Registration Statement No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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POLAROID CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 04-1734655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
549 Technology Square
Cambridge, MA 02139
(617) 386-2000
(Address, including zip code, and
telephone number, including area code,
of Registrant's principal executive offices)
Richard F. deLima, Esq.
Polaroid Corporation
549 Technology Square
Cambridge, MA 02139
(617) 386-3273
(Name, address, including zip code,
and telephone number, including area code,
of agent for service)
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Approximate date of commencement of proposed sale to the public:
From time to time after the Registration Statement becomes
effective at the discretion of the Selling Securityholders.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. ____
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or
interest reinvestment plans, check the following box. __X__
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities
Act, please check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same offering. ____
If this Form is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement
number of the earlier effective registration statement for
the same offering. _____
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. ____
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CALCULATION OF REGISTRATION FEE
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Title of Each Class |Amount to be | Proposed | Proposed | Amount of
of | Registered | Maximum | Maximum |Registration
Securities to be | | Offering Price| Aggregate| Fee
Registered | | Per Security(1)| Offering |
| | | Price(1) |
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8% Subordinated | | | |
Convertible | $140,000,000| 138.65% | $194,115,191| $66,937
Debentures Due 2001 | | | |
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Common Stock, $1.00 | 4,307,688(3)| N/A | N/A | N/A (4)
par value(2) | | | |
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(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) under the
Securities Act of 1933 and calculated on the basis of
full conversion of the Debentures into shares of Common
Stock of the Registrant valued on the basis of the
average of the high and low prices for such shares of
$45.0625 on the New York Stock Exchange on February 1,
1996.
(2) Represents shares initially issuable upon conversion
of the Debentures.
(3) Plus an indeterminate number of additional shares of
Common Stock that may be issuable upon conversion of
the Debentures as a result of the antidilution
provisions thereof.
(4) No additional consideration will be received in
connection with the exercise of the conversion
privilege in respect of which the Common Stock is
issuable and therefore no registration fee is required
pursuant to Rule 457(i).
The Registrant hereby amends this Registration Statement
on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until
this Registration Statement shall become effective on such
date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS
TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY OFFER OR SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 8, 1996
PRELIMINARY PROSPECTUS
POLAROID CORPORATION
$140,000,000
8% Subordinated Convertible Debentures Due 2001
and
Shares of Common Stock
(par value $1.00 per share)
Issuable Upon Conversion Thereof
This Prospectus relates to the sale from time to time by
the holders (the "Selling Securityholders") of up to
$140,000,000 aggregate principal amount of 8% Subordinated
Convertible Debentures Due 2001 (the "Debentures") of
Polaroid Corporation (the "Company"). This Prospectus also
relates to sales by the Selling Securityholders from time to
time of shares of Common Stock, $1.00 par value per share
(the "Common Stock"), of the Company issuable upon
conversion of the Debentures.
The Debentures were originally issued by the Company in
October 1991 as partial consideration for the repurchase of
convertible preferred stock and warrants originally issued
by the Company to the Selling Securityholders in 1989. The
Debentures will mature on September 30, 2001. Interest on
the Debentures is payable semiannually on March 31 and
September 30 of each year. The Debentures are convertible
at the option of the holder into shares of Common Stock of
the Company at any time at or prior to maturity, unless
previously redeemed, at a conversion price of approximately
$32.50 per share (equivalent to a conversion rate of 30.7692
shares per $1,000 principal amount of Debentures), subject
to adjustment in certain events. Upon conversion of
Debentures, accrued and unpaid interest thereon will be
payable to the date of conversion.
Prior to September 30, 1998, the Debentures are redeemable,
in whole or, subject to certain limitations, in part, at any
time, upon not less than 30 days' nor more than 60 days'
notice, if the Current Market Price (as defined) per share
of Common Stock is, for at least 20 of 30 consecutive
trading days during the period commencing October 7, 1991
and ending on the date notice of such redemption is given,
at least $48.75. The redemption price for any Debentures
redeemed in accordance with the provision described in the
preceding sentence will be the principal amount of the
Debentures to be redeemed, together with accrued and unpaid
interest to the date of redemption. On or after
September 30, 1998, the Debentures are redeemable, in whole
or, subject to certain limitations, in part, at any time
(without regard to the Current Market Price), upon not less
than 30 days' nor more than 60 days' notice, at such
redemption price. In the event there occurs a Change in
Control (as defined), any holder of any Debenture may
require the Company to redeem all or any portion of the
Debentures at the redemption prices set forth herein.
The Debentures are unsecured general obligations of the
Company, subordinated in right of payment to all existing
and future Senior Indebtedness of the Company, and are
structurally subordinated to all liabilities (including
trade payables) of the Company's subsidiaries. The
Indenture will not restrict the incurrence of Senior
Indebtedness by the Company or its subsidiaries. At
December 31, 1995, the Company had $426.4 million of Senior
Indebtedness, and the Company's subsidiaries had
$706.4 million of liabilities. See "Description of the
Debentures".
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2
Associated with the Common Stock are certain Rights (as
defined herein) which will not be exercisable or evidenced
separately from the Common Stock prior to the occurrence of
certain events. See "Description of Capital Stock--Rights
Agreement".
The Debentures and the Common Stock issuable upon
conversion of the Debentures may be sold by the Selling
Securityholders from time to time directly to purchasers or
through agents, underwriters or dealers. See "Plan of
Distribution". If required, the names of any such agents or
underwriters involved in the sale of the Debentures and the
Common Stock issuable upon conversion of the Debentures in
respect of which this Prospectus is being delivered and the
applicable agent's commission, dealer's purchase price or
underwriter's discount, if any, will be set forth in an
accompanying supplement to this Prospectus (the "Prospectus
Supplement").
The Selling Securityholders will receive all the net
proceeds from the sale of the Debentures and the Common
Stock issuable upon conversion of the Debentures and will
pay all underwriting discounts and selling commissions, if
any, applicable to the sale of the Debentures and the Common
Stock issuable upon conversion of the Debentures. The
Company is generally responsible for payment of its expenses
incident to the offer and sale of the Debentures and the
Common Stock issuable upon conversion of the Debentures as
well as certain other expenses of the Selling
Securityholders in accordance with the terms of the
Registration Rights Agreement dated as of October 7, 1991
(the "Registration Rights Agreement"), between the Company
and the Selling Securityholders. The Company and the
Selling Stockholders will be indemnified by each other
against certain civil liabilities, including certain
liabilities under the Securities Act of 1933 (the
"Securities Act"), or will be entitled to contribution in
connection therewith.
Any broker-dealer, agent or underwriter which participates
in the distribution of the Debentures and the Common Stock
issuable upon conversion of the Debentures may be deemed to
be "underwriters" within the meaning of the Securities Act,
and any commission received by them and any profit on the
resale of the Debentures and the Common Stock issuable upon
conversion of the Debentures purchased by them may be deemed
to be underwriting commissions or discounts under the
Securities Act. See "Plan of Distribution".
There is no established public trading market for the
Debentures. Any listing on any national securities exchange
or admission to trading in the National Association of
Securities Dealers Automated Quotation system of the
Debentures will be set forth in a Prospectus Supplement.
The Common Stock is listed on the New York Stock Exchange
(the "NYSE") and the Pacific Stock Exchange under the
trading symbol "PRD". On February 7, 1996, the last
reported sale price of the Common Stock as reported on the
NYSE was $46 per share. The Company intends to utilize
shares of Common Stock held in treasury that have been
listed on the NYSE as the shares of Common Stock issuable
upon conversion of any Debentures. For a description of
certain Federal income tax consequences to the holders of
the Debentures and Common Stock, see "Certain Federal Income
Tax Consequences".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996
(cover page continued)
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3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities
and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information may be inspected and
copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Northeast Regional Office,
7 World Trade Center, Suite 1300, New York, New York 10048;
and Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can also be obtained by mail from the
Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Common Stock of the Company is listed on the New York
Stock Exchange and such reports, proxy statements and other
information can also be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York,
New York 10005.
The Company has filed with the Commission a Registration
Statement on Form S-3 (herein together with all amendments
and exhibits thereto, called the "Registration Statement")
under the Securities Act with respect to the securities
offered by this Prospectus. This Prospectus does not
contain all of the information set forth or incorporated by
reference in the Registration Statement and the exhibits and
schedules relating thereto, certain portions of which have
been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the
Company and the securities offered by this Prospectus,
reference is made to the Registration Statement and the
exhibits filed or incorporated as a part thereof, which are
on file at the offices of the Commission and may be obtained
upon payment of the fee prescribed by the Commission or may
be examined without charge at the offices of the Commission.
Statements contained in this Prospectus as to the contents
of any documents referred to are not necessarily complete,
and, in each such instance, are qualified in all respects by
reference to the applicable documents filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission are hereby incorporated by reference into this
Prospectus:
(a) the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, dated March 30,
1995;
(b) the Company's Quarterly Report on
Form 10-Q for the period ended April 2, 1995, dated
May 15, 1995;
(c) the Company's Quarterly Report on
Form 10-Q for the period ended July 2, 1995, dated
August 15, 1995;
(d) the Company's Quarterly Report on
Form 10-Q for the period ended October 1, 1995, dated
November 13, 1995;
(e) the Company's Current Report on Form 8-
K, dated January 16, 1996; and
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4
(f) the description of the Company's Rights
to purchase the Company's Series A Participating
Cumulative Preferred Stock contained in its
Registration Statement on Form 8-A dated September 14,
1986, as amended by amendments on Form 8 dated
August 18, 1988, September 15, 1988, January 30, 1989,
February 21, 1989, October 21, 1991, March 24, 1993,
and July 2, 1993, and any amendment or report filed
with the Commission for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior
to the termination of the offering of securities hereunder
shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date
of the filing thereof. Any statement contained in a
document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to
each person to whom a copy of this Prospectus has been
delivered, at the written or oral request of any such
person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference in
this Prospectus (other than certain exhibits). Requests for
such copies should be directed to: Polaroid Corporation,
549 Technology Square, Cambridge, MA 02139, Attention:
Richard F. deLima, Esq., telephone (617) 386-3273.
THE COMPANY
The Company designs, manufactures and markets worldwide a
variety of products primarily in instant image recording
fields. These include instant photographic cameras and
films, electronic imaging recording devices, conventional
films and light polarizing filters and lenses. The
principal products of the Company are used in amateur and
professional photography, industry, science, medicine and
education.
The Company's principal executive offices are located at
549 Technology Square, Cambridge, MA 02139. The Company's
telephone number is (617) 386-2000. References herein to
the Company shall mean Polaroid Corporation and its
subsidiaries, unless the context requires otherwise.
RECENT DEVELOPMENTS
On December 1, 1995, Gary T. DiCamillo became Chairman and
Chief Executive Officer of the Company pursuant to a long-
term contract.
Mr. DiCamillo, age 45, had been a Group Vice President of
Black & Decker Corporation and President of its Power Tools
and Accessories businesses.
On December 19, 1995, the Company announced a broad plan of
action that would result in total pre-tax charges of at
least $195 million of which $155 million was planned to be
charged in the fiscal 1995 fourth quarter and at least
$40 million was planned to be charged in fiscal 1996; these
amounts were increased when the Company announced its 1995
results, as described below. The foregoing is in addition
to $77 million restructuring charges recorded in the first
quarter of 1995. In addition, the Company stated that it
expected its 1995 fourth quarter operating profit (before
special charges) to be below its 1995
<PAGE>
5
third quarter operating profit. The announced restructuring
plan features three principal components: program
reductions in certain product, research and manufacturing
areas; strategic refocusing of the Company's digital imaging
businesses for the medical diagnostic and graphic arts
markets; and a reduction in corporate overhead expenses. A
copy of the December 19, 1995 announcement is attached to
the Company's Current Report on Form 8-K dated January 16,
1996 incorporated herein by reference.
During 1995, the Company spent $40.2 million to purchase
approximately 1.2 million shares of its Common Stock in
market transactions. After the December 19, 1995
announcement, the Company suspended making any additional
stock repurchases; this may negatively impact the market
price of its Common Stock.
1995 Results
On January 30, 1996, the Company announced its 1995 results
as follows:
Worldwide sales for the fourth quarter of 1995 were $674.8
million, a two percent decrease compared with sales of
$685.9 million in the fourth quarter of 1994. The net loss
for the fourth quarter of 1995 was $111.0 million, or $2.44
primary loss per common share, compared to net earnings of
$57.3 million, or $1.23 primary earnings per common share,
in the fourth quarter of 1994. Excluding the pre-tax
special charge for restructuring and other expenses of $170
million and the related tax effect, the primary loss per
common share for the fourth quarter of 1995 would have been
$.01.
The fourth quarter special charge for restructuring and
other expenses, announced on December 19, 1995, related to
the severance and early retirement programs and write-off of
certain assembly equipment, fixed assets and inventory. The
special charge for this program is expected to total
approximately $260 to $270 million. Of that amount,
$170 million was taken in the fourth quarter of 1995 and an
estimated $90 million to $100 million will be charged in the
first quarter of 1996. The total special charge exceeds by
$65 to $75 million an earlier estimate principally due to
the fact that the severance program is expected to result in
the elimination of 1,600 positions worldwide, 300 more than
originally anticipated, and will include a higher proportion
of salaried employees.
Operating profit for the fourth quarter of 1995, excluding
the special charge, was $29.4 million, compared to
$83.9 million for the fourth quarter of 1994. This decrease
was due to less-than-expected revenues, particularly in the
United States, and higher overhead expenses, including
significant instant film marketing promotions and increased
spending in the Company's new digital imaging businesses.
Including the special charge, the loss from operations for
the fourth quarter of 1995 was $140.6 million.
U.S. sales decreased in the fourth quarter of 1995 to
$328.9 million compared with $346.9 million in the same
period last year, due primarily to the price promotions
offered on instant integral film in the United States and
Europe. International sales were $345.9 million in the
fourth quarter of 1995, compared with $339.0 million for the
fourth quarter of 1994.
For the full year, 1995 worldwide sales decreased three
percent to $2.24 billion, compared with $2.31 billion in
1994. U.S. sales for the full year 1995 were $1.02 billion,
compared with $1.16 billion for 1994 and resulting in a
decline of 12%. International sales for the full year 1995
were $1.22 billion, compared with $1.15 billion in 1994 and
resulting in an increase of 6%.
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6
Russia continued its impressive growth in 1995, with
$196.3 million in sales, a 27% increase compared with
$154.3 million in 1994.
The Company sold 5.4 million cameras in 1995, compared with
6.4 million cameras in 1994, primarily due to lower sales of
Captiva than in the prior year. Instant film shipments
decreased slightly for the full year compared to 1994,
reflecting the dealer inventory adjustment program in the
United States and Europe and a change to direct distribution
in Japan.
The net loss for the full year 1995 was $140.2 million, or
$3.09 primary loss per common share, compared with earnings
of $117.2 million for the full year 1994, or $2.49 primary
earnings per common share. The full year 1995 results
include special charges totaling $247.0 million for the two
early retirement and severance programs offered in 1995 and
other special charges associated with the program announced
in December 1995. Excluding these items, the full year 1995
primary earnings per common share would have been
approximately $.45 per share.
The loss from operations for the full year 1995 was $157.8
million, compared with an operating profit of $200.3 million
in 1994. Excluding the special charges for restructuring
and other expenses of $247.0 million, operating profit for
1995 would have been $89.2 million, a reduction of more than
$110 million compared to 1994 which is attributable to a
combination of factors, primarily to the decline in domestic
instant film sales, the increase in worldwide promotional
expenses, the increase in international marketing expenses
for developing countries and slightly higher losses for
digital imaging.
Total losses in the Company's digital imaging businesses
were approximately $190 million compared to approximately
$180 million in 1994. The 1995 losses are principally
attributable to medical imaging and to graphic imaging with
a lesser proportion attributable to electronic imaging. The
1994 losses were principally attributable to medical imaging
with a smaller proportion attributable to each of graphic
imaging and electronic imaging. Shipments of the new
graphics imaging product, Dry Tech Imagesetting Film, began
in October 1995, and the Company plans to ship a number of
new products for the graphic arts market in 1996. Shipments
of Helios medical imaging systems doubled in 1995 compared
to the low base amount in 1994.
For the full year 1995, the effective tax rate was 30%,
versus 27% for 1994. For purposes of determining the after-
tax special charges, the Company applied a statutory tax
rate of 35% to calculate the partially offsetting tax
benefit. The net after-tax foreign currency exchange loss
from balance sheet translation for the full year 1995
amounted to $.03 per common share, compared with a $.02 loss
for 1994.
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7
Polaroid Corporation and Subsidiary Companies
Condensed Consolidated Statement of Earnings
(In millions, except per share data)
Year ended December 31
----------------------
1995 1994
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Net sales:
United States $1,019.0 $1,160.3
International 1,217.9 1,152.2
- --------------------------------------------------------------
Total net sales 2,236.9 2,312.5
- --------------------------------------------------------------
Cost of sales 1,298.6 1,324.2
Marketing, research, engineering
and administrative expenses 849.1 788.0
Restructuring and other 247.0 --
- -------------------------------------------------------------
Total costs 2,394.7 2,112.2
- -------------------------------------------------------------
Profit/(loss) from operations (157.8) 200.3
Other Income 8.5 7.0
Interest expense 52.1 46.6
- -------------------------------------------------------------
Earnings/(loss) before income taxes (201.4) 160.7
Federal, state and foreign income
tax expense/(benefit) (61.2) 43.5
- ------------------------------------------------------------
Net earnings/(loss) ($140.2) $117.2
============================================================
Primary earnings/(loss) per common
share ($3.09) $2.49
Fully diluted earnings per common
share * $2.42
Cash dividends per common share $0.60 $0.60
Weighted average common shares used
for primary earnings per share
calculation (in thousands) 45,404** 46,992**
Common shares outstanding at end of 45,533 45,998
period (in thousands)
================================================================
* Fully diluted earnings per share are not stated because
they are greater than primary earnings per common share.
**The weighted average shares used to calculate primary
earnings per common share include assumed conversion of
options outstanding, as appropriate.
<PAGE>
8
Polaroid Corporation and Subsidiary Companies
Condensed Consolidated Balance Sheet
(In millions)
At December 31
--------------------
1995 1994
------- -------
Current assets:
Cash and cash equivalents $73.3 $143.3
Short-term investments 9.8 85.6
Receivables 550.4 541.0
Inventories:
Raw materials 137.2 112.4
Work-in-process 233.7 231.2
Finished goods 244.6 233.8
------ ------
Total inventories 615.5 577.4
Prepaid expenses and other assets 208.5 141.4
------ -------
Total current assets 1,457.5 1,488.7
Net property, plant and equipment 691.0 747.3
Deferred tax assets 113.3 80.7
------- --------
Total assets $2,261.8 $2,316.7
======== ========
Current liabilities:
Short-term debt $160.4 $117.1
Current portion of long-term debt 39.7 35.9
Payables and accruals 274.9 275.7
Compensation and benefits 197.4 121.4
Federal, state and foreign income
taxes 46.6 51.8
------ -------
Total current liabilities 719.0 601.9
Long-term debt 526.7 566.0
Accrued postretirement benefits 257.2 247.2
Accrued postemployment benefits 41.2 37.2
Stockholders' equity:
Common stock, $1 par value 75.4 75.4
Additional paid-in capital 401.9 387.2
Retained earnings 1,525.8 1,692.1
Less: Treasury stock, at cost 1,205.4 1,174.5
Deferred compensation 80.0 115.8
-------- --------
Total stockholders' equity 717.7 864.4
-------- --------
Total liabilities and equity $2,261.8 $2,316.7
========= =========
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The Company has incurred net losses in two out of its three
most recent fiscal years. In 1995 the Company incurred a
pre-tax special charge for restructuring and other expenses
of $247 million. In 1993, pre-tax cumulative effect of
changes in accounting principle totaled $216.9 million.
Other Developments
In recent years, the Company has made very substantial
investments in its new digital imaging businesses. These
businesses have been very unprofitable as set forth
previously. The future prospects of these new businesses
are uncertain and they are likely to continue to affect the
Company's results adversely for a few years. With regard to
its medical imaging business, the Company has made very
substantial expenditures to develop its Helios product as a
substitute for conventional transparency films used for
x-ray and other medical applications and to build a new
multi-use film manufacturing plant in which to manufacture
Helios type transparency films, as well as graphic imaging
films. Despite certain technical advantages of digital
radiology and the Helios product, its ongoing costs exceed
revenues. The Company is exploring the feasibility of a
variety of business relationships to improve the results of
its medical imaging business. It is uncertain to what
extent the Helios product line may result in further
charges.
With regard to instant photography, the Company broadened
its traditional product line by developing the Captiva
smaller format instant camera which was introduced first
abroad and then in 1993 in the United States. Captiva sales
have been below the Company's expectations. In 1995, the
Company decided to limit its production of Captiva cameras
to the completion of work-in-progress. It will continue to
market Captiva cameras and film for the foreseeable future,
as well as provide service. The December 1995 special
charges which cover Captiva's U.S. and international
operations includes provision for a write-off of excess
Captiva equipment and obsolete inventory.
Profits of the Company's basic instant photography business
have been higher than the Company's total profit from
operations. The development of the electronic imaging
industry is likely to begin to impact negatively such
business and profits. The Company's own electronic imaging
efforts are intended to develop niche products which will be
used in conjunction with mainstream products and standards
developed by others. The future effect on the Company of
developments in the electronic imaging industry is uncertain
and could be adverse. Also, an industry consortium not
including the Company has developed a so-called Advanced
Photo System which it announced will be incorporated in
cameras and film to be introduced in 1996.
The Company continues to study the different areas of its
business, including their cost structures. The competitive
forces and margin pressures in many of its business areas
are severe and its new multi-use film manufacturing plant
has substantial overcapacity which results in unabsorbed
costs and underutilization losses. In connection with
ongoing planning review by corporate management, additional
personnel and asset reductions may be made, producing
additional charges which may be significant. In conjunction
with the performance and outlook of the business, the
Company's Board of Directors will continue to review from
period to period related cash flow and other future cash
requirements, including the level of any future dividends to
be paid on its Common Stock.
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10
The Company's bank financing agreements were amended as of
December 29, 1995, to provide a waiver until February 29,
1996, with respect to net worth and other financial
covenants as to which the Company was not in compliance by
reason of its 1995 results. The Company is negotiating the
terms of these agreements to provide greater leeway with
respect to financial covenants which may or may not result
in increased costs to the Company. If the Company does not
comply with these or any other financial covenants, payments
of principal of and interest on the Debentures might not be
able to be made by the Company. See "Description of the
Debentures--Subordination of Debentures".
On December 4, 1994, Polaroid Corporation entered into a
consent agreement with the Environmental Protection Agency
("EPA") to resolve alleged violations of the Toxic
Substances Control Act ("TSCA"). Under this agreement,
Polaroid paid a civil penalty of $80,000 and agreed to
conduct an internal audit of certain TSCA practices. This
audit was recently completed and revealed potential
liability, although not yet confirmed by the EPA, in the
range between $64,000 and $89,000.
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31
-----------------------------------
1991 1992 1993 1994 1995
----- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges(a) 15.5(b) 3.0 2.3(c) 3.3 --(d)
_______________
(a) The ratio of earnings to fixed charges has been computed
by dividing earnings available for fixed charges
(earnings/(loss) before income taxes and cumulative
effect of changes in accounting principles plus fixed
charges (excluding capitalized interest)) by fixed
charges. Fixed charges consist of interest expense
(including amortization of deferred financing costs), the
portion of rental expense that is representative of the
interest factor (deemed by the Company to be one-third)
and capitalized interest.
(b) In 1991 the Company received a pre-tax litigation
settlement of $924.5 million. Excluding the settlement,
the ratio of earnings to fixed charges was 3.1.
(c) For the year ended December 31, 1993, pre-tax cumulative
effect of changes in accounting principle totaled
$216.9 million. Including such cumulative effect,
earnings were insufficient to cover fixed charges by
$127.8 million.
(d) Earnings were insufficient to cover fixed charges by
$206.2 million due to pre-tax special charge for
restructuring and other expenses of $247.0 million.
Excluding the special charge of $247.0 million, the ratio
of earnings to fixed charges was 1.6.
USE OF PROCEEDS
The Selling Securityholders will receive all of the net
proceeds from the sale of the Debentures and Common Stock
offered hereby after any applicable underwriting discounts
and selling commissions. The Company will not receive any
of the proceeds from any such sale and is generally
responsible for payment of its expenses incident to such
sale as well as certain expenses of the Selling
Securityholders in accordance with the terms of the
Registration Rights Agreement.
DESCRIPTION OF THE DEBENTURES
The Debentures were originally issued by the Company in
October 1991 as partial consideration for the repurchase of
convertible preferred stock and warrants originally issued
by the Company to the Selling Securityholders in 1989.
<PAGE>
11
The Debentures, in the form in which they were originally
issued, are referred to herein as the "Notes".
In connection with the sale by any Selling Securityholder
of Debentures offered hereby and in order to comply with the
Trust Indenture Act of 1939, as amended, Notes held by such
Selling Securityholder in a corresponding principal amount
will be amended and restated so as to cause them to be
Debentures outstanding pursuant to an indenture (the
"Indenture") to be entered into between the Company and
State Street Bank and Trust Company, as trustee (the
"Trustee"). Although the Notes and the Debentures will have
substantially similar terms, the Notes, until such time as
they may be so amended and restated, will not be entitled to
the benefits of the Indenture and will not be deemed
outstanding for purposes thereof. A copy of the Indenture
substantially in the form in which it is to be executed has
been filed as an exhibit to the Registration Statement. Set
forth below is a summary of certain provisions of the
Debentures and the Indenture, which summary does not purport
to be complete and is subject to, and is qualified in its
entirety by, reference to all of the provisions of the
Indenture, including the definitions thereof. Copies of the
Indenture can be obtained from the Company upon request.
Capitalized terms used herein without definition have the
meanings ascribed to them in the Indenture. As used in this
section, the "Company" refers to Polaroid Corporation,
exclusive of its subsidiaries. Wherever particular
provisions of the Indenture are referred to in this summary,
such provisions are incorporated by reference as a part of
the statements made and such statements are qualified in
their entirety by such reference.
General
The Debentures are limited to $140,000,000 aggregate
principal amount, are unsecured subordinated obligations of
the Company and will mature on September 30, 2001. The
Debentures bear interest from October 7, 1991 at the rate of
8% per annum. Interest is payable semi-annually on March 31
and September 30 of each year, subject to certain
exceptions, commencing March 31, 1992, to the person in
whose name the Debenture is registered at the close of
business on the fifteenth day of March or September, as the
case may be (the "Regular Record Date"), next preceding such
interest payment date. Principal of (premium, if any) and
interest on the Debentures will be payable, and the
Debentures will be convertible and exchangeable and
transfers thereof will be registrable, at the office of the
Trustee or the office or agency of the Company maintained
for such purpose in The City of New York and at any other
office or agency maintained by the Company for such purpose,
provided that at the option of the Company payment of
interest may be made by check mailed to the address of the
person entitled thereto as it appears in the Debenture
Register or in such other manner as the Company and such
person shall agree. All payments of interest and principal
will be made in U.S. Dollars. (Sections 3.01, 3.05, 3.07,
10.02, 12.02 and 13.01)
The Debentures will be issued only in registered form
without coupons in denominations of $1,000 or any integral
multiple thereof. (Section 3.02) Debentures will be
executed on behalf of the Company and will not be valid
unless the certificate of authentication thereon provided
for in the Indenture has been duly executed. (Section 3.03)
No service charge will be made for any registration of
transfer or exchange of Debentures, but the Company may
require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
(Section 3.05)
Conversion Rights
The Debentures will be convertible into Common Stock at any
time prior to redemption (except as set forth in the
following sentence), exchange or maturity, initially at a
conversion price of approximately $32.50 (equivalent to a
conversion rate of 30.7692 shares per $1,000 principal
amount of Debentures). (Section 12.01) The right to
convert Debentures called for redemption will terminate at
the close of business on the second Business Day immediately
preceding a Redemption Date and will be lost if not
exercised prior to that time. (Section 12.03) See
"Optional Redemption".
<PAGE>
12
Upon conversion of Debentures, accrued and unpaid interest
thereon will be payable in cash to the date of conversion.
(Section 12.04) Fractional shares of Common Stock will not
be issued upon conversion, but in lieu thereof, the Company
will pay a cash adjustment based upon the market price of
such shares at such time. (Section 12.05)
The Conversion Price is subject to adjustment (under
formulae set forth in the Indenture) under certain
circumstances, including: (i) the issuance of Common Stock
as a dividend or distribution on Common Stock; (ii) certain
subdivisions, reclassifications, and combinations of Common
Stock; (iii) the issuance of Common Stock (or securities
convertible into or exchangeable for Common Stock) at a
price per share (or having a conversion price per share)
less than the Debenture's then applicable conversion price;
(iv) dividends or other distributions on its Common Stock
other than (a) regularly quarterly dividends not exceeding
$.15 per share (as adjusted) or (b) regularly quarterly cash
dividends not exceeding in the aggregate 50% of net income
from continuing operations before extraordinary items for
the period from October 7, 1991 to the date of such
dividend's payment; and (v) the purchase of Common Stock
pursuant to a tender offer made by the Company at a purchase
price per share in excess of 110% of the current market
price over a specified period or the repurchase by the
Company of Common Stock other than by a tender offer by the
Company at a weighted average purchase price per share in
excess of the weighted average per share sales price of the
Common Stock. (Section 12.07) In the case of certain
capital reorganizations or reclassifications, or in case of
any consolidation or merger of the Company with another
corporation or the sale or conveyance to another corporation
of the property of the Company as an entirety or
substantially as an entirety, at the option of the holder of
any Debentures (i) each Debenture then outstanding shall be
convertible into, in lieu of the Common Stock issuable upon
such conversion, the kind and amount of securities, cash and
other property receivable upon the consummation of such
transaction by a holder of that number of shares of Common
Stock into which each Debenture is convertible immediately
prior to such transaction or (ii) each Debenture shall
entitle the holder thereof to receive subsequent to the
consummation of such transaction (a) if the surviving entity
is a U.S. corporation meeting certain public corporation
qualifications, that number of shares of common stock of the
surviving entity determined by multiplying the number of
shares of Common Stock into which each Debenture was
convertible immediately prior to such transaction by a
fraction, the numerator of which is the current market price
of the Common Stock immediately prior to such transaction
and the denominator of which is the current market price of
the common stock of the surviving entity over a period
preceding the transaction or (b) if the surviving entity is
not a U.S. corporation meeting certain public corporation
qualifications, cash equal to the fair market value
(computed without interest) of the securities or other
property to which such holder would have been entitled under
clause (i) above, as determined by an independent investment
banking firm (with an established national reputation as a
valuer of equity securities), but in any event not less than
the Change in Control Price. (Section 12.08) Change in
Control Price is defined as the greater of (i) the
redemption price for each Debenture and (ii) the product of
the number of shares of Common Stock into which each
Debenture is then convertible (or, if the Debentures are no
longer convertible into shares of Common Stock as a result
of the relevant change in control, the number of shares of
Common Stock, as adjusted, into which each Debenture was
convertible immediately prior to such change in control) and
the highest price per share of Common Stock paid or agreed
to be paid by any person who acquired control of the Company
within the two-year period immediately preceding the date of
such change in control or at any time thereafter, together
with accrued and unpaid interest on such principal amount of
Debentures to the date of redemption. (Section 11.03)
<PAGE>
13
Subordination of Debentures
The Debentures are subordinated and subject, to the extent
and in the manner set forth in the Indenture, to the prior
payment in full of all Senior Indebtedness. (Section 13.01)
Senior Indebtedness is defined to include all Indebtedness
of the Company, unless such Indebtedness is subordinated in
right of payment to any other unsecured Indebtedness of the
Company. (Section 1.01) At December 31, 1995, the Company
had $426.4 million of outstanding indebtedness that would
have constituted Senior Indebtedness under the Indenture.
