wales
or Luxembourg, authorized under such laws to act as
Authenticating Agent and subject to supervision or
examination by government or other fiscal authority. If at
any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 6.12, such
Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section 6.12.
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
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Authenticating Agent, shall continue to be an Authenticating
Agent, PROVIDED such corporation shall be otherwise eligible
under this Section 6.12, 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 6.12, the Trustee may appoint a
successor Authenticating Agent which shall be subject to
acceptance by the Company. 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 6.12.
The Company agrees to pay to each Authenticating
Agent from time to time reasonable compensation for its
services under this Section 6.12.
If an Authenticating Agent is appointed with
respect to the Securities pursuant to this Section 6.12, the
Securities may have endorsed thereon, in addition to or in
lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following
form:
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This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: MARINE MIDLAND BANK,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By ___________________________
Authorized Signatory
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ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. 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 all 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 all or substantially all of its properties
and assets 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, limited liability
company, 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 supple
mental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and
punctual payment of the principal of, premium, if any,
and interest (including Additional Amounts and Bearer
Additional Amounts, if any, payable pursuant to Section
10.4) on all of the Securities and coupons, as
applicable, 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 Article Twelve;
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(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 (except in the case
of the merger of any Person into the Company where the
Common Stock is not converted into or exchanged for the
right to receive cash, property or securities, or the
conveyance, transfer or lease by any Person of its
properties and assets substantially as an entirety to
the Company) 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 comply with this Article and that all
conditions precedent herein provided for relating to
such transaction have been complied with, together with
any documents required under Section 8.3.
SECTION 7.2. 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 all or substantially all
the properties and assets of the Company in accordance with
Section 7.1, 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, the
Securities and the coupons, if any.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Holders of Securities or Coupons.
------------------------------------------
Without the consent of any Holders of Securities
or coupons, 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, 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 and obligations of the Company herein
and in the Securities and coupons as permitted by this
Indenture; or
(2) to add to the covenants of the Company for
the benefit of the Holders of Securities or coupons, or
to surrender any right or power herein conferred upon
the Company; or
(3) to secure the Securities; or
(4) to permit Registered Securities to be
exchanged for Bearer Securities or to remove or relax
the restrictions on payment of principal, premium, if
any, or interest in respect of Bearer Securities in the
United States to the extent then permitted under the
Code and applicable regulations of the United States
Treasury Department; PROVIDED, HOWEVER, that no adverse
consequences would result to any Holder; or
(5) to make provision with respect to the
conversion rights of Holders of Securities pursuant to
Section 12.11; or
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(6) to cure any ambiguity, to correct or
supplement any provision herein which may be
inconsistent with any other provision herein or which
is otherwise defective, or to make any other provisions
with respect to matters or questions arising under this
Indenture as the Company and the Trustee may deem
necessary or desirable, PROVIDED, such action pursuant
to this clause (6) shall not adversely affect the
interests of the Holders of Securities or coupons.
Upon Company Request, accompanied by a Board
Resolution authorizing the execution of any such
supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3
hereof, the Trustee shall join with the Company in the
execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be
therein contained.
SECTION 8.2. Supplemental Indentures with Consent of
Holders of Securities.
---------------------------------------
With either (a) the written consent of the Holders
of not less than a majority in principal amount of the
Outstanding Securities, by the Act of said Holders delivered
to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of
66-2/3% in principal amount of the Outstanding Securities
represented at such meeting, the Company, when authorized by
a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of
Securities or coupons under this Indenture; PROVIDED,
however, that no such supplemental indenture shall, without
the consent or affirmative vote of the Holder of each
Outstanding Security or coupon affected thereby,
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(1) change the Stated Maturity of the principal
of, or any installment of interest on, any Security, or
reduce the principal amount or the rate of interest
payable thereon or any premium payable upon redemption
or repurchase thereof, or change the obligation of the
Company to pay Additional Amounts and any Bearer
Additional Amounts pursuant to Section 10.4, or change
the coin or currency in which any Security or the
interest or any premium thereon or any other amount in
respect thereof is payable, or impair the right to
institute suit for the enforcement of any payment in
respect of any Security or coupon on or after the
Stated Maturity thereof (or, in the case of redemption
or any repurchase, on or after the Redemption Date or
Repurchase Date, as the case may be) or, except as
permitted by Section 12.11, 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 of Securities or coupons, or
(2) reduce the requirements of Section 9.4 for
quorum or voting, or reduce the percentage in principal
amount of the Outstanding Securities the consent of
whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required
for any waiver (of compliance with certain provisions
of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture, or
(3) modify the obligation of the Company to
maintain an office or agency in the Borough of
Manhattan, The City of New York, and in a city in a
Western European country (or Luxembourg in particular
if so required) pursuant to Section 10.2, or
(4) modify any of the provisions of this Section
or Section 5.13 or 10.12, except to increase any
percentage contained herein or therein or to provide
that certain other provisions of this Indenture cannot
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<PAGE> 146
be modified or waived without the consent of the Holder
of each Outstanding Security affected thereby; or
(5) modify the provisions of Article Fourteen in
a manner adverse to the Holders; or
(6) modify any of the provisions of Section 10.10
or 10.11.
It shall not be necessary for any Act of Holders
of Securities 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 8.3. 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 Sections 6.1 and 6.3) 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, that such
supplemental indenture has been duly authorized, executed
and delivered by the Company and constitutes a valid and
legally binding obligation of the Company enforceable
against the Company in accordance with its terms. 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 8.4. 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 and of any coupons appertaining
thereto shall be bound thereby.
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SECTION 8.5. Reference in Securities to Supplemental
Indentures.
---------------------------------------
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company
shall so determine, new Securities so modified as to
conform, in the opinion of the Company and the Trustee, to
any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities.
SECTION 8.6. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and
the Trustee of any supplemental indenture pursuant to the
provisions of Section 8.2, the Company shall give notice to
all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture,
in the manner provided in Section 1.6. Any failure of the
Company to give such notice, or any defect therein, shall
not in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Holders of Securities may be called
at any time and from time to time pursuant to this Article
to make, give or take any request, demand, authorization,
direction, notice, consent, waiver or other action provided
by this Indenture to be made, given or taken by Holders of
Securities.
SECTION 9.2. Call, Notice and Place of Meetings.
----------------------------------
(a) The Trustee may at any time call a meeting of
Holders of Securities for any purpose specified in
Section 9.1, to be held at such time and at such place in
the Borough of Manhattan, The City of New York, or in the
City of London, England, as the Trustee shall determine.
Notice of every meeting of Holders of Securities, setting
forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall
be given, in the manner provided in Section 1.6, not less
than 21 nor more than 180 days prior to the date fixed for
the meeting.
(b) In case at any time the Company, pursuant to
a Board Resolution, or the Holders of at least 10% in
principal amount of the Outstanding Securities shall have
requested the Trustee to call a meeting of the Holders of
Securities for any purpose specified in Section 9.1, by
written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee
shall not have made the first publication of the notice of
such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held
as provided herein, then the Company or the Holders of
Securities in the amount specified, as the case may be, may
determine the time and the place in the Borough of
Manhattan, The City of New York, or in the City of London,
England, for
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such meeting and may call such meeting for such purposes
by giving notice thereof as provided in paragraph (a) of
this Section.
SECTION 9.3. Persons Entitled to Vote at Meetings.
------------------------------------
To be entitled to vote at any meeting of Holders
of Securities, a Person shall be (a) a Holder of one or more
Outstanding Securities, or (b) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or
Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 9.4. Quorum; Action.
--------------
The Persons entitled to vote a majority in
principal amount of the Outstanding Securities shall
constitute a quorum. In the absence of a quorum within 30
minutes of the time appointed for any such meeting, the
meeting shall, if convened at the request of Holders of
Securities, be dissolved. In any other case, the meeting
may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at
any such adjourned meeting, such adjourned meeting may be
further adjourned for a period not less than 10 days as
determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting (subject to repeated
applications of this sentence). Notice of the reconvening
of any adjourned meeting shall be given as provided in
Section 9.2(a), except that such notice need be given only
once not less than five days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly
the percentage of the principal amount of the Outstanding
Securities which shall constitute a quorum.
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Subject to the foregoing, at the reconvening of
any meeting adjourned for a lack of a quorum, the Persons
entitled to vote 25% in principal amount of the Outstanding
Securities at the time shall constitute a quorum for the
taking of any action set forth in the notice of the original
meeting.
At a meeting or an adjourned meeting duly
reconvened and at which a quorum is present as aforesaid,
any resolution and all matters (except as limited by the
proviso to Section 8.2) shall be effectively passed and
decided if passed or decided by the Persons entitled to vote
not less than 66-2/3% in principal amount of Outstanding
Securities represented and entitled to vote at such meeting.
Any resolution passed or decisions taken at any
meeting of Holders of Securities duly held in accordance
with this Section shall be binding on all the Holders of
Securities and coupons, whether or not present or
represented at the meeting. The Trustee shall, in the name
and at the expense of the Company, notify all the Holders of
Securities of any such resolutions or decisions pursuant to
Section 1.6.
SECTION 9.5. Determination of Voting Rights; Conduct
and Adjournment of Meetings.
---------------------------------------
(a) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations
as it may deem advisable for any meeting of Holders of
Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by
any such regulations, the holding of Securities shall be
proved in the manner specified in Section 1.4 and the
appointment of any proxy shall be proved in the manner
specified in Section 1.4 or by having the signature of the
Person executing the proxy
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witnessed or certified by any officer authorized by Section
1.4(c) to certify to the holding of Bearer Securities.