The Indenture will not limit the amount of Senior
Indebtedness that the Company may incur or the amount of
liabilities that its subsidiaries may incur. At such date
the Company's subsidiaries had $706.4 million of liabilities
(including trade payables), to which the Debentures are
structurally subordinated.
"Indebtedness" of the Company is defined to mean all
amounts due pursuant to the provisions of the instruments,
whether currently outstanding or hereafter created, incurred
or assumed, providing for (a) indebtedness of the Company
for money borrowed or in respect of letters of credit issued
for its own account, (b) guarantees by the Company of
indebtedness for money borrowed by or in respect of letters
of credit issued for the account of or payment or
performance obligations due from any other person,
(c) purchase money obligations, evidenced by notes, lease-
purchase agreements, purchase contracts or agreements, or
similar instruments for the payment of which the Company is
liable by guarantees or otherwise, (d) obligations of the
Company under any agreement or lease, or lease of, any real
or personal property which are required to be capitalized in
accordance with generally accepted accounting principles,
(e) obligations of the Company to purchase property or
assets, including securities, at a future date, incurred in
connection with financings by the Company, (f) performance,
completion or similar bonds of the Company and
(g) modifications, renewals, extensions and refunding of any
such indebtedness, guarantees, obligations or bonds.
(Section 1.01)
No payments of principal of (or premium, if any) or
interest on the Debentures may be made and no Debentures may
be redeemed, acquired or retired at any time when any event
has occurred and is continuing which with the passage of
time or the giving of notice or both would have the effect
of accelerating the maturity of any Senior Indebtedness or
would permit the holder of any Senior Indebtedness to
accelerate the maturity thereof. (Section 13.02) As
discussed above, if the Company does not comply with the
financial covenants under its bank financing agreements with
respect to which it recently received a waiver until
February 29, 1996, or any other applicable financial
covenants, payments of principal and interest on the
Debentures might not be able to be made by the Company. See
"Recent Developments".
Upon any payment or distribution of assets of the Company
in the event of any insolvency, reorganization, liquidation
or similar proceeding, all Senior Indebtedness must be
repaid in full before the holders of the Debentures will be
entitled to receive or retain any payment. (Section 13.02)
By reason of such subordination, in the event of
insolvency, creditors of the Company who are holders of
Senior Indebtedness may recover more, ratably, than holders
of the Debentures.
The Indenture will provide that the Company will not incur
or assume any Indebtedness of the Company that is
subordinated in right of payment to any other unsecured
Indebtedness of the Company unless such Indebtedness ranks
pari passu with, or is subordinated in right of payment to,
the Debentures.
<PAGE>
14
Optional Redemption
The Debentures will be redeemable upon not less than 30 nor
more than 60 day's notice by mail at any time, in whole or
(subject to certain limitations set forth in the Indenture)
in part, at the election of the Company, at a redemption
price equal to the percentage of the principal amount of the
Debentures to be redeemed, together with accrued and unpaid
interest to the date of redemption (subject to the right of
holders of Debentures of record on Regular Record Dates to
receive interest due on an Interest Payment Date). The
Company may not redeem any Debentures prior to September 30,
1998, unless, for at least 20 of 30 consecutive trading days
during the period commencing October 7, 1991 and ending on
the date notice of such redemption is given, the current
market price per share of Common Stock is at least $48.75
(appropriately adjusted for stock splits, stock
combinations, stock dividends and similar events).
Notwithstanding the foregoing, if a Debenture is redeemed
pursuant to this paragraph at a time when the holder could
redeem the Debenture pursuant to the next paragraph, the
Debenture shall be redeemed at the Change in Control Price.
(Sections 2.03 and 11.01)
Upon the occurrence of a Change in Control, any holder of
any Debentures shall have the right to require the Company
to redeem all or any portion of such Debentures at the
Change in Control Price, together with accrued and unpaid
interest on such principal amount of Debentures to the date
of redemption. (Sections 2.03 and 11.03)
Failure by the Company to redeem the Debentures when
required will result in an Event of Default under the
Indenture whether or not such redemption is permitted by the
subordination provisions of the Indenture. (Section 5.01)
Within 30 days following the occurrence of a Change in
Control, the Company is obligated to mail to all holders of
Debentures a notice of such Change in Control, which notice
shall set forth each holder's right to require the Company
to redeem any Debenture, the redemption date (which shall be
not more than 60, nor less than 45, days from the date of
such notice) and the procedures such holder must follow in
exercising the right to cause such redemption; however, if
the Debentures are owned by 50 or fewer holders or groups of
affiliated holders, such notice shall be mailed promptly
following the Change in Control (but in no event more than
five business days thereafter), and shall set forth (i) that
the redemption date shall be five business days after
receipt by the Company of the notice by the holder referred
to in the next paragraph and (ii) the procedures such holder
must follow in exercising the right to cause such
redemption. If at the time the Debentures are listed on any
national securities exchange or traded in the over-the-
counter market, the Company shall, within 30 days of such
Change in Control, publish notice thereof and of the right
to redemption in a newspaper of general circulation in the
Borough of Manhattan, The City of New York. (Section 11.04)
In the event a holder of Debentures shall elect to require
the Company to redeem any Debentures after the occurrence of
a Change in Control, such holder shall deliver within
30 business days of the mailing to him of the Company's
notice, or, if no notice is given, within 30 business days
following the last day the Company was required to give
notice of the Change in Control (in which case the date of
redemption shall be (i) if the Debentures are not owned by
50 or fewer holders or groups of affiliated holders, the
date which is 45 business days following the last day the
Company was required to give notice of the Change in
Control, after which date the right of such Holders to
require the Company to redeem Debentures shall terminate or
(ii) if the Debentures are owned by 50 or fewer holders or
groups of affiliated holders, the date of which is
five business days after the delivery to the Company of an
election to redeem), a written notice to the Company, so
stating, specifying the principal amount of Debentures;
however, if the Debentures are owned by 50 or fewer holders
or groups of affiliated holders, such holders or groups may
deliver a notice of an election to redeem at any time within
60 business days following the occurrence of a Change in
Control, and such holders or groups shall not be required to
wait for the Company's notice or for the expiration of the
time allowed for the Company's notice.
<PAGE>
15
A "Change in Control" shall mean: (i) the acquisition,
other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors, but excluding,
for this purpose, any such acquisition by (a) the Company or
any of its subsidiaries or (b) any corporation with respect
to which, following such acquisition, more than 50% of the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by individuals and entities who were
the beneficial owners of voting securities of the Company
immediately prior to such acquisition in substantially the
same proportion of their ownership, immediately prior to
such acquisition, of the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors;
(ii) individuals who, as of January 1, 1991, constitute the
Board of Directors of the Company (as of January 1, 1991,
the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided that any individual
becoming a director subsequent to January 1, 1991, whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); (iii) approval by the
stockholders of the Company of a reorganization, merger or
consolidation with respect to which all or substantially all
the individuals and entities who were the respective
beneficial owners of the voting securities of the Company
immediately prior to such reorganization, merger or
consolidation do not thereafter beneficially own, directly
or indirectly, more than 50% of the combined voting power of
the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation;
or (iv) the sale or other disposition of all or
substantially all the assets of the Company in one
transaction or series of related transactions.
(Section 1.01)
There is no definition of the phrase "all or substantially
all" as applied to the Company's assets and used in the
definition of Change in Control in the Indenture, and there
is no clear definition of such phrase under applicable law.
As a result of the uncertainty of the meaning of this
phrase, in the event the Company were to sell a significant
amount of its assets, the holders of the Debentures and the
Company may disagree over whether the sale gave rise to the
right of holders to require the Company to redeem the
Debentures. In such case, the holders of the Debentures
would likely not be able to require the Company to redeem
the Debentures unless and until the disagreement were
resolved in favor of the holders of the Debentures.
The right to require the Company to redeem Debentures as a
result of the occurrence of a Change in Control could create
an event of default under Senior Indebtedness, as a result
of which any redemption could, absent a waiver, be blocked
by the subordination provisions of the Debentures. See
"Subordination of Debentures". The Company's ability to pay
cash to the holders of the Debentures upon a redemption also
may be limited by certain financial covenants contained in
the Company's Senior Indebtedness.
The Change in Control redemption feature of the Debentures
may in certain circumstances make more difficult or
discourage a takeover of the Company and, thus, the removal
of incumbent management.
The foregoing provisions would not necessarily afford
holders of Debentures protection in the event of highly
leveraged or other transactions involving the Company that
may adversely affect holders.
<PAGE>
16
Exchange of Debentures
Debentures held by the Selling Securityholders, but not by
any subsequent holders, may, under certain circumstances, be
exchanged for shares of the Company's Series D Cumulative
Convertible Preferred Stock, par value $1.00 per shares,
which Series D Preferred Stock is also convertible into
Common Stock. (Section 14.01)
Sinking Fund
There will be no sinking fund established for the
retirement of the Debentures.
Modification of the Indenture
Modifications and amendments of the Indenture and waivers
of future compliance by the Company therewith may be made by
the Company and the Trustee with the consent of the holders
of a majority in principal amount of the Outstanding
Debentures provided that no such modification, amendment or
waiver may, without the consent of the holder of each
Outstanding Debenture affected thereby, (i) change the
stated maturity date of the principal of, or any installment
of interest on, the Debentures, (ii) reduce the principal
amount of, the rate of interest thereon, or any premium
payable on, any Debentures, (iii) change the coin or
currency in which any Debenture or any payment or the
interest thereon is payable, (iv) impair the right to
institute suit for the enforcement of any such payment when
due, (v) reduce the percentage in principal amount of
Debentures, the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for
waiver of certain defaults, (vi) adversely affect the
conversion rights of the holders or (vii) adversely affect
the right to require the Company to redeem Debentures.
(Section 9.02)
Events of Default; Notice and Waiver
The following will be Events of Default under the
Indenture: (i) default in the payment of any interest,
continued for, if the Debentures are owned by 50 or fewer
holders or groups of affiliated holders, five days on which
the Company's administrative offices are open for regular
business or, if the Debentures are not owned by 50 or fewer
holders or groups of affiliated holders, 30 days on which
the Company's administrative offices are open for regular
business; (ii) default in the payment of principal or
premium, if any, when due, upon acceleration, redemption or
otherwise; (iii) default in the performance of any other
covenant continued for, if the Debentures are owned by 50 or
fewer holders or groups of affiliated holders, 30 days or,
if the Debentures are not owned by 50 or fewer holders or
groups of affiliated holders, 60 days, in each case after
written notice to the Company as provided in the Indenture;
(iv) certain events in bankruptcy, insolvency or
reorganization; and (v) default in respect of any bond,
debenture, note or other evidence of indebtedness of the
Company or any of its subsidiaries for money borrowed which
results in acceleration of the maturity of at least
$10 million of such indebtedness, if such acceleration is
not rescinded or such indebtedness is not discharged within,
if the Debentures are owned by 50 or fewer holders or groups
of affiliated holders, four days on which the Company's
administrative offices are open for regular business or, if
the Debentures are not owned by 50 or fewer holders or
groups of affiliated holders, 10 days on which the Company's
administrative offices are open for regular business, in
each case after written notice to the Company as provided in
the Indenture. (Section 5.01) If any Event of Default shall
happen and be continuing, the Trustee or the holders of not
less than 25% in principal amount of the Outstanding
Debentures may declare the Debentures due and payable
immediately by a notice in writing to the Company (and to
the Trustee if by the holders), except that if an Event of
Default relating to certain events in bankruptcy, insolvency
or reorganization shall happen and be continuing, the
Debentures shall automatically become due and payable
immediately. (Section 5.02) At any time after a
declaration of acceleration with respect to the Debentures
has been made, the holders of a majority in principal amount
of the Outstanding Debentures may, under certain
circumstances, rescind and annul such acceleration.
(Section 5.02)
<PAGE>
17
Within 90 days after the occurrence of any default under
the Indenture, the Trustee must give by mail to the holders
of the Debentures notice of such default known to the
Trustee, unless such default shall have been cured or
waived, provided that, except in the case of a default in
the payment of the principal of (or premium, if any) or
interest on any Debenture, the Trustee shall be protected in
withholding such notice if and so long as the Trustee in
good faith determines that the withholding of such notice is
in the interest of the holders, and provided further that,
in the case of any default described in clause (iii) above,
no such notice to holders shall be given until at least
30 days after the occurrence thereof. For the purpose of
this paragraph, the term "default" means any event which is,
or after notice or lapse of time or both would become, an
Event of Default. (Section 6.02)
No holder of any Debentures will have any right to
institute any proceeding with respect to the Indenture or
for any remedy under the Indenture unless (i) the holder
previously has given to the Trustee written notice of a
continuing Event of Default, (ii) the holders of not less
than 25% in principal amount of the Outstanding Debentures
have made written request, and offered reasonable indemnity,
to the Trustee to institute proceedings as trustee and
(iii) within 60 days after such request, the Trustee has
neither instituted such proceeding nor received from the
holders of a majority in aggregate principal amount of the
Outstanding Debentures a direction inconsistent with the
request. (Section 5.07)
The Indenture will provide that the Trustee will be under
no obligation, subject to the duty of the Trustee during
default to act with the required standard of care, to
exercise any of its rights or powers under the Indenture at
the request or direction of any of the holders of any
Debentures, unless such holders shall have offered to the
Trustee reasonable indemnification. (Section 6.03) Subject
to such provisions for indemnification of the Trustee, the
holders of a majority in principal amount of the Outstanding
Debentures will have the right to direct the time, method
and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power
conferred on the Trustee. (Section 5.12)
The holders of a majority in principal amount of the
Outstanding Debentures may on behalf of the holders of all
Debentures waive certain past defaults except a default in
payment of the principal of (or premium if any) or interest
on any Debenture or in respect of a covenant or provision
which under the Indenture cannot be modified or amended
without the consent of the holder of each Outstanding
Debenture affected. (Section 5.13)
The Company must furnish to the Trustee by May 15 in each
year a certificate stating whether or not, to the best
knowledge of the signatory of such statement, the Company is
in compliance with all conditions and covenants of the
Indenture and, if the signatory has obtained knowledge of
any default by the Company under any such conditions and
covenants, specifying each such default and the nature
thereof. (Section 7.04)
<PAGE>
18
Consolidation, Merger, Conveyance, Transfer or Lease
The Indenture will provide that the Company shall not
consolidate with or merge into, or sell, assign, transfer or
lease its properties and assets as an entirety or
substantially as an entirety to any person, unless (i) any
such successor, which must be a U.S. corporation, assumes
the Company's obligations under the Debentures and the
Indenture, (ii) after giving effect thereto, no Event of
Default shall have occurred and be continuing and
(iii) certain other conditions under the Indenture have been
satisfied. (Section 8.01) Upon any such consolidation or
merger, or any such transfer of the properties and assets of
the Company, the successor corporation formed by such
consolidation or into which the Company is merged, or to
which such transfer is made, shall succeed to, and be
substituted for, any may exercise every right and power of,
the Company under the Indenture with the same effect as if
such successor corporation had been named as the Company.
The Company as the predecessor corporation shall be relieved
of all obligations and covenants under the Indenture.
(Section 8.02)
Satisfaction and Discharge
Subject to certain exceptions, the Indenture will cease to
be of further effect when (i) either (a) all Debentures,
subject to certain exceptions, have been delivered to the
Trustee for cancelation or (b) all Debentures not previously
delivered to the Trustee for cancelation (1) have become due
and payable, (2) will become due and payable at their stated
maturity within one year or (3) 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 (1), (2) or (3), has deposited
with the Trustee funds for that purpose sufficient to pay
and discharge the entire indebtedness on such Debentures not
previously delivered to the Trustee for cancelation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Debentures which have become
due and payable) or to the stated maturity or redemption
date, as the case may be and, in the case of (2) or (3), has
delivered to the Trustee an opinion of counsel stating that
(A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(B) since the date of the Indenture, there has been a change
in the applicable U.S. Federal income tax law, in either
case to the effect that the holders of the Debentures will
not recognize income, gain or loss for Federal income tax
purposes as a result of such satisfaction and discharge and
will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been
the case if such satisfaction and discharge had not
occurred; (ii) the Company has paid all other sums payable
under the Indenture by the Company; and (iii) certain other
conditions under the Indenture have been satisfied.
(Section 4.01)
Governing Law
The Indenture will provide that the Debentures will be
governed by, and construed in accordance with, the laws of
the State of New York without regard to principles of
conflicts of laws. (Section 1.12)
The Trustee
State Street Bank and Trust Company will be the Trustee
under the Indenture. State Street Bank and Trust Company,
as successor to The First National Bank of Boston, also
serves as the indenture trustee with respect to the
Company's Indenture dated as of December 15, 1991, providing
for an unlimited amount of debt securities and under which
are issued and outstanding the Company's 7-1/4% Notes due
January 15, 1997 and 8% Notes due March 15, 1999. Boston
EquiServe, L.P., a joint venture of which the Trustee is an
affiliate, serves as Transfer Agent and Registrar for the
Common Stock.
<PAGE>
19
DESCRIPTION OF CAPITAL STOCK
Common Stock
The Company is authorized to issue 150,000,000 shares of
Common Stock. Holders of shares of Common Stock are
entitled to one vote per share on any matter submitted to
the stockholders. Because stockholders do not have
cumulative voting rights, the holders of a majority of the
shares of Common Stock represented at a meeting can elect
all the directors standing for election at such meeting.
The Common Stock is not redeemable or convertible. Subject
to the rights of holders of any Preferred Stock, holders of
Common Stock are entitled to receive dividends as and when
declared by the Board of Directors of the Company out of
funds legally available therefor and to share pro rata in
any distribution to stockholders. Upon dissolution or
liquidation of the Company, subject to the rights of the
holders of any shares of Preferred Stock, the holders of
Common Stock are entitled to receive ratably all the assets
legally available for distribution to stockholders. All
outstanding shares of Common Stock are fully paid and
nonassessable. The Common Stock does not have preemptive or
other subscription rights.
Preferred Stock
The Company is authorized to issue up to 20,000,000 shares
of Preferred Stock, par value $1.00 per share. The Board of
Directors has authority to issue Preferred Stock in one or
more series and to fix the rights, preferences, privileges
and restrictions, including the dividend rights, dividend
rate, conversion rights, voting rights, terms of redemption,
price or prices, liquidation preferences and the number of
shares constituting any series or the designations of such
series, without any further vote or action by the
stockholders. The Company has authorized, but has not
issued, two series of Preferred Stock, Series A Preferred
Stock and Series D Preferred Stock; the Series A is issuable
pursuant to the Rights Agreement described below and the
Series D will only be issued to the Selling Securityholders
that still hold Debentures at the time of the occurrence of
certain events in exchange for the Debentures held by such
Selling Securityholders. See "Description of the
Debentures". The Company has no present plans to issue any
other Preferred Stock.
The Delaware Business Combination Act
Section 203 of the General Corporation Law of the State of
Delaware (the "DGCL") imposes a three-year moratorium on
business combinations (as defined) and other specified
transactions between a Delaware corporation, such as the
Company, and an "interested stockholder" (in general, a
stockholder owning 15% or more of a corporation's
outstanding voting stock) or an affiliate or associate
thereof unless (a) prior to an interested stockholder
becoming such, the Board of Directors of the corporation
approved either the business combination or the transaction
resulting in the interested stockholder becoming such,
(b) upon consummation of the transaction resulting in an
interested stockholder becoming such, the interested
stockholder owns 85% of the voting stock outstanding at the
time the transaction commenced (excluding, from the
calculation of outstanding shares, shares beneficially owned
by management, directors and certain employee stock plans)
or (c) at or after an interested stockholder becomes such,
the business combination is approved by (i) the board of
directors and (ii) holders of at least 66-2/3% of the
outstanding shares (other than those shares beneficially
owned by the interested stockholder) at a meeting of
stockholders.
<PAGE>
20
Business combinations include (a) mergers or
consolidations, (b) sales, leases, exchanges or other
transfers of 10% or more of the aggregate assets of the
Company, (c) issuance or transfers by the corporation of any
stock of the corporation which would have the effect of
increasing the interested stockholder's proportionate share
of the stock of any class or series of the corporation,
(d) any other transaction which has the effect of increasing
the proportionate share of the stock of any class or series
of the corporation which is owned by an interested
stockholder and (e) receipt by an interested stockholder of
the benefit (except proportionately as stockholder) of
loans, advances, guarantees, pledges or other financial
benefits provided by the corporation.
Limitation on Directors' Liability
Pursuant to the DGCL, the Company's Restated Certificate of
Incorporation (the "Certificate") eliminates a director's
personal liability for monetary damages to the Company and
its stockholders arising from a breach of a director's
fiduciary duty, except for liability with respect to an
illegal dividend or stock repurchase or liability for a
breach of the director's duty of loyalty to the Company or
its stockholders, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation
of law or for any transaction in which the director derived
an improper personal benefit. The effect of this provision
in the Certificate of Incorporation is to eliminate the
rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to
recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting
from negligent or grossly negligent behavior) except in the
situations described above.
The Company's By-Laws (the "By-Laws") require the Company
to indemnify its directors, officers, employees and other
agents against certain liabilities. Generally, a director
will be entitled to be indemnified against a claim if a
majority of the directors who are not parties to the
relevant legal proceedings, independent legal counsel or the
stockholders determines that the director acted in good
faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Company and, with
respect to a criminal action, had no reasonable cause to
believe his conduct was unlawful.
Certain Provisions of the Certificate of Incorporation and
By-Laws
The Certificate and the By-Laws contain certain provisions
that may delay, defer or prevent a change in control of the
Company and make removal of management of the Company more
difficult.
The Certificate provides that stockholder action may be
taken only at an annual or special meeting of stockholders
and may not be taken by written consent of the stockholders.
The By-Laws provide that special meetings may be called only
by the Chairman of the Board, the President or the Board of
Directors.
The By-Laws provide that the Board of Directors shall fix
the number of directors and that a stockholder may nominate
directors only if written notice is delivered to the Company
by such stockholder (a) not less than 90 days prior to the
anniversary of the immediately preceding annual meeting of
stockholders or (b) in the event that the annual meeting of
stockholders is called for a date more than 20 days prior to
such anniversary, not later than the close of business on
(i) the 20th day (or if that day is not a business day for
the Company, on the next succeeding business day) following
the first date on which the date of such meeting was
publicly disclosed or (ii) if such date of public disclosure
occurs more than 90 days prior to such scheduled date of
such meeting, then the later of (1) the 20th day (or if that
day is not a business day for the Company, on the next
succeeding business day) following the first date of public
disclosure of the date of such meeting or (2) the 90th day
prior to such scheduled date of such meeting (or if that day
is not a business day for the Company, on the next
succeeding business day).
<PAGE>
21
The Certificate provides that, in case of any increase in
the number of directors of the Company, the additional
directors may be elected by the directors or by the
stockholders in the manner provided in the By-Laws. The
Certificate also provides that any vacancy in the Board of
Directors shall be filled in the manner provided by the By-
Laws. The By-Laws, in turn, provide that all vacancies in
the Board of Directors may, except as provided in the
Certificate, be filled by the remaining directors or a
majority of them attending a meeting for that purpose, even
though less than a quorum may be present, or by the
stockholders at any regular or special meeting prior to the
filling of such vacancy by the Board of Directors. A
director thus elected to fill any vacancy shall hold office
for the unexpired term of his predecessor and until his
successor is elected.
In addition to the power of the stockholders to amend or
repeal the By-Laws, the By-Laws may be amended or repealed
by a majority of the Board of Directors.
The foregoing provisions, together with the Rights
Agreement described below and the ability of the Board of
Directors to issue Preferred Stock without further
stockholder action, could delay or frustrate the removal of
incumbent directors or the assumption of control by the
holder of a large block of the Company's Common Stock even
if such removal or assumption would be beneficial, in the
short term, to stockholders of the Company. The provisions
could also discourage or make more difficult a merger,
tender offer or proxy contest event if such event would be
favorable to the interests of stockholders.
Rights Agreement
In 1986 the Company distributed a dividend of one Right for
each outstanding share of Common Stock. Each Right, when it
becomes exercisable as described below, will entitle the
registered holder to purchase from the Company one one-
hundredth (1/100th) of a share of Series A Participating
Cumulative Preferred Stock, par value $1 per share (the
"Preferred Shares"), of the Company at a price of $200 (the
"Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement dated as of September 9,
1986 (the "Rights Agreement"), as amended and supplemented,
between the Company and First Chicago Trust Company (as
successor to Morgan Shareholder Services Trust Company), as
Rights Agent (the "Rights Agent").
The Rights Agreement provides for the authorization and
issuance of a number of Rights in respect of each share of
the Company's Series D Preferred Stock, which shares of
Series D Preferred Stock are, upon the occurrence of certain
events, required to be issued and exchanged for Subordinated
Debentures that have not been transferred by a Selling
Securityholder, equal to the number of shares of Common
Stock into which each share of Series D Preferred Stock is
convertible, such issuance of Rights to be effective upon
exchange of Subordinated Debentures for Series D Preferred
Stock. The number of Rights so issued shall be adjusted
from time to time so as to ensure that the number of Rights
held in respect of each share of Series D Preferred Stock
equals the number of shares of Common Stock into which each
share of Series D Preferred Stock is then convertible.
<PAGE>
22
Until the earliest of (i) the tenth day after the first
public disclosure that a person or group (including any
affiliate or associate of such person or group) acquired, or
obtained the right to acquire, beneficial ownership of 20%
or more of the outstanding Common Stock (subject to the
exception described below, such person or group being called
an "Acquiring Person" and such date of first public
disclosure being called the "Share Acquisition Date"),
(ii) the occurrence of any Triggering Event (as defined
below) or (iii) the tenth day after the commencement of, or
first public disclosure of an intention to commence, a
tender or exchange offer for 30% or more of the outstanding
Common Stock (the earliest of such dates being called the
"Distribution Date"), the Rights will be evidenced by the
certificates for Common Stock registered in the names of the
holders thereof (which certificates for Common Stock shall
also be deemed to be Right Certificates, as defined below)
or by the certificates representing Series D Preferred
Stock, as applicable, and not by separate Right
Certificates. Therefore, until the Distribution Date, the
Rights will be transferred with and only with the Common
Stock or the Series D Preferred Stock.
With respect any Distribution Date to be determined
pursuant to clause (iii) of the preceding paragraph, the
Board of Directors of the Company, prior to the close of
business on such date, may from time to time, pursuant to a
resolution approved by a majority of the Disinterested
Directors (as defined in the Rights Agreement), postpone the
occurrence of such Distribution Date to a later date which
is certain or determined upon the occurrence of one or more
events; however, such Distribution Date may not be postponed
by the Board of Directors of the Company to a date which is
later than the earlier of any Distribution Date determined
pursuant to clause (i) or (ii) of the preceding paragraph.
Common Stock beneficially owned by any Selling
Securityholder under the Exchange Agreement dated as of
October 7, 1991, between the Company and the Selling
Securityholders (or any permitted transferee thereunder) by
virtue of (i) its ownership of Subordinated Debentures
acquired and held pursuant to and in accordance with the
Exchange Agreement, (ii) its ownership of Series D Preferred
Stock acquired upon exchange of Subordinated Debentures for
Series D Preferred Stock and held pursuant to and in
accordance with the Exchange Agreement or (iii) its
ownership of any other securities of the Company acquired
and held by it in accordance with the Exchange Agreement, is
disregarded in determining whether such Selling
Securityholder beneficially owns 20% of the outstanding
Common Stock for purposes of the definition of an "Acquiring
Person".
If a Distribution Date were to occur, then as soon as
practicable thereafter separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of
record of the Common Stock and the Series D Preferred Stock
as of the close of business on the Distribution Date, and
such separate Right Certificates alone will thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date
and will expire on July 1, 2000, unless extended by the
Board of Directors of the Company (the "Expiration Date"),
subject to their earlier redemption as described below. The
Board may from time to time extend the Rights for not more
than seven years beyond the then current expiration date,
but prior to authorizing any extension the Board of
Directors will submit the question of extending the Rights
to the stockholders for a vote which is solely for the
information and guidance of the Board of Directors and shall
not control or limit in any way the actions of the Board of
Directors.
<PAGE>
23
The number of Preferred Shares or other securities issuable
upon exercise of the Rights is subject to adjustment from
time to time in the event of (i) the declaration of a stock
dividend payable in Preferred Shares or a subdivision,
combination or reclassification of the Preferred Shares,
(ii) the issuance of certain rights, options or warrants to
holders of Common Stock or Equivalent Stock (as defined in
the Rights Agreement) to subscribe for or purchase Common
Stock or Equivalent Shares at a price per share less than
the then-current market value of such Common Stock or
Equivalent Shares or (iii) the distribution to holders of
Common Stock or Equivalent Shares of cash (excluding regular
periodic cash dividends at a rate not in excess of 125% of
the rate of the last regular cash dividend theretofore paid)
or evidences of indebtedness, assets or securities or
subscription rights, options or warrants (other than those
referred to above). The Purchase Price and the number of
Preferred Shares or other securities issuable upon exercise
of the Rights are subject to adjustment from time to time in
the event of the declaration of a stock dividend on the
Common Stock payable in Common Stock or a subdivision or
combination of the Common Stock prior to the Distribution
Date.