(b) The Trustee shall, by an instrument in
writing, appoint a temporary chairman (which may be the
Trustee) of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as
provided in Section 9.2(b), in which case the Company or the
Holders of Securities calling the meeting, as the case may
be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a
majority in principal amount of the Outstanding Securities
represented at the meeting.
(c) At any meeting, each Holder of a Security or
proxy shall be entitled to one vote for each U.S.$1,000
principal amount of Securities held or represented by him;
PROVIDED, HOWEVER, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly
called pursuant to Section 9.2 at which a quorum is present
may be adjourned from time to time by Persons entitled to
vote a majority in principal amount of the Outstanding
Securities represented at the meeting, and the meeting may
be held as so adjourned without further notice.
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SECTION 9.6. Counting Votes and Recording Action
of Meetings.
-----------------------------------
The vote upon any resolution submitted to any
meeting of Holders of Securities shall be by written ballots
on which shall be subscribed the signatures of the Holders
of Securities or of their representatives by proxy and the
principal amounts at Stated Maturity and serial numbers of
the Outstanding Securities held or represented by them. The
permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and
file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the
proceedings of each meeting of Holders of Securities shall
be prepared by the secretary of the meeting and there shall
be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more Persons having knowledge of the
facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy
shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting. Any
record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees that it will duly
and punctually pay the principal of and premium, if any, and
interest on the Securities in accordance with the terms of
the Securities, the coupons appertaining thereto and this
Indenture. The interest due on the Bearer Securities on or
before Maturity, other than Additional Amounts and Bearer
Additional Amounts payable as provided in Section 10.4 in
respect of principal of such a Security, shall be payable
only upon presentation and surrender of the several coupons
for such interest installments as are evidenced thereby as
they severally mature. The Company will deposit or cause to
be deposited with the Trustee, one Business Day prior to the
Stated Maturity of any Security or one Business Day prior to
the due date for any installment of interest, all payments
so due, which payments shall be in immediately available
funds on the date of such Stated Maturity or due date, as
the case may be.
SECTION 10.2. Maintenance of Offices or Agencies.
----------------------------------
The Company hereby appoints (a) the Corporate
Trust Office of the Trustee as its agent in the Borough of
Manhattan, The City of New York, where Registered Securities
may be presented or surrendered for payment, where Bearer
Securities and coupons may be presented or surrendered for
payment in the circumstances described below (and not
otherwise), where Registered Securities may be surrendered
for registration of transfer or exchange, where Registered
Securities may be surrendered for conversion, where Bearer
Securities may be surrendered for conversion in the
circumstances described below (and not otherwise) and where
notices and demands to or upon the Company in respect of the
Securities and coupons and this Indenture may be served, and
(b) (i) the office of Midland Bank plc, Mariner House, Pepys
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Street, London EC3N 4DA, England and (ii) the office of
Banque Internationale # Luxembourg S.A., 69, route d'Esch,
L-1470 Luxembourg, as its agents outside of the United
States where, subject to any applicable laws or regulations,
Bearer Securities and coupons may be presented and
surrendered for payment, where, subject to any applicable
laws and regulations, Registered Securities may be
surrendered for payment, where Registered Securities may be
surrendered for registration of transfer or exchange, where
Bearer Securities may be presented for exchange, and where
Securities may be surrendered for conversion. As provided
in the form of Bearer Securities set forth in
Section 2.2(a), payment of principal of, premium, if any, or
interest on Bearer Securities, including any Additional
Amounts and any Bearer Additional Amounts payable on Bearer
Securities pursuant to Section 10.4, may be made, and Bearer
Securities may be surrendered for conversion, at the
Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York, if (but only if) payment of
the full amount of such principal, interest, Additional
Amounts or Bearer Additional Amounts, or surrender of Bearer
Securities for conversion, as the case may be, at all
offices outside the United States maintained for such
purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or
other similar restrictions on the full payment or receipt of
such amounts in United States Dollars, as determined by the
Company, or on the surrender of any Bearer Securities for
conversion.
The Company may at any time and from time to time
vary or terminate the appointment of any such agent or
appoint any additional agents for any or all of such pur
poses; PROVIDED, HOWEVER, that until all of the Securities
have been delivered to the Trustee for cancellation, or
moneys sufficient to pay the principal of, premium, if any,
and interest on the Securities have been made available for
payment and either paid or returned to the Company pursuant
to the provisions of Section 10.3, the Company will maintain
(1) in the Borough of Manhattan, The City of New York, an
office or agency where Registered Securities may be
presented or surrendered for payment and conversion, where
Bearer
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Securities and coupons may be presented or surrendered
for payment and conversion in the circumstances
described in the last sentence of the first paragraph of
this Section (and not otherwise), where Registered
Securities may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the
Company in respect of the Securities and coupons and this
Indenture may be served, and (2) subject to any laws or
regulations applicable thereto, in any city in a Western
European country, an office or agency where Securities and
coupons may be presented and surrendered for payment and
where Securities may be presented for registration of
transfer or exchange or conversion; and PROVIDED, FURTHER,
that so long as the Securities are listed on the Luxembourg
Stock Exchange and such stock exchange shall so require, the
Company will maintain a Paying Agent and Conversion Agent in
Luxembourg. The Company will give prompt written notice to
the Trustee, and notice to the Holders in accordance with
Section 1.6, of the appointment or termination of any such
agents and of the location and any change in the location of
any 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, presentations and
surrenders may be made and notices and demands may be served
on the Corporate Trust Office of the Trustee, except that
Bearer Securities and coupons may be presented and
surrendered for payment and conversion to the Paying Agent
in London at its office in the City of London, England or
other Paying Agent or conversion agent outside the United
States, and the Company hereby appoints the Paying Agent in
London as its agent to receive such respective
presentations, surrenders, notices and demands.
SECTION 10.3. Money for Security Payments To Be Held
in Trust.
--------------------------------------
If the Company shall act as its own Paying Agent,
it will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons
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entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided and the Company 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, one Business Day prior to each due date of
the principal of, premium, if any, or interest on any
Securities, deposit with the Trustee a sum sufficient to pay
the principal, premium, if any, or interest so becoming due,
such sum to be held for the benefit of the Persons entitled
to such principal, premium, if any, or interest, and (unless
such Paying Agent is the Trustee) the Company will promptly
notify the Trustee of any 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:
(1) hold all sums held by it for the payment of
the principal of, premium, if any, or interest on
Securities for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in
the making of any payment of principal, premium, if
any, or interest; and
(3) at any time during the continuance of any
such default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held by such
Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture
or for any other purpose, pay, or by Company Order direct
any
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Paying Agent to pay, to the Trustee all sums held in trust
by the Company or such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which
such sums were held by the Company or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment
of the principal of, premium, if any, or interest on any
Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and
payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such
trust; and the Holder of such Security or any coupon
appertaining thereto 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 an
Authorized Newspaper in each Place of Payment, notice that
such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 10.4. Additional Amounts and Bearer
Additional Amounts.
-----------------------------
The Company will pay to the Holder of any Bearer
Security or any coupon appertaining thereto Additional
Amounts and Bearer Additional Amounts as provided in the
form of Bearer Security and to a Holder of any Registered
Security Additional Amounts as provided in the form of
Registered Security, in each case set forth in Section 2.2.
Whenever in this Indenture there is mentioned, in any
context, the payment of the principal of, premium, if any,
or interest on,
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or in respect of, any Security or any coupon, such
mention shall be deemed to include mention of the payment
of Additional Amounts and Bearer Additional Amounts
provided for in this Section to the extent that, in
such context, Additional Amounts and Bearer Additional
Amounts are, were or would be payable in respect thereof
pursuant to the provisions of this Section and express
mention of the payment of Additional Amounts and Bearer
Additional Amounts (if applicable) in any provisions hereof
shall not be construed as excluding Additional Amounts and
Bearer Additional Amounts in those provisions hereof where
such express mention is not made.
At least 10 days prior to October 1, 1996 or an
earlier Redemption Date or Repurchase Date (and at least
10 days prior to each date of payment of principal, premium,
if any, or interest after October 1, 1996 or such earlier
Redemption Date or Repurchase Date, if there has been any
change with respect to the matters set forth in the below-
mentioned Officers' Certificate), the Company will furnish
the Trustee and the Company's Paying Agents in London,
England, and in the Borough of Manhattan, The City of New
York, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agents
whether such payment of principal of, premium, if any, or
interest on the Securities shall be made to Holders of
Securities or coupons who are not United States persons
without withholding for or on account of any tax, assessment
or other governmental charge described in the second
paragraph of the face of the forms of Definitive Securities
set forth in Section 2.2. If any such withholding shall be
required, then such Officers' Certificate shall specify by
country the amount, if any, required to be withheld on such
payments to such Holders of Securities or coupons and the
Company will pay to the Trustee or the Paying Agent in
London the Additional Amounts required by this Section to be
paid in the event of any such withholding. The Company
covenants to indemnify the Trustee and any Paying Agent for,
and to hold them harmless against, any loss, liability or
expense arising out of or in connection with actions taken
or omitted by any of them in reliance on any Officers'
Certificate furnished
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pursuant to this Section, except to the extent such loss,
liability or expense is attributable to the Trustee's
negligence or bad faith.
SECTION 10.5. Existence.
---------
Subject to Article Seven, the Company will do or
cause to be done all things necessary to preserve and keep
in full force and effect its existence, rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the
Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct
of the business of the Company and that the loss thereof is
not disadvantageous in any material respect to the Holders.
SECTION 10.6. Maintenance of Properties.