The Preferred Shares are authorized to be issued in
fractions which are an integral multiple of one one-
hundredth (1/100th) of a Preferred Share. The Company may,
but is not required to, issue fractions of shares upon the
exercise of Rights, and in lieu of fractional shares, the
Company may make a cash payment based on the market price of
such shares on the first trading date prior to the date of
exercise or utilize a depositary arrangement as provided by
the terms of the Preferred Shares.
In the event the Company is acquired in a merger or other
business combination (other than certain Completion Mergers
(as defined in the Rights Agreement) effected by the Offerer
or any of its affiliates after consummation of a tender
offer not triggering, pursuant to the exception set forth in
clause (i) of the next paragraph, the rights described in
such paragraph) or 50% or more of its assets or assets
representing more than 50% of its earning power are sold,
leased, exchanged or otherwise transferred (in one or more
transactions) to a publicly traded corporation, the Rights
will entitle each holder of a Right to purchase, for the
Purchase Price, that number of common shares of such
corporation which at the time of the transaction would have
a market value of twice the Purchase Price. In the event
the Company is acquired in a merger or other business
combination (other than certain Completion Mergers, as
aforesaid) or 50% or more of the assets or assets
representing more than 50% of the earning power of the
Company are sold, leased, exchanged or otherwise transferred
(in one or more transactions) to an entity that is not a
publicly traded corporation, the Rights will entitle each
holder of a Right to purchase, for the Purchase Price, at
such holder's option, (i) that number of shares of such
entity (or, at the holder's option, of the surviving
corporation in such acquisition, which could be the Company)
which at the time of the transaction would have a book value
of twice the Purchase Price or (ii) if such entity has an
affiliate which has publicly traded common shares, that
number of common shares of such affiliate which at the time
of the transaction would have a market value of twice the
Purchase Price.
In the event an Acquiring Person (i) acquires beneficial
ownership of 20% or more of the Common Stock outstanding,
unless pursuant to an all cash tender offer for all
outstanding Common Stock that meets certain conditions
including being determined by the Disinterested Directors to
be at a price and on other terms and conditions that are
fair and adequate and in the best interest of the Company's
stockholders or (ii) engages in one or more "self-dealing"
transactions with the Company as set forth in the Rights
Agreement (any such event being called a "Triggering
Event"), the Rights will entitle each holder of a Right to
purchase, at the Purchase Price, that number of one one-
hundredths (1/100th) of a Preferred Share equivalent to the
number of Common Stock which at the time of the transaction
would have a market value of twice the Purchase Price.
In the event the Company merges with an Acquiring Person
and the Company is the surviving corporation and all the
Common Stock shall remain outstanding and unchanged (any
such event being called an "Affiliate Merger"), the Rights
will entitle each holder of a Right to purchase, for the
Purchase Price, that number of Common Stock which at the
time of the transaction would have a market value of twice
the Purchase Price.
<PAGE>
24
Any Rights that are or were, at any time on or after the
earlier of the Distribution Date or the Share Acquisition
Date, beneficially owned by an Acquiring Person (or any
affiliate or associate of an Acquiring Person) will become
null and void upon the occurrence of an Affiliate Merger or
a Triggering Event and any holder of any such Right
(including any subsequent holder) will be unable to exercise
any such Right after the occurrence of an Affiliate Merger
or Triggering Event.
Rights outstanding may be redeemed only in whole, but not
in part, at a redemption price of $.05 per Right
(appropriately adjusted for stock splits and similar
transactions) (the "Redemption Price") prior to such time as
any person becomes an Acquiring Person and (i) by action of
the Board of Directors of the Company at its option or
(ii) in the event the Company receives an Offer (as defined
below), by stockholder action taken at a special meeting of
stockholders (the "Special Meeting") which the Board of
Directors of the Company shall call for the purpose of
voting on a resolution requesting the Board of Directors to
accept such Offer (the "Resolution") and which generally
must be held not less than 90 and not more than 120 days
after the date such Offer is received. Such stockholder
action requires the affirmative vote of a majority of all
shares of Common Stock and any other capital stock of the
Company entitled to vote generally in the election of
directors of the Company ("Voting Stock") outstanding as of
the record date of the Special Meeting, not giving effect to
any affirmative votes cast by the Offeror or its affiliates
or by certain insiders of the Company, and is effective
immediately prior to the consummation of any tender offer
consummated within 60 days after the Special Meeting at a
price per share equal to or greater than the price contained
in the Resolution approved at the Special Meeting and for
consideration, the cash proportion of which is equal to or
greater than that contained in the Resolution approved at
the Special Meeting and non-cash portion of which, if any,
is of the same type and on terms no less favorable than that
contained in the Resolution approved at the Special Meeting.
An "Offer" is a written proposal delivered to the Company
by any person (an "Offeror" which includes any person
controlling such person), which (i) provides for the
acquisition of all the outstanding shares of Voting Stock
held by any person other than the Offeror and its affiliates
on the same terms for consideration that it is at least 80%
cash; (ii) is accompanied by a written opinion, in customary
form, of a nationally recognized investment banking firm
which is addressed to the holders of shares of Voting Stock
other than the Offeror and its affiliates and states that
the price to be paid to such holders pursuant to the Offer
is fair to such holders and which includes any written
presentation of such firm showing the range of values
underlying such conclusion; (iii) is accompanied by written
financing commitments, subject only to customary conditions
which are likely to be fulfilled, from recognized financing
sources, and/or has on hand cash or cash equivalents, for
the full amount of all financing necessary to consummate the
Offer together with copies of all written materials prepared
by the Offeror for its lenders for use in their credit
decision; (iv) requests the Company to call a special
meeting of the holders of Voting Stock for the purpose of
voting on a resolution requesting the Board of Directors to
accept such Offer and contains a written agreement of the
Offeror to pay (or share with any other Offeror) at least
one-half of the Company's costs of such special meeting
(exclusive of the Company's costs of preparing and mailing
proxy material for its own solicitation); provided that the
Offeror files the written proposal delivered to the Company
as a tender offer, pursuant to Section 14(d) of the Exchange
Act at least five days prior to the date of mailing by the
Company of any proxy statement for the Special Meeting;
(v) is conditioned upon the commitment of the Offeror to
purchase, upon its consummation, all shares validly tendered
and such shares purchased pursuant to the Offer are a
majority of the Voting Stock; (vi) such Offer by its terms
(a) remains open for at least 20 business days after the
date of the Special Meeting plus 10 business days after any
change in price and (b) provides that after its consummation
the Offeror commits either to offer to acquire within 30
business days all the remaining shares at the same price
(for the same amount of cash and other consideration) as
paid in the Offer or to initiate within 50 business days and
consummate promptly thereafter a merger that provides such
same price for all remaining shares; and (vii) is made by,
or on behalf of, an Offeror which is not a foreign issuer
(nor is any parent of the Offeror).
<PAGE>
25
The Board of Directors retains its authority to reject any
Offer, or to recommend that stockholders reject any tender
offer, or to take any other action with respect to any Offer
or any tender offer that the Board of Directors believes is
necessary or appropriate in the exercise of its fiduciary
duty.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to
receive dividends.
At any time prior to the Distribution Date, the Company
may, without the approval of any holder of the Rights,
supplement or amend any provision of the Rights Agreement
(including the date on which the Distribution Date shall
occur), except that no supplement or amendment shall be made
which reduces the Redemption Price or provides for an
earlier Expiration Date. However, at any time when there
shall be an Acquiring Person, the Rights Agreement may be
supplemented or amended only if the Board of Directors of
the Company, with the concurrence of a majority of the
Disinterested Directors, determines that such supplement or
amendment is in the best interests of the Company and its
stockholders.
Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights, or upon the
effectiveness of the redemption of the Rights pursuant to
shareholder action, the right to exercise the Rights will
terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price.
The Rights have certain antitakeover effects. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the
offer on substantially all the Rights being acquired. The
Rights will not interfere with any merger or other business
combination approved by the Board of Directors or the
stockholders of the Company, as described above.
Reference is hereby made to the Rights Agreement
specifying the terms of the Rights, which includes as
Exhibit A the Certificate of Designation of the Preferred
Shares specifying the terms of the Preferred Shares and as
Exhibit B the form of Right Certificate, and this
description is qualified in its entirety by reference to the
terms and conditions thereof.
<PAGE>
26
SELLING SECURITYHOLDERS
The Debentures and Common Stock that may be offered
pursuant to this Prospectus will be offered by any or all of
the Selling Securityholders identified in the table below.
The following table sets forth the principal amount of Notes
owned by, and the percentage of all outstanding Notes owned
by, the Selling Securityholders, all as of February 1, 1996.
In connection with the sale from time to time by a Selling
Securityholder of Debentures offered hereby, Notes held by
such Selling Securityholder in a corresponding principal
amount will be amended and restated so as to cause them to
be Debentures as described above under "Description of the
Debentures". The aggregate principal amount of Notes or
number of shares of Common Stock to be sold by each Selling
Securityholder will be set forth in the applicable
supplement to this Prospectus.
Name of Selling Principal Amount Percent of
Securityholder of Total Outstanding
Notes Owned (1) Notes
- ------------------ ---------------- -----------------
Corporate Partners, $118,149,000 84.4%
L.P.(1)(2)
Corporate Offshore 8,131,000 5.8
Partners,
L.P.(1)(2)
State Board of 13,720,000 9.8
Administration of
Florida (2)(3)
-------------- ------
Total $140,000,000 100.0%
============== ======
(1) In November 1992, the Selling Securityholders
transferred the Notes to a trust (the "Trust") and
currently hold receipts issued by such trust entitling
them to reacquire the Notes on specified terms. This
table gives effect to the reacquisition of all Notes from
the Trust. The $500,000 aggregate principal amount of
Notes which Sub Debt Partners Inc., a Delaware
corporation wholly owned by the Selling Securityholders,
has the right to reacquire from the Trust, has been
allocated to the Selling Securityholders in proportion to
their interest in Sub Debt Partners Inc. See
"Description of the Debentures".
(2) The Company has received the following information:
LFCP Corp. ("LFCP"), a subsidiary of Lazard Freres & Co.
L.L.C. ("Lazard Freres"), is the general partner of
Corporate Advisors, L.P. ("Corporate Advisors").
Corporate Advisors is the general partner of two limited
partnerships which are Selling Securityholders, Corporate
Partners, L.P. ("CP") and Corporate Offshore
Partners, L.P. Corporate Advisors also serves as
investment manager for, and exercises sole investment
discretion with respect to, account assets held in a
certain custody account for the State Board of
Administration of Florida. Giving effect to the
reacquisition and conversion of all Notes which the
Selling Securityholders have the right to reacquire, as
of February 1, 1996, CP beneficially owned 3,635,350
shares of Common Stock (7.3%). As of such date, and
giving effect to the reacquisition and conversion of all
Notes which the Selling Securityholders have the right to
reacquire, each of LFCP and Corporate Advisors (through
their control of the Selling Securityholders) may be
deemed to have owned beneficially 4,307,688 shares of
Common Stock (8.6%). Lester Pollack, a director of the
Company, is Chairman, Treasurer and a director of LFCP,
Senior Managing Director of Corporate Advisors and a
Managing Director of Lazard Freres. Through those
positions, Mr. Pollack may be deemed to control LFCP and
Corporate Advisors and to be able to direct the voting
and investment of Common Stock beneficially owned by the
Selling Securityholders. Mr. Pollack disclaims
beneficial ownership of such 4,307,688 shares of Common
Stock.
(3) As of December 27, 1995, the State Board of
Administration of Florida also owned 127,852 shares of
Common Stock (outside of the custody account referred to
in footnote (2) above), representing 0.26% of the
outstanding Common Stock (assuming conversion of all
outstanding Notes).
<PAGE>
27
The Exchange Agreement provides that, until the earliest of
(i) January 30, 1999, (ii) such date as the Selling
Securityholders cease to beneficially own (assuming
conversion of all outstanding Notes held by them or which
they have the right to acquire) voting securities
representing at least 5% of the total voting power (assuming
such conversion) and (iii) the occurrence of a Change in
Control (as defined in the Indenture), Corporate Advisors,
L.P. (the general partner of Corporate Partners, L.P. and
Corporate Offshore Partners, L.P.) acting on behalf of the
Selling Securityholders and after consultation with the
Company, is entitled to propose to the Board of Directors of
the Company or the Nominating Committee thereof one person,
who shall not be unsatisfactory to the Company's Board of
Directors in the exercise of its fiduciary obligations (each
such person, a "Satisfactory Nominee"), for election to such
Board of Directors. The Company has agreed to cause each
Satisfactory Nominee to be included in the slate of nominees
recommended by such Board to the Company's stockholders for
election as directors at each annual meeting of the
stockholders of the Company and to use its best efforts to
cause the election of such Satisfactory Nominee, including
soliciting proxies in favor of the election of such person.
In the event that any Satisfactory Nominee elected to the
Company's Board of Directors ceases to serve as a director
for any reason, the Company has agreed that the vacancy
resulting therefrom shall be filled by such Board with a
substitute Satisfactory Nominee. According to the terms of
the Exchange Agreement, notwithstanding the foregoing, the
right of Corporate Advisors to designate persons for
election to the Company's Board of Directors shall terminate
when (i) the Selling Securityholders' voting power (assuming
conversion of all outstanding Notes held by them or which
they have the right to acquire) is less than 3% of the total
voting power (assuming such conversion) and (ii) the Selling
Securityholders beneficially own (assuming conversion of all
outstanding Notes held by them or which they have the right
to acquire) less than 1,500,000 shares of Common Stock (with
appropriate antidilution adjustments).
Pursuant to such right, Corporate Advisors has designated
Lester Pollack to be nominated for election to the Company's
Board of Directors. Prior to the repurchase in October 1991
by the Company from the Selling Securityholders of
convertible preferred stock and warrants originally issued
to them, Corporate Advisors, acting on behalf of the Selling
Securityholders, had the right to propose for nomination a
second person for election to the Company's Board of
Directors. Delbert C. Staley was originally proposed for
nomination for election pursuant to such right prior to
October 1991 and has continued as a director of the Company.
Other than as described above and other than as a result of
the ownership of Notes, none of the Selling Securityholders
had any material relationship with the Company within the
three-year period ending on the date of this Prospectus.
Because the Selling Securityholders may offer all or some
of the Debentures that they hold as Notes and/or Common
Stock pursuant to the offering contemplated by this
Prospectus, and because there are currently no agreements,
arrangements or understandings with respect to the sale of
any of the Debentures, Notes or Common Stock by the Selling
Securityholders, no estimate can be given as to the
principal amount of Debentures, Notes or Common Stock that
will be held by the Selling Securityholders after completion
of this offering. See "Plan of Distribution".
<PAGE>
28
PLAN OF DISTRIBUTION
The Debentures and Common Stock offered hereby may be sold
from time to time to purchasers directly by the Selling
Securityholders. Alternatively, the Selling Securityholders
may from time to time offer the Debentures and Common Stock
to or through underwriters, broker/dealers or agents, who
may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling
Securityholders or the purchasers of Debentures and Common
Stock for whom they may act as agents. Any underwriters,
broker/dealers or agents which participate in the
distribution of Debentures and Common Stock may be deemed to
be "underwriters" within the meaning of the Securities Act
and any profit on the sale of Debentures and Common Stock by
them and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer
or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Debentures and Common Stock issuable upon conversion
thereof may be sold from time to time in one or more
transactions at fixed prices, at prevailing market prices at
the time of sale, at varying prices determined at the time
of sale or at negotiated prices. The sale of the Debentures
and the Common Stock issuable upon conversion thereof may be
effected in transactions (which may involve crosses or block
transactions) (i) on any national securities exchange or
quotation service on which the Debentures or the Common
Stock may be listed or quoted at the time of sale, (ii) in
the over-the-counter market, (iii) in transactions otherwise
than on such exchanges or in the over-the-counter market or
(iv) through the writing of options. At the time a
particular offering of the Debentures or the Common Stock is
made, a Prospectus Supplement, if required, will be
distributed which will set forth the aggregate amount of
Debentures and Common Stock being offered, any listing for
the Debentures and the terms of the offering, including the
name or names of any underwriters, broker/dealers or agents,
any discounts, commissions and other terms constituting
compensation from the Selling Securityholders and any
discounts, commissions or concessions allowed or reallowed
or paid to broker/dealers. Underwriters, dealers, agents
and other persons may be entitled, under agreements which
may be entered into with the Selling Securityholders and the
Company, to indemnification against certain civil
liabilities, including liabilities under the Securities Act.
To comply with the securities laws of certain
jurisdictions, if applicable, the Debentures and Common
Stock will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Debentures and Common
Stock may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or
any exemption from registration or qualification is
available and is complied with.
Under the terms of the Registration Rights Agreement, the
Selling Securityholders are required to (i) use all
reasonable efforts to effect as wide a distribution of the
Debentures and Common Stock issuable upon conversion thereof
as reasonably practicable, (ii) subject to certain
exceptions, not knowingly to make any sale of such
securities to any person that, together with certain
affiliates and persons acting in concert with it, after
giving effect to such sale, would beneficially own voting
securities of the Company representing more than 5% of the
total voting power and (iii) to secure the agreement of any
underwriters to the effect of the foregoing clauses (i) and
(ii).
Pursuant to the Registration Rights Agreement, the Selling
Securityholders will pay all underwriting discounts and
selling commissions, if any, applicable to the sale of the
Debentures and the Common Stock and the Company is generally
responsible for payment of all other expenses incident to
the offer and sale of the Debentures and the Common Stock,
including, without limitation, Commission filing fees and
expenses of compliance with state securities or "blue sky"
laws. The Selling Securityholders will be indemnified by
the Company against certain civil liabilities, including
certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith. The
Company will be indemnified by the Selling Securityholders
against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
<PAGE>
29
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of U.S. Federal income tax
consequences deals only with Debentures held as capital
assets by initial United States holders. It does not deal
with special situations, such as those of foreign persons,
dealers in securities, financial institutions, life
insurance companies, holders whose "functional currency" is
not the U.S. dollar, or certain "straddle" or hedging
transactions. A "U.S. holder" is (i) a citizen or resident
of the United States, (ii) a corporation created or
organized under the laws of the United States or any State
thereof (including the District of Columbia) or (iii) a
person otherwise subject to United States Federal income
taxation on its worldwide income. PROSPECTIVE INVESTORS
ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND
DISPOSING OF THE DEBENTURES, INCLUDING THE TAX CONSEQUENCES
ARISING UNDER ANY STATE, LOCAL OR FOREIGN LAWS.
No Original Issue Discount
The Debentures were not issued with original issue
discount.
Market Discount
Under the market discount rules, a Debenture will be
treated as purchased at a market discount if a holder
purchases it at a price below its stated redemption price at
maturity and if the discount is in excess of a statutorily-
defined de minimis amount (a "Market Discount Debenture").
In general, any partial payment of principal on, or gain
recognized on the maturity or disposition of, a Market
Discount Debenture will be treated as ordinary income to the
extent that such gain does not exceed the accrued market
discount on such Debenture. Market discount accrues on a
straight-line basis, unless the Holder elects to accrue such
discount on a constant yield to maturity basis. Such an
election is applicable only to the Debenture with respect to
which it is made and is irrevocable.
Alternatively, a holder of a Market Discount Debenture may
elect to include market discount in income currently over
the life of the Market Discount Debenture. Such an election
applies to all debt instruments with market discount
acquired by the electing holder on or after the first day of
the first taxable year to which the election applies and may
not be revoked without the consent of the Internal Revenue
Service (the "IRS").
A holder of a Market Discount Debenture that does not elect
to include market discount in income currently generally
will be required to defer deductions for interest on
borrowings allocable to such Debenture in an amount not
exceeding the accrued market discount on such Debenture,
until the maturity or disposition of such Debenture.
Amortizable Bond Premium
A holder that purchases a Debenture for an amount in excess
of its principal amount is considered to have purchased the
Debenture with "amortizable bond premium" in an amount equal
to such excess (excluding any excess attributable to the
conversion feature of the Debenture), and may elect to
amortize such premium over the term of the Debenture. Any
election to amortize bond premium is applicable to all bonds
held by the holder (other than bonds the interest on which
is excludible from gross income) at the beginning of the
first taxable year to which the election applies or
thereafter acquired by the holder, and may not be revoked
without the consent of the IRS.
<PAGE>
30
Sale, Exchange or Retirement of Convertible Debentures and
Common Stock
A holder generally will recognize gain or loss upon the
sale, exchange, redemption, repurchase, retirement or other
disposition (other than a conversion) of the Debentures
measured by the difference (if any) between (i) the amount
of cash and the fair market value of any property received
(except to the extent that such cash or other property is
attributable to the payment of accrued interest not
previously included in income, which amount will be taxable
as ordinary income) and (ii) the holder's adjusted tax basis
in those Debentures (including any market discount
previously included in income by the holder). Each holder
of Common Stock into which the Debentures are converted, in
general, will recognize gain or loss upon the sale,
exchange, redemption, or other disposition of the Common
Stock measured under rules similar to those described in the
preceding sentence for the Debentures. Special rules may
apply to redemptions of Common Stock which may result in
different treatment. Any such gain or loss recognized on
the sale, exchange, redemption, repurchase, retirement or
other disposition of a Debenture or shares of Common Stock
will be capital gain or loss (except as discussed under "--
Market Discount" above), and would be long-term capital gain
or loss if the Debenture or the Common Stock has been held
for more than one year at the time of the sale or exchange.
An investor's initial basis in a Debenture will be the cash
price it paid therefor.
Conversion of Debentures
A holder generally will not recognize gain or loss upon
conversion of the Debentures into Common Stock (except with
respect to cash received in lieu of fractional shares). The
holder's basis in the Common Stock received on conversion
will be the same as the holder's adjusted tax basis in the
Debentures at the time of conversion (reduced by the portion
of adjusted basis allocated to any fractional share of
Common Stock exchanged for cash). The holding period for
the Common Stock received on conversion will include the
holding period of the Debentures that were converted.
The conversion ratio of the Debentures is subject to
adjustment under certain circumstances. Under Section 305
of the Internal Revenue Code of 1986, a holder could be
treated as having received a constructive distribution,
resulting in ordinary income (subject to a dividends
received deduction in the case of certain corporate holders)
to the extent of the Company's earnings and profits, as a
result of such an adjustment (in particular, an adjustment
to reflect a taxable dividend to holders of Common Stock)
that increases the proportionate interest of the holder in
the fully diluted Common Stock. Moreover, if there is not a
full adjustment to the conversion ratio of the Debentures to
reflect a stock dividend or other event increasing the
proportionate interest of the holders of Common Stock, then
such increase in the proportionate interest of the holders
of the Common Stock generally will be treated as a
distribution to such holders, taxable as ordinary income
(subject to a dividends received reduction in the case of
certain corporate holders) to the extent of the Company's
earnings and profits.
Backup Withholding
A holder of Debentures or Common Stock may be subject to
"back-up withholding" at a rate of 31% with respect to
certain "reportable payments", including interest payments,
dividend payments and, under certain circumstances,
principal payments on the Debentures. The back-up
withholding rules apply if the holder, among other things,
(i) fails to furnish a social security number or other
taxpayer identification number ("TIN"), (ii) furnishes an
incorrect TIN, (iii) is notified by the Internal Revenue
Service that it has failed to properly report payments of
interest or dividends or (iv) under certain circumstances,
fails to provide a certified statement, signed under
penalties of perjury, that the TIN furnished is the correct
number and that the holder has not been notified by the
Internal Revenue Service that it is subject to backup
withholding for failure to report interest and dividend
payments. Any amount withheld from a payment to a holder
under the back-up withholding rules is creditable against
the holder's federal income tax liability, provided the
required information is furnished to the IRS. Back-up
withholding and information reporting will not apply,
however, with respect to payments made to certain holders,
including corporations, and tax-exempt organizations.
<PAGE>
31
The Company will report to the holders of Debentures and
Common Stock and to the IRS the amount of any "reportable
payments" for each calendar year and the amount of tax
withheld, if any, with respect to such payments.
EXPERTS
The consolidated financial statements of the Company and
its subsidiaries as of December 31, 1994 and 1993, and for
each of the years in the three-year period ended
December 31, 1994, have been incorporated by reference
herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The report of KPMG Peat Marwick LLP dated January 31, 1995
refers to a change in 1993 in the method of accounting for
income taxes and for certain postretirement and
postemployment benefits.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to
future contingencies) incurred or expected to be incurred by
the Company in connection with this Registration Statement.
SEC registration fee $66,937
Legal fees and expenses 30,000
Reimbursement of legal fees and
expenses 30,000
to Selling Securityholders
Accounting fees and expenses 5,000
Trustee's fees 13,000
Printing and engraving fees 5,000
Miscellaneous expenses 3,063
--------
Total $153,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102 of the Delaware General
Corporation Law (the "DGCL"), the Company's Restated
Certificate of Incorporation eliminates a director's
personal liability for monetary damages to the Company and
its stockholders arising from a breach of a director's
fiduciary duty, except for liability with respect to an
illegal dividend or stock repurchase or liability for a
breach of the director's duty of loyalty to the Company or
its stockholders, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation
of law or for any transaction in which the director derived
an improper personal benefit. The effect of this provision
in the Certificate of Incorporation is to eliminate the
rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to
recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting
from negligent or grossly negligent behavior) except in the
situations described above.
The Company's By-Laws provide that, to the extent not
inconsistent with Delaware or other applicable law in effect
from time to time, the Company shall indemnify any person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of
the Company) by reason of the fact that he is or was a
director, officer, employee or agent of the Company or is or
was serving at the request of the Company as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
II-1
<PAGE>
The Company's By-Laws also provide that, to the extent not
inconsistent with Delaware or other applicable law in effect
from time to time, the Company shall indemnify any person
who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in
the right of the Company to procure a judgment in its favor
by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including
attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted under similar standards, except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable to the Company unless and only to the extent
that the Court of Chancery or the court in which such action
or suit was brought shall determine that despite the
adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Generally, a director will be entitled to be indemnified
against a claim if a majority of the directors who are not
parties to the relevant legal proceedings, independent legal
counsel or the stockholders determine that the director
acted under such standards.
The Company's By-Laws further provide that to the extent
that a director, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to above or in
defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith; that the indemnification provided for by the By-
Laws shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and that the
Company is empowered to purchase and maintain insurance on
behalf of a person who is or was acting in any of the
capacities set forth above against any liability asserted
against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the
Company would have the power to indemnify him against such
Liabilities under the By-Laws.
Section 145 of the DGCL similarly provides for
indemnification by the Company of its directors and officers
and certain other persons.
Under the terms of the Registration Rights Agreement, the
directors and officers of each of the Selling
Securityholders will be indemnified by the Company against
certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to
contribution in connection therewith. As Senior Managing
Director of Corporate Advisors, L.P., one of the Selling
Securityholders, Lester Pollack, a director of the Company,
will be entitled to such indemnification or contribution.
Additionally, under the terms of an agreement to be entered
into among the Company and the Selling Securityholders, each
of the directors and officers of the Company will be
indemnified by the Selling Securityholders against certain
civil liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution in
connection therewith.
The Company maintains policies of insurance under which
directors, officers and certain employees of the Company and
its subsidiaries are insured, subject to certain specific
exclusions and deductible maximum amounts, against loss
arising from any civil claim which may be made against them,
or any of them, arising out of any misstatement, misleading
statement, omission or other act done or alleged to have
been done, or wrongfully attempted, while acting in their
representative capacities.
II-2
<PAGE>
ITEM 16. EXHIBITS
The following exhibits are filed as part of this
Registration Statement:
Exhibit No. Description
----------- -------------
4.1 Form of Indenture between the Company and
State Street Bank and Trust Company, as
Trustee, with respect to the Debentures.
4.2 Form of Debenture (included in Exhibit 4.1).
4.3 Specimen of Common Stock Certificate of the
Company. (The Specimen of Common Stock
Certificate of the Company included as
Exhibit 4.4 to the Company's Form S-8 as filed
on November 23, 1993 is hereby incorporated
herein by reference.)
4.4 Rights Agreement dated as of September 9,
1986, between the Company and Morgan
Shareholder Services Trust Company, as Rights
Agent. (The Rights Agreement included as
Exhibit 1 to the Company's Form 8-A as filed
on September 15, 1986, is hereby incorporated
herein by reference.)
4.5 First Amendment dated as of August 16, 1988,
to Rights Agreement dated as of September 9,
1986, between the Company and Morgan
Shareholder Services Trust Company, as Rights
Agent. (The First Amendment included as
Exhibit 4 to the Company's Form 8 (Amendment
No. 1 to Form 8-A filed on September 15, 1986)
as filed on August 18, 1988, is hereby
incorporated herein by reference.)
4.6 Second Amendment dated as of September 14,
1988, to Rights Agreement dated as of
September 9, 1986, between the Company and
Morgan Shareholder Services Trust Company, as
Rights Agent. (The Second Amendment included
as Exhibit 5 to the Company's Form 8
(Amendment No. 2 to the Form 8-A filed on
September 15, 1986) as filed on September 15,
1988, is hereby incorporated herein by
reference.)
4.7 Supplemental Rights Agreement and Third
Amendment dated as of January 30, 1989, to
Rights Agreement dated as of September 9,
1986, between the Company and Morgan
Shareholder Services Trust Company, as Rights
Agent. (The Supplemental Rights Agreement and
Third Amendment included as Exhibit 6 to the
Company's Form 8 (Amendment No. 3 to the
Form 8-A filed on September 15, 1986) as filed
on January 30, 1989, is hereby incorporated
herein by reference.)
4.8 Fourth Amendment dated as of February 21,
1989, to Rights Agreement dated as of
September 9, 1986 between the Company and
Morgan Shareholder Services Trust Company, as
Rights Agent. (The Fourth Amendment included
as Exhibit 7 to the Company's Form 8
(Amendment No. 4 to the Form 8-A filed on
September 15, 1986) as filed on February 21,
1989, is hereby incorporated herein by
reference.)
II-3
<PAGE>
4.9 Supplemental Rights Agreement and Fifth
Amendment dated as of October 7, 1991, to the
Rights Agreement dated as of September 9,
1986, between the Company of New York and
First Chicago Trust Company (as successor to
Morgan Shareholder Services Trust Company), as
Rights Agent. (The Supplemental Rights
Agreement and Fifth Amendment included as
Exhibit 8 to the Company's Form 8 (Amendment
No. 5 to the Form 8-A filed on September 15,
1986) as filed on October 21, 1991, is hereby
incorporated herein by reference.)
4.10 Sixth Amendment (previously designated as the
Fifth Amendment) dated as of March 23, 1993,
to the Rights Agreement dated as of
September 9, 1986, between the Company and
First Chicago Trust Company of New York, as
Rights Agent. (The Sixth Amendment
(previously designated as the Fifth Amendment)
included as Exhibit 9 (previously designated
as Exhibit 8) to the Company's Form 8
(Amendment No. 6 (previously designated as
Amendment No. 5) to the Form 8-A filed on
September 15, 1986) as filed on July 2, 1993,
is hereby incorporated herein by reference.)
4.11 Amendment dated as of June 30, 1993, to the
Fifth Amendment dated as of March 23, 1993, to
the Rights Agreement dated as of September 9,
1986, between the Company and First Chicago
Trust Company of New York, as rights agent.
(The Amendment to the Sixth Amendment included
as Exhibit 10 to the Company's Form 8
(Supplement to Amendment No. 5 and
redesignation thereof as Amendment No. 6 to
the Form 8-A filed on September 15, 1986) as
filed on July 2, 1993, is hereby incorporated
herein by reference.)
5 Opinion of Richard F. deLima, Esq. as to the
leg ality of the securities being registered
hereby.
12 Statement re computation of earnings to fixed
charges.
15 Letter re unaudited interim financial
information.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Richard F. deLima, Esq. (included
in Exhibit 5.1).
24 Powers of Attorney (included in the signature
pages to the Registration Statement).
25 Form T-1 Statement of Eligibility and
Qualification of Trustee.
99.1 Form of Agreement between the Company and
Corporate Partners, L.P., Corporate Offshore
Partners, L.P. and State Board of
Administration of Florida.
99.2 Registration Rights Agreement dated as of
October 7, 1991, between the Company and
Corporate Partners, L.P., Corporate Offshore
Partners, L.P. and State Board of
Administration of Florida.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to
this Registration Statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of this
Registration Statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in this
Registration Statement; and
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement;
provided, however, that paragraphs (i) and (ii) shall not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission
by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
C. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the provisions described under Item 15 above (other than
through the liability insurance therein referenced), or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding and other than
through such liability insurance) is asserted by such
director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such
issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing a
Form S-3 and has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cambridge, Commonwealth of
Massachusetts, on January 30, 1996.
POLAROID CORPORATION,
by /s/ Gary T. DiCamillo
--------------------------
Name: Gary T. DiCamillo
Title: Chairman of the Board
and Chief Executive
Officer
Know All Men By These Presents, that each person whose
signature appears below constitutes and appoints Gary T.
DiCamillo, William J. O'Neill, Jr. and Richard F. deLima,
severally, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him
and in his name, place and stead, and in any and all
capacities, to sign any and all amendments to this
Registration Statement, and to file the same with all
exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, severally, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as each such
person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or
their substitute or substitutes, may lawfully do or cause to
be done by virtue hereof, all on January 30, 1996.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on January 30, 1996.
Signature Title
-------------- -------------------
/s/ Gary T. DiCamillo Chairman of the
---------------------- Board and Chief
Gary T. DiCamillo Executive Officer
(Chief Executive Officer)
/s/ Yen-Tsai Feng Director
----------------------
Yen-Tsai Feng
/s/ Frank S. Jones Director
----------------------
Frank S. Jones
II-8
<PAGE>
/s/ John W. Loose Director
---------------------------
John W. Loose
/s/ James D. Mahoney Director
----------------------------
James D. Mahoney
/s/ Albin F. Moschner Director
---------------------------
Albin F. Moschner
/s/ Henry Necarsulmer Director
---------------------------
Henry Necarsulmer
/s/ Kenneth H. Olsen Director
--------------------------
Kenneth H. Olsen
/s/ Lester Pollack Director
--------------------------
Lester Pollack
/s/ Charles P. Slichter Director
--------------------------
Charles P. Slichter
/s/ Ralph Z. Sorenson Director
--------------------------
Ralph Z. Sorenson
/s/ Delbert C. Staley Director
--------------------------
Delbert C. Staley
/s/ Alfred M. Zeien Director
--------------------------
Alfred M. Zeien
/s/ William J. O'Neill, Jr. Executive Vice
-------------------------- President and Chief
William J. O'Neill, Jr. Financial Officer
(Principal Financial Officer)
/s/ Ralph M. Norwood Vice President and
-------------------------- Controller
Ralph M. Norwood (Controller)
II-8
Exhibit 4.1
INDENTURE
Between
POLAROID CORPORATION
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
Dated as of February [ ], 1996
8% Subordinated Convertible Debentures Due 2001
<PAGE>
POLAROID CORPORATION
Reconciliation and Tie Between the Trust Indenture Act
of 1939 and Indenture dated as of February [ ], 1996
Trust Indenture
Act Section Indenture Section
310(a)(1) 6.08
(a)(2) 6.08
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 6.08
(b) 6.08
6.09
311(a) 6.12
(b) 6.12
(b)(2) 7.03(a)(ii)
7.03(b)
312(a) 7.01
7.02(a)
(b) 7.02(b)
(c) 7.02(c)
313(a) 7.03(a)
(b) 7.03(b)
(c) 7.03(a)
(d) 7.03(c)
314(a) 7.04
(b) Not Applicable
(c)(1) 1.02
(c)(2) 1.02
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.02
315(a) 6.01(a)
(b) 6.02
(c) 6.01(b)
(d) 6.01(c)
(d)(1) 6.01(c)(i)
(d)(2) 6.01(c)(ii)
(d)(3) 6.01(c)(iii)
(e) 5.14
<PAGE>
2
316(a) 5.12
(a)(1)(A) 5.12
(a)(1)(B) 5.13
(a)(2) Not Applicable
(b) 5.08
317(a)(1) 5.03
(a)(2) 5.04
(b) 10.03
318(a) 1.07
____________________
Note: This reconciliation and tie
shall not, for any purpose, be
deemed to be a part of the
Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions 1
SECTION 1.02. Compliance Certificates and
Opinions 13
SECTION 1.03. Form of Documents Delivered to
Trustee 13
SECTION 1.04. Acts of Holders 14
SECTION 1.05. Notices, etc., to Trustee and
Company 15
SECTION 1.06. Notice to Holders; Waiver 16
SECTION 1.07. Conflict with Trust Indenture Act 16
SECTION 1.08. Effect of Headings and Table of
Contents 17
SECTION 1.09. Successors and Assigns 17
SECTION 1.10. Separability Clause 17
SECTION 1.11. Benefits of Indenture 17
SECTION 1.12. Governing Law 17
SECTION 1.13. Legal Holidays 17
SECTION 1.14. No Recourse Against Others 18
ARTICLE II
Debenture Forms
SECTION 2.01. Forms Generally 18
SECTION 2.02. Form of Face of Debenture 18
SECTION 2.03. Form of Reverse of Debenture 20
SECTION 2.04. Form of Trustee's Certificate of
Authentication 27
____________________
Note: This table of contents shall not, for any purpose,
be deemed to be part of the Indenture.
<PAGE>
Contents, p. 2
PAGE
ARTICLE III
The Debentures
SECTION 3.01. Title and Terms 27
SECTION 3.02. Denominations 28
SECTION 3.03. Execution, Authentication, Delivery
and Dating 28
SECTION 3.04. Temporary Debentures 29
SECTION 3.05. Registration, Registration of Transfer
and Exchange 29
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Debentures 31
SECTION 3.07. Payment of Interest; Interest Rights
Preserved 32
SECTION 3.08. Persons Deemed Owners 33
SECTION 3.09. Cancelation 34
SECTION 3.10. Computation of Interest 34
SECTION 3.11. CUSIP Number 34
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of
Indenture 34
SECTION 4.02. Application of Trust Money 36
ARTICLE V
Remedies
SECTION 5.01. Events of Default 36
SECTION 5.02. Acceleration of Maturity; Rescission
and Annulment 39
SECTION 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee 40
SECTION 5.04. Trustee May File Proofs of Claim 41
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Debentures 42
SECTION 5.06. Application of Money Collected 42
SECTION 5.07. Limitation on Suits 43
SECTION 5.08. Right of Holders To Receive
Principal, Premium and
Interest and To Convert 43
SECTION 5.09. Restoration of Rights and Remedies 44
<PAGE>
Contents, p. 3
PAGE
SECTION 5.10. Rights and Remedies Cumulative 44
SECTION 5.11. Delay or Omission Not Waiver 44
SECTION 5.12. Control by Holders 44
SECTION 5.13. Waiver of Past Defaults 45
SECTION 5.14. Undertaking for Costs 45
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities 46
SECTION 6.02. Notice of Defaults 47
SECTION 6.03. Certain Rights of Trustee 48
SECTION 6.04. Not Responsible for Recitals or
Issuance of Debentures 49
SECTION 6.05. May Hold Debentures 49
SECTION 6.06. Money Held in Trust 49
SECTION 6.07. Compensation and Reimbursement 50
SECTION 6.08. Corporate Trustee Required;
Eligibility 51
SECTION 6.09. Resignation and Removal; Appointment
of Successor 51
SECTION 6.10. Acceptance of Appointment by
Successor 53
SECTION 6.11. Merger, Conversion, Consolidation or
Succession to Business 53
SECTION 6.12. Preferential Collection of Claims
Against Company 54
SECTION 6.13. Appointment of Authenticating Agent 54
ARTICLE VII
Holders' Lists and Reports
by Trustee and Company
SECTION 7.01. Company To Furnish Trustee Names and
Addresses of Holders 57
SECTION 7.02. Preservation of Information
Communication to Holders 57
SECTION 7.03. Reports by Trustee 59
SECTION 7.04. Reports by Company 60
<PAGE>
Contents, p. 4
PAGE
ARTICLE VIII
Consolidation, Merger, Conveyance
or Transfer
SECTION 8.01. Company May Consolidate, Etc., Only on
Certain Terms 62
SECTION 8.02. Successor Corporation Substituted 62
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without
Consent of Holders 63
SECTION 9.02. Supplemental Indentures with Consent
of Holders 64
SECTION 9.03. Execution of Supplemental Indentures 65
SECTION 9.04. Effect of Supplemental Indentures 65
SECTION 9.05. Conformity with Trust Indenture Act 65
SECTION 9.06. Reference in Debentures to
Supplemental Indentures 65
SECTION 9.07. Consent of Holders of Senior
Indebtedness 66
ARTICLE X
Covenants
SECTION 10.01. Interest 66
SECTION 10.02. Maintenance of Office or Agency 66
SECTION 10.03. Money for Debenture Payments To Be
Held in Trust 67
SECTION 10.04. Corporate Existence 69
SECTION 10.05. Dividend, Repurchase and Redemption
Restrictions 69
SECTION 10.06. Payment of Taxes and Other Claims 70
SECTION 10.07. Waiver of Stay or Extension Laws 70
SECTION 10.08. Notice of Defaults 70
SECTION 10.09. Other Subordinated Indebtedness 71
<PAGE>
Contents, p. 5
PAGE
ARTICLE XI
Redemption of Debentures
SECTION 11.01. Original Redemption by the Company 71
SECTION 11.02. Selection of Debentures To Be
Redeemed 72
SECTION 11.03. Redemption at the Option of the
Holder 72
SECTION 11.04. Redemption Notice and Mechanics 73
SECTION 11.05. Deposit of Redemption or Change in
Control Price 75
SECTION 11.06. Debentures Payable on Redemption
Date 76
SECTION 11.07. Debentures Redeemed in Part 76
ARTICLE XII
Conversion of Debentures
SECTION 12.01. Optional Conversion 76
SECTION 12.02. Mechanics of Conversion 77
SECTION 12.03. Conversion of Debentures Called for
Redemption or Exchanged 78
SECTION 12.04. Dividends, Etc. 78
SECTION 12.05. Fractional Shares 78
SECTION 12.06. Reservation of Common Stock 79
SECTION 12.07. Conversion Ratio Adjustments 79
SECTION 12.08. Reorganization; Merger; Consolidation,
Etc. 85
SECTION 12.09. Notice to Holders 87
SECTION 12.10. Reports as to Adjustments 87
SECTION 12.11. Responsibility of Trustee 88
ARTICLE XIII
Subordination of Debentures
SECTION 13.01. Debentures Subordinate to Senior
Indebtedness 88
SECTION 13.02. Default on Senior Indebtedness;
Distribution of Assets 89
SECTION 13.03. Subrogation of Debentures 91
<PAGE>
Contents, p. 6
PAGE
SECTION 13.04. Subordination Rights Not Impaired by
Acts or missions of the Company or
Holders of Senior Indebtedness 92
SECTION 13.05. Further Assurances 93
SECTION 13.06. Trustee To Effectuate Subordination 93
SECTION 13.07. Trustee Not Charged with Knowledge
of Prohibition 93
SECTION 13.08. Trustee's Relation to Senior
Indebtedness 94
SECTION 13.09. Article Applicable to Paying Agent 94
ARTICLE XIV
Exchange of Debentures
SECTION 14.01. Exchange 95
SECTION 14.02. Mechanics of Exchange 95
SECTION 14.03. Debentures Exchanged Effective on the
Exchange Date 96
<PAGE>
INDENTURE dated as of
February [ ], 1996, between POLAROID
CORPORATION, a corporation duly organized and
existing under the laws of the State of
Delaware (herein called the "Company"),
having its principal office at 549 Technology
Square, Cambridge, Massachusetts 02139, and
STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, as Trustee
(herein called the "Trustee").
The Company has previously authorized, and on October 7, 1991
issued and delivered, $140,000,000 aggregate principal amount of its 8%
Subordinated Convertible Debentures Due 2001 (the "Notes"). The Company and
the holders of the Notes may desire, pursuant to a separate agreement between
them, to amend and restate from time to time and at any time all or any
portion of the Notes from the form in which they were originally issued so as
to cause them to be outstanding under this Indenture. In order to provide
therefor, the Company has duly authorized the execution and delivery of this
Indenture.
The Notes that are so amended and restated from time to time so as
to be outstanding hereunder are referred to, from and after such time, as the
Debentures, which term shall not include any of the Notes that have not yet
been so amended and restated at such time. Prior to the time of such
amendment and restatement, the Notes shall not be entitled to any rights
under this Indenture and the Notes will not be Outstanding (as defined
herein) for purposes of this Indenture.
All things necessary to make the Debentures, when 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.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Debentures, as follows:
ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
<PAGE>
2
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include
the plural as well as the singular;
(b) all other terms used herein which are defined
in the Trust Indenture Act (as hereinafter defined),
either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance
with generally accepted accounting principles; and
(d) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this
Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act" when used with respect to any Holder has the
meaning specified in Section 1.04.
"Affiliate and Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
"Authenticating Agent" means any Person authorized
by the Trustee to act on behalf of the Trustee to
authenticate Debentures.
"Board of Directors" means either the board of
directors of the Company or any duly authorized committee of
that board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" shall mean any day other than a
Saturday or Sunday or a day on which banking institutions in
the State of New York or the Commonwealth of Massachusetts
are authorized or obligated by law or executive order to be
closed.
<PAGE>
3
"Change in Control" shall mean: (a) the
acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)3 or
14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the combined voting power of
the then outstanding voting securities of the Company
entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by (i) the
Company or any of its subsidiaries or (ii) any corporation
with respect to which, following such acquisition, more than
50% of the combined voting power of the then outstanding
voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially
owned, directly or indirectly, by individuals and entities
who were the beneficial owners of voting securities of the
Company immediately prior to such acquisition in sub
stantially the same proportion as their ownership,
immediately prior to such acquisition, of the combined
voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors; or
(b) individuals who, as of January 1, 1991,
constitute the Board of Directors of the Company (as of
January 1, 1991, the "Incumbent Board") cease for any reason
to constitute at least a majority of such Board; provided
that any individual becoming a director subsequent to
January 1, 1991, whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
the directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange
Act); or
<PAGE>
4
(c) approval by the stockholders of the Company of
a reorganization, merger or consolidation, in each case,
with respect to which all or substantially all the
individuals and entities who were the respective beneficial
owners of the voting securities of the Company immediately
prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors of the corporation resulting from such
reorganization, merger or consolidation; or
(d) the sale or other disposition of all or
substantially all the assets of the Company in one
transaction or series of related transactions.
"Change in Control Price" shall have the meaning
specified in Section 11.03.
"Closing Price" has the meaning specified in
Section 14.05.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under
the Securities Exchange Act of 1934, or, if at any time
after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Stock" shall mean the Common Stock, par
value $1 per share, of the Company.
"Company" means the Person named as the "Company"
in the first paragraph of this instrument until a successor
corporation shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a
written request or order signed in the name of the Company
by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary and delivered to the
Trustee.
"Corporate Trust Office" means the principal
office of the Trustee at which at any particular time its
corporate trust business shall be administered, which office
at the time of the execution of this indenture is located at
2 International Place, Fourth Floor, Boston, MA 02110,
Attention of Corporate Trust Department (Polaroid Corpora
tion 8% Subordinated Convertible Debentures Due 2001).
<PAGE>
5
"Current Market Price", when used with reference
to shares of Common Stock or other securities on any date,
shall mean the closing price per share of Common Stock or
such other securities on such date and, when used with
reference to shares of Common Stock or other securities for
any period, shall mean the average of the daily closing
prices per share of Common Stock or such other securities
for such period. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Common Stock or such
other securities are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the Common Stock or such other securities
are listed or admitted to trading or, if the Common Stock or
such other securities are not listed or admitted to trading
on any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use,
or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Common
Stock or such other securities selected by the Board of
Directors. If the Common Stock or such other securities are
not publicly held or so listed or publicly traded, "Current
Market Price" shall mean the Fair Market Value per share of
Common Stock or of such other securities as determined in
good faith by the Board of Directors based on an opinion of
an independent investment banking firm with an established
national reputation as a valuer of securities, which opinion
may be based on such assumptions as such firm shall deem to
be necessary and appropriate.
"Debenture Register" and "Debenture Registrar"
have the respective meanings specified in Section 3.05.
"Defaulted Interest" has the meaning specified in
Section 3.07.
<PAGE>
6
"Event of Default" has the meaning specified in
Section 5.01.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange Agreement" shall mean the Exchange
Agreement dated as of October 7, 1991, between the Initial
Holders and the Company.
"Exchange Stock" shall have the meaning assigned
to such term in Section 14.01.
"Fair Market Value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's-length
transaction.
"Holder" means a Person in whose name a Debenture
is registered in the Debenture Register.
"Indebtedness" shall mean, with respect to any
Person, the principal of, and premium, if any, and accrued
and unpaid interest on and all other amounts due pursuant to
the provisions of the instruments, whether outstanding on
the date hereof or thereafter created, incurred or assumed,
providing for (a) indebtedness of such Person for money
borrowed or in respect of letters of credit issued for its
own account, (b) guarantees by such Person of indebtedness
for money borrowed by or in respect of letters of credit
issued for the account of or payment or performance
obligations due from any other Person, (c) purchase money
obligations, evidenced by notes, lease-purchase agreements,
purchase contracts or agreements, or similar instruments for
the payment of which such Person is responsible or liable by
guarantees or otherwise, (d) obligations of such Person
under any agreement or lease, or lease of, any real or
personal property which are required to be capitalized in
accordance with generally accepted accounting principles,
(e) obligations of such Person to purchase property or
assets, including securities, at a future date, incurred in
connection with financings by such Person, (f) performance,
completion or similar bonds of such Person and
(g) modifications, renewals, extensions and refunding of any
such indebtedness, guarantees, obligations or bonds.
<PAGE>
7
"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.
"Initial Holder" shall mean each of Corporate
Partners, L.P., Corporate Offshore Partners, L.P., and State
Board of Administration of Florida.
"Interest Payment Date" means the Stated Maturity
of an installment of interest on the Debentures.
"Investing Person" shall have the meaning
specified in the definition of Investment Shares.
"Investment Shares" shall mean shares of Common
Stock beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) by any Person (an
"Investing Person") (i) who or which became the beneficial
owner of such shares of Common Stock by virtue of (A) its
ownership of the Debentures acquired and held by it pursuant
to and in accordance with the provisions of the Exchange
Agreement or (B) its ownership of any other securities of
the Company acquired and held by it in accordance with the
provisions of the Exchange Agreement or (ii) to whom or to
which the beneficial ownership of the shares of Common Stock
owned by any Person who or which became the beneficial owner
of such shares as described in clause (i) above shall have
been transferred, if (X) at the time of such transfer, such
shares were held by the transferor thereof in accordance
with the provisions of the Exchange Agreement and (Y) such
transfer was effected pursuant to and in accordance with the
provisions of the Exchange Agreement.
"Officers' Certificate" means a certificate signed
by the Chairman of the Board, the President or a Vice
President and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of
counsel acceptable to the Trustee, who may be counsel for,
or employed by, the Company.
<PAGE>
8
"Outstanding" when used with respect to Debentures
means, as of the date of determination, all Debentures
theretofore authenticated and delivered under this
Indenture, except:
(i) Debentures theretofore canceled by the Trustee
or delivered to the Trustee for cancelation;
(ii) Debentures for whose payment or redemption
money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other
than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such
Debentures; provided that, if such Debentures are to be
redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Debentures in exchange for or in lieu of
which other Debentures have been authenticated and
delivered pursuant to this Indenture, except for
Debentures in lieu of which other Debentures have been
issued pursuant to Section 3.06 in respect of which the
Company receives proof satisfactory to it that the
replaced Debenture is held by a bona fide purchaser;
and
(iv) Debentures held by any wholly owned
Subsidiary of the Company (but not by any other
Affiliate of the Company);
provided, however, that, in determining whether the Holders
of the requisite principal amount of the Outstanding
Debentures have given any request, demand, authorization,
direction, notice, consent or waiver or taken any other
action hereunder, Debentures owned by the Company or any
Affiliate of the Company, other than any Initial Holder or
any of its other Affiliates, shall be disregarded and deemed
not to be outstanding, except that, in determining whether
the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent,
waiver or other action, only Debentures which the Trustee
has actual knowledge of being so owned shall be so
disregarded.
"Paying Agent" means any Person authorized by the
Company to pay the principal of (and premium, if any) or
interest on any Debentures on behalf of the Company, which
may include the Company or any Affiliate.
<PAGE>
9
"Person" shall mean any individual, firm,
corporation or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Predecessor Debenture" of any particular
Debenture means every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such
particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under
Section 3.06 in exchange for or in lieu of all or a portion
of a mutilated, destroyed, lost or stolen Debenture shall be
deemed to evidence the same debt as such mutilated,
destroyed, lost or stolen Debenture or portion thereof.
"Qualified Person" shall mean any Person that,
immediately after giving effect to the applicable
Transaction, (i) is a solvent corporation or other entity
organized under the laws of any State of the United States
of America having its common stock or, in the case of an
entity other than a corporation, equivalent equity
securities, listed on the New York Stock Exchange or the
American Stock Exchange or quoted by the NASDAQ National
Market System or any successor thereto or comparable system,
and such common stock or equivalent entity security
continues to meet the requirements for such listing or
quotation and (ii) is required to file, and in each of its
three fiscal years immediately preceding the consummation of
the applicable Transaction (or since its inception) has
filed, reports with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
"Redemption Date", when used with respect to any
Debenture to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.
"Redemption Price" has the meaning specified in
Section 11.01.
"Regular Record Date" shall mean, with respect to
any interest payment date, the close of business on the
March 15 or September 15, as the case may be, next preceding
such interest payment date unless the Regular Record Date as
so determined would not be a Business Day, in which event it
shall be the Business Day next preceding such date.
<PAGE>
10
"Responsible Officer", when used with respect to
the Trustee, means any officer within the Corporate Trust
Department (or any successor department) of the Trustee or
any other officer of the Trustee customarily performing
functions similar to those performed by any of such officers
and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the
particular subject.
"Rights" shall mean any rights to purchase
securities of the Company issued pursuant to any Rights
Agreement.
"Rights Agreement" shall mean the Rights Agreement
dated as of September 9, 1986, between the Company and First
Chicago Trust Company (as successor to Morgan Shareholder
Services Trust Company), as amended and supplemented and as
it may be further amended or supplemented from time to time,
and any similar rights agreement that may hereafter be
adopted by the Company, as it may be amended or supplemented
from time to time.
"Securities Act" shall mean the Securities Act of
1933.
"Senior Indebtedness" means, with respect to any
Person, any Indebtedness of such Person, unless, in the
instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is expressly provided that
such Indebtedness is subordinated in right of payment to any
other unsecured Indebtedness of such Person.
"Special Record Date" for the payment of any
Defaulted Interest means a date fixed by the Trustee
pursuant to Section 3.07.
"Stated Maturity", when used with respect to any
Debenture or any installment of interest thereon, means the
date specified in such Debenture as the fixed date on which
the principal of such Debenture or such installment of
interest is due and payable; provided, however, that, if
such date shall not be a Business Day, then the Stated
Maturity shall be the next Business Day.
"Subsidiary" of any Person means any corporation
or other entity of which a majority of the voting power of
the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
<PAGE>
11
"Surviving Person" shall mean the continuing or
surviving Person of a merger, consolidation or other
corporate combination, the Person receiving a transfer of
all or a substantial part of the properties and assets of
the Company, or the Person consolidating with or merging
into the Company in a merger, consolidation or other
corporate combination in which the Company is the continuing
or surviving Person, but in connection with which the
Debentures or Common Stock of the Company is exchanged,
converted or reinstated into the securities of any other
Person or cash or any other property; provided, however, if
such Surviving Person is a direct or indirect Subsidiary of
a Qualified Person, the parent entity that is a Qualified
Person shall be the Surviving Person.
"Survivor Common Stock" with respect to any Person
shall mean any shares of such Person of any class or series
which has no preference or priority in the payment of
dividends or in the distribution of assets upon any
voluntary or involuntary liquidation, dissolution or winding
up of such Person and which is not subject to redemption by
such Person; provided, however, that if at any time there
shall be more than one such class or series, the shares of
each such class and series issuable upon conversion of the
Debentures then being converted shall be substantially in
the proportion to the total number of shares of each such
class and series.
"Trading Day" shall mean a day on which the
principal national securities exchange on which the Common
Stock is listed or admitted to trading is open for the
transaction of business or, if the Common Stock is not
listed or admitted to trading on any national securities
exchange, a Business Day.
"Transaction" shall have the meaning specified in
Section 12.08.
<PAGE>
12
"Triggering Event" means:
(i) public disclosure by the Company or a Person
(other than any Subsidiary of the Company, any employee
benefit plan of the Company or any of its Subsidiaries
or any Person holding Common Stock for or pursuant to
the terms of any such employee benefit plan) who or
which, together with all Affiliates and Associates of
such Person, shall beneficially own (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) 20%
or more of the shares of Common Stock then outstanding,
that such Person, together with its Affiliates and
Associates, beneficially owns such shares; provided,
however, that (A) an event described in this
clause (i) shall not become a Triggering Event unless
and until the Distribution Date (as defined in the
Rights Agreement) occurs as a result thereof and
(B) for purposes of this clause (i) an Investing Person
shall be deemed not to be the beneficial owner of any
shares of Common Stock that are Investment Shares;
(ii) the commencement of a tender offer or
exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit
plan of the Company or any of its subsidiaries or any
Person holding shares of Common Stock for or pursuant
to the terms of any such employee benefit plan) for 30%
or more of the outstanding shares of Common Stock; or
(iii) the commencement of a solicitation by any
Person or group of Persons (other than the Company, any
Subsidiary of the Company, any employee benefit plan of
the Company or any of its Subsidiaries or any Person
holding shares of Common Stock for or pursuant to the
terms of any such employee benefit plan) in connection
with an actual or threatened election contest relating
to the election of the directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act).
"Trust Indenture Act" means the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform Act of
1990 and as in force at the date as of which this instrument
was executed, except as provided in Section 9.05.
"Trustee" means the Person named as the "Trustee"
in the first paragraph of this instrument until a successor
Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
<PAGE>
13
"Vice President", when used with respect to the
Company or the Trustee, means any vice president, whether or
not designated by a number or a word or words added before
or after the title "vice president".
SECTION 1.02. Compliance Certificates and
Opinions. Upon any application or request by the Company to
the Trustee to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with,
except that, in the case of any such application or request
as to which the furnishing of such documents is specifically
required by any provision of this Indenture relating to such
particular application or request, no additional certificate
or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture (other than certificates delivered pursuant to
Section 7.04(d)) shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or
condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or
investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of
each such individual, such condition or covenant has
been complied with.
<PAGE>
14
SECTION 1.03. Form of Documents Delivered to
Trustee. In any case where several matters are required to
be certified by, or covered by an opinion of, any specified
Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion
with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several
documents.
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
certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the
information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in
the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or
execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 1.04. Acts of Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument
or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made
in the manner provided in this Section.
<PAGE>
15
(b) The fact and date of the execution by any
Person of any such instrument or writing may be proved by
the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged
to him the execution thereof. Where such execution is by a
signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems
sufficient.
(c) The ownership of Debentures shall be proved
by the Debenture Register.
(d) Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the
Holder of any Debenture shall bind every future Holder of
the same Debenture and the Holder of every Debenture issued
upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action
is made upon such Debenture.
SECTION 1.05. Notices, etc., to Trustee and
Company. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon,
given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing and mailed,
first-class, postage prepaid, to the Trustee at its
Corporate Trust Office, Attention of Corporate Trust
Department (Polaroid Corporation 8% Subordinated
Convertible Debentures Due 2001), or
<PAGE>
16
(b) the Company by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office
specified in the first paragraph of this instrument or
at any other address previously furnished in writing to
the Trustee by the Company, or
(c) the Company by the Trustee or the Trustee by
the Company shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided)
if transmitted by facsimile transmission to the Company
at [( ) ] or to the Trustee at
(617) 664-5365 (or to such other facsimile transmission
number previously furnished in writing to the Company
by the Trustee or to the Trustee by the Company) and in
each case confirmed by a copy sent to the Company or to
the Trustee, as the case may be, by guaranteed
overnight courier.
SECTION 1.06. Notice to Holders; Waiver. Where
this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Debenture
Register, not later than the latest date and not earlier
than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice nor any defect
in any notice so mailed to any particular Holder shall
affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance
upon such waiver.