-------------------------
The Company will cause all properties used or
useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at
all times; PROVIDED, however, that nothing in this Section
shall prevent the Company from discontinuing the operation
or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect
to the Holders.
SECTION 10.7. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge, or cause to be
paid or discharged, before the same may become delinquent,
(1) all taxes, assessments and governmental charges levied
or imposed upon the Company or any Subsidiary or upon the
income, profits or property of the Company or any
Subsidiary,
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(2) all claims for labor, materials and supplies which, if
unpaid, might by law become a lien or charge upon the
property of the Company or any Subsidiary, and (3) all
stamps and other duties, if any, which may be imposed by the
United States or the United Kingdom or any political
subdivision thereof or therein in connection with the
issuance, transfer, exchange or conversion of any Securities
or coupons or with respect to this Indenture; PROVIDED,
HOWEVER, that, in the case of clauses (1) and (2), the
Company shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 10.8. Registration and Listing.
------------------------
Within a reasonable time after the issuance of the
Temporary Global Bearer Security, the Company (i) will
effect all registrations with, and obtain all approvals by,
all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities
Act, the Exchange Act and state securities and Blue Sky
laws) before the shares of Common Stock issuable upon
conversion of Securities may be lawfully issued and
delivered, and thereafter publicly traded (if permissible
under the Securities Act), and qualified or listed as
contemplated by clause (ii) (it being understood that the
Company shall not be required to register the Securities
under the Securities Act); and (ii) will qualify the shares
of Common Stock required to be issued and delivered upon
conversion of Securities prior to such issuance or delivery
for quotation on the Nasdaq National Market or, if the
Common Stock is not then quoted on the Nasdaq National
Market, list the Common Stock on each national securities
exchange on which outstanding Common Stock is listed at the
time of such delivery.
SECTION 10.9. Statement by Officers as to Default.
-----------------------------------
The Company shall deliver to the Trustee within
120 days after the end of each fiscal year of the Company an
Officers' Certificate stating whether or not to the best
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knowledge of the signers thereof any default exists in the
performance and observance of any of the terms, provisions
and conditions of this Article Ten 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 10.10. Delivery of Certain Information.
-------------------------------
At any time when the Company is not subject to
Section 13 or 15(d) of the Exchange Act, upon the request of
a Holder of a Restricted Security or the holder of shares of
Common Stock issued upon conversion thereof, the Company
will promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder of Restricted
Securities or such holder of shares of Common Stock issued
upon conversion of Restricted Securities, or to a
prospective purchaser of any such security designated by any
such Holder or holder, as the case may be, to the extent
required to permit compliance by such Holder or holder with
Rule 144A under the Securities Act (or any successor
provision thereto) in connection with the resale of any such
security; PROVIDED, HOWEVER, that the Company shall not be
required to furnish such information in connection with any
request made on or after the date which is three years from
the later of (i) the date such a security (or any such
predecessor security) was last acquired from the Company or
(ii) the date such a security (or any such predecessor
security) was last acquired from an "affiliate" of the
Company within the meaning of Rule 144 under the Securities
Act (or any successor provision thereto). "Rule 144A
Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto).
SECTION 10.11. Resale of Certain Securities; Reporting
---------------------------------------
Issuer.
- - ------
During the period beginning on October 5, 1995 and
ending on the date that is three years from such date, the
Company will not, and will not permit any of its
"affiliates" (as defined under Rule 144 under the Securities
Act or any successor provision thereto) to, resell (x) any
Securities
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which constitute "restricted securities" under Rule 144 or
(y) any securities into which the Securities have been
converted under this Indenture which constitute
"restricted securities" under Rule 144, that in either case
have been reacquired by any of them. The Trustee shall have
no responsibility in respect of the Company's performance of
its agreement in the preceding sentence. The Company will
continue to be a "reporting issuer" for purposes of Rule 903
under the Securities Act until the full principal amount of
the Temporary Global Bearer Security has been exchanged for
Bearer Securities in accordance with this Indenture.
SECTION 10.12. Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to
comply with any convenant or conditions set forth in
Sections 10.5 to 10.7, inclusive (other than a covenant or
condition which under Article Eight cannot be modified or
amended without the consent of the Holder of each
Outstanding Security affected), if before the time for such
compliance the Holders shall, through the written consent
of, or the adoption of a resolution at a meeting of Holders
of the Outstanding Securities at which a quorum is present
by, not less than a majority in principal amount of the
Outstanding Securities, either waive such compliance in such
instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee or
any Paying or Conversion Agent in respect of any such
covenant or condition shall remain in full force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption.
-------------------
The Securities may be redeemed in accordance with
the provisions of the forms of Securities set forth in Sec
tion 2.2.
SECTION 11.2. Applicability of Article.
------------------------
Redemption of Securities at the election of the
Company or otherwise, as permitted or required by any
provision of the Securities or this Indenture, shall be made
in accordance with such provision and this Article Eleven.
SECTION 11.3. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any
Securities shall be evidenced by a Board Resolution. In
case of any redemption at the election of the Company of any
of the Securities, the Company shall, at least 60 days (or
75 days in the case of a redemption pursuant to the fourth
paragraph of the reverse of the form of Bearer Security set
forth in Section 2.2(a)) prior to the Redemption Date fixed
by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing
of such Redemption Date. If the Securities are to be
redeemed pursuant to an election of the Company which is
subject to a condition specified in the forms of Securities
set forth in Section 2.2, the Company shall furnish the
Trustee with an Officers' Certificate stating that the
Company is entitled to effect such redemption and setting
forth a statement of facts showing that the conditions
precedent to the right of the Company so to redeem have
occurred.
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SECTION 11.4. Selection by Trustee of Securities
to Be Redeemed.
----------------------------------
If less than all the Securities are to be redeemed
(other than pursuant to the third or fourth paragraph on the
reverse of the form of Bearer Security in Section 2.2(a) or
the third paragraph on the reverse of the form of Registered
Security in Section 2.2(b)), the particular Securities to be
redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption,
individually by lot in the case of Bearer Securities, and by
such method as the Trustee may deem substantially equivalent
thereto in the case of Registered Securities and under
circumstances intended not to discriminate between
Registered and Bearer Securities to be redeemed pursuant to
the terms thereof and hereof in the selection of Securities
(or portion thereof) selected for redemption. Partial
redemption must be in an amount not less than U.S.$1,000,000
principal amount of Securities.
If any Registered Security selected for partial
redemption is converted in part before termination of the
conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for
redemption. Securities which have been converted during a
selection of Securities to be redeemed may be treated by the
Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and
each Security Registrar in writing of the securities
selected for redemption and, in the case of any Registered
Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to the
redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part, to the
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portion of the principal amount of such Securities which has
been or is to be redeemed.
SECTION 11.5. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner
provided in Section 1.6 to the Holders of Securities to be
redeemed not less than 20 nor more than 60 days prior to the
Redemption Date, and (except, in the case of a redemption
pursuant to the fourth paragraph of the form of reverse of
the Bearer Security set forth in Section 2.2(a), to the
extent otherwise expressly provided in such form) such
notice shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest,
if any,
(3) if less than all Outstanding Securities are
to be redeemed, the aggregate principal amount of
Securities to be redeemed and the aggregate principal
amount of Securities which will be outstanding after
such partial redemption,
(4) that on the Redemption Date the Redemption
Price, and accrued interest, if any, will become due
and payable upon each such Security to be redeemed, and
that interest thereon shall cease to accrue on and
after said date,
(5) the Conversion Price, the date on which the
right to convert the Securities to be redeemed will
terminate and the places where such Securities,
together with all unmatured coupons and any matured
coupons in default appertaining thereto, may be
surrendered for conversion, and
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(6) the place or places where such Securities,
together with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price and
accrued interest, if any.
In case of a partial redemption, the first notice
given shall specify the last date on which exchanges or
transfers of Securities may be made pursuant to Section 3.5,
and the second notice shall specify the serial and ISIN (if
any) numbers of the Bearer Securities (either individually
or in group, from one number to another, or by last digit or
digits) called for redemption and, in the case of Registered
Securities, the serial and CUSIP numbers (if any) and the
portions thereof called for redemption.
Notice of redemption of Securities to be redeemed
at the election of the Company shall be given by the Company
or, at the Company's request, by the Trustee in the name of
and at the expense of the Company. Notice of redemption of
Securities to be redeemed at the election of the Company
received by the Trustee shall be given by the Trustee to
each Paying Agent in the name of and at the expense of the
Company.
SECTION 11.6. Deposit of Redemption Price.
---------------------------
Not less than one Business Day prior to any
Redemption Date, the Company shall deposit with the Trustee
or with the Paying Agent in London (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust
as provided in Section 10.3) an amount of money (which shall
be in immediately available funds on such Redemption Date)
sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be
redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to
the date of such deposit.
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If any Security called for redemption is
converted, any money deposited with the Trustee or with a
Paying Agent or so segregated and held in trust for the
redemption of such Security shall (subject to any right of
the Holder of such Security, if a Registered Security, or
any Predecessor Security to receive interest as provided in
the last paragraph of Section 3.7) be paid to the Company on
Company Request or, if then held by the Company, shall be
discharged from such trust.