In case by reason of the suspension of regular
mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such
notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every
purpose hereunder.
<PAGE>
17
SECTION 1.07. Conflict with Trust Indenture Act.
If and to the extent that any provision hereof limits,
qualifies or conflicts with the duties imposed by, or with
another provision (an "incorporated provision") included in
this Indenture by operation of, any of Sections 3.10 to
3.18, inclusive, of the Trust Indenture Act, such imposed
duties or incorporated provision shall control.
SECTION 1.08. Effect of Headings and Table of
Contents. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 1.09. Successors and Assigns. All
covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed
or not.
SECTION 1.10. Separability Clause. In case any
provision in this Indenture or in the Debentures shall be
invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in
this Indenture or in the Debentures, express or implied,
shall give to any Person, other than the parties hereto and
their successors hereunder, the holders of Senior
Indebtedness and the Holders of Debentures, any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
SECTION 1.12. Governing Law. This Indenture and
the Debentures shall be governed by and construed in
accordance with the laws of the State of New York without
regard to principles of conflicts of laws.
SECTION 1.13. Legal Holidays. In any case where
any interest payment date, Redemption Date or Stated
Maturity of any Debenture or the last date on which a Holder
has the right to convert or exchange his Debentures shall
not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Debentures) payment of
interest or principal (and premium, if any) or Redemption
Price or conversion or exchange of the Debentures need not
be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on
the interest payment date, Redemption Date or at the Stated
Maturity or on such last day for conversion or exchange;
provided that no interest shall accrue for the period from
and after such interest payment date, Redemption Date or
Stated Maturity or such last day for conversion or exchange,
as the case may be.
<PAGE>
18
SECTION 1.14. No Recourse Against Others. No
director, officer, employee or stockholder of the Company
shall have any liability for any obligations of the Company
under the Debentures or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Debenture waives and
releases all such liability.
ARTICLE II
Debenture Forms
SECTION 2.01. Forms Generally. The Debentures
and the Trustee's certificates of authentication shall be in
substantially the forms set forth in this Article, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture,
including forms of conversion and forms of assignment, if
requested by the Company, and may have such letters, numbers
or other marks of identification and such legends or
endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers
executing such Debentures, as evidenced by their execution
of the Debentures. The Company shall furnish any such
legends or endorsements to the Trustee in writing.
The definitive Debentures shall be printed,
lithographed or engraved or produced by any combination of
these methods on steel-engraved borders or may be produced
in any other manner permitted by the rules of any securities
exchange on which the Debentures may be listed, all as
determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
SECTION 2.02. Form of Face of Debenture.
THIS DEBENTURE IS SUBORDINATED IN RIGHT OF PAYMENT UPON THE
TERMS SET FORTH HEREIN.
<PAGE>
19
POLAROID CORPORATION
8% Subordinated Convertible Debentures Due 2001
No. $
POLAROID CORPORATION, a Delaware corporation
(hereinafter called the "Company", which term includes any
successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
or registered assigns the
principal sum of dollars on September 30, 2001,
and to pay interest thereon from October 7, 1991, or from
the most recent Interest Payment Date to which interest has
been paid or duly provided for, semiannually on March 31 and
September 30 in each year, commencing March 31, 1992, at the
rate of 8% per annum, until the principal hereof is paid or
made available for payment and at such rate on any overdue
principal and premium, if any, and, to the extent allowed by
law, on any overdue installment of interest. Interest will
be computed on the basis of a 360 day year of twelve 30 day
months. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose
name this Debenture (or one or more Predecessor Debentures)
is registered at the close of business on the Regular Record
Date for such interest, which shall be March 15 or
September 15, as the case may be, next preceding such
Interest Payment Date unless the Regular Record Date as so
determined would not be a Business Day, in which event it
shall be the Business Day next preceding such date. Any
such interest not so punctually paid or duly provided for on
the due date for such payment will forthwith cease to be
payable to the Holder on such Interest Payment Date and may
either be paid to the Person in whose name this Debenture
(or one or more Predecessor Debentures) is registered at the
close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee,
notice of which shall be given to the Holders of Debentures
not less than 10 days prior to such Special Record Date, or
be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities
exchange on which the Debentures may be listed, and upon
such notice as may be required by such exchange, all as more
fully provided in said Indenture. Payment of the principal
of (and premium, if any) and interest on this Debenture will
<PAGE>
20
be made at the office or agency of the Company maintained
for that purpose in the City of New York or at any other
office or agency maintained by the Company for such purpose,
in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public
and private debts; provided, however, that at the option of
the Company payment of interest may be made by check mailed
to the address of the Person entitled thereto as such
address shall appear in the Debenture Register or in such
other manner as the Company and such Person shall agree.
Reference is hereby made to the further provisions
of this Debenture set forth on the reverse hereof, which
further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon
has been executed by the Trustee referred to on the reverse
hereof by manual signature, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated:
POLAROID
CORPORATION,
by
________________________________
Attest:
______________________
<PAGE>
21
SECTION 2.03. Form of Reverse of Debenture. This
Debenture is one of a duly authorized issue of Debentures of
the Company designated as its 8% Subordinated Convertible
Debentures Due 2001 (herein called the "Debentures"),
limited in aggregate principal amount to $140,000,000
outstanding under an Indenture dated as of February [ ],
1996 (herein called the "Indenture"), between the Company
and State Street Bank and Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders
of the Debentures and of the terms upon which the Debentures
are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions
of the Indenture, the Holder of this Debenture is entitled,
at such Holder's option, or, in case this Debenture or a
portion hereof is called for redemption, then in respect of
this Debenture or such portion hereof until and including,
but (unless the Company defaults in making the payment due
upon redemption) not after, the close of business on the
second Business Day prior to the Redemption Date, or, in
case this Debenture is exchanged upon the occurrence of a
Triggering Event, then in respect of this Debenture until
and including, but not after, the close of business on the
Exchange Date, to convert this Debenture (or any portion of
the principal amount hereof which is $1,000 or any integral
multiple thereof), at the principal amount hereof, or of
such portion, into fully paid and nonassessable shares of
Common Stock of the Company, with the number of shares of
Common Stock deliverable upon conversion of each $1,000
principal amount of Debentures being 30.7692, subject to
adjustment from time to time pursuant to the Indenture, by
surrender of this Debenture at the office or agency of the
Company maintained for that purpose in the City of New York
or at any other office or agency maintained by the Company
for such purpose, accompanied by written notice stating that
the Holder hereof elects to convert all or a specified
multiple of $1,000 of the principal of this Debenture in
accordance with the Indenture and specifying the name or
names in which the Holder wishes the certificate or
certificates of Common Stock to be issued, and, in case such
notice shall specify a name or names other than that of the
Holder, such notice shall be accompanied by payment of all
transfer taxes payable upon the issuance of shares of Common
Stock in such names or names. The Company shall not be
<PAGE>
22
required to convert, and no surrender of any Debenture shall
be effective for that purpose, while the transfer books of
the Company for the Common Stock are closed for any purpose
(but not for any period in excess of 5 days); but the
surrender of any Debenture for conversion during any period
while such books are so closed shall become effective for
conversion immediately upon the reopening of such books, as
if the conversion had been made on the date such Debenture
was surrendered, and at the conversion ratio in effect at
the date of such surrender. Upon conversion, no payment or
adjustment shall be made by the Company to the Holder of
Debentures surrendered for conversion in respect of any
accrued and unpaid dividends on the shares of Common Stock
issuable upon conversion thereof; provided, however, that
the Company shall pay or cause to be paid in cash to the
Persons entitled thereto all accrued and unpaid interest to
the date of conversion on the portion of such Debenture
converted. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but
instead of any fractional interest the Company shall pay a
cash adjustment as provided in the Indenture. The
conversion ratio is subject to adjustment as provided in the
Indenture. In addition, the Indenture provides that, in
case of certain capital reorganizations or reclassifications
of outstanding shares of Common Stock or in case of any
consolidations or mergers of the Company or any sale or
conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each
of the foregoing being referred to as a "Transaction"), at
the option of the holder of any Debentures (i) each $1,000
principal amount of Debentures then outstanding shall
thereafter be convertible only into the kind and amount of
shares of stock and other securities and property receivable
(including cash) upon the consummation of such Transaction
by a holder of that number of shares of Common Stock into
which $1,000 principal amount of Debentures is convertible
immediately prior to such Transaction (including, on a pro
rata basis, the cash, securities or property received by
holders of Common Stock in any tender or exchange offer that
is a step in such Transaction), or (ii) each $1,000
principal amount of Debentures shall entitle the holder
thereof to receive, upon presentation thereof to the
Surviving Person subsequent to the consummation of such
Transaction (1) if the surviving person is a Qualified
Person, that number of shares of Survivor Common Stock of
the Surviving Person determined by multiplying the number of
shares of Common Stock into which $1,000 principal amount of
Debentures was convertible immediately prior to the
consummation of such Transaction by a fraction, the
numerator of which is the Current Market Price of the Common
Stock immediately prior to the consummation of such
Transaction and the denominator of which is the Current
Market Price of the Survivor Common Stock of the Surviving
<PAGE>
23
Person for the 20 Trading Days preceding the consummation of
the Transaction giving rise to the adjustment or (2) if the
Surviving Person is not a Qualified Person, cash equal to
the Fair Market Value, as of the consummation of such
Transaction (computed without interest), of the securities
or other property to which he would have been entitled under
clause (i) above, as determined by an independent investment
banking firm (with an established national reputation as a
valuer of equity securities), but in any event not less than
the Change in Control Price.
The Debentures are subject to redemption upon not
less than 30 nor more than 60 days' notice by mail at any
time, as a whole or (subject to certain limitations set
forth in the Indenture) in part, at the election of the
Company, at a Redemption Price equal to the principal amount
of the Debentures to be redeemed, together with accrued and
unpaid interest thereon to the date of redemption. The
Company may not redeem any Debentures prior to September 30,
1998, unless, for at least 20 of 30 consecutive Trading Days
during the period commencing on October 7, 1991 and ending
on the date notice of such redemption is given, the Current
Market Price per share of Common Stock is greater than or
equal to $48.75 (appropriately adjusted for stock splits,
stock combinations, stock dividends and similar events).
Notwithstanding the foregoing, if this Debenture is redeemed
pursuant to this paragraph at a time when the Holder could
redeem this Debenture pursuant to the next paragraph, this
Debenture shall be redeemed at a price equal to the greater
of the Redemption Price and the Change in Control Price.
Upon the occurrence of a Change in Control (as
defined in the Indenture), the Holder hereof shall have the
right, in accordance with the procedures set forth in the
Indenture, to require the Company to redeem all or any
portion (in amounts of $1,000 or integral multiples of
$1,000) of this Debenture at a price per $1,000 principal
amount of Debentures (the "Change in Control Price") equal
to the greater of (i) the Redemption Price therefor and
(ii) the product of the number of shares of Common Stock
into which $1,000 principal amount of Debentures is then
convertible (or, if the Debentures are no longer convertible
into shares of Common Stock as a result of such Change in
Control, the number of shares of Common Stock, adjusted in
accordance with customary antidilution provisions, into
which $1,000 principal amount of Debentures was convertible
immediately prior to the consummation of such Change in
Control) and the highest price per share of Common Stock
<PAGE>
24
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid or agreed to be paid by any
Person who acquired control of the Company (or any Affiliate
or associate of such Person) within the two-year period
immediately preceding the date of such Change in Control or
at any time thereafter, together with accrued and unpaid
interest on such principal amount of Debentures to the date
of redemption.
Upon the occurrence of a Triggering Event (as
defined in the Indenture), all Debentures acquired by the
Initial Holders pursuant to the Exchange Agreement that are
then held by such Initial Holders automatically shall be
exchanged for shares of the Company's Series D Cumulative
Convertible Preferred Stock, par value $1 per share (the
"Exchange Stock"), effective on the date (the "Exchange
Date") that is the later of (i) the close of business on the
date such Triggering Event occurs and (ii) if on such date
the Certificate of Designation for the Exchange Stock has
not been approved by the Board of Directors of the Company
or filed with the Secretary of State of the State of
Delaware, on the close of business on the date on which such
Certificate of Designation has been so approved and filed,
provided that no such exchange shall occur if the Distribu
tion Date (as defined in the Rights Agreement) has occurred
prior to the date on which such Certificate of Designation
has been so approved and filed, as provided in the
Indenture. The principal amount of Debentures to be
exchanged for each share of Exchange Stock pursuant to this
paragraph shall be equal to the lowest "Liquidation
Preference" for one share of Exchange Stock. In connection
with any such exchange, the Company shall pay or cause to be
paid in cash to the Persons entitled thereto all accrued and
unpaid interest on the Debentures to be exchanged to the
Exchange Date. If shares of Exchange Stock to be issued in
exchange for any Debentures pursuant to this Section 14.02
are to be issued in a name or names other than that of the
Holder of such Debentures, no such issuance shall be made
until the Holder requesting such issuance has paid to the
Company all transfer taxes payable upon the issuance of
shares of Exchange Stock in such name or names. No
fractions of shares of Exchange Stock shall be issued upon
any exchange of Debentures pursuant to this paragraph, but
in lieu thereof the Company shall pay a cash adjustment
equal to such fractional interest multiplied by the lowest
"Liquidation Preference" for one share of Exchange Stock.
If more than one Debenture shall be surrendered for exchange
by the same Holder, the number of full shares of Exchange
Stock issuable on exchange thereof shall be computed on the
basis of the total principal amount of Debentures so
surrendered.
<PAGE>
25
In the event of redemption or conversion of this
Debenture in part only, a new Debenture or Debentures for
the unredeemed or unconverted portion hereof will be issued
in the name of the Holder hereof upon the cancelation
hereof.
The indebtedness evidenced by the Debentures is,
to the extent and in the manner set forth in the Indenture,
expressly subordinated and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the
Company, as defined in the Indenture, and this Debenture is
issued subject to such provisions of the Indenture, and each
Holder of this Debenture, by accepting the same, agrees to
and shall be bound by such provisions and authorizes and
directs the Trustee on his behalf to take such action as may
be necessary or appropriate to acknowledge or effectuate the
subordination as provided in the Indenture and appoints the
Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be
continuing, the principal of all the Debentures may be
declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification
of the rights and obligations of the Company and the rights
of the Holders of the Debentures under the Indenture at any
time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal
amount of the Debentures at the time Outstanding. The
Indenture also contains provisions permitting the Holders of
a majority in aggregate principal amount of the Debentures
at the time Outstanding, on behalf of the Holders of all the
Debentures, to waive compliance by the Company with any
provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debenture shall be conclusive
and binding upon such Holder and upon all future Holders of
this Debenture and of any Debenture issued upon the
registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or
waiver is made upon this Debenture.
<PAGE>
26
Except with respect to the rights of the holders
of Senior Indebtedness set forth in the Indenture and in
this Debenture, no reference herein to the Indenture and no
provision of this Debenture or of the Indenture shall alter
or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if
any) and interest on this Debenture at the times, place and
rate, and in the coin or currency, herein prescribed or to
convert or exchange this Debenture as provided in the
Indenture.
As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of this
Debenture is registrable in the Debenture Register, upon
surrender of this Debenture for registration of transfer at
the office or agency of the Company maintained for that
purpose in the City of New York or at any other office or
agency maintained by the Company for such purpose, duly
endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company, the Trustee
and the Debenture Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures, of authorized
denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Debentures are issuable only in registered
form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Debentures
are exchangeable for a like aggregate principal amount of
Debentures of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name this Debenture is registered as the owner hereof
for all purposes, whether or not this Debenture be overdue,
and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
<PAGE>
27
All terms used in this Debenture which are defined
in the Indenture shall have the meanings assigned to them in
the Indenture.
SECTION 2.04. Form of Trustee's Certificate of
Authentication. This is one of the Debentures referred to
in the within-mentioned Indenture.
Dated:
State Street Bank and Trust
Company, as Trustee,
by
--------------------
Authorized Signatory
ARTICLE III
The Debentures
SECTION 3.01. Title and Terms. The aggregate
principal amount of Debentures which may be authenticated
and delivered under this Indenture is limited to
$140,000,000, except for Debentures authenticated and
delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debentures pursuant to
Section 3.04, 3.05, 3.06, 9.06, 11.08, 12.02 or 14.02(c).
The Debentures shall be known and designated as
the "8% Subordinated Convertible Debentures Due 2001" of the
Company. Their Stated Maturity shall be September 30, 2001,
and they shall bear interest at the rate of 8% per annum,
from October 7, 1991, or from the most recent Interest
Payment Date to which interest has been paid or duly
provided for, as the case may be, payable semiannually on
March 31 and September 30, commencing March 31, 1992, until
the principal thereof is paid or made available for payment.
<PAGE>
28
The principal of (and premium, if any) and
interest on the Debentures shall be payable at the office or
agency of the Company maintained for such purpose in the
City of New York and at any other office or agency
maintained by the Company for such purpose, in such coin or
currency of the United States of America as at the time of
payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall
appear in the Debenture Register or in such other manner as
the Company and such Person shall agree.
The Debentures shall be redeemable as provided in
Article XI.
The Debentures shall be convertible into Common
Stock of the Company as provided in Article XII.
The Debentures shall be subordinated in right of
payment to Senior Indebtedness as provided in Article XIII.
The Debentures shall be exchangeable only by the
Initial Holders into Series D Cumulative Convertible
Preferred Stock of the Company upon the occurrence of a
Triggering Event as provided in Article XIV.
SECTION 3.02. Denominations. The Debentures
shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral
multiple thereof.
SECTION 3.03. Execution, Authentication, Delivery
and Dating. The Debentures shall be executed on behalf of
the Company by its Chairman of the Board, its President or
one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these
officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and
delivery of such Debentures or did not hold such offices at
the date of such Debentures.
<PAGE>
29
At any time and from time to time after the
execution and delivery of this Indenture, the Company may
deliver Debentures executed by the Company to the Trustee
for authentication, together with a Company Order for the
authentication and delivery of such Debentures; and the
Trustee in accordance with such Company order shall
authenticate and deliver such Debentures as in this
Indenture provided and not otherwise.
Each Debenture shall be dated the date of its
authentication.
No Debenture shall be entitled to any benefit
under this Indenture or be valid or obligatory for any
purpose unless there appears on such Debenture a certificate
of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such
certificate upon any Debenture shall be conclusive evidence,
and the only evidence, that such Debenture has been duly
authenticated and delivered hereunder.
SECTION 3.04. Temporary Debentures. Pending the
preparation of definitive Debentures, the Company may
execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Debentures which are
printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Debentures in
lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as
the officers executing such Debentures may determine, as
evidenced by their execution of such Debentures.
If temporary Debentures are issued, the Company
will cause definitive Debentures to be prepared without
unreasonable delay. After the preparation of definitive
Debentures, the temporary Debentures shall be exchangeable
for definitive Debentures upon surrender of the temporary
Debentures, at any office or agency of the Company
designated pursuant to Section 10.02, without charge to the
Holder. Upon surrender for cancelation of any one or more
temporary Debentures, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor
a like principal amount of definitive Debentures of
authorized denominations. Until so exchanged, the temporary
Debentures shall in all respects be entitled to the same
benefits under this Indenture as definitive Debentures.
<PAGE>
30
SECTION 3.05. Registration, Registration of
Transfer and Exchange. The Company shall cause to be kept
at the Corporate Trust Office of the Trustee a register (the
register maintained in such office being herein sometimes
referred to as the "Debenture Register") in which, subject
to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Debentures and
of transfers of Debentures. The Trustee is hereby appointed
"Debenture Registrar" for the purpose of registering
Debentures and transfers of Debentures as herein provided.
Upon surrender for registration of transfer of any
Debenture at an office or agency of the Company, the Company
shall promptly execute, and the Trustee shall register on
the Debenture Register and shall authenticate and deliver,
in the name of the designated transferee or transferees, one
or more new Debentures of any authorized denominations, of a
like aggregate principal amount.
At the option of the Holder, Debentures may be
exchanged for other Debentures of any authorized
denominations, of a like aggregate principal amount, upon
surrender of the Debentures to be exchanged at such office
or agency. Whenever any Debentures are so surrendered for
exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Debentures which the Holder
making the exchange is entitled to receive.
All Debentures issued upon any registration of
transfer or exchange of Debentures shall be the valid
obligations of the Company, evidencing the same debt and
entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or
exchange.
Every Debenture presented or surrendered for
registration of transfer or for exchange shall (if so
required by the Company or the Trustee) be duly endorsed, or
be accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee and the Debenture
Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any
registration of transfer or exchange of Debentures, but the
Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Debentures, other than exchanges pursuant to Section 3.04,
9.06, 11.07 or 12.02 not involving any transfer.
<PAGE>
31
Neither the Company nor the Trustee or Debenture
Registrar shall be required (a) to issue, authenticate or
register the transfer of or exchange any Debenture during a
period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of
Debentures selected for redemption under Section 11.02 and
ending at the close of business on the day of such mailing
or (b) to register the transfer of or exchange any Debenture
so selected for redemption in whole or in part, except the
unredeemed portion of any Debenture being redeemed in part.
SECTION 3.06. Mutilated, Destroyed, Lost and
Stolen Debentures. If any mutilated Debenture is
surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange
therefor a new Debenture of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the
Trustee (a) evidence to their satisfaction of the
destruction, loss or theft of any Debenture and (b) such
security or indemnity as may be required by them to save
each of them and any agent of either of them harmless
(which, in the case of any Initial Holder, may be an
undertaking by such Holder so to indemnify the Company),
then, in the absence of notice to the Company or the Trustee
that such Debenture has been acquired by a bona fide
purchaser, the Company shall execute and upon its request
the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Debenture, a new Debenture of
like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or
stolen Debenture has become or is about to become due and
payable, the Company in its discretion may, instead of
issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this
Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee)
connected therewith.
<PAGE>
32
Every new Debenture issued pursuant to this
Section in lieu of any destroyed, lost or stolen Debenture
shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed,
lost or stolen Debenture shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other
Debentures duly issued hereunder.
The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debentures.
SECTION 3.07. Payment of Interest; Interest
Rights Preserved. Interest on any Debenture which is
payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose
name that Debenture (or one or more Predecessor Debentures)
is registered at the close of business on the Regular Record
Date for such interest. The Company shall deposit with the
Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such interest in
immediately available funds or shall make arrangements
satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to
such interest as in this clause provided.
Any interest on any Debenture which is payable,
but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest")
shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in
clause (a) or (b) below:
<PAGE>
33
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Debentures (or their respective Predecessor Debentures)
are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on
each Debenture and the date of the proposed payment,
and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Debenture
Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Debentures (or
their respective Predecessor Debentures) are registered
at the close of business on such Special Record Date
(irrespective of whether such Debentures or portions
thereof are converted into Common Stock of the Company
after such Special Record Date) and shall no longer be
payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on
which the Debentures may be listed, and upon such
notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner
of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this
Section, each Debenture delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of
any other Debenture shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by
such other Debenture.
<PAGE>
34
SECTION 3.08. Persons Deemed Owners. Prior to
due presentment of a Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Debenture is
registered as the owner of such Debenture for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 3.07) interest on such Debenture and for
all other purposes whatsoever, whether or not such Debenture
be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.09. Cancelation. All Debentures
surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to
any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancelation any
Debentures previously authenticated and delivered hereunder
which the Company may have acquired in any manner
whatsoever, and all Debentures so delivered shall be
whatsoever, and all Debentures so delivered shall be
promptly canceled by the Trustee. No Debentures shall be
authenticated in lieu of or in exchange for any Debentures
canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Debentures held
by the Trustee shall be delivered to the Company by the
Trustee.
SECTION 3.10. Computation of Interest. Interest
on the Debentures shall be computed on the basis of a
360 day year of twelve 30-day months.
SECTION 3.11. CUSIP Number. The Company in
issuing Debentures may use a "CUSIP" number, and if so, the
Trustee may use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such
notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the
notice or on the Debentures, and that reliance may be placed
only on the other identification numbers printed on the
Debentures.
<PAGE>
35
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of
Indenture. This Indenture shall cease to be of further
effect (except as to any surviving rights of conversion,
registration of transfer or exchange of Debentures herein
expressly provided for), and the Trustee, on demand of and
at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this
Indenture, when
(a) either
(i) all Debentures theretofore
authenticated and delivered (other than
(A) Debentures which have been destroyed, lost or
stolen and which have been replaced or paid as
provided in Section 3.06 and (B) Debentures for
whose payment money has theretofore been deposited
in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or
discharged from such trust, as provided in
Section 10.03) have been delivered to the Trustee
for cancelation; or
(ii) all such Debentures not theretofore
delivered to the Trustee for cancelation
(A) have become due and payable, or
(B) will become due and payable at their
Stated Maturity within one year, or
(C) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (A), (B) or
(C) above, has deposited or caused to be deposited
with the Trustee as trust funds in trust for that
purpose funds sufficient to pay and discharge the
entire indebtedness on such Debentures not
theretofore delivered to the Trustee for
cancelation, for principal (and premium, if any)
and interest to the date of such deposit (in the
case of Debentures which have become due and
payable) or to the Stated Maturity or Redemption
Date, as the case may be and, in the case of (B)
or (C) above, has delivered to the Trustee an
Opinion of Counsel stating that (1) the Company
has received from, or there has been published by,
the Internal Revenue Service a ruling or (2) since
the date of the Indenture, there has been a change
<PAGE>
36
in the applicable United States Federal income tax
law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm
that, the Holders of the Debentures will not
recognize income, gain or loss for United States
Federal income tax purposes as a result of such
satisfaction and discharge and will be subject to
United States Federal income tax on the same
amounts, in the same manner and at the same times
as would have been the case if such satisfaction
and discharge had not occurred;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an opinion of Counsel, each
stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee
under Section 6.07 and the obligations of the Trustee to any
Authenticating Agent under Section 6.13 shall survive.
SECTION 4.02. Application of Trust Money. All
money deposited with the Trustee pursuant to Section 4.01
shall be held in trust and applied by it, in accordance with
the provisions of the Debentures and this Indenture, to the
payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for
whose payment such money has been deposited with the
Trustee. All moneys deposited with the Trustee pursuant to
Section 4.01 (and held by it or any Paying Agent) for the
payment of Debentures subsequently converted shall be
returned to the Company upon receipt by the Trustee of an
Officers' Certificate.
<PAGE>
37
ARTICLE V
Remedies
SECTION 5.01. Events of Default. An "Event of
Default" shall exist if one or more of the following occurs
and is continuing:
(a) the Company defaults in the payment of
interest on any Debentures when the same becomes due
and payable and the default continues for (i) if the
Debentures are owned by 50 or fewer Holders or groups
of affiliated Holders, 5 days on which the Company's
administrative offices are open for regular business or
(ii) if the Debentures are not owned by 50 or fewer
Holders or groups of affiliated Holders, 30 days, in
each case whether or not such payment shall be
prohibited by the provisions of Article XIII hereof;
(b) the Company defaults in the payment of the
principal of or premium, if any, on any Debentures when
the same becomes due and payable at maturity, upon
acceleration or redemption or otherwise, whether or not
such payment shall be prohibited by the provisions of
Article XIII hereof;
(c) the Company fails to comply with any other
covenants or agreements contained in the Indenture and
such failure continues for a period of (i) if the
Debentures are owned by 50 or fewer Holders or groups
of affiliated Holders, 30 days or (ii) if the
Debentures are not owned by 50 or fewer Holders or
groups of affiliated Holders, 60 days, in each case
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 not less than 25% in
aggregate principal amount of the Outstanding
Debentures, a written notice specifying such failure
and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(d) the (i) entry of an order for relief in
respect of any petition filed against the Company under
the Federal Bankruptcy Act, or the entry of a decree or
order by a court having competent jurisdiction in the
premises in respect of any petition filed or action
taken against the Company looking to reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any other present
or future Federal or state statute, law or regulation,
resulting in the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other
similar official of the Company or of any substantial
part of its property, or resulting in the winding-up or
liquidation of its affairs, all without the consent or
acquiescence of the Company, and the continuance of any
such decree or order unstayed and in effect for a
period of 90 consecutive days; or (ii) filing of a
petition for relief under the Federal Bankruptcy Act by
the Company, or the consent, acquiescence or taking of
any action by the Company in support of a petition
filed by or against it looking to reorganization,
arrangement, composition, readjustment, liquidation,
<PAGE>
38
dissolution or similar relief under any other present
or future Federal or state statute, law or regulation,
or the appointment, with the consent of the Company, of
any receiver, liquidator, custodian, 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; or
(e) a default under any bond, debenture, note or
other evidence of indebtedness for money borrowed by
the Company or any Subsidiary of the Company or under
any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the
Company or any Subsidiary of the Company, whether such
indebtedness now exists or shall hereafter be created,
which default shall have resulted in such indebtedness
in an amount exceeding $10,000,000 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 (i) if the Debentures are owned by 50 or
fewer Holders or groups of affiliated Holders, 4 days
on which the Company's administrative offices are open
for regular business or (ii) if the Debentures are not
owned by 50 or fewer Holders or groups of affiliated
Holders, 10 days on which the Company's administrative
offices are open for regular business, in each case
<PAGE>
39
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 not less than
25% in aggregate principal amount of the Outstanding
Debentures a written notice specifying such default and
requiring the Company to cause such acceleration to be
rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; provided, however, that,
subject to the provisions of Sections 6.01 and 6.02,
the Trustee shall not be deemed to have knowledge of
such default unless either (i) a Responsible Officer of
the Trustee shall have actual knowledge of such default
or (ii) the Trustee shall have received written notice
thereof from the Company, from any Holder, from the
holder of any such indebtedness or from the trustee
under any such mortgage, indenture or other instrument.
SECTION 5.02. Acceleration of Maturity;
Rescission and Annulment. If an Event of Default (other
than an event described in paragraph (d) above) occurs and
is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the
Outstanding Debentures may declare the principal of all the
Debentures, together with interest accrued thereon, to be
due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon
any such declaration such principal shall become immediately
due and payable, without any demands or other notice of any
kind. If an Event of Default described in paragraph (d)
above occurs and is continuing, then the principal of all
the Debentures, together with interest accrued thereon,
shall automatically become immediately due and payable,
without any demand or other notice of any kind.
At any time after such a declaration of
acceleration has been made, the Holders of a majority in
principal amount of the Outstanding Debentures, by written
notice to the Company and the Trustee, may rescind and annul
such declaration and its consequence if:
(a) the Company has paid or deposited with the
Trustee a sum sufficient to pay interest on overdue
principal and premium, if any, and, to the extent the
payment of such interest is lawful, interest on overdue
installments of interest, which has become due
otherwise than by such declaration of acceleration, has
been paid; and
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40
(b) all Events of Default, other than the non
payment of the principal of and accrued interest on the
Debentures which have become due solely by such
declaration of acceleration, have been cured or waived
as provided in Section 5.13.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
SECTION 5.03. Collection of Indebtedness and
Suits for Enforcement by Trustee. The Company covenants
that if:
(a) default is made in the payment of any
installment of interest on any Debenture when such
interest becomes due and payable and such default
continues for (i) if the Debentures are owned by 50 or
fewer Holders or groups of affiliated Holders, 5 days
on which the Company's administrative offices are open
for regular business or (ii) if the Debentures are not
owned by 50 or fewer Holders or groups of affiliated
Holders, 30 days; or
(b) default is made in the payment of the
principal of (or premium, if any, on) any Debenture
when the same becomes due and payable at maturity, upon
acceleration or redemption or otherwise;
the Company will upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Debentures, the whole
amount then due and payable on such Debentures for principal
(and premium, if any) and interest, with interest upon the
overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable,
upon overdue installments of interest, at the rate borne by
the Debentures; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
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41
If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as
trustee of an express trust, may institute a judicial
proceeding for the collection of sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other
obligor upon the Debentures and collect the moneys adjudged
or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon the
Debentures, wherever situated.
If an Event of Default occurs and is continuing,
the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders by such
appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding
relative to the Company or any other obligor upon the
Debentures or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of
whether the principal of the Debentures shall then be due
and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount
of principal (and premium, if any) and interest owing
and unpaid in respect of the Debentures and to file
such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee,
its agents and counsel) and of the Holders allowed in
such judicial proceeding; and
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and
to distribute the same after deduction of its charges
and expenses;
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42
and any receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan or reorganization,
arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 5.05. Trustee May Enforce Claims Without
Possession of Debentures. All rights of action and claims
under this Indenture or the Debentures may be prosecuted and
enforced by the Trustee without the possession of any of the
Debentures or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agents and counsel, be for the ratable benefit of the
Holders of the Debentures in respect of which such judgment
has been recovered.
SECTION 5.06. Application of Money Collected.
Subject to Article XIII, any money collected by the Trustee
pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in
case of the distribution of such money on account of
principal (or premium, if any) or interest, upon
presentation of the Debentures and the notation thereon of
the payment if only partially paid and upon surrender
thereof if fully paid:
(a) to the payment of all amounts due the Trustee
under Section 6.07;
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43
(b) to the payment of the amounts then due and
unpaid for principal of (and premium, if any) and
interest on the Debentures in respect of which or for
the benefit of which such money has been collected,
ratably, without preference or priority of any kind,
according to the amounts due and payable on such
Debentures for principal (and premium, if any) and
interest, respectively; and
(c) to the payment of the remainder, if any, to
the Company, its successors or assigns, or to
whomsoever may be lawfully entitled to the same, or as
a court of competent jurisdiction may determine.
SECTION 5.07. Limitation on Suits. No Holder of
any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless
(a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal
amount of the Outstanding Debentures shall have made
written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance
with such request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed
to institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such
60-day period by the Holders of a majority in principal
amount of the outstanding Debentures;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders, or to
obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and
ratable benefit of all the Holders.
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44
SECTION 5.08. Right of Holders To Receive
Principal, Premium and Interest and To Convert.
Notwithstanding any other provision in this Indenture, but
subject to Article XIII, the Holder of any Debenture shall
have the right to receive payment of the principal of (and
premium, if any) and (subject to Section 3.07) interest on
such Debenture on the Stated Maturity expressed in such
Debenture (or, in the case of redemption, on the Redemption
Date), to convert such Debenture in accordance with
Article XII, to exchange such Debenture in accordance with
Article XIV and to institute suit for the enforcement of any
such payment and right to convert or exchange, and such
rights shall not be impaired without the consent of such
Holder.
SECTION 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee
and the Holders shall be restored severally and respectively
to their former positions hereunder and thereafter all
rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No
right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No
delay or omission of the Trustee or of any Holder of any
Debenture to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.
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45
SECTION 5.12. Control by Holders. The Holders of
a majority in principal amount of the Outstanding Debentures
shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the
Trustee; provided that:
(a) such direction shall not be in conflict with
any rule of law or with this Indenture;
(b) such direction is not unduly prejudicial to
the other security holders or may involve the Trustee
in personal liability or if the Trustee determines that
it does not have sufficient indemnity against any loss
or expense connected to such action; and
(c) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with
such direction.
SECTION 5.13. Waiver of Past Defaults. The
Holders of not less than a majority in principal amount of
the Outstanding Debentures may on behalf of the Holders of
all the Debentures waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal of (or
premium, if any) or interest on any Debenture; or
(b) in respect of a covenant or provision hereof
which under Article IX cannot be modified or amended
without the consent of the Holder of each Outstanding
Debenture affected.
Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this
Indenture but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties
to this Indenture agree, and each Holder of any Debenture by
such Holder's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the
<PAGE>
46
costs of such suit and that such court may in its discretion
assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of
this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the
Outstanding Debentures or to any suit instituted by any
Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest on any Debenture on or
after the Stated Maturity expressed in such Debenture (or,
in the case of redemption, on or after the Redemption Date)
or for the enforcement of the right to convert any Debenture
in accordance with Article XII.
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and
Responsibilities. (a) Except during the continuance of an
Event of Default:
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee;
and
(ii) in the absence of wilful misconduct on its
part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Indenture, but, in the case of any
such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Indenture.
(b) In case an Event of Default has occurred and
is continuing, the Trustee shall exercise such of the rights
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.
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47
(c) No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its
own wilful misconduct, except that:
(i) this subsection shall not be construed to
limit the effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made by a Responsible Officer, unless it
shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
accordance with the direction of the Holders of a
majority in principal amount of the Outstanding
Debentures relating to the time, method and place of
conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
SECTION 6.02. Notice of Defaults. Within 90 days
after the occurrence of any default hereunder, the Trustee
shall transmit by mail to all Holders, as their names and
addresses appear in the Debenture Register, notice of such
default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any
Debenture, the Trustee shall be protected in withholding
<PAGE>
48
such notice if and so long as a trust committee of
Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of
the Holders; provided further that, in the case of any
default of the character specified in Section 5.01(c), no
such notice to Holders shall be given until at least 30 days
after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event
of Default. The Trustee shall not be deemed to have
knowledge of any default other than those described in
Sections 5.01(a) and (b) unless a Responsible Officer of the
Trustee has actual knowledge of such default.
SECTION 6.03. Certain Rights of Trustee. Except
as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond,
debenture, note or other paper or document believed by
it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of
the Board of Directors may be sufficiently evidenced by
a Board Resolution;
(c) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a
matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the
written advice of such counsel or any opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance
thereon;
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49
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note or other paper or
document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or
investigation, it shall be entitled to examine the
books, records and premises of the Company, personally
or by agent or attorney; and
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 6.04. Not Responsible for Recitals or
Issuance of Debentures. The recitals contained herein and
in the Debentures, except the Trustee's certificates of
authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the
Debentures. The Trustee shall not be accountable for the
use or application by the Company or any Paying Agent other
than the Trustee of Debentures or the proceeds thereof.
SECTION 6.05. May Hold Debentures. The Trustee,
any Authenticating Agent, any Paying Agent, any Debenture
Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or
pledgee of Debentures and, subject to Section 6.12 and to
Section 310(b) of the Trust Indenture Act, may otherwise
deal with the Company with the same rights it would have if
it were not Trustee, Authenticating Agent, Paying Agent,
Debenture Registrar or such other agent.
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50
Subject to Section 310(b) of the Trust Indenture
Act, the Trustee may become and act as trustee under other
indentures under which other securities, or certificates of
interest or participation in other securities, of the
Company are outstanding in the same manner as if it were not
Trustee.
SECTION 6.06. Money Held in Trust. Money held by
the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed on
with the Company.
SECTION 6.07. Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time such
compensation as may be agreed upon by the Trustee and
the Company from time to time for all services rendered
by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its
agents, counsel and other persons not regularly in its
employ), except to the extent any such expense,,
disbursement or advance may be attributable to its
negligence or bad faith; and
(c) to indemnify the Trustee (in its individual
capacity and as Trustee), its officers, directors,
attorneys-in-fact and agents for, and to hold each such
person harmless against, any loss, claim, damage,
liability or expense, incurred without negligence or
bad faith on such person's part, arising out of or in
connection with the acceptance or administration of
this trust, including the costs and expenses of
defending itself against or investigating any claim or
liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Company under this Section 6.07
to compensate and indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and
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51
advances shall constitute additional indebtedness
hereunder and shall survive the satisfaction and
discharge of this Indenture. To secure the Company's
payment obligations in this Section 6.07, the Trustee
shall have a lien prior to the Debentures on all money
or property held or collected by the Trustee except
money or property held in trust to pay principal of
(and premium, if any) or interest on particular
Debentures and such lien shall survive the satisfaction
and discharge of the Indenture and any other termina
tion of the Indenture including any termination under
any bankruptcy law. When the Trustee incurs expenses
or renders services in connection with an Event of
Default of Section 5.01(d), the Holders by their
acceptance of the Debentures hereby agree that such
expenses and the compensation for such services are
intended to constitute expenses of administration under
any bankruptcy law. "Trustee" for the purposes of this
Section 6.07 shall include any predecessor Trustee, but
the negligence or willful misconduct of any Trustee
shall not affect the indemnification of any other
Trustee.
SECTION 6.08. Corporate Trustee Required;
Eligibility. The Trustee shall at all times satisfy the
eligibility requirements of Section 310 of the Trust
Indenture Act and together with its immediate parent
maintain a combined capital and surplus of at least
$50,000,000 and be subject to supervision or examination by
Federal or State authority. If such corporation publishes
reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining
authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 6.09. Resignation and Removal;
Appointment of Successor. (a) No resignation or removal of
the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under
Section 6.10.
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52
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. If an instrument of
acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act
of the Holders of a majority in principal amount of the
Outstanding Debentures, delivered to the Trustee and to the
Company.
(d) If at any time:
(i) the Trustee shall cease to be eligible under
Section 6.08 and shall fail to resign after written
request therefor by the Company or by any such Holder;
or
(ii) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee, or (ii) subject to
Section 5.14, any Holder who has been a bona fide Holder of
a Debenture for at least six months may, on behalf of
himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in
the office of Trustee for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor
Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Debentures
delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the
<PAGE>
53
Company. If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, the Trustee
or any Holder who has been a bona fide Holder of a Debenture
for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each
resignation and each removal of the Trustee and each
appointment of a successor Trustee by mailing written notice
of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Debenture
Register. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust
Office.
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 appoint
ment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon
payment of its charges pursuant to Section 6.07, execute and
deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such
retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers
and trusts. Any retiring trustee shall, nevertheless,
retain a lien on all property or funds held or collected by
such trustee to secure any amounts then due pursuant to the
provisions of Section 6.07.
Upon acceptance of appointment by a successor
Trustee as provided in this Section, the Company shall cause
such successor Trustee to mail notice of succession of such
Trustee hereunder to all Holders of Debentures as the names
and addresses of such Holders appear on the Debenture
Register.
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54
No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be eligible under this Article and qualified under
Section 3.10(b) of the Trust Indenture Act.
SECTION 6.11. Merger, Conversion, Consolidation
or Succession to Business. Any corporation or national
banking association into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation or national banking association resulting from
any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the
Trustee (including the trust created by this Indenture),
shall be the successor of the Trustee hereunder; provided
such corporation or national banking association shall be
otherwise eligible under this Article and qualified under
Section 3.10(b) of the Trust Indenture Act, without the
execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debentures
shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so
authenticated with the same effect as if such successor
Trustee had itself authenticated such Debentures.
SECTION 6.12. Preferential Collection of Claims
Against Company. The Trustee is subject to Section 311(a)
and (b) of the Trust Indenture Act. Any Trustee that has
resigned or been removed shall be subject to Section 311(a)
and (b) of the Trust Indenture Act to the extent indicated
therein.
SECTION 6.13. Appointment of Authenticating
Agent. The Trustee may appoint an Authenticating Agent or
Agents which shall be authorized to act on behalf of the
Trustee to authenticate Debentures issued upon exchange,
registration of transfer or partial redemption or repurchase
thereof or pursuant to Section 3.06, and Debentures so
authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Wherever
reference is made in this Indenture to the authentication
and delivery of Debentures by the Trustee or the Trustee's
certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of
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55
authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a
corporation organized and doing business under the laws of
the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus
of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report
of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect
specified in this Section.
Any corporation or national banking association
into which an Authenticating Agent may be merged or
converted or with which it may be consolidated or any
corporation or national banking association resulting from
any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation
succeeding to the corporate agency or corporate trust
business of an Authenticating Agent, shall continue to be an
Authenticating Agent; provided such corporation or national
banking association shall be otherwise eligible under this
Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by
giving written notice thereof to the Trustee and to the
Company. The Trustee may at any time terminate the agency
of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to
the Company and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Debenture
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56
Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested
with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating
Agent shall be appointed unless eligible under the
provisions of his Section.
The Company agrees to pay to each Authenticating
Agent from time to time reasonable compensation for its
services under this Section.
If an appointment is made pursuant to this
Section, the Debentures may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following
form:
This is one of the Debentures referred to in the
within-mentioned Indenture.
Dated:
State Street Bank and Trust
Company, as Trustee
by
__________________________
As Authenticating Agent
by
__________________________
Authorized Signatory
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57
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
SECTION 7.01. Company To Furnish Trustee Names
and Addresses of Holders. The Company will furnish or cause
to be furnished to the Trustee:
(a) semiannually, not more than 15 days after each
Regular Record Date, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Holders as of such Regular Record
Date, and
(b) at such other times as the Trustee may request
in writing, within 30 days after the receipt by the
Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by
the Trustee in its capacity as Debenture Registrar.
SECTION 7.02. Preservation of Information
Communications to Holders. (a) The Trustee shall preserve,
in as current a form as is reasonably practicable, the names
and addresses of Holders contained in the most recent list
furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders received by the Trustee in
its capacity as Debenture Registrar. The Trustee may
destroy any list furnished to it as provided in Section 7.01
upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to
as "applicants") apply in writing to the Trustee, and
furnish to the Trustee reasonable proof that each such
applicant has owned a Debenture for a period of at least six
months preceding the date of such application, and such
application states that the applicants desire to communicate
with other Holders with respect to their rights under this
Indenture or under the Debentures and is accompanied by a
copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such
application, at its election, either:
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58
(i) afford such applicants access to the
information preserved at the time by the Trustee in
accordance with Section 7.02(a), or
(ii) inform such applicants as to the approximate
number of Holders whose names and addresses appear in
the information preserved at the time by the Trustee in
accordance with Section 7.02(a), and as to the
approximate cost of mailing to such Holders the form of
proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall,
upon the written request of such applicants, mail to each
Holder whose name and address appear in the information
preserved at the time by the Trustee in accordance with
Section 7.02(a) a copy of the form of proxy or other
communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless
within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with
a copy of the material to be mailed, a written statement to
the effect that, in the opinion of the Trustee, such mailing
would be contrary to the best interest of the Holders or
would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one
or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material to
all such Holders with reasonable promptness after the entry
of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
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59
(c) Every Holder of Debentures, by receiving and
holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any agent of
either of them shall be held accountable by reason of the
disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 7.02(b),
regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made
under Section 7.02(b).
SECTION 7.03. Reports by Trustee. (a) Within
60 days after May 15 of each year commencing with the year
1996, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Debenture Register,
a brief report dated as of May 15 with respect to any of the
following events which may have occurred during the twelve
months preceding the date of such report (but if no such
event has occurred within such period, no report need be
transmitted):
(i) any change to its eligibility under
Section 6.08 and its qualifications under
Section 310(b) of the Trust Indenture Act;
(ii) the creation of or any material change to a
relationship specified in Section 310(b)(1) through
310(b)(10) of the Trust Indenture Act;
(iii) the character and amount of any advances
(and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by
the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it
claims or may claim a lien or charge, prior to that of
the Debentures, on any property or funds held or
collected by it as Trustee, except that the Trustee
shall not be required (but may elect) to report such
advances if such advances so remaining unpaid aggregate
not more than 1/2 of 1% of the principal amount of the
Debentures Outstanding on the date of such report;
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60
(iv) any change to the amount, interest rate and
maturity date of all other indebtedness owing by the
Company (or by any other obligor on the Debentures) to
the Trustee in its individual capacity, on the date of
such report, with a brief description of any property
held as collateral security therefor except an
indebtedness based upon a creditor relationship arising
in any manner described in paragraph (2), (3), (4) or
(6) of Section 311 of the Trust Indenture Act;
(v) any change to the property and funds, if any,
physically in the possession of the Trustee as such on
the date of such report;
(vi) any additional issue of Debentures which the
Trustee has not previously reported; and
(vii) any action taken by the Trustee in the
performance of its duties hereunder which it has not
previously reported and which in its opinion materially
affects the Debentures, except action in respect of a
default, notice of which has been or is to be withheld
by the Trustee in accordance with Section 6.02.
(b) The Trustee shall transmit by mail to all
Holders, as their names and address appear in the Debenture
Register, a brief report with respect to the character and
amount of any advances (and if the Trustee elects so to
state, the circumstances surrounding the making thereof)
made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this
Section (or if no such report has yet been so transmitted,
since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or
charge, prior to that of the Debentures, on property or
funds held or collected by it as Trustee and which it has
not previously reported pursuant to this Subsection, except
that the Trustee shall not be required (but may elect) to
report such advances if such advances remaining unpaid at
any time aggregate 10% or less of the principal amount of
the Debentures Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time
of such transmission to Holders, be filed by the Trustee
with each stock exchange upon which the Debentures are
listed, with the Commission and with the Company. The
Company will notify the Trustee when the Debentures are
listed on any stock exchange.
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61
SECTION 7.04. Reports by Company. The Company
shall:
(a) file with the Trustee, within 15 days after
the Company is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission
may from time to time by rules and regulations
prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934;
or, if the Company is not required to file information,
documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents
and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a
national securities exchange as may be prescribed from
time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from
time to time by the Commission, such additional
information, documents and reports with respect to
compliance by the Company with the conditions and
covenants of this Indenture as may be required from
time to time by such rules and regulations;
(c) transmit by mail to all Holders, as their
names and addresses appear in the Debenture Register,
within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents
and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as
may be required by rules and regulations prescribed
from time to time by the Commission; and
(d) file with the Trustee a certificate of the
principal executive officer, the principal financial
officer or the principal accounting officer of the
Company on or before May 15 in each year, commencing
with the year 1996 stating whether or not, to the
knowledge of the signer, the Company has complied with
all conditions and covenants on its part contained in
this Indenture, and, if the signer has obtained
<PAGE>
62
knowledge of any default by the Company in the
performance, observance or fulfillment of any such
condition or covenant, specifying each such default and
the nature thereof. For the purpose this Section 7.04,
compliance shall be determined without regard to any
grace period or requirement of notice provided pursuant
to the terms of this Indenture.
ARTICLE VIII
Consolidation, Merger, Conveyance or Transfer
SECTION 8.01. Company May Consolidate, Etc., Only
on Certain Terms. The Company shall not consolidate with or
merge into or sell, assign, transfer or lease its properties
and assets as an entirety or substantially as an entirety to
any Person, unless:
(1) the Company shall be the continuing
Person, or the Person (if other than the Company)
formed by such consolidation or into which the
Company is merged or to which the properties and
assets of the Company substantially as an entirety
are transferred shall be a corporation organized
and existing under the laws of the United States
or any state thereof or the District of Columbia
and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the
Trustee, all the obligations of the Company under
the Debentures and the Indenture;
(2) immediately before and immediately
after giving effect to such transaction, no Event
of Default or event which, after notice or lapse
of time or both, would become an Event of Default
shall have occurred and be continuing; and
(3) the Company shall have delivered to
the Trustee, an Officers' Certificate and an
Opinion of Counsel, each stating that such
consolidation, merger, transfer or lease and such
supplemental indenture comply with this Article
and that all conditions precedent herein provided
for relating to such transaction have been
complied with.
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63
SECTION 8.02. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of the
assets of the Company as an entirety in accordance with
Section 8.01, the successor corporation formed by such
consolidation or into which the Company is merged or to
which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of,
and shall perform every obligation of the Company under this
Indenture with the same effect as if such successor
corporation had been named as the Company herein, and
thereafter the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the
Debentures.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without
Consent of Holders. Without the consent of or notice to any
Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following
purposes:
(a) to evidence the succession of another
corporation to the Company and the assumption by any
such successor of the covenants of the Company herein
and in the Debentures; or
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or
power herein conferred upon the Company; or
(c) to provide for uncertificated Debentures in
addition to or in place of certificated Debentures; or
(d) to cure any ambiguity or defect, to correct or
supplement any provision herein which may be
inconsistent with any other provision herein, or to
make any other provisions with respect to matters or
questions arising under this Indenture; provided such
action shall not adversely affect the interests of the
Holders in any material respect; or
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64
(e) to modify, eliminate or add to the provisions
of this Indenture to such extent as shall be necessary
to effect or maintain the qualification of this
Indenture under the Trust Indenture Act, or under any
similar Federal statute hereafter enacted; or
(f) to make any other change that does not
adversely affect the rights of any Holder.
SECTION 9.02. Supplemental Indentures with
Consent of Holders. Without notice to any Holder but with
the consent of the Holders of not less than a majority in
principal amount of the Outstanding Debentures, by Act of
said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions
to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner
the rights of the Holders under this Indenture or waiving
future compliance by the Company with any of the provisions
of this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the
Holder of each Outstanding Debenture affected thereby,
(a) change the Stated Maturity of the principal
of, or any installment of interest on, any Debenture,
or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in
which any Debenture or any premium or the interest
thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of
redemption, on or after the applicable redemption
date), or
(b) reduce the percentage in principal amount of
the Outstanding Debentures, the consent of whose
Holders is required for any such supplemental
indenture, or the consent of whose Holders is required
for any waiver provided for in this Indenture, or
(c) modify any of the provisions of this Section
except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder
of each Outstanding Debenture affected thereby, or
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65
(d) adversely affect a right provided in Article
XI to cause the Company to redeem Debentures or in
Article XII to convert to Debentures.
It shall not be necessary for any Act of Holders
under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient
if such Act shall approve the substance thereof.
After a Supplemental Indenture under this
Section 9.02 becomes effective, the Trustee shall mail to
the Holder of each Debenture affected thereby, as their
names and addresses appear in the Debenture Register, a
notice briefly describing the Supplemental Indenture. Any
failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the
validity of any such Supplemental Indenture.
SECTION 9.03. Execution of Supplemental
Indentures. In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by
this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully
protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may,
but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be, and shall be deemed to be,
modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all
purposes; and every Holder of Debentures theretofore or
thereafter authenticated and delivered hereunder shall be
bound thereby, whether or not notation thereof is made on
any Debenture held by such Holder.
SECTION 9.05. Conformity with Trust Indenture
Act. Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust
Indenture Act as then in effect.
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66
SECTION 9.06. Reference in Debentures to
Supplemental Indentures. Debentures authenticated and
delivered after the execution of any supplemental indenture
pursuant to this Article shall, if the Company so
determines, bear a notation as to any matter provided for in
such supplemental indenture. If the Company shall so
determine, new Debentures so modified as to conform, in the
opinion of the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for
Outstanding Debentures.
SECTION 9.07. Consent of Holders of Senior
Indebtedness. A supplemental indenture under this Article
may not make any change that adversely affects the rights
under Article XIII of any holder of an issue of Senior
Indebtedness of the Company unless the holders of that
issue, pursuant to its terms, consent to the change.
ARTICLE X
Covenants
SECTION 10.01. Interest. The Company shall pay,
or cause to be paid, the principal of and, premium, if any,
and interest on the Debentures on the dates and in the
manner provided in the Debentures and this Indenture. An
installment of principal, premium, if any, or interest shall
be considered paid on the date due if the Paying Agent holds
on that date funds (or if the Company is its own Paying
Agent, on that date such funds are segregated in trust)
designated for and sufficient to pay the installment and is
not prohibited from paying such funds to the Holders of the
Debentures pursuant to Article XIII.
The Company shall pay interest on overdue
principal and premium, if any, at the same rate per annum
borne by the Debentures; it shall pay interest on overdue
installments of interest at the same rate per annum borne by
the Debentures, to the extent lawful.
SECTION 10.02. Maintenance of Office or Agency.
The Company will maintain (in the City of New York, so long
as the same shall be required by the rules of any stock
exchange or over-the-counter market in or on which the
Debentures are listed or traded) an office or agency where
Debentures may be presented or surrendered for payment,
where Debentures may be surrendered for registration of
transfer or exchange, where Debentures may be surrendered
for conversion and where notices and demands to or upon the
Company in respect of the Debentures and this Indenture may
be served. The Company will give prompt written notice to
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67
the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate
one or more other offices or agencies (in or outside the
City of New York) where the Debentures may be presented or
surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that
no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office
or agency in the City of New York for such purposes if
required as described above. The Company will give prompt
written notice to the Trustee of any such required office or
agency. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate
one or more other offices or agencies (in or outside the
City of New York) where the Debentures may be presented or
surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that
no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office
or agency in the City of New York for such purposes. The
Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 10.03. Money for Debenture Payments To Be
Held in Trust. If the Company shall at any time act as its
own Paying Agent (as it will initially act) it will, on or
before each due date of the principal of (and premium, if
any) or interest on any of the Debentures, segregate and
hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium
if any) or interest so becoming due until such sums shall be
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68
paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action
or failure so to act; provided, however, that in the case of
any redemption pursuant to Article XI, the Company shall
deposit such sum with a Paying Agent other than the Company
as provided in Article XI.
Whenever the Company shall have one or more Paying
Agents, it will prior to each due date of the principal of
(and premium if any) or interest on any Debentures, deposit
with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum
to be held in trust for the benefit of the Persons entitled
to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly
notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other
than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of
the principal of (and premium, if any) or interest on
Debentures in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the
Company (or any other obligor upon the Debentures) in
the making of any payment of principal (and premium, if
any) or interest; and
(c) at any time during the continuance of any such
default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust
by such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture
or for any other purpose, pay, or by Company Order direct
any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which
such sums were held by the Company or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further
liability with respect to such money.
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Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment
of the principal of (and premium, if any) or interest on any
Debenture and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due
and payable shall be paid to the Company on Company Request,
or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Debenture shall
thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof,
shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English
language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the
Company.
SECTION 10.04. Corporate Existence. Subject to
Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and
statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or
franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct
of the business of the Company and its Subsidiaries taken as
a whole.
SECTION 10.05. Dividend, Repurchase and
Redemption Restrictions. The Company will not declare any
dividends (other than dividends payable solely in stock of
the Company or in rights or warrants entitling the holders
thereof to subscribe for or to purchase stock of the
Company) on any stock of the Company or make, or permit any
Subsidiary of the Company to make, any payment on account of
the purchase, redemption or other retirement of any shares
of such stock or make, or permit any Subsidiary of the
Company to make, any distribution in respect thereof, either
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70
directly or indirectly, unless, after giving effect to such
proposed dividend or other payment or distribution, at the
date of such declaration (in the case of a dividend) or of
such other payment or distribution, there does not exist any
Event of Default.
SECTION 10.06. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all
material taxes, assessments and governmental charges levied
or imposed upon the Company or upon the income, profits or
property of the Company, and (b) all material lawful claims
for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company;
provided, however, that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate
proceedings.
SECTION 10.07. Waiver of 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 the Debentures; 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 Holders of
Debentures, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 10.08. Notice of Defaults. The Company
shall give to each Holder of Debentures, at such Holder's
address as it appears on the Debenture Register, and to the
Trustee promptly and in any event within 10 days after the
Company has knowledge of the occurrence of any event of
default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any
Subsidiary of the Company in an amount exceeding $10,000,000
or under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company
or any Subsidiary of the Company in an amount exceeding
$10,000,000 which is continuing, notice of such event of
default.
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71
SECTION 10.09. Other Subordinated Indebtedness.
The Company will not incur, create, assume or suffer to
exist any Indebtedness of the Company that is subordinated
in right of payment to any other unsecured Indebtedness of
the Company unless such Indebtedness ranks pari passu with,
or is subordinated in right of payment to, the Debentures.
ARTICLE XI
Redemption of Debentures
SECTION 11.01. Optional Redemption by the
Company. (a) Except as set forth in paragraph (b) below,
the Company shall not have any right to redeem all or any
part of the Debentures prior to September 30, 1998. On and
after such date, the Company shall have the right, at its
sole option and election, to redeem the Debentures, in whole
or in part, at any time and from time to time, at a price
equal to the principal amount of the Debentures to be
redeemed, together with accrued and unpaid interest thereon
to the date of redemption (the "Redemption Price");
provided, however, that, if the Debentures are owned by 50
or fewer Holders or groups of affiliated Holders, the
Company shall not have any such right to redeem the
Debentures in part unless at least $50,000,000 aggregate
principal amount of Debentures would remain Outstanding
after giving effect to such redemption.
(b) The Company shall have the right, at its sole
option and election, to redeem the Debentures, in whole or
in part, at any time and from time to time, at the
Redemption Price, if, for at least 20 of 30 consecutive
Trading Days during the period commencing on October 7, 1991
and ending on the date notice of such redemption is given,
the Current Market Price per share of Common Stock is
greater than or equal to $48.75 (appropriately adjusted for
stock splits, stock combinations, stock dividends and
similar events); provided, however, that if the Debentures
are owned by 50 or fewer Holders or groups of affiliated
Holders, the Company shall not have any such right to redeem
the Debentures in part unless at least $50,000,000 aggregate
principal amount of Debentures would remain Outstanding
after giving effect to such redemption.
(c) Notwithstanding the foregoing, any Debentures
redeemed pursuant to this Section 11.01 at a time when a
Holder of Debentures could require the Company to redeem
such Debentures pursuant to Section 11.03 shall be redeemed
at a price equal to the greater of the Redemption Price and
the Change in Control Price.