SECTION 11.7. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as
aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption
Price therein specified and from and after such date (unless
the Company shall default in the payment of the Redemption
Price, including accrued interest) such Securities shall
cease to bear interest and the coupons for such interest
appertaining to Bearer Securities shall, except to the
extent provided below, be void. Upon surrender of any
Security for redemption in accordance with said notice,
together with all coupons, if any, appertaining thereto
maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price together with
accrued and unpaid interest to the Redemption Date;
PROVIDED, HOWEVER, that installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable only upon presentation and
surrender of coupons for such interest (at an office or
agency outside the United States, except as otherwise
provided in the form of Bearer Security set forth in
Section 2.2(a)); and PROVIDED, FURTHER, that installments of
interest on Registered Securities whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Record Date
according to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be
so paid upon surrender thereof for redemption, the principal
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amount of, premium, if any, and, to the extent permitted by
applicable law, accrued interest on such Security shall,
until paid, bear interest from the Redemption Date at a rate
of 4-1/2% per annum and each Security shall remain
convertible into Common Stock until the principal of such
Security (or portion thereof, as the case may be) shall have
been paid or duly provided for.
If any Bearer Security surrendered for redemption
shall not be accompanied by all appurtenant coupons maturing
after the Redemption Date, such Security may be paid after
deducting from the Redemption Price an amount equal to the
face amount of all such missing coupons or the surrender of
such missing coupons or coupon may be waived by the Company
and the Trustee or the Paying Agent in London or its agent,
if there be furnished to them such security or indemnity as
they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall
surrender to any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the
Redemption Price, such Holder shall be entitled to receive
the amount so deducted; PROVIDED, HOWEVER, that interest
represented by coupons shall be payable only upon
presentation and surrender of those coupons at an office or
agency located outside of the United States (except as
otherwise provided in the form of Bearer Security set forth
in Section 2.2(a)).
SECTION 11.8. Registered Securities Redeemed in Part.
--------------------------------------
Any Registered Security which is to be redeemed
only in part shall be surrendered at an office or agency of
the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee
duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for
delivery to the Holder of such Registered Security without
service charge, a new Registered Security or Securities, of
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any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Registered
Security so surrendered.
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ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion Price.
-----------------------------------------
Subject to and upon compliance with the provisions
of this Article, at the option of the Holder thereof, any
Security other than the Temporary Global Bearer Security may
be converted into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100th of
a share) of Common Stock of the Company at the Conversion
Price, determined as hereinafter provided, in effect at the
time of conversion. Such conversion right shall commence on
January 3, 1996 and expire at the close of business on
October 1, 2000. In case a Security or portion thereof is
called for redemption or is delivered for repurchase, such
conversion right in respect of the Security or portion so
called shall expire at the close of business on the fifth
Trading Day preceding the Redemption Date or the second
Trading Day preceding the Repurchase Date (as defined in
Article Fourteen), as the case may be, unless the Company
defaults in making the payment due upon redemption or
repurchase, as the case may be.
The price at which shares of Common Stock shall be
delivered upon conversion (herein called the "Conversion
Price") shall be initially U.S.$33 per share of Common
Stock. The Conversion Price shall be adjusted in certain
instances as provided in this Article Twelve.
SECTION 12.2. Exercise of Conversion Privilege.
--------------------------------
In order to exercise the conversion privilege, the
Holder of any Definitive Security to be converted shall
surrender such Security, duly endorsed or assigned to the
Company or in blank (in the case of any Registered
Security), at any office or agency of the Company maintained
for that purpose pursuant to Section 10.2, accompanied by a
duly signed conversion notice substantially in the form set
forth
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in Section 2.5 stating that the Holder elects to convert
such Security or, if less than the entire principal
amount thereof is to be converted (in the case of any
Registered Security), the portion thereof to be converted.
Each Bearer Security surrendered for conversion must be
surrendered together with all coupons appertaining thereto
that mature after the date of conversion. If any Bearer
Security surrendered for conversion shall not be accompanied
by all such appurtenant coupons, the surrender of any or all
of such missing coupons may be waived by the Company and the
Trustee, if there be furnished to them such security or
indemnity as they may require to save each of them and any
Paying Agent harmless. Matured coupons not in default
(including coupons maturing on the date of conversion) will
be payable against surrender thereof, and matured coupons
previously surrendered and in default will continue to be
payable, notwithstanding the exercise of the right of conver
sion by the Holder of the Security to which the coupon apper
tains. Each Registered Security surrendered for conversion
(in whole or in part) during the Interest Period shall be
accompanied by payment in New York Clearing House funds or
other funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the
principal amount of such Registered Security (or part
thereof, as the case may be) being surrendered for
conversion (or, if such Registered Security was issued in
exchange for a Bearer Security after the close of business
on such Regular Record Date, by surrender of one or more
coupons relating to such Interest Payment Date or by both
payment in such funds and surrender of such coupon or
coupons, in either case in an amount equal to the interest
payable on such Interest Payment Date on the principal
amount of such Registered Security (or portion thereof) then
being converted); except that if any Registered Security or
portion thereof has been called for redemption and, pursuant
to Section 12.1 of the Indenture, as a result of such
redemption the right to convert such Registered Security
terminates during an Interest Period, then if such
Registered Security or portion thereof is surrendered for
conversion during such Interest Period such Registered
Security or portion thereof shall be accompanied by payment
in New York Clearing House Funds or other funds acceptable
to
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the Company of an amount equal to the difference between
(i) the interest on the principal amount of such Registered
Security or portion thereof payable on such Interest Payment
Date and (ii) the amount of accrued interest on the
principal amount of such Registered Security or portion
thereof to but not including the date of conversion. The
interest so payable on such Interest Payment Date in respect
of such Registered Security (or portion thereof, as the case
may be) surrendered for conversion shall be paid to the
Holder of such Security as of such Regular Record Date.
Interest payable in respect of any Registered Security
surrendered for conversion on or after an Interest Payment
Date shall be paid to the Holder of such Security as of the
next preceding Regular Record Date, notwithstanding the
exercise of the right of conversion. Except as provided in
this paragraph and subject to the last paragraph of Sec
tion 3.7, no cash payment or adjustment shall be made upon
any conversion on account of, if the date of conversion is
not an Interest Payment Date, any interest accrued from the
Interest Payment Date next preceding the conversion date, in
respect of any Definitive Security (or part thereof, as the
case may be) surrendered for conversion, or on account of
any dividends on the Common Stock issued upon conversion.
The Company's delivery to the Holder of the fixed number of
shares of Common Stock (or a cash adjustment, as provided in
this Indenture) into which a Definitive Security is
convertible will be deemed to satisfy the Company's
obligation to pay the principal amount of the Security.
Definitive Securities shall be deemed to have been
converted immediately prior to the close of business on the
day of surrender of such Securities for conversion in
accordance with the foregoing provisions, and at such time
the rights of the Holders of such Securities as Holders
shall cease, and the Person or Persons entitled to receive
the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such
Common Stock at such time. As promptly as practicable on or
after the conversion date, the Company shall issue and
deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of
Common Stock
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issuable upon conversion, together with payment in lieu of
any fraction of a share, as provided in Section 12.3.
All shares of Common Stock delivered upon such
conversion of Restricted Securities shall bear restrictive
legends substantially in the form of the legends required to
be set forth on the Restricted Securities pursuant to
Section 2.6 and shall be subject to the restrictions on
transfer provided in such legends. Neither the Trustee nor
any agent maintained for the purpose of such conversion
shall have any responsibility for the inclusion or content
of any such restrictive legends on such Common Stock;
PROVIDED, HOWEVER, that the Trustee or any agent maintained
for the purpose of such conversion shall have provided, to
the Company or to the Company's transfer agent for such
Common Stock, prior to or concurrently with a request to the
Company to deliver such Common Stock, written notice that
the Securities delivered for conversion are Restricted
Securities.
In the case of any Registered Security which is
converted in part only, upon such conversion the Company
shall execute and the Trustee shall authenticate and deliver
to the Holder thereof, at the expense of the Company, a new
Registered Security or Securities of authorized
denominations in an aggregate principal amount equal to the
unconverted portion of the principal amount of such
Security. A Registered Security may be converted in part,
but only if the principal amount of such Security to be
converted is any integral multiple of U.S.$1,000 and the
principal amount of such security to remain Outstanding
after such conversion is equal to U.S.$5,000 or any integral
multiple of $1,000 in excess thereof.
SECTION 12.3. Fractions of Shares.
-------------------
No fractional shares of Common Stock shall be
issued upon conversion of any Definitive Security or
Securities. If more than one Definitive Security shall be
surrendered for conversion at one time by the same Holder,
the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the
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aggregate principal amount of the Definitive Securities (or
specified portions thereof) so surrendered. Instead of any
fractional share of Common Stock which would otherwise be
issuable upon conversion of any Definitive Security or
Securities (or specified portions thereof), the Company
shall calculate and pay a cash adjustment in respect of such
fraction (calculated to the nearest 1/100th of a share) in
an amount equal to the same fraction of the current market
price per share of Common Stock (calculated in accordance
with Section 12.4(8) below) at the close of business on the
day of conversion. Such cash payments shall, in the case of
a conversion of Bearer Securities, be made to an address
outside of the United States.
SECTION 12.4. Adjustment of Conversion Price.
------------------------------
The Conversion Price shall be subject to
adjustments from time to time as follows:
(1) In case the Company shall pay or make a
dividend or other distribution on any class of capital stock
of the Company in Common Stock, the Conversion Price in
effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced
by multiplying such Conversion Price by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination and the denominator shall be the sum of
such number of shares and the total number of shares
constituting such dividend or other distribution, such
reduction to become effective immediately after the opening
of business on the day following the date fixed for such
determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company
but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury
of the Company.
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(2) In case the Company shall issue rights,
options or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the current market
price per share (determined as provided in paragraph (8) of
this Section) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such
rights or warrants, the Conversion Price in effect at the
opening of business on the day following the date fixed for
such determination shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination
plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock
so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business
on the day following the date fixed for such determination.
For the purposes of this paragraph (2), the number of shares
of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Company
will not issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company.
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(3) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of
Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such
subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of
Common Stock shall each be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon
which such combination becomes effective shall be propor
tionately increased, such reduction or increase, as the case
may be, to become effective immediately after the opening of
business on the day following the day upon which such sub
division or combination becomes effective.
(4) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, shares of any class of
capital stock, cash or assets (including securities, but
excluding any (i) rights or warrants referred to in para
graph (2) of this Section, (ii) any dividend or distribution
paid exclusively in cash, (iii) any dividend or distribution
referred to in paragraph (1) of this Section and (iv) any
merger or consolidation to which Section 12.11 applies), the
Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business
on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which
the numerator shall be the current market price per share
(determined as provided in paragraph (8) of this Section) of
the Common Stock on the date fixed for such determination
less the then fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Trustee) of
the portion of the assets, shares or evidences of indebted
ness so distributed applicable to one share of Common Stock
and the denominator shall be such current market price per
share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on
the
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day following the date fixed for the determination of
stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the Company
shall distribute rights or warrants (other than those
referred to in paragraph (2) of this Section) ("Rights") pro
rata to holders of Common Stock, including any such Rights
that the Company has distributed pursuant to the Rights
Agreement, dated as of February 3, 1994, between the Company
and the First National Bank of Boston, as Rights Agent, the
Company shall make proper provision so that each Holder of a
Security who converts such Security (or any portion thereof)
after the record date for such distribution and prior to the
expiration or redemption of the Rights shall be entitled to
receive upon such conversion, in addition to the shares of
Common Stock issuable upon such conversion (the "Conversion
Shares"), a number of Rights to be determined as follows:
(i) if such conversion occurs on or prior to the date for
the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution
Date"), the same number of Rights to which a holder of a
number of shares of Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion
in accordance with the terms and provisions of and applic
able to the Rights; and (ii) if such conversion occurs after
the Distribution Date, the same number of Rights to which a
holder of the number of shares of Common Stock into which
the principal amount of the Security so converted was
convertible immediately prior to the Distribution Date would
have been entitled on the Distribution Date in accordance
with the terms and provisions of and applicable to the
Rights; PROVIDED, HOWEVER, that if after the Distribution
Date with respect to such Rights converting Holders of
Securities are not entitled to receive the Rights that would
otherwise be attributable (but for the date of conversion)
to their respective Conversion Shares or such Rights are not
issued to them upon conversion for any reason, then
adjustment of the Conversion Price shall be made under this
paragraph, except the Distribution Date with respect to such
Rights shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination";
PROVIDED, FURTHER, that
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that if such an adjustment is made and such Rights are
later redeemed, invalidated or terminated, then a
corresponding reversing adjustment of the Conversion Price
shall be made to the Conversion Price, on an equitable
basis, to take account of such event.
(5) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock
cash (excluding any cash that is distributed upon a merger
or consolidation to which Section 12.11 applies or as part
of a distribution referred to in paragraph (4) of this
Section) in an aggregate amount that, combined together with
(I) the aggregate amount of any other distributions to all
holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant
to this paragraph (5) has been made and (II) the aggregate
of any cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of consideration
payable in respect of any tender offer by the Company or any
of its subsidiaries for all or any portion of the Common
Stock concluded within the 12 months preceding the date of
payment of such distribution and in respect of which no
adjustment pursuant to paragraph (6) of this Section has
been made, exceeds 12.5% of the product of the current
market price per share of the Common Stock on the date for
the determination of holders of shares of Common Stock
entitled to receive such distribution times the number of
shares of Common Stock outstanding on such date, then, and
in each such case, immediately after the close of business
on such date for determination, the Conversion Price shall
be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date fixed
for determination of the stockholders entitled to receive
such distribution by a fraction (i) the numerator of which
shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section) of
the Common Stock on the date fixed for such determination
less an amount equal to the quotient of (x) the excess of
such combined amount over such 12.5% and (y) the number of
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shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be
equal to the current market price per share (determined as
provided in paragraph (8) of this Section) of the Common
Stock on such date for determination.
(6) In case a tender offer made by the Company or
any Subsidiary for all or any portion of the Common Stock
shall expire and such tender offer (as amended upon the
expiration thereof) shall require the payment to
stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased
Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and
described in a Board Resolution) that combined together with
(I) the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), as
of the expiration of such tender offer, of consideration
payable in respect of any other tender offer by the Company
or any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of
such tender offer and in respect of which no adjustment
pursuant to this paragraph (6) has been made and (II) the
aggregate amount of any distributions to all holders of the
Company's Common Stock made exclusively in cash within 12
months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to paragraph (5) of
this Section has been made, exceeds 12.5% of the product of
the current market price per share of the Common Stock
(determined as provided in paragraph (8) of this Section) as
of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender offer (as it may be
amended) times the number of shares of Common Stock
outstanding (including any tendered shares) as of the
Expiration Time, then, and in each such case, immediately
prior to the opening of business on the day after the date
of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined
by multiplying the Conversion Price immediately prior to
close of business on the date of the Expiration Time
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by a fraction (i) the numerator of which shall be equal to
(A) the product of (I) the current market price per share of
the Common Stock (determined as provided in paragraph (8) of
this Section) on the date of the Expiration Time and (II)
the number of shares of Common Stock outstanding (including
any tendered shares) on the Expiration Time less (B) the
amount of cash plus the fair market value (determined as
aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased
Shares, and (ii) the denominator of which shall be equal to
the product of (A) the current market price per share of the
Common Stock (determined as provided in paragraph (8) of
this Section) as of the Expiration Time and (B) the number
of shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time less the number
of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any
such maximum, being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into
securities including other than Common Stock (other than any
reclassification upon a consolidation or merger to which
Section 12.11 applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to
all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for
the determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination"
within the meaning of paragraph (4) of this Section), and
(b) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to
be "the day upon which such subdivision becomes effective"
or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision
or combination becomes effective" within the meaning of
paragraph (3) of this Section).
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(8) For the purpose of any computation under
paragraphs (2), (4), (5) or (6) of this Section 12.4, the
current market price per share of Common Stock on any date
shall be calculated by the Company and be deemed to be the
average of the daily Closing Prices Per Share for the five
consecutive Trading Days selected by the Company commencing
not more than 10 Trading Days before, and ending not later
than, the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution
requiring such computation. For purposes of this paragraph,
the term "'ex' date", when used with respect to any issuance
or distribution, means the first date on which the Common
Stock trades regular way in the applicable securities market
or on the applicable securities exchange without the right
to receive such issuance or distribution.
(9) No adjustment in the Conversion Price shall
be required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (9)) would
require an increase or decrease of at least one percent in
such price; PROVIDED, HOWEVER, that any adjustments which by
reason of this paragraph (9) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article
shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.
(10) The Company may make such reductions in the
Conversion Price, for the remaining term of the Securities
or any shorter term, in addition to those required by
paragraphs (1), (2), (3), (4), (5) and (6) of this
Section 12.4, as it considers to be advisable in order to
avoid or diminish any income tax to any holders of shares of
Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for
income tax purposes.
SECTION 12.5. Notice of Adjustments of Conversion Price.
-----------------------------------------
Whenever the Conversion Price is adjusted as
herein provided:
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(1) the Company shall compute the adjusted
Conversion Price in accordance with Section 12.4 and
shall prepare a certificate signed by the Treasurer of
the Company setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall
promptly be filed with the Trustee and with each
Conversion Agent; and
(2) a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted
Conversion Price shall forthwith be required, and as
soon as practicable after it is required, such notice
shall be provided by the Company to all Holders in
accordance with Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under
any duty or responsibility with respect to any such
certificate or the information and calculations contained
therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during
normal business hours.
SECTION 12.6. Notice of Certain Corporate Action.
----------------------------------
In case:
(a) the Company shall declare a dividend (or
any other distribution) on its Common Stock
payable (i) otherwise than exclusively in cash or
(ii) exclusively in cash in an amount that would
require any adjustment pursuant to Section 12.4;
or
(b) the Company shall authorize the granting
to the holders of its Common Stock of rights,
options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any
other rights; or
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(c) of any reclassification of the Common
Stock of the Company (other than a subdivision or
combination of its outstanding shares of Common
Stock), or of any consolidation or merger to which
the Company is a party and for which approval of
any stockholders of the Company is required, or of
the sale or transfer of all or substantially all
of the assets of the Company; or
(d) of the voluntary or involuntary
dissolution, liquidation or winding up of the
Company; or
(e) the Company or any Subsidiary shall
commence a tender offer for all or a portion of
the Company's outstanding shares of Common Stock
(or shall amend any such tender offer);
then the Company shall cause to be filed at each office or
agency maintained for the purpose of conversion of
Securities pursuant to Section 10.2, and shall cause to be
provided to all Holders in accordance with Section 1.6, at
least 20 days (or 10 days in any case specified in clause
(a) or (b) above) prior to the applicable record, expiration
or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the
purpose of such dividend, distribution, rights, options or
warrants, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights, options or warrants
are to be determined, (y) the date on which the right to
make tenders under such tender offer expires or (z) the date
on which such reclassification, consolidation, merger, share
exchange, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective,
and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other
property deliverable upon such reclassification,
consolidation, merger, share exchange, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up. If at
the time the Trustee shall not be
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cpnversion agent, a copy of such notice and any notice
referred to in the following paragraph shall also
forthwith be filed by the Company with the Trustee.