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72
SECTION 11.02. Selection of Debentures To Be
Redeemed. If less than all the Debentures are to be
redeemed, the Company shall allocate, subject to the
following sentence, the total principal amount to be
redeemed pro rata among Holders of Debentures, based on the
percentage each holds of the aggregate outstanding principal
amount of Debentures. Debentures and portions of Debentures
selected for redemption shall be in amounts of $1,000 or
integral multiples of $1,000. Provisions of this
Section 11.02 that apply to Debentures called for redemption
also apply to portions of Debentures called for redemption.
If any Debenture is selected for partial redemp
tion and is converted in part prior to termination of the
conversion right with respect to the portion of the
Debenture to be redeemed, the converted portion of the
Debenture shall be deemed (so far as may be) to be the
portion selected for redemption.
SECTION 11.03. Redemption at the Option of the
Holder. In the event there occurs a Change in Control, any
Holder of Debentures, in accordance with the procedures set
forth in Section 11.04(b), may require the Company to redeem
all or any portion (in amounts of $1,000 or integral
multiples of $1,000) of the Debentures held by such Holder
at a price per $1,000 principal amount of Debentures (the
"Change in Control Price") equal to the greater of (i) the
Redemption Price therefor and (ii) the product of the number
of shares of Common Stock into which $1,000 principal amount
of Debentures is then convertible (or, if the Debentures are
no longer convertible into shares of Common Stock as a
result of such Change in Control, the number of shares of
Common Stock, adjusted in accordance with customary
antidilution provisions, into which $1,000 principal amount
of Debentures was convertible immediately prior to the
consummation of such Change in Control) and the highest
price per share of Common Stock (including any brokerage
commissions, transfer taxes and soliciting dealers' fees)
paid or agreed to be paid by any Person who acquired control
of the Company (or any Affiliate or Associate of such
Person) within the two-year period immediately preceding the
date of such Change in Control or at any time thereafter,
together with accrued and unpaid interest on such principal
amount of Debentures to the date of redemption.
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73
SECTION 11.04. Redemption Notice and Mechanics.
(a) Notice of any redemption of Debentures pursuant to
Section 11.01 shall be given by publication in a newspaper
of general circulation in the Borough of Manhattan, The City
of New York, not less than 30, nor more than 60, days prior
to the date fixed for redemption, if the Debentures are
listed on any national securities exchange or traded in the
over-the-counter market; and, in any case, a similar notice
shall be given to the Trustee and shall be mailed at least
30, but not more than 60, days prior to the date fixed for
redemption to each Holder of Debentures to be redeemed, at
such Holder's address as it appears on the Debenture
Register. The notice shall identify the Debentures to be
redeemed and shall state:
(i) the redemption date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Debentures called for redemption must be
surrendered to the Paying Agent to collect the
Redemption Price;
(v) that, unless the Company defaults in making
the redemption payment, interest on Debentures called
for redemption ceases to accrue on and after the
redemption date and the only remaining right of the
Holders is to receive payment of the Redemption Price
upon surrender to the Paying Agent of such Debentures;
(vi) if any Debenture is being redeemed in part,
the portion of the principal amount (equal to $1,000 or
any integral multiple thereof) of such Debenture to be
redeemed and that, on and after the redemption date,
upon surrender of such Debenture, a new Debenture or
Debentures in authorized denominations and in an
aggregate principal amount equal to the unredeemed
portion thereof will be issued; and
(vii) the aggregate principal amount of Debentures
that are being redeemed.
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74
(b) Within 30 days following a Change in Control,
the Company shall, if the Debentures are listed on any
national securities exchange or traded in the over-the-
counter market, give notice by publication in a newspaper of
general circulation in the Borough of Manhattan, The City of
New York, of such Change of Control, which notice shall set
forth each Holder's right to require the Company to redeem
any Debenture (or portion thereof equal to $1,000 or any
integral multiple of $1,000) held by such Holder, the
redemption date (which date shall be not more than 60, nor
less than 45, days from the date of such notice) and the
procedures to be followed by such Holder in exercising such
Holder's right to cause such redemption; and, in any case, a
similar notice shall be given to the Trustee and shall be
mailed concurrently to each Holder of Debentures, at such
Holder's address as it appears on the Debenture Register;
provided, however, that, if the Debentures are owned by 50
or fewer Holders or groups of affiliated Holders, such
notice shall be mailed promptly following the Change of
Control (but in no event more than five Business Days
thereafter), and shall set forth (A) that the redemption
date shall be five Business Days after receipt by the
Company of the notice by the Holder referred to in the last
sentence of this paragraph (b), and (B) the procedures to be
followed by such Holder in exercising his right to cause
such redemption. Failure by the Company to give the notice
prescribed by the preceding sentence, or the formal
insufficiency of any such notice, shall not prejudice the
rights of any Holder of Debentures to cause the Company to
redeem any Debentures held by him. In the event a Holder of
Debentures shall elect to require the Company to redeem any
Debentures pursuant to Section 11.03, such Holder shall
deliver within 30 Business Days of the mailing to him of the
Company's notice described in this paragraph (b), or, if no
notice is given, within 30 Business Days following the last
day the Company was required to give notice of the Change in
Control in accordance with this paragraph (b) (in which case
the date of redemption shall be (1) if the Debentures are
not owned by 50 or fewer Holders or groups of affiliated
Holders, the date which is 45 Business Days following the
last day the Company was required to give notice of the
Change in Control in accordance with this paragraph (b),
after which date the right of such Holders to require the
Company to redeem Debentures pursuant to Section 11.03 shall
terminate, or (2) if the Debentures are owned by 50 or fewer
Holders or groups of affiliated Holders, the date of which
is five Business Days after the delivery to the Company of
an election to redeem), a written notice, in the form
specified by the Company (if the Company did in fact give
the notice required by this paragraph (b)), to the Company
so stating, specifying the principal amount of Debentures
pursuant to Section 11.03; provided, however, that, if the
Debentures are owned by 50 or fewer Holders or groups of
affiliated Holders, such Holders or groups may deliver a
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75
notice of an election to redeem at any time within 60
Business Days following the occurrence of a Change in
Control, and such Holders or groups shall not be required to
wait for the Company's notice provided for in this
paragraph (b) or for the expiration of the time allowed for
the Company's notice hereunder.
SECTION 11.05. Deposit of Redemption or Change in
Control Price. On the date of any redemption being made
pursuant to Section 11.01 which is specified in a notice
given pursuant to Section 11.04, the Company shall, and at
any time after such notice shall have been mailed and before
the date of redemption the Company may, deposit with the
Trustee or with a Paying Agent (or, if the Company is its
own Paying Agent, shall segregate and hold in trust for the
benefit of the Holders of Debentures to be redeemed) funds
sufficient to pay the Redemption Price of all Debentures to
be redeemed on that date.
On the date of any redemption being made pursuant
to Section 11.03 which is specified in a notice given
pursuant to Section 11.04, the Company shall, and at any
time after such notice shall have been made and before the
date of redemption the Company may, deposit with the Trustee
or with a Paying Agent (other than the Company) funds
sufficient to pay the Change in Control Price of all
Debentures to be redeemed on that date.
If any Debenture to be redeemed is converted
pursuant to Article XII, any funds so deposited with the
Trustee or with a Paying Agent for the redemption of such
Debenture shall, upon demand by the Company, be paid to the
Company, or if then so segregated and held in trust by the
Company, shall be discharged from such trust.
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SECTION 11.06. Debentures Payable on Redemption
Date. Notice of redemption having been given as aforesaid,
upon the deposit or segregation in trust of funds pursuant
to Section 11.05 in respect of Debentures to be redeemed
pursuant to Section 11.01 or 11.03, the Debentures so to be
redeemed shall, on the redemption date, become due and
payable at the Redemption Price or the Change in Control
Price, as the case may be, and notwithstanding that the
Debentures so to be redeemed shall not have been surrendered
for cancelation, on such date (unless the Company shall
default in the payment of the Redemption Price or the Change
in Control Price, as the case may be), such Debentures shall
cease to bear interest and the only remaining right of
Holders thereof is to receive payment of the Redemption
Price or the Change in Control Price, as the case may be,
upon surrender to the Paying Agent of such Debentures. Upon
surrender of such Debentures for redemption in accordance
with such notice, such Debentures shall be paid by the
Company at the Redemption Price or the Change in Control
Price, as the case may be.
If any Debenture called for redemption shall not
be so paid upon surrender thereof for redemption, the
principal thereof and premium, if any, thereon shall, until
paid, bear interest from the redemption date at the rate
borne by the Debentures.
SECTION 11.07. Debentures Redeemed in Part. Any
Debenture which is to be redeemed only in part shall be
surrendered at any office or agency of the Company
designated for that purpose (with, if the Company or the
Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company,
the Trustee and the Debenture Registrar duly executed by,
the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such
Debenture without service charge, a new Debenture or
Debentures, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the
Debenture so surrendered.
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ARTICLE XII
Conversion of Debentures
SECTION 12.01. Optional Conversion. Each
Debenture shall be convertible at the option of the Holder
thereof into fully paid and nonassessable shares of Common
Stock. The number of shares of Common Stock deliverable
upon conversion of each $1,000 principal amount of
Debentures, adjusted as hereinafter provided, is referred to
herein as the "conversion ratio". The conversion ratio
shall be 30.7692, subject to adjustment from time to time
pursuant to Section 12.07. Such conversion right shall
expire at the close of business on September 30, 2001. In
case a Debenture or portion thereof is called for
redemption, such conversion right in respect of the
Debenture or portion so called shall expire at the close of
business on the second Business Day preceding the Redemption
Date, unless the Company defaults in making the payment due
upon redemption or, in case this Debenture is exchanged upon
the occurrence of a Triggering Event, the close of business
on the Exchange Date.
SECTION 12.02. Mechanics of Conversion.
Conversion of the Debentures may be effected by any such
Holder upon the surrender to the Company at any office or
agency of the Company maintained for that purpose of a
Debenture accompanied by a written notice stating that such
Holder elects to convert all or a specified multiple of
$1,000 of the principal of such Debenture in accordance with
the provisions of this Article XII and specifying the name
or names in which such Holder wishes the certificate or
certificates for shares of Common Stock to be issued. In
case such notice shall specify a name or names other than
that of such Holder, such notice shall be accompanied by
payment of all transfer taxes payable upon the issuance of
shares of Common Stock in such name or names. Other than
such taxes, the Company will pay any and all issue and other
taxes (other than taxes based on income) that may be payable
in respect of any issue or delivery of shares of Common
Stock on conversion of Debentures pursuant hereto. As
promptly as practicable, and in any event within five
Business Days after the surrender of such Debenture and the
receipt of such notice relating thereto and, if applicable
payment of all transfer taxes (or the demonstration to the
satisfaction of the Company that such taxes have been paid),
(A) the Company shall deliver or cause to be delivered
certificates representing the number of validly issued,
fully paid and nonassessable full shares of Common Stock to
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78
which the Holder of the Debenture being converted shall be
entitled and (B) if less than the full principal amount of
any Debenture is being converted, the Company shall execute
and the Trustee shall authenticate and deliver a new
Debenture, of like tenor, in any authorized denominations
requested by such Holder, for the principal amount evidenced
by such surrendered Debenture less the principal amount
being converted. Such conversion shall be deemed to have
been made at the close of business on the date of giving of
such notice and of such surrender of the Debenture to be
converted so that the rights of the Holder thereof as to the
principal amount of the Debenture being converted shall
cease except for the right to receive shares of Common Stock
in accordance herewith, and the Person entitled to receive
the shares of Common Stock shall be treated for all purposes
as having become the record holder of such shares of Common
Stock at such time. The Company shall not be required to
convert, and no surrender of any Debenture shall be
effective for that purpose, while the transfer books of the
Company for the Common Stock are closed for any purpose (but
not for any period in excess of 5 days); but the surrender
of any Debenture for conversion during any period while such
books are so closed shall become effective for conversion
immediately upon the reopening of such books, as if the
conversion had been made on the date such Debenture was
surrendered, and at the conversion ratio in effect at the
date of such surrender. Provisions of this Article XII that
apply to Debentures surrendered for conversion also apply to
portions of Debentures surrendered for conversion.
SECTION 12.03. Conversion of Debentures Called
for Redemption or Exchanged. In case any Debentures are to
be redeemed pursuant to Article XI, such right of conversion
shall cease and terminate as to the Debentures to be
redeemed at the close of business on the second Business Day
next preceding the date fixed for redemption unless the
Company shall default in the payment of the Redemption Price
or the Change in Control Price, as the case may be.
In case Debentures are exchanged pursuant to
Article XIV, such right of conversion shall cease and
terminate as to the Debentures to be exchanged at the close
of business on the Exchange Date.
SECTION 12.04. Dividends, Etc. The conversion
ratio shall be subject to adjustment from time to time in
certain instances as hereinafter provided. Upon conversion,
no payment or adjustment shall be made by the Company to any
Holder of Debentures surrendered for conversion in respect
of any accrued and unpaid dividends on the shares of Common
Stock issuable upon conversion thereof; provided, however,
that the Company shall pay or cause to be paid in cash to
the Persons entitled thereto all accrued and unpaid interest
to the date of conversion on the portion of such Debenture
converted.
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SECTION 12.05. Fractional Shares. In connection
with the conversion of any Debenture, no fraction of shares
of Common Stock shall be issued, but in lieu thereof the
Company shall pay a cash adjustment in respect of such
fractional interest of the product of such fractional
interest multiplied by the Current Market Price per share of
Common Stock on the Trading Day on which such Debenture is
deemed to have been converted. If more than one Debenture
shall be surrendered for conversion by the same Holder at
the same time, the number of full shares of Common Stock
issuable on conversion thereof shall be computed on the
basis of the total principal amount of Debentures so
surrendered.
SECTION 12.06. Reservation of Common Stock. The
Company shall at all times reserve and keep available for
issuance upon the conversion of Debentures such number of
its authorized but unissued shares of Common Stock as will
from time to time be sufficient to permit the conversion of
all outstanding Debentures and shall take all action
required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all
outstanding Debentures.
SECTION 12.07. Conversion Ratio Adjustments. The
conversion ratio shall be subject to adjustment from time to
time as follows:
(a) In case the Company shall at any time or from
time to time after October 7, 1991 (i) pay a dividend
or make a distribution on the outstanding shares of
Common Stock in shares of Common Stock, (ii) subdivide
the outstanding shares of Common Stock, (iii) combine
the outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of
the shares of Common Stock any shares of capital stock
of the Company, then, and in each such case, the
conversion ratio in effect immediately prior to such
event or the record date therefor, whichever is
earlier, shall be adjusted so that the Holder of any
Debentures thereafter surrendered for conversion shall
be entitled to receive, in respect of each $1,000
principal amount of Debentures so surrendered, the
number of shares of Common Stock or other securities of
the Company which such holder would have owned or have
been entitled to receive after the happening of any of
the events described above, had such Debentures been
surrendered for conversion immediately prior to the
happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to
this paragraph (a) shall become effective (x) in the
case of any such dividend or distribution, immediately
after the close of business on the record date for the
determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or
(y) in the case of any such subdivision,
reclassification or combination, at the close of
business on the day upon which such corporate action
becomes effective.
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(b) In case the Company shall issue shares of
Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) after
October 7, 1991 at a price per share (or having a
conversion price per share) less than $1,000 divided by
the then applicable conversion ratio (the "conversion
price"), as of the date of issuance of such shares or
of such convertible securities, then, and in each such
case, the conversion ratio shall be adjusted so that
the Holder of each Debenture shall be entitled to
receive, upon the conversion thereof, in respect of
each $1,000 principal amount thereof to be converted,
the number of shares of Common Stock determined by
multiplying (1) the applicable conversion ratio on the
day immediately prior to such date by (2) a fraction,
the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding on such
date and (B) the number of additional shares of Common
Stock issued (or into which the convertible securities
may convert), and the denominator of which shall be the
sum of (1) the number of shares of Common Stock
outstanding on such date and (2) the number of shares
of Common Stock which the aggregate consideration
receivable by the Company for the total number of
shares of Common Stock so issued (or into which the
convertible securities may convert) would purchase at
such conversion price on such date. An adjustment made
pursuant to this paragraph (b) shall be made on the
next Business Day following the date on which any such
issuance is made and shall be effective retroactively
immediately after the close of business on such date.
For purposes of this paragraph (b), the aggregate
consideration receivable by the Company in connection
with the issuance of shares of Common Stock or of
securities convertible into shares of Common Stock
shall be deemed to be equal to the sum of the aggregate
offering price (before deduction of underwriting
discounts or commissions and expenses payable to third
parties) of all such securities plus the minimum
aggregate amount, if any, payable upon conversion of
any such convertible securities into shares of Common
Stock. Neither the issuance of any shares of Common
Stock (whether treasury shares or newly issued shares)
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81
pursuant to a dividend or distribution on, or
subdivision, combination or reclassification of, the
outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to
paragraph (a) of this Section 12.07, or pursuant to any
plan providing for the reinvestment of dividends or
interest payable on securities of the Company, and the
investment of additional optional amounts, in shares of
Common Stock, in any such case at a price per share of
not less than 85% of the current market price
(determined as provided in such plans) per share of
Common Stock, or pursuant to any employee benefit plan
or program of the Company, pursuant to any option,
warrant, right, or convertible security outstanding as
of the date hereof (including, but not limited to, the
Debentures and the Rights) or pursuant to the Exchange
Stock shall be deemed to constitute an issuance of
Common Stock or convertible securities by the Company
to which this paragraph (b) applies.
(c) In case the Company shall at any time or from
time to time after October 7, 1991 declare, order, pay
or make a dividend or other distribution (including,
without limitation, any distribution of stock or other
securities or property or rights or warrants to
subscribe for securities of the Company or any of its
Subsidiaries by way of dividend or spin-off), on its
Common Stock, other than (i) regular quarterly
dividends payable in cash in an aggregate amount not to
exceed 50% of net income from continuing operations
before extraordinary items of the Company, determined
in accordance with generally accepted accounting
principles, during the period (treated as one
accounting period) commencing on October 7, 1991 and
ending on the date such dividend is paid; provided,
however, that in no event shall any adjustment be made
pursuant to this paragraph (c) in respect of the
payment of any regular quarterly dividend in an amount
not in excess of $.15 per share of Common Stock
(appropriately adjusted for stock splits, stock
combinations, stock dividends and similar events) or
(ii) dividends or distributions of shares of Common
Stock which are referred to in paragraph (a) of this
Section 12.07, then, and in each such case, the
conversion ratio shall be adjusted so that the Holder
of each Debenture shall be entitled to receive, upon
the conversion thereof, in respect of each $1,000
principal amount thereof so converted, the number of
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shares of Common Stock determined by multiplying
(A) the applicable conversion ratio on the day
immediately prior to the record date fixed for the
determination of stockholders entitled to receive such
dividend or distribution by (B) a fraction, the
numerator of which shall be the Current Market Price
per share of Common Stock for the period of 20 Trading
Days preceding such record date, and the denominator of
which shall be such Current Market Price per share of
Common Stock less the Fair Market Value per share of
Common Stock (as determined in good faith by the Board
of Directors of the Company, a certified resolution
with respect to which shall be mailed to each holder of
Debentures) of such dividend or distribution; provided,
however, that in the event of a distribution of shares
of capital stock of a Subsidiary of the Company (a
"Spin-Off") made to holders of shares of Common Stock
the numerator of such fraction shall be the sum of the
Current Market Price per share of Common Stock for the
period of 20 Trading Days preceding the 35th Trading
Day after the effective date of such Spin-Off and the
Current Market Price of the number of shares (or the
fraction of a share) of capital stock of the Subsidiary
which is distributed in such Spin-Off in respect of one
share of Common Stock for the period of 20 Trading Days
preceding such 35th Trading Day and the denominator of
which shall be the Current Market Price per share of
Common Stock for the period of 20 Trading Days
preceding such 35th Trading Day. An adjustment made
pursuant to this paragraph (c) shall be made upon the
opening of business on the next Business Day following
the date on which any such dividend or distribution is
made and shall be effective retroactively immediately
after the close of business on the record date fixed
for the determination of stockholders entitled to
receive such dividend or distribution; provided,
however, that if the proviso to the preceding sentence
applies, then such adjustment shall be made and be
effective as of such 35th Trading Day after the
effective date of such Spin-Off.
(d) In case the Company shall (i) during any
12-month period ending on October 7 repurchase shares
of Common Stock pursuant to any self tender offer at a
purchase price per share (the "Self-Tender Price") in
excess of 110% of the Current Market Price of the
Common Stock for the period of five Trading Days
immediately preceding the date of the first public
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83
announcement by the Company of the commencement (as
defined in Rule 13e-4 under the Exchange Act) of such
self tender offer (the "Preannouncement Price") (the
number of shares so repurchased multiplied by the
amount of such excess of the Self-Tender Price over the
Preannouncement Price being referred to as an "Excess
Amount") or (ii) during any 12-month period ending on
October 7 repurchase shares of Common Stock other than
pursuant to a self tender offer at a weighted average
purchase price per share (the "Purchase Price") in
excess of 110% of the weighted average of the per share
sales prices of the Common Stock for all trades made on
the principal exchange on which the Common Stock is
then traded on the Trading Days on which such
repurchases were made (the "Trade Price"); provided
that any such repurchases by the Company shall be
disregarded for purposes of determining such weighted
average for this clause (ii) (the number of shares so
repurchased multiplied by the amount of such excess of
the Purchase Price over the Trade Price being referred
to as an "Excess Amount"), the applicable conversion
ratio shall be adjusted in accordance with the
provisions set forth above, as if, in lieu of such
repurchases, the Company had during any 12-month period
distributed a dividend of property having a Fair Market
Value equal to the aggregate of the Excess Amounts with
respect to such 12-month period, with such dividend
paid to holders of Common Stock (including holders of
Common Stock so repurchased) on the date the first
share of Common Stock is so repurchased in such 12-
month period; provided, however, that no adjustment
shall be made to the conversion ratio pursuant to this
paragraph (d) in respect of the repurchase by the
Company after October 7, 1991 and prior to December 31,
1992, of Common Stock to the extent that the aggregate
purchase price therefor does not exceed $150,000,000;
provided that, if such repurchase is pursuant to a self
tender offer, the Self-Tender Price does not exceed
120% of the Preannouncement Price and, if such
repurchase is other than pursuant to a self tender
offer, the Purchase Price does not exceed 120% of the
Trade Price, determined as provided in clause (ii)
above. In addition, in the event that during any 12-
month period referred to above Debentures are redeemed
pursuant to Article XI hereof or converted in
accordance with this Article XII, the conversion ratio
shall be adjusted on the date of such redemption or
conversion, as the case may be, with respect to the
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84
Debentures so redeemed or converted in accordance with
the procedures set forth above, effective immediately
prior to such redemption or conversion, as if during
the portion of such 12-month period ending immediately
prior to such redemption or conversion (a "Partial
Period") the Company had distributed a dividend of
property having a Fair Market Value equal to the
aggregate of the Excess Amounts with respect to such
Partial Period, with such dividend paid to holders of
Common Stock (including holders of Common Stock so
repurchased) on the date the first share of Common
Stock is so repurchased in such Partial Period,
subject, however, to the proviso to the immediately
preceding sentence.
(e) For purposes of this Section 12.07, the
number of shares of Common Stock at any time
outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the
Company.
(f) The term "dividend", as used in this
Section 12.07 shall mean a dividend or other
distribution upon stock of the Company except pursuant
to the Rights Agreement. Notwithstanding anything in
this Article XII to the contrary, the conversion ratio
shall not be adjusted as a result of (i) any dividend,
distribution or issuance of securities of the Company
pursuant to the Rights Agreement or (ii) any dividend
to stockholders of put rights entitling the holders
thereof to sell shares of Common Stock to the Company
at a specific price which may be in excess of the
Current Market Price of Common Stock at the time such
put rights are distributed; provided, however, that the
conversion ratio shall be adjusted upon the repurchase
of shares of Common Stock pursuant to the exercise of
any such put rights to the extent provided in
paragraph (d) of this Section 12.07.
(g) Anything in this Section 12.07 to the
contrary notwithstanding, the Company shall not be
required to give effect to any adjustment in the
conversion ratio unless and until the net effect of one
or more adjustments (each of which shall be carried
forward), determined as above provided, shall have
resulted in a change of the conversion ratio by at
least one-hundredth of one share of Common Stock, and
when the cumulative net effect of more than one
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85
adjustment so determined shall be to change the
conversion ratio by at least one-hundredth of one share
of Common Stock, such change in conversion ratio shall
thereupon be given effect.
(h) The certificate of any firm of independent
public accountants of recognized standing selected by
the Board of Directors of the Company (which may be the
firm of independent public accountants regularly
employed by the Company) shall be presumptively correct
for any computation made under this Section 12.07.
(i) If the Company shall take a record of the
holders of its Common Stock for the purpose of
entitling them to receive a dividend or other
distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon
its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the
number of shares of Common Stock issuable upon exercise
of the right of conversion granted by this Article XII
or in the conversion ratio then in effect shall be
required by reason of the taking of such record.
(j) There shall be no adjustment of the
conversion ratio in case of the issuance of any stock
of the Company in a merger, reorganization, acquisition
or other similar transaction except as set forth in
paragraphs (a) and (b) of this Section 12.07 and in
Section 12.08.
SECTION 12.08. Reorganization; Merger;
Consolidation, Etc. In case of any capital reorganization
or reclassification of outstanding shares of Common Stock
(other than a reclassification covered by paragraph (a) of
Section 12.07), or in case of any consolidation or merger of
the Company with or into another corporation, or in case of
any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as
an entirety (each of the foregoing being referred to as a
"Transaction"), at the option of the holder of any
Debentures (a) each $1,000 principal amount of Debentures
then outstanding shall thereafter be convertible into, in
lieu of the Common Stock issuable upon such conversion prior
to consummation of such Transaction, the kind and amount of
shares of stock and other securities and property receivable
(including cash) upon the consummation of such Transaction
by a holder of that number of shares of Common Stock into
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86
which $1,000 principal amount of Debentures is convertible
immediately prior to such Transaction (including, on a pro
rata basis, the cash, securities or property received by
holders of Common Stock in any tender or exchange offer that
is a step in such Transaction), or (b) each $1,000 principal
amount of Debentures shall entitle the holder thereof to
receive, upon presentation thereof to the Surviving Person
subsequent to the consummation of such Transaction (1) if
the Surviving Person is a Qualified Person, that number of
shares of Survivor Common Stock of the Surviving Person
determined by multiplying the number of shares of Common
Stock into which $1,000 principal amount of Debentures was
convertible immediately prior to the consummation of such
Transaction by a fraction, the numerator of which is the
Current Market Price of the Common Stock immediately prior
to the consummation of such Transaction and the denominator
of which is the Current Market Price of the Survivor Common
Stock of the Surviving Person for the 20 Trading Days
preceding the consummation of the Transaction giving rise to
the adjustment in this Section 12.08 or (2) if the Surviving
Person is not a Qualified Person, cash equal to the Fair
Market Value, as of the consummation of such Transaction
(computed without interest), of the securities or other
property to which he would have been entitled under
clause (a) above, as determined by an independent investment
banking firm (with an established national reputation as a
valuer of equity securities), but in any event not less than
the Change in Control Price. In any such case, if
necessary, appropriate adjustment (as determined by the
Board of Directors) shall be made in the application of the
provisions set forth in this Article XII with respect to the
rights and interests thereafter of the Holders of Debentures
to the end that the provisions set forth herein for the
protection of the conversion rights of the Debentures shall
thereafter be applicable, as nearly as reasonably may be, to
any such other shares of stock and other securities and
property deliverable upon conversion of the Debentures
remaining outstanding (with such adjustments in the
conversion price and number of shares issuable upon
conversion and such other adjustments in the provisions
hereof as the Board of Directors shall determine to be
appropriate). In case securities or property other than
Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this
Article XII shall be deemed to apply, so far as appropriate
and as nearly as may be, to such other securities or
property.
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87
SECTION 12.09. Notice to Holders. In case at any
time or from time to time the Company shall pay any dividend
or make any other distribution to the holders of its Common
Stock, or shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock
of any class or any other right, or there shall be any
capital reorganization or reclassification of the Common
Stock of the Company or consolidation or merger of the
Company with or into another corporation, or any sale or
conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, or
there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company, then, in any one
or more of said cases the Company shall deliver to the
Trustee and at each office or agency maintained for the
purpose of conversion of Debentures and shall give or cause
to be given at least 10 days' prior written notice (the time
of mailing of such notice shall be deemed to be the time of
giving thereof) to the Holders of the Debentures at the
addresses of each as shown on the Debenture Register of the
date on which (a) the books of the Company shall close or a
record shall be taken for such stock dividend, distribution
or subscription rights or (b) such reorganization,
reclassification, consolidation, merger, sale or conveyance,
dissolution, liquidation or winding up shall take place, as
the case may be; provided that in the case of any
Transaction to which Section 12.08 applies the Company shall
give at least 30 days' prior written notice as aforesaid.
Such notice shall also specify the date as of which the
holders of the Common Stock of record shall participate in
said dividend, distribution or subscription rights or shall
be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance
or participate in such dissolution, liquidation or winding
up, as the case may be. Failure to give such notice shall
not invalidate any action so taken.
SECTION 12.10. Reports as to Adjustments. Upon
any adjustment of the conversion ratio then in effect and
any increase or decrease in the number of shares of Common
Stock issuable upon the operation of the conversion set
forth in this Article XII, then, and in each such case, the
Company shall promptly deliver to the Trustee an Officer's
Certificate setting forth in reasonable detail the event
requiring the adjustment and the method by which such
adjustment was calculated and specifying the conversion
ratio then in effect following such adjustment and the
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88
increased or decreased number of shares issuable upon the
conversion set forth in this Article XII. The Company shall
also promptly after the making of such adjustment give
written notice to the Holders of the Debentures at the
address of each Holder as shown on the Debenture Register,
which notice shall state the conversion ratio then in
effect, as adjusted, and the increased or decreased number
of shares issuable in respect of $1,000 principal amount of
Debentures upon the exercise of the right of conversion
granted by this Article XII, and shall set forth in
reasonable detail the method of calculation of each and a
brief statement of the facts requiring such adjustment.
Where appropriate, such notice to Holders of Debentures may
be given in advance and included as part of the notice
required under the provisions of Section 12.01.