SECTION 12.7. Company to Reserve Common Stock.
-------------------------------
The Company shall at all times reserve and keep
available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of
effecting the conversion of Securities, the full number of
shares of Common Stock then issuable upon the conversion of
all Outstanding Securities.
SECTION 12.8. Taxes on Conversions.
--------------------
The Company will pay any and all taxes and duties
that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Securities pursuant
hereto. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock
in a name other than that of the Holder of the Security or
Securities to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such
issue has paid to the Company the amount of any such tax, or
has established to the satisfaction of the Company that such
tax has been paid.
SECTION 12.9. Covenant as to Common Stock.
---------------------------
The Company agrees that all shares of Common Stock
which may be delivered upon conversion of Securities, upon
such delivery, will have been duly authorized and validly
issued and will be fully paid and nonassessable and, except
as provided in Section 12.8, the Company will pay all taxes,
liens and charges with respect to the issue thereof.
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SECTION 12.10. Cancellation of Converted Securities.
------------------------------------
All Securities delivered for conversion shall be
delivered to the Trustee or the Paying Agent in London or
its agent to be cancelled by or at the direction of the
Trustee, which shall dispose of the same as provided in
Section 3.9.
SECTION 12.11. Provision in Case of Consolidation, Merger or
Sale of Assets.
---------------------------------------------
In case of any consolidation of the Company with,
or merger of the Company into, any other Person, any merger
of another Person into the Company (other than a merger
which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common
Stock of the Company) or any sale or transfer of all or
substantially all of the assets of the Company, the Person
formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then Outstanding
shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 12.1,
to convert such Security only into the kind and amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which
such Security might have been converted immediately prior to
such consolidation, merger, sale or transfer, assuming such
holder of Common Stock of the Company (i) is not a Person
with which the Company consolidated or into which the
Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election,
if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger,
sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for
each share of Common Stock of the Company held immediately
prior to such consolidation, merger, sale or
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transfer by others than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall
not have been exercised ("Non-electing Share"), then for the
purpose of this Section 12.11 the kind and amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by the holders of each
Non-electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing
Shares), and further assuming, if such consolidation,
merger, conveyance, transfer, sale or lease occurs prior to
the later of January 3, 1996 and the receipt of Securities
in definitive form (in the case of Securities initially
represented by a Temporary Global Bearer Security), that the
Security was convertible at the time of such occurrence at
the Conversion Price specified in Section 12.1 as adjusted
from the issue date of such Security to such time as
provided in this Article Twelve. Such supplemental
indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be prac
ticable to the adjustments provided for in this Article.
The above provisions of this Section 12.11 shall similarly
apply to successive consolidations, mergers, sales or
transfers. Notice of the execution of such a supplemental
indenture shall be given by the Company to the Holder of
each Security as provided in Section 1.6 promptly upon such
execution.
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ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinated to Senior
---------------------------------
Indebtedness.
- - ------------
All Securities and any coupons appertaining
thereto issued under this Indenture shall be issued subject
to the following provisions and each Holder of any Security
or any coupon whether upon original issue or upon transfer
or assignment thereof accepts and agrees to be bound by such
provisions.
All Securities and any coupons appertaining
thereto issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and subject in
right of payment to the prior payment in full of all Senior
Indebtedness. "Senior Indebtedness" means (a) all
indebtedness of the Company, including the principal of,
premium, if any, and interest on such indebtedness whether
outstanding on the date of this Indenture or thereafter
created, (i) for borrowed money, (ii) for money borrowed by
others and guaranteed, directly or indirectly, by the
Company, (iii) constituting purchase money indebtedness for
the payment of which the Company is directly or contingently
liable, (iv) constituting reimbursement obligations under
bank letters of credit, (v) under interest rate and currency
swaps, caps, floors, collars or similar agreements or
arrangements intended to protect the Company against
fluctuations in interest or currency exchange rates, or (vi)
under any lease of any real or personal property, whether
outstanding on the date of execution of this Indenture or
thereafter created, incurred or assumed, which obligations
are capitalized on the books of the Company in accordance
with generally accepted accounting principles, unless, in
any such case, by the terms of the instrument creating or
evidencing such indebtedness it is provided that such
indebtedness is not superior in right of payment to the
Securities or to other indebtedness which is PARI PASSU
with,
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or subordinated to, the Securities, and (b) any
modifications, refundings, deferrals, renewals or extensions
of any such Senior Indebtedness, or securities, notes or
other evidences of indebtedness issued in exchange for such
Senior Indebtedness. As used in the preceding sentence the
term "purchase money indebtedness" shall mean indebtedness
evidenced by a note, debenture, bond or other similar
instrument (whether or not secured by any lien or other
security interest) given in connection with the acquisition
of any business, properties or assets of any kind acquired
by the Company or any Subsidiary; PROVIDED, HOWEVER, that,
without limiting the generality of the foregoing, such term
shall not include any conditional sale contract or any
account payable or any other indebtedness created or assumed
by the Company in the ordinary course of business in
connection with the obtaining of inventories or services.
SECTION 13.2. No Payments in Certain Circumstances; Payment
Over of Proceeds Upon Dissolution, Etc.
---------------------------------------------
No payment on account of principal of, premium, if
any, or interest on, or redemption or repurchase of, the
Securities or any coupons appertaining thereto shall be made
if, at the time of such payment or immediately after giving
effect thereto: (i) there shall exist a default in the
payment of principal of, premium, if any, sinking funds or
interest (including a default under any purchase or
redemption obligations) with respect to any Senior
Indebtedness, or (ii) there shall have occurred an event of
default (other than a default in the payment of principal,
premium, if any, sinking funds or interest) with respect to
any Senior Indebtedness, as defined therein or in the
instrument under which the same is outstanding, permitting
the holders thereof to accelerate the maturity thereof and
written notice of such occurrence shall have been given to
the Company and to the Trustee under this Indenture by the
holder or holders of such Senior Indebtedness and such event
of default shall not have been cured or waived or shall not
have ceased to exist. Notwithstanding the foregoing, the
Company may make, and the Trustee may receive and shall
apply, any payment in respect of the Securities (for
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principal, premium, if any, or interest or repurchase) if
such payment was made prior to the occurrence of any of the
contingencies specified in clauses (i) and (ii) above. In
addition, nothing in this paragraph shall prevent the
Company from making, or the Trustee from receiving or
applying, any payment in connection with the redemption of
Securities if the first publication of notice of such
redemption (whether by mail or otherwise in accordance with
this Indenture) has been made prior to the occurrence of any
of the contingencies specified in clauses (i) and (ii)
above.
Upon (i) any acceleration of the principal amount
due on the Securities or (ii) any payment or distribution of
assets of the Company of any kind or character, whether in
cash, property or securities, to creditors upon any dissolu
tion or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involun
tary or in bankruptcy, insolvency, receivership or other
proceedings, all principal of, premium, if any, sinking fund
and interest due or to become due upon all Senior
Indebtedness (including interest thereon accruing after the
commencement of any such proceedings) shall first be paid in
full, or payment thereof provided for in money or money's
worth in accordance with its terms, before any payment is
made on account of the principal of, premium, if any, or
interest on, or repurchase of, the indebtedness evidenced by
the Securities or any coupon appertaining thereto, and upon
any such dissolution or winding up or liquidation or
reorganization any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities, to which the Holders of the Securities or any
coupons appertaining thereto or the Trustee under this
Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the
Holders of the Securities or any coupons appertaining
thereto or by the Trustee under this Indenture if received
by them or it, as the case may be, directly to the holders
of Senior Indebtedness (pro rata to each such holder on the
basis of the respective amounts of Senior Indebtedness held
by such
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holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, in money
or money's worth, after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to
the Holders of the Securities or any coupons appertaining
thereto or to the Trustee under this Indenture.
In the event that, contrary to the foregoing, any
payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall
be received by the Trustee or the Holders of the Securities
before all Senior Indebtedness is paid in full or provision
made for such payment, in accordance with its terms, such
payment or distribution shall be held in trust for the
benefit of, and shall be paid over or delivered to, the
holders of such Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any
of such Senior Indebtedness have been issued, as their
respective interests may appear, for application to the
payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all such Senior Indebtedness in full
in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
Subject to the payment in full of all Senior
Indebtedness, the Holders of the Securities and any coupons
(together with the holders of any other indebtedness of the
Company which is subordinated in right of payment to the
payment in full of all Senior Indebtedness, which is not
subordinated in right of payment to the Securities and which
by its terms grants such right of subrogation to the holders
thereof) shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of
assets of the Company made on the Senior Indebtedness until
the principal of, premium, if any, and interest on, or
repurchase of, the Securities shall be paid in full; and,
for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any
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cash, property or securities to which the Holders of the
Securities and any coupons appertaining thereto or the
Trustee would be entitled except for the provisions of this
Article, and no payment over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by the
Holders of the Securities or any coupon or the Trustee,
shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the Holders of
Securities and coupons, be deemed to be a payment by the
Company to the holders of or on account of Senior
Indebtedness it being understood that the provisions of this
Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the
Securities and coupons, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
SECTION 13.3. Notice to Trustee of Specified Events;
Reliance on Certificate of Liquidating Agent.
--------------------------------------------
The Company shall give prompt written notice to
the Trustee of any insolvency or bankruptcy proceeding in
respect of the Company, of any proceedings for voluntary
liquidation, dissolution or other winding up of the Company
(whether or not involving insolvency or bankruptcy), of the
declaration of any Security as due and payable before its
expressed maturity, and of any event which pursuant to
Section 13.2 would prevent payment by the Company on account
of the principal, premium, if any, or interest on, or
repurchase of, the Securities. The Trustee, subject to the
provisions of Section 6.1, shall be entitled to assume that
no such event has occurred unless the Company, or a holder
of Senior Indebtedness, or any trustee therefor, has given
such notice.
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Upon any distribution of assets of the Company or
payment by or on behalf of the Company referred to in this
Article, the Trustee and the Holders of the Securities shall
be entitled to rely upon any order or decree of a court of
competent jurisdiction in which any proceedings of the
nature referred to in Section 13.2 are pending, and the
Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities and coupons shall be entitled to
rely upon a certificate of the liquidating trustee or agent
or other Person making any distribution to the Trustee or to
the Holders of the Securities or coupons for the purpose of
ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this
Article. 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, as to
the extent to which such Person is entitled to participate
in such payment or distribution, and as to other facts
pertinent to the rights of such Person under this 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 13.4. Trustee to Effectuate Subordination.
-----------------------------------
The Holder of each Security and coupon by his
acceptance thereof authorizes and directs the Trustee in his
behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination
as provided in this Article and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 13.5. Trustee Not Charged with Knowledge of
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Prohibition.
---------------------------------------
Notwithstanding the provisions of this Article or
any other provision of this Indenture, but subject to the
provisions of Section 6.1 as between the Holders of
Securities and coupons and the Trustee, neither the Trustee
nor any Paying Agent shall be charged with knowledge of any
facts which would prohibit the making of any payment of
moneys to or by the Trustee or any such Paying Agent, unless
and until the Trustee or such Paying Agent shall have
received written notice thereof at its Corporate Trust
Office from the Company or any holder of Senior Indebtedness
or the trustee or representative of any holder of such
Senior Indebtedness on his behalf; and, prior to the receipt
of any such written notice, the Trustee and any such Paying
Agent shall be entitled to assume that no such facts exist.
If the Trustee or Paying Agent, as the case may be, shall
not have received, at least three Business Days prior to the
date upon which by the terms hereof any such moneys may
become payable for any purpose (including, without
limitation, the payment of the principal of, premium, if
any, or the interest on any Security) with respect to such
moneys, the notice provided for in this Section, then,
anything herein contained to the contrary notwithstanding,
the Trustee and such Paying Agent, as the case may be, shall
have full power and authority to receive such moneys and to
apply the same to the purpose for which they were received
and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior
to such date.
SECTION 13.6. 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 coupons 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.
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<PAGE> 194
With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants or obligations as are
specifically set forth in this Article and no implied
covenants or obligations with respect to holders of Senior
Indebtedness shall be read into this Indenture against the
Trustee.
SECTION 13.7. 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
6.7.
SECTION 13.8. 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 13.5, 13.6 and 13.7 shall not apply to
the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
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SECTION 13.9. Certain Conversions Deemed Payment.
----------------------------------
For the purposes of this Article only, (1) the
issuance and delivery of junior securities upon conversion
of Securities in accordance with Article Twelve shall not be
deemed to constitute a payment or distribution on account of
the principal of or premium or interest on Securities or on
account of the purchase or other acquisition of Securities,
and (2) the payment, issuance or delivery of cash, property
or securities (other than junior securities) upon conversion
of a Security shall be deemed to constitute payment on
account of the principal of such Security. For the purposes
of this Section, the term "junior securities" means Common
Stock and any other cash, property or securities into which
the Securities are convertible pursuant to Article Twelve.
Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the
Securities, the right, which is absolute and unconditional,
of the Holder of any Security to convert such Security in
accordance with Article Twelve.
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ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase.
---------------------------
In the event that a Change in Control (as
hereinafter defined) shall occur, then each Holder shall
have the right, at the Holder's option, to require the
Company to repurchase, and upon the exercise of such right
the Company shall repurchase, all of such Holder's
Securities, or any portion of the principal amount thereof
that is equal to U.S.$5,000 or any integral multiple of
U.S.$1,000 in excess thereof (PROVIDED that no single Bearer
Security may be repurchased in part, and no single
Registered Security may be repurchased in part unless the
portion of the principal amount of such Registered Security
to be Outstanding after such repurchase is equal to
U.S.$5,000 or integral multiples of U.S.$1,000 in excess
thereof), on the date (the "Repurchase Date") that is 45
days after the date of the Company Notice (as defined in
Section 14.2) at a purchase price equal to 100% of the
principal amount of the Securities to be repurchased (the
"Repurchase Price") plus interest accrued to the Repurchase
Date; PROVIDED, HOWEVER, that installments of interest on
Bearer Securities whose Stated Maturity is on or prior to
the Repurchase Date shall be payable only upon presentation
and surrender of coupons for such interest (at an office or
agency outside the United States, except as otherwise
provided in the form of Bearer Security set forth in Section
2.2(a)); and PROVIDED, FURTHER, that installments of
interest on Registered Securities whose Stated Maturity is
on or prior to the Repurchase Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Record Date
according to their terms and the provisions of Section 3.7.
Such right to require the repurchase of the Securities shall
not continue after a discharge of the Company from its
obligations with respect to the Securities in accordance
with Article Four, unless a Change in Control
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shall have occurred prior to such discharge. At the option
of the Company, the Repurchase Price may be paid in cash or,
except as otherwise provided in Section 14.2(j), by delivery
of shares of Common Stock having a fair market value equal to
the Repurchase Price; PROVIDED that payment may not be made
in Common Stock unless at the time of payment such stock is
listed on a national securities exchange or quoted on the
Nasdaq National Market. For purposes of this Section, the
fair market value of shares of Common Stock shall be equal
to 95% of the average of the Closing Prices Per Share for
the five consecutive Trading Days ending on and including
the third Trading Day immediately preceding the Repurchase
Date. Whenever in this Indenture (including Sections 2.2,
3.1, 5.1(2) and 5.8) there is a reference, in any context,
to the principal of any Security as of any time, such
reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase
Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those
provisions of this Indenture when such express mention is
not made.
SECTION 14.2. Notices; Method of Exercising
Repurchase Right, Etc.
-----------------------------
(a) Unless the Company shall have theretofore
called for redemption all of the Outstanding Securities, on
or before the 30th day after the occurrence of a Change of
Control, the Company or, at the request and expense of the
Company, the Trustee, shall give to all Holders of
Securities, in the manner provided in Section 1.6, notice
(the "Company Notice") of the occurrence of the Change of
Control and of the repurchase right set forth herein arising
as a result thereof. The Company shall also deliver a copy
of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
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(2) the date by which the repurchase right must
be exercised,
(3) the Repurchase Price, and accrued interest,
if any,
(4) a description of the procedure which a Holder
must follow to exercise a repurchase right, and the
place or places where such Securities, together with
all coupons appertaining thereto, if any, maturing
after the Repurchase Date, are to be surrendered for
payment of the Repurchase Price and accrued interest,
if any,
(5) that on the Repurchase Date the Repurchase
Price, and accrued interest, if any, will become due
and payable upon each such Security designated by the
Holder to be repurchased, and that interest thereon
shall cease to accrue on and after said date,
(6) the Conversion Price then in effect, the date
on which the right to convert the principal amount of
the Securities to be repurchased will terminate and the
place or places where such Securities, together with
all unmatured coupons and any matured coupons in
default appertaining thereto, may be surrendered for
conversion, and
(7) the place or places that the certificate
required by Section 2.2 shall be delivered, and the
form of such certificate.
In addition, at least two Business Days preceding
the Repurchase Date, the Company shall give to all Holders
of the Securities and coupons, in the manner provided in
Section 1.6 notice specifying whether the Repurchase Price
will be payable in cash or shares of Common Stock and shall
deliver a copy of such notice to the Trustee.
No failure of the Company to give the foregoing
notices or defect therein shall limit any Holder's right to
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exercise a repurchase right or affect the validity of the
proceedings for the repurchase of Securities.
If any of the foregoing provisions or other
provisions of this Article are inconsistent with applicable
law, such law shall govern.
(b) To exercise a repurchase right, a Holder
shall deliver to the Trustee or any Paying Agent on or
before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal
amount of the Securities to be repurchased (and, if any
Registered Security is to repurchased in part, the serial
number thereof, the portion of the principal amount thereof
to be repurchased and the name of the Person in which the
portion thereof to remain Outstanding after such repurchase
is to be registered) and a statement that an election to
exercise the repurchase right is being made thereby, and, in
the event that the Repurchase Price shall be paid in shares
of Common Stock, the name or names (with addresses) in which
the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the Securities with respect to
which the repurchase right is being exercised, together with
all coupons, if any, appertaining thereto maturing after the
Repurchase Date; PROVIDED, HOWEVER, that Bearer Securities
shall be delivered only to an office of a Paying Agent
located outside the United States except in the limited
circumstances described in Section 10.2. Such written
notice shall be irrevocable, except that the right of the
Holder to convert the Securities with respect to which the
repurchase right is being exercised shall continue until the
close of business on the second Trading Day preceding the
Repurchase Date.
(c) In the event a repurchase right shall be
exercised in accordance with the terms hereof, the Company
shall pay or cause to be paid to the Trustee or the Paying
Agent in London the Repurchase Price in cash or shares of
Common Stock, as provided above, for payment to the Holder
on the Repurchase Date or, if shares of Common Stock are to
be
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paid, as promptly after the Repurchase Date as
practicable, together with accrued and unpaid interest to
the Repurchase Date payable with respect to the Securities
as to which the purchase right has been exercised; PROVIDED,
HOWEVER, that installments of interest that mature on or
prior to the Repurchase Date shall be payable in cash, in
the case of Registered Securities, to the Holders of such
Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant
Regular Record Date and, in the case of Bearer Securities,
to the holder of the coupon with respect thereto, in each
case according to the terms and provisions of Article Three;
and PROVIDED, FURTHER, that Bearer Securities and coupons
shall be so payable only at an office or agency outside the
United States (except as otherwise provided in the form of
Bearer Security set forth in Section 2.2(a)).
(d) If any Bearer Security surrendered for
repurchase shall not be accompanied by all appurtenant
coupons maturing after the Repurchase Date, such Security
may be paid after deducting from the Repurchase Price an
amount equal to the face amount of all such missing coupons
or the surrender of such missing coupons or coupon may be
waived by the Company and the Trustee, if there be furnished
to them such security or indemnity as they may require to
save each of them and any Paying Agent harmless. If
thereafter the Holder of such Bearer Security shall
surrender to any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the
Repurchase Price, if any, such Holder shall be entitled to
receive the amount so deducted; PROVIDED, HOWEVER, that
interest represented by coupons shall be payable only upon
presentation and surrender of those coupons at an office or
agency located outside of the United States (except as
otherwise provided in the form of Bearer Security set forth
in Section 2.2(a)).
(e) If any Security (or portion thereof)
surrendered for repurchase shall not be so paid on the
Repurchase Date, the principal amount of such Security (or
portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the
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Repurchase Date at the rate of 4-1/2% per annum, and each
Security shall remain convertible into Common Stock until
the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(f) Any Registered Security which is to be
repurchased only in part shall be surrendered to the Trustee
(with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the
Holder of such Registered Security without service charge, a
new Registered Security or Registered Securities, containing
identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of
the Registered Security so surrendered.
(g) Any issuance of shares of Common Stock in
respect of the Repurchase Price shall be deemed to have been
effected immediately prior to the close of business on the
Repurchase Date and the Person or Persons in whose name or
names any certificate or certificates for shares of Common
Stock shall be issuable upon such repurchase shall be deemed
to have become on the Repurchase Date the holder or holders
of record of the shares represented thereby; PROVIDED,
HOWEVER, that any surrender for repurchase on a date when
the stock transfer books of the Company shall be closed
shall constitute the Person or Persons in whose name or
names the certificate or certificates for such shares are to
be issued as the recordholder or holders thereof for all
purposes at the opening of business on the next succeeding
day on which such stock transfer books are open. No payment
or adjustment shall be made for dividends or distributions
on any Common Stock issued upon repurchase of any Security
declared prior to the Repurchase Date.
(h) No fractions of shares or scrip representing
fractions of shares shall be issued upon repurchase of
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Securities. If more than one Security shall be repurchased
from the same Holder and the Repurchase Price shall be pay
able in shares of Common Stock, the number of full shares
which shall be issuable upon such repurchase shall be com
puted on the basis of the aggregate principal amount of the
Securities so repurchased. Instead of any fractional share
of Common Stock which would otherwise be issuable on the
repurchase of any Security or Securities, the Company will
deliver to the applicable Holder its check for the current
market value of such fractional share. The current market
value of a fraction of a share is determined by multiplying
the current market price of a full share by the fraction,
and rounding the result to the nearest cent. For purposes
of this Section, the current market price of a share of
Common Stock is the Closing Price Per Share of the Common
Stock on the last Trading Day prior to the Repurchase Date.
(i) Any issuance and delivery of certificates for
shares of Common Stock on repurchase of Securities shall be
made without charge to the Holder of Securities being repur
chased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or
the securities represented thereby; PROVIDED, HOWEVER, that
the Company shall not be required to pay any tax or duty
which may be payable in respect of (i) income of the Holder
or (ii) any transfer involved in the issuance or delivery of
certificates for shares of Common Stock in a name other than
that of the Holder of the Securities being repurchased, and
no such issuance or delivery shall be made unless and until
the Person requesting such issuance or delivery has paid to
the Company the amount of any such tax or duty or has
established, to the satisfaction of the Company, that such
tax or duty has been paid.
(j) If any shares of Common Stock to be issued
upon repurchase of Securities hereunder require registration
with or approval of any governmental authority under any
federal or state law before such shares may be validly
issued or delivered upon repurchase, the Company covenants
that it will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the
case may be;
-191-
<PAGE> 203
PROVIDED, HOWEVER, that nothing in this Section shall be
deemed to affect in any way the obligations of the
Company to repurchase Securities as provided in this Article
and if such registration is not completed or does not become
effective or such approval is not obtained prior to the
Repurchase Date, the Repurchase Price shall be paid in cash.
(k) The Company covenants that all shares of
Common Stock which may be issued upon repurchase of
Securities will upon issue be duly and validly issued and
fully paid and non-assessable.
SECTION 14.3. Certain Definitions.
-------------------
For purposes of this Article Fourteen,
(a) the term "beneficial owner" shall be deter
mined in accordance with Rule 13d-3, as in effect on the
date of the original execution of this Indenture, promul
gated by the Commission pursuant to the Exchange Act;
(b) the term "Capital Stock" shall mean capital
stock of the Company that does not rank prior, as to the
payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company, to shares of capital stock of
any other class of the Company;
(c) a "Change in Control" shall be deemed to have
occurred at the time, after the original issuance of the
Securities, of:
(i) the acquisition by any Person of
beneficial ownership, directly or indirectly,
through a purchase, merger or other
acquisition transaction or series of
transactions, of shares of capital stock of
the Company entitling such Person to exercise
50% or more of the total voting power of all
shares of capital stock of the Company
entitled to vote generally in the elections
of directors (any
-192-
<PAGE> 204
shares of voting stock of which such person
or group is the beneficial owner that are not
then outstanding being deemed outstanding for
purposes of calculating such percentage); or
(ii) any consolidation of the Company
with, or merger of the Company into, any
other Person, any merger of another Person
into the Company, or any sales or transfer of
all or substantially all of the assets of the
Company to another Person (other than a
merger (x) which does not result in any
reclassification, conversion, exchange or
cancellation of outstanding shares of Capital
Stock or (y) which is effected solely to
change the jurisdiction of incorporation of
the Company and results in a
reclassification, conversion or exchange of
outstanding shares of Common Stock into
solely shares of common stock);
PROVIDED, HOWEVER, that a Change in Control shall not be
deemed to have occurred if either (x) the Closing Price Per
Share on any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later
of the date of the Change in Control or the date of the
public announcement of the Change in Control (in the case of
a Change in Control under Clause (i) above) or the period of
10 consecutive Trading Days ending immediately prior to the
date of the Change in Control (in the case of a Change in
Control under Clause (ii) above) shall equal or exceed 105%
of the Conversion Price in effect on such trading day or (y)
all the consideration (excluding cash payments for
fractional shares) to be paid for the Common Stock in the
transaction or transactions constituting the Change in
Control consists of shares of common stock traded on a
national securities exchange or quoted on the Nasdaq
National Market and as a result of such transaction or
transactions the Securities become convertible solely into
such common stock; and
-193-
<PAGE> 205
(d) the term "Person" shall include any syndicate
or group which would be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, as in effect on the
date of the original execution of this Indenture.
-194-
<PAGE> 206
ARTICLE FIFTEEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. 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
the Regular Record Date, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Holders of Registered Securities as of
such Regular Record Date, and
(b) at such other times as the Trustee may
reasonably 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 15.2. Preservation of Information.
---------------------------
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 15.1 and the names and
addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list
furnished to it pursuant to Section 15.1 upon receipt of a
new list so furnished.
_____________________
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to
be
-195-
<PAGE> 207
an original, but all such counterparts shall together
constitute but one and the same instrument.
-196-
<PAGE> 208
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.
STAPLES, INC.
By
-------------------------------
Name:
Title:
Attest:
- - -----------------------------
Name:
Title:
MARINE MIDLAND BANK
By
--------------------------------
Name:
Title:
Attest:
- - -----------------------------
Name:
Title:
-197-
<PAGE> 209
STATE OF )
: ss.:
COUNTY OF )
On the 5th day of October, 1995, before me
personally came , to me known, who,
being by me duly sworn, did depose and say that he is
of Staples, Inc., one of the corporations
described in and which executed the foregoing instrument;
that he 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 signed his name thereto by like
authority.
--------------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 5th day of October, 1995, before me
personally came , to me known, who,
being by me duly sworn, did depose and say that he is
of Marine Midland Bank, one of the corporations
described in and which executed the foregoing instrument;
that he 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 signed his name thereto by like authority.
--------------------------------
Notary Public
-198-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STAPLES, INC. FOR THE NINE MONTHS ENDED OCTOBER 28,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> OCT-28-1995
<CASH> 71,849
<SECURITIES> 20,404
<RECEIVABLES> 130,961
<ALLOWANCES> 1,201
<INVENTORY> 702,637
<CURRENT-ASSETS> 960,299
<PP&E> 378,208
<DEPRECIATION> 115,317
<TOTAL-ASSETS> 1,398,115
<CURRENT-LIABILITIES> 485,364
<BONDS> 320,568
<COMMON> 63
0
0
<OTHER-SE> 565,129
<TOTAL-LIABILITY-AND-EQUITY> 1,398,115
<SALES> 2,092,526
<TOTAL-REVENUES> 2,092,526
<CGS> 1,611,207
<TOTAL-COSTS> 1,928,244
<OTHER-EXPENSES> 89,574
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,014
<INCOME-PRETAX> 63,154
<INCOME-TAX> 24,314
<INCOME-CONTINUING> 38,840
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,840
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