SECTION 12.11. Responsibility of Trustee. The
Trustee, subject to the provisions of Section 6.01, shall
not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist which may
require any adjustment of the conversion price, or with
respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or
in any supplemental indenture, provided to be employed, in
making the same. The Trustee shall not be accountable with
respect to the validity or value (or the kind of amount) of
any shares of Common Stock, or of any other securities or
property, which may at any time be issued or delivered upon
the conversion of any Debenture; and it does not make any
representation with respect thereto. The Trustee shall not
be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or
property upon the surrender of any Debenture for the purpose
of conversion; and the Trustee, subject to the provisions of
Section 6.01, shall not be responsible for any failure of
the Company to comply with any of the covenants of the
Company contained in this Article.
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ARTICLE XIII
Subordination of Debentures
SECTION 13.01. Debentures Subordinate to Senior
Indebtedness. To the extent and in the manner hereinafter
set forth, the payment of the principal of and premium, if
any, and interest on the Debentures is expressly subor
dinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness of the Company. The
Company assents and agrees and each holder of the
Debentures, by his acceptance thereof, assents and agrees to
all the provisions of this Article XIII.
SECTION 13.02. Default on Senior Indebtedness;
Distribution of Assets. No payment on account of principal
of or premium, if any, or interest on the Debentures shall
be made, and the Company shall not, directly or indirectly,
redeem, acquire or retire any of the Debentures, except as
contemplated by Article XIV or in connection with the
conversion thereof pursuant to Article XII, at any time when
there shall have occurred and be continuing with respect to
any Senior Indebtedness of the Company any event which with
the passage of time or giving of notice or both would have
the effect of accelerating the maturity thereof or would
permit the holders thereof (or a trustee on their behalf) to
accelerate the maturity thereof.
Upon any payment by the Company, or distribution
of assets of the Company of any kind or character, whether
in cash, property or securities, to creditors upon any
dissolution or winding-up or total or partial liquidation or
reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due upon all
Senior Indebtedness of the Company 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 or premium, if any, or
interest on the Debentures in cash, property or securities;
and upon any such dissolution or winding-up or liquidation
or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which
the Holders of the Debentures would be entitled, except for
the provisions of this Article XIII, shall be paid by the
Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such
payment or distribution directly to the holders of Senior
Indebtedness of the Company or their representative or
representatives or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any
Senior Indebtedness of the Company may have been issued, as
their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness of the Company 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 of the Company, before any payment or
distribution is made to the Holders of the Debentures.
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In the event that, notwithstanding the preceding
paragraphs, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities, prohibited by the preceding paragraphs shall
be received by the Holders of the Debentures, such payment
or distribution shall be paid over or delivered to the
holders of Senior Indebtedness of the Company or their
representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any
instrument evidencing any such Senior Indebtedness may have
been issued, as their respective interests may appear, for
application to the payment of all such Senior Indebtedness
in full in money or money's worth in accordance with its
terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior
Indebtedness.
For purposes of this Article XIII, the words,
"cash, property or securities" shall not be deemed to
include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least
to the extent provided in this Article XIII with respect to
the Debentures to the payment of all Senior Indebtedness of
the Company which may at the time be outstanding; provided
that (i) the Senior Indebtedness of the Company is assumed
by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the
holders of such Senior Indebtedness are not, without the
consent of the requisite percentage, as required by any
applicable bankruptcy or similar law, of such holders,
altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or
transfer of its assets as an entirety or substantially as an
entirety to another corporation upon the terms and
conditions provided in Article VIII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for
the purposes of this paragraph if such other corporation
shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions stated in
Article VIII.
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SECTION 13.03. Subrogation of Debentures.
Subject to the payment in full of all Senior Indebtedness of
the Company, the Holders of the Debentures shall be
subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to such
Senior Indebtedness until the principal of and premium, if
any, and interest on the Debentures shall be paid in full.
For purposes of such subrogation no payments or
distributions to the holders of the Senior Indebtedness of
the Company of any cash, property or securities of the
Company to which the Holders of the Debentures would be
entitled except for the provisions of this Article XIII, and
no payments pursuant to the provisions of this Article XIII
to the holders of Senior Indebtedness of the Company by
Holders of the Debentures, shall, as between the Company,
its creditors other than holders of such Senior
Indebtedness, and the Holders of the Debentures, be deemed
to be a payment or distribution by the Company to or on
account of such Senior Indebtedness.
It is understood that the provisions of this
Article XIII are and are intended solely for the purpose of
defining the relative rights of the Holders of the
Debentures, on the one hand, and the holders of Senior
Indebtedness of the Company, on the other hand. Nothing
contained in this Article XIII or elsewhere in the
Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior
Indebtedness of the Company, and the Holders of the
Debentures, the obligation of the Company, which is absolute
and unconditional, to pay to the Holders of the Debentures
the principal of and premium, if any, and interest on the
Debentures as and when the same shall become due and payable
in accordance with its terms, or is intended to or shall
affect the relative rights against the Company of the
Holders of the Debentures and creditors of the Company other
than the holders of Senior Indebtedness of the Company, nor
shall anything herein or therein prevent the Holders of the
Debentures from exercising all remedies otherwise permitted
by applicable law upon default under the Debentures, subject
to the rights, if any, under this Article XIII of the
holders of Senior Indebtedness of the Company to receive
cash, property or securities of the Company otherwise
payable or deliverable to such Holders.
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Upon any payment or distribution of assets of the
Company referred to in this Article XIII, the Trustee shall
be entitled to rely upon any order or decree of a court of
competent jurisdiction in which any proceedings of the
nature referred to in this Article XIII are pending, and the
Trustee, subject as between the Trustee and the Holders to
the provisions of Section 6.01, shall be entitled to rely
upon a certificate of the liquidating trustee or agent or
other person making such payment or distribution to the
Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this
Section. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this
Article XIII, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, as to
the extent to which such Person is entitled to participate
in such payment or distribution, and as to other facts
pertinent to the rights of such Person under this Section,
and if such evidence is not furnished, the Trustee may defer
any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
The terms "paid in full" and "payment in full" as
used in this Article XIII with respect to Senior
Indebtedness of the Company mean the receipt, in cash or
securities (taken at their market value at the time of the
receipt thereof), of the principal amount of such Senior
Indebtedness (and any premium due thereon) and full interest
thereon to the date of such payment of principal and all
other amounts due to holders of such Senior Indebtedness
pursuant to the provisions of the instruments providing
therefor.
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SECTION 13.04. Subordination Rights Not Impaired
by Acts or Omissions of the Company or Holders of Senior
Indebtedness. No right of any present or future holders of
any Senior Indebtedness of the Company to enforce
subordination as provided herein shall at any time in any
way be prejudiced or impaired by any noncompliance by the
Company with the terms of the Debentures, regardless of any
knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness
of the Company may extend, renew, waive a default or event
of default, modify or amend the terms of any instrument
pursuant to which the Senior Indebtedness of the Company is
issued or any security therefor and otherwise deal freely
with the Company, all without affecting the liabilities and
obligations of the Holders or of the Company with respect to
the Debentures. No provisions in any supplemental indenture
which affects the superior position of the holders of the
Senior Indebtedness of the Company shall be effective
against the holders of the Senior Indebtedness of the
Company who have not consented thereto, except, in the case
of any bankruptcy or similar proceeding with respect to the
Company, if the consent of the requisite percentage of such
holders, as required by any applicable bankruptcy or similar
law, has been obtained.
SECTION 13.05. Further Assurances. The Trustee
and the Company each will, at the Company's expense and at
any time and from time to time, promptly execute and deliver
all further instruments and documents, and take all further
action, that may be necessary to protect any right or
interest granted or purported to be granted by the
provisions of this Article XIII or to enable the holders of
any Senior Indebtedness of the Company or a trustee on
behalf thereof, or other representative thereof, to exercise
and enforce their rights and remedies hereunder.
SECTION 13.06. Trustee To Effectuate
Subordination. The Holder of each Debenture by his
acceptance thereof authorizes and directs the Trustee in his
behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination
as provided in this Article and appoints the Trustee as
attorney-in-fact for any and all such purposes.
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SECTION 13.07. Trustee Not Charged with Knowledge
of Prohibition. Notwithstanding the provisions of this
Article or any other provision of this Indenture, but
subject as between the Trustee and the Holders to the
provisions of Section 6.01, the Trustee shall not be charged
with knowledge of the existence of any Senior Indebtedness,
or of any default in the payment of any Senior Indebtedness,
or of any facts which would prohibit the making of any
payment of moneys to or by the Trustee, unless and until
three Business Days after the Trustee shall have received
written notice thereof from the Company or any holder of
Senior Indebtedness or the representative or representatives
of such holder, and the Trustee may conclusively rely on any
writing purporting to be from a holder of Senior
Indebtedness, or a representative of such holder, as being
genuine; nor shall the Trustee be charged with knowledge of
the curing of any such default or of the elimination of the
act or condition preventing any such payment unless and
until the Trustee shall have received an Officers'
Certificate to such effect. The provisions of this Section
shall not limit any rights of holders of Senior Indebtedness
under this Article XIII to recover from the Holders of
Debentures any payment made to any such Holder.
SECTION 13.08. Trustee's Relation to Senior
Indebtedness. The Trustee shall be entitled to all the
rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness; and
nothing in Section 6.12, or elsewhere in this Indenture,
shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants and obligations as are
specifically set forth in this Article XIII, and no implied
covenants or obligations with respect to the holders of
Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness
and, subject to the provisions of Section 13.02 and Section
6.01, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to
holders of Debentures, the Company or any other person money
or assets to which any holder of Senior Indebtedness shall
be entitled by virtue of this Article XIII or otherwise.
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SECTION 13.09. Article Applicable to Paying
Agent. In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then
acting hereunder, the term "Trustee" as used in this Article
shall in such case (unless the context shall otherwise
require) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named int his Article
in addition to or in place of the Trustee; provided,
however, that Sections 13.07 and 13.08 shall not apply to
the Company or any Affiliate of the Company if the Company
or such Affiliate acts as Paying Agent.
ARTICLE XIV
Exchange of Debentures
SECTION 14.01. Exchange. Upon the occurrence of
a Triggering Event, all Debentures acquired by the Initial
Holders pursuant to the Exchange Agreement that are then
held by such Initial Holders automatically shall be
exchanged for shares of the Company's Series D Cumulative
Convertible Preferred Stock, par value $1 per share (the
"Exchange Stock"), effective on the date (the "Exchange
Date") that is the later of (i) the close of business on the
date such Triggering Event occurs and (ii) if on such date
the Certificate of Designation for the Exchange Stock has
not been approved by the Board of Directors of the Company
or filed with the Secretary of State of the State of
Delaware, on the close of business on the date on which such
Certificate of Designation has been so approved and filed,
provided that no such exchange shall occur if the
Distribution Date (as defined in the Rights Agreement) has
occurred prior to the date on which such Certificate of
Designation has been so approved and filed, as provided in
Section 14.02.
SECTION 14.02. Mechanics of Exchange. Promptly
following the occurrence of the Exchange Date, and in any
event not later than 10 days thereafter, the Company shall
mail notice of the occurrence thereof to each Holder of
Debentures to be exchanged, at such Holder's address as it
appears on the Debenture Register. The notice shall state:
(i) the Exchange Date and the Triggering Event
giving rise thereto;
(ii) the principal amount of Debentures to be
exchanged for each share of Exchange Stock;
(iii) the address of the office of the Company or
its agent where the Debentures to be exchanged may be
surrendered in exchange for Exchange Stock;
(iv) that the Debentures to be exchanged must be
surrendered to the Company or its agent to receive
shares of Exchange Stock in exchange therefor; and
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(v) that interest on the Debentures to be
exchanged ceased to accrue after the Exchange Date and
the only remaining right of the Holders thereof is to
receive shares of Exchange Stock and cash in lieu of
fractional shares of Exchange Stock in accordance with
this Section 14.02.
The principal amount of Debentures to be exchanged
for each share of Exchange Stock pursuant to this
Section 14.02 shall be equal to the lowest "Liquidation
Preference" for one share of Exchange Stock.
In connection with any such exchange, the Company
shall pay or cause to be paid in cash to the Persons
entitled thereto all accrued and unpaid interest on the
Debentures to be exchanged to the Exchange Date; and unless
such exchange is exempt from the registration requirements
of the Securities Act, the Company shall register such
exchange under such Act.
If shares of Exchange Stock to be issued in
exchange for any Debentures pursuant to this Section 14.02
are to be issued in a name or names other than that of the
Holder of such Debentures, no such issuance shall be made
until the Holder requesting such issuance has paid to the
Company all transfer taxes payable upon the issuance of
shares of Exchange Stock in such name or names. Other than
such taxes, the Company will pay any and all issue and other
taxes (other than taxes based on income) that may be payable
in respect of any issue or delivery of shares of Exchange
Stock in exchange for Debentures pursuant hereto.
No fractions of shares of Exchange Stock shall be
issued upon any exchange of Debentures pursuant to this
paragraph (b), but in lieu thereof the Company shall pay a
cash adjustment equal to such fractional interest multiplied
by the lowest "Liquidation Preference" for one share of
Exchange Stock. If more than one Debenture shall be
surrendered for exchange by the same Holder, the number of
full shares of Exchange Stock issuable on exchange thereof
shall be computed on the basis of the total principal amount
of Debentures so surrendered.
<PAGE>
97
SECTION 14.03. Debentures Exchanged Effective on
the Exchange Date. Upon the occurrence of the Exchange
Date, notwithstanding that notice of the occurrence thereof
has not been given as aforesaid or that the Debentures to be
exchanged shall not have been surrendered for cancelation,
from and after Exchange Date (i) interest shall cease to
accrue thereon and (ii) all rights of the Holders of
Debentures to be exchanged shall cease and terminate,
excepting only the right to receive shares of Exchange Stock
and cash in lieu of fractional shares of Exchange Stock as
provided in Section 14.02. Upon surrender of such
Debentures for exchange in accordance with such notice, such
Debentures shall be exchanged for shares of Exchange Stock
and cash in lieu of fractional shares in accordance with
Section 14.02.
* * *
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to
be an original, but all such counterparts shall together
constitute but one and the same instrument.
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.
POLAROID CORPORATION,
by
__________________________
Name:
Title:
[Seal]
Attest:
- -------------------
Title:
<PAGE>
98
STATE STREET BANK AND TRUST COMPANY,
by
__________________________
Name:
Title:
[Seal]
Attest:
- ----------------------
Title:
POLAROID CORPORATION
CAMBRIDGE, MASSACHUSETTS 02139
Exhibit 5
RICHARD F. DELIMA
VICE PRESIDENT,
SECRETARY AND
GENERAL COUNSEL
January 31, 1996
Polaroid Corporation
549 Technology Square
Cambridge, Massachusetts 02139
Dear Sirs/Mss.:
Polaroid Corporation (the "Company") intends to file a
Registration Statement on Form S-3 with the Securities and
Exchange Commission to register $140,000,000 aggregate principal
amount of 8% Subordinated Convertible Debentures Due 2001 (the
"Debentures") to be outstanding under an Indenture between the
Company and a trustee (the "Indenture") and shares of Common
Stock, par value $1.00 per share (the "Common Stock"), issuable
upon conversion of the Debentures. In that connection it is my
opinion that:
(1) the Company has been duly incorporated and is a
validly existing corporation under the laws of the State of
Delaware;
(2) when executed, authenticated and delivered, the
Debentures will be legally issued and will constitute valid
and binding obligations of the Company; and
(3) the Common Stock, when issued upon conversion of
the Debentures in accordance with the Indenture, will be
legally issued, fully paid and non-assessable.
I hereby consent to the use of this opinion as an exhibit to
Registration Statement.
Very truly yours,
/s/ Richard F. deLima
Polaroid Corporation Exhibit 12
Computation of Ratios of Earnings to Fixed Charges
(in millions except for ratios)
Years Ended December 31,
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
EARNINGS
Earnings / (loss) before
income taxes and cumulative
effect of changes in
accounting principle $1,083.2 $163.1 $101.7 $160.7 ($201.4)
Interest expense 58.4 58.5 47.9 46.6 52.1
Interest portion of
rental expense (A) 8.7 9.1 10.4 10.3 11.1
-------- ------- ------ ------ ------
Earnings as adjusted $1,150.3 $230.7 $160.0 $217.6 ($138.2)
======== ====== ====== ====== =======
FIXED CHARGES
Interest expense $58.4 $58.5 $47.9 $46.6 $52.1
Interest portion of
rental expense (A) 8.7 9.1 10.4 10.3 11.1
Capitalized Interest 6.9 10.0 12.6 9.7 4.8
------ ------ ------ ------ ------
Total fixed charges $74.0 $77.6 $70.9 $66.6 $68.0
====== ====== ====== ====== ======
RATIOS OF EARNINGS
TO FIXED CHARGES 15.5(B) 3.0 2.3(C) 3.3 --- (D)
(A) Deemed to be approximately 1/3 of total rental expense.
(B) In 1991, the Company received a pre-tax litigation settlement of
$924.5 million. Excluding the settlement, the ratio of earnings
to fixed charges was 3.1.
(C) For the year ended December 31, 1993, pre-tax cumulative effect of
changes in accounting principle totaled $216.9 million.
Including such cumulative effect, earnings were insufficient to
cover fixed charges by $127.8 million.
(D) Earnings were insufficient to cover fixed charges by $206.2 million
due to pre-tax special charge for restructuring and other expenses
of $247.0 million. Excluding the special charge of
$247.0 million, the ratio of earnings to fixed charges was 1.6.
Exhibit 15
----------
Polaroid Corporation
Technology Square
Cambridge, MA 02139
Re: Registration Form S-3
With respect to the subject registration statement, we acknowledge our
awareness of the use therein of our reports dated April 18, 1995, July
18, 1995 and October 17, 1995 related to our reviews of interim
financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such reports
are not considered part of a registration statement prepared or
certified by an accountant or a report prepared or certified by an
accountant within the meaning of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
February 6, 1996
Exhibit 23.1
------------
Consent of Independent Auditors'
--------------------------------
The Board of Directors
Polaroid Corporation
The audits referred to in our report dated January 31, 1995, included
the related financial statement schedules as of December 31, 1994, and
for each of the years in the three-year period ended December 31, 1994,
incorporated herein by reference. Our report refers to a change in
1993 in the method of accounting for income taxes and for certain
postretirement and postemployment benefits. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement
schedules based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the consolidated
financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
We consent to the use of our report dated January 31, 1995 on the
consolidated financial statements of Polaroid Corporation as of
December 31, 1994 and for each of the three years in the three-year
period then ended incorporated herein by reference and to the reference
to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
February 6, 1996
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form T-1
____________
------------
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a
Trustee Pursuant to Section 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization if not a U.S.
national bank)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Senior Vice President and Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(Name, address and telephone number of agent for service)
_____________________
---------------------
POLAROID CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 04-1734655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
549 Technology Square
Cambridge, MA 02139
(Address of principal executive offices) (Zip Code)
____________
------------
8% Subordinated Convertible Debentures Due 2001 (Title
of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority
to which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether the trustee is authorized to execute corporate
trust powers.
The Trustee is so authorized.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 6.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to
commence business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A copy of the authorization of the trustee to exercise
corporate trust powers, if such authorization is not contained in
the documents specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange Commission
as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern Edison
Company (File No. 33-37823) and is incorporated herein by reference
thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor
is in default.
Not applicable.
6. The consents of United States institutional trustees required
by Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a part
hereof.
NOTES
In answering any item of this Statement of Eligibility and
Qualification which relates to matters peculiarly within the knowledge of
the obligor or any underwriter for the obligor, the trustee has relied
upon information furnished to it by the obligor and the underwriters, and
the trustee disclaims responsibility for the accuracy or completeness of
such information.
The answer furnished to Item 2. of this statement will be
amended, if necessary, to reflect any facts which differ from those stated
and which would have been required to be stated if known at the date
hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of
Massachusetts, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Boston and The Commonwealth of
Massachusetts, on the 19th day of January, 1996.
STATE STREET BANK AND TRUST COMPANY
By: /s/ James E. Mogavero
--------------------------------
James E. Mogavero
Assistant Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939, as amended, in connection with the proposed
issuance by Allbritton Communications Company of its Subordinated Debt
Securities, we hereby consent that reports of examination by Federal,
State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request
therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ James E. Mogavero
-------------------------
James E. Mogavero
AssistantVice President
Dated: January 19, 1996
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company
of Boston, Massachusetts and foreign and domestic subsidiaries, a
state banking institution organized and operating under the banking laws
of this commonwealth and a member of the Federal Reserve System, at the
close of business December 31, 1994, published in accordance with a call
made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act and in accordance with a call
made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
Thousands of
ASSETS Dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. 942,661
Interest-bearing balances. ......................... 4,843,628
Securities................................................... 8,410,339
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary...................... 2,240,374
Loans and lease financing receivables:
Loans and leases, net of unearned income. .....3,257,795
Allowance for loan and lease losses............ 58,184
Loans and leases, net of unearned income and allowances.. 3,199,611
Assets held in trading accounts............................... 825,549
Premises and fixed assets..................................... 375,086
Other real estate owned....................................... 4,359
Investments in unconsolidated subsidiaries ................... 25,051
Customers'liability to this bank on acceptances outstanding... 55,358
Intangible assets............................................. 34,862
Other assets.................................................. 653,750
-----------
Total assets.................................................. 21,610,628
===========
LIABILITIES
Deposits:
In domestic offices..................................... 5,946,262
Noninterest-bearing.................... 4,175,167
Interest-bearing....................... 1,771,095
In foreign offices and Edge subsidiary ................. 8,147,182
Noninterest-bearing.................... 44,817
Interest-bearing....................... 8,102,365
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary..................... 4,912,704
Demand notes issued to the U.S. Treasury and
Trading Liabilities..................................... 423,324
Other borrowed money......................................... 386,049
Bank's liability on acceptances executed and outstanding .... 55,621
Other liabilities............................................ 530,536
-----------
Total liabilities ........................................... 20,401,678
===========
EQUITY CAPITAL
Common stock................................................ 28,043
Surplus..................................................... 177,736
Undivided profits........................................... 1,003,171
------------
Total equity capital........................................ 1,208,950
------------
Total liabilities and equity capital........................ 21,610,628
============
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above
named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true to the best of my
knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of
our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve
System and is true and correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
Exhibit 99.1
AGREEMENT dated as of February [ ], 1996,
among POLAROID CORPORATION, a Delaware corporation (the
"Company"), CORPORATE PARTNERS, L.P., a Delaware limited
partnership ("Corporate Partners"), CORPORATE OFFSHORE
PARTNERS, L.P., a Bermuda limited partnership ("Corporate
Offshore Partners"), and STATE BOARD OF ADMINISTRATION OF
FLORIDA, a body corporate organized under the constitution
of the State of Florida, solely in its capacity as a
managed account under an Investment Management Agreement
with Corporate Advisors, L.P. ("Florida" and, together
with Corporate Partners and Corporate Offshore Partners,
the "Sellers").
WHEREAS pursuant to an Exchange Agreement dated as of
October 7, 1991 (the "Exchange Agreement"), among the Company and the
Sellers, the Company issued to the Sellers $140,000,000 aggregate
principal amount of the Company's 8% Subordinated Convertible Debentures
Due 2001 (the "Debentures"). The Debentures are convertible into shares
of Common Stock, par value $1.00 per share (the "Common Stock"), of the
Company;
WHEREAS the Sellers have exercised their right to require the
Company to effect the registration under the Securities Act of 1933
pursuant to a registration statement on Form S-3 (the "Registration
Statement") of the offering and sale of the Debentures and the Common
Stock pursuant to the Registration Rights Agreement dated as of
October 7, 1991 (the "Registration Rights Agreement"), between the
Company and the Sellers (capitalized terms used but not defined herein
having the meanings assigned to them in such Agreement);
WHEREAS the Registration Rights Agreement provides that, as a
condition to including any Registrable Securities in any registration
statement, the Company shall have received an undertaking from the
Sellers to indemnify and hold harmless the Company and certain other
Persons with respect to certain matters; and
WHEREAS the Company and the Sellers are entering into this
agreement to provide for such indemnity and certain other matters in
connection with such registration of the Debentures and the Common Stock.
<PAGE>
2
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
SECTION 1. Indemnification. (a) Indemnification by the
Sellers. Each of the Sellers will, and hereby does, indemnify and hold
harmless the Company and each director of the Company, each officer of
the Company and each other Person, if any, who controls the Company
within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director, officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed
by such Seller specifically stating that it is for use in the preparation
of the Registration Statement and such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, and each Seller
will severally, and not jointly, reimburse the Company and each such
director, officer and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such
securities by each Seller.
(b) Information Furnished to the Company. The information
indicated in Exhibit A hereto is written information furnished to the
Company by each Seller, to the extent it relates to such Seller, for use
in the preparation of the Registration Statement and such preliminary
prospectus, final prospectus, summary prospectus and amendment or
supplement.
<PAGE>
3
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Section 1(a), such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified
party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 1(a), except to the
extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of such
claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 1 shall for any reason be held by a court to be unavailable to an
indemnified party in respect of any loss, claim, damage or liability, or
any action in respect thereof, then, in lieu of the amount paid or
payable under paragraph (a) hereof, the indemnified party and the
indemnifying party under subparagraph (a) hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative
fault of the Company and each Seller which resulted in such loss, claim,
damage or liability, or action in respect thereof, with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion
as shall be appropriate to reflect the relative benefits received by the
Company and such Seller from the offering of the securities covered by
the Registration Statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Each Seller's obligations to
contribute as provided in this paragraph (d) are several in proportion to
the relative value of its respective Registrable Securities covered by
the Registration Statement and not joint. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent,
which consent shall not be unreasonably withheld.
<PAGE>
4
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding paragraphs of this Section 1
(with appropriate modifications) shall be given severally, and not
jointly, by each Seller with respect to any required registration or
other qualification of securities in connection with the Registration
Statement under any Federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 1 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
(g) Indemnification by the Company. The Company acknowledges
its indemnification and contribution obligations to the Sellers pursuant
to the Registration Rights Agreement.
<PAGE>
5
SECTION 2. Indenture. Pursuant to the Registration Rights
Agreement, the Company and State Street Bank and Trust Company, as
trustee, intend to enter into an indenture (the "Indenture")
incorporating the terms of the Debentures concurrently with the first
sale of any of the Debentures under the Registration Statement. The
Debentures so sold shall, as of the time of such sale, automatically be
deemed to be amended and restated to be outstanding under the Indenture.
Thereafter, any additional Debentures sold from time to time under the
Registration Statement shall, as of the time of such sale, automatically
be likewise deemed to be amended and restated so as to be outstanding
under the Indenture. Upon any such sale, Debentures in the amounts sold
shall be executed by the Company, authenticated pursuant to the Indenture
and delivered to the Seller of such Debentures or its nominee, whereupon
the Debentures so sold in the form they are currently outstanding shall
be deemed cancelled. Prior to the delivery of such Debentures to the
Seller or its nominee, if any consents or authorizations are required in
order to effectuate the transactions contemplated by this Section 2,
including any consents or authorizations from any Person in connection
with the trust in which the Debentures have been held, the Seller shall
so advise the Company.
SECTION 3. Transfer Restrictions. The restrictions contained
in the Exchange Agreement relating to the transfer of the Debentures and
Voting Securities (as defined in the Exchange Agreement) and the
provisions of the Exchange Agreement relating to the termination of such
transfer restrictions shall continue in full force and effect
notwithstanding the nonincorporation into the Debentures to be issued
under the Indenture of the reference to such transfer restrictions
contained in the Debentures in the form in which they are currently
outstanding.
SECTION 4. Miscellaneous. (a) Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(b) Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the transactions
contemplated hereby.
(c) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become
effective when one or more of the counterparts have been signed by each
party and delivered to the other parties.
<PAGE>
6
(d) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company and the Sellers have caused
this Agreement to be duly executed, all as of the date first above
written.
POLAROID CORPORATION,
by
--------------------------------
Name:
Title:
CORPORATE PARTNERS, L.P.,
by Corporate Advisors, L.P.
General Partner
by LFCP Corp.
General Partner
by
--------------------------
Name:
Title:
CORPORATE OFFSHORE PARTNERS, L.P.,
by Corporate Advisors, L.P.
General Partner
by LFCP Corp.
General Partner
by
----------------------------
Name:
Title:
<PAGE>
7
STATE BOARD OF ADMINISTRATION
OF FLORIDA,
by Corporate Advisors, L.P.
Attorney-In-Fact
by LFCP Corp.
General Partner
by
----------------------
Name:
Title:
<PAGE>
EXHIBIT A
(1) All of the information set forth under the caption "SELLING
SECURITYHOLDERS", other than the first, second and third paragraphs
immediately following the third footnote to the table included therein.
(2) All of the information set forth under the caption "PLAN OF
DISTRIBUTION".
(3) A statement shall not be included to the effect that the
Sellers may be deemed to be "underwriter" within the meaning of the
Securities Act of 1933 or that any profit on the resale of the Debentures
or the Common Stock issuable upon conversion of the Debentures received
by them may be deemed to be underwriting discounts or commissions under
the Securities Act of 1933. 1/
____________________
1/ Alternatively, a statement to this effect can be included in the
Registration Statement
Exhibit 99.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated as of October 7,
1991, between Polaroid Corporation, a Delaware corporation
(the "Company"), Corporate Partners, L.P., a Delaware
limited partnership ("Corporate Partners"), Corporate
Offshore Partners, L.P., a Bermuda limited partnership
("Corporate Offshore Partners"), and the State Board of
Administration of Florida, a body corporate organized under
the constitution of the State of Florida solely in its
capacity as a managed account under an Investment Management
Agreement with Corporate Advisors, L.P. ("Florida";
Corporate Partners, Corporate Offshore Partners and Florida
being referred to collectively as the "Investors").
1. Background. Pursuant to an Exchange Agreement dated as of
the date hereof, between the Company and the Investors (the "Exchange
Agreement"), the Company has issued to Corporate Partners, Corporate
Offshore Partners and Florida $140,000,000 aggregate principal amount of
the Company's 8% Subordinated Convertible Debentures Due 2001 (the
"Subordinated Debentures"). The Subordinated Debentures are convertible
into shares of Common Stock, par value $1.00 per share, of the Company (the
"Common Stock"). Additionally, under certain circumstances described in the
Subordinated Debentures, Subordinated Debentures will be exchanged for
shares of the Company's Preferred Stock, par value $1.00 per share. Such
shares of Preferred Stock, if issued, will be convertible into shares of
Common Stock.
2. Registration Under Securities Act
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2.1. Registration on Request. (a) Request. Subject to Section
2.9 hereof, upon the written request of one or more holders (the
"Initiating Holders") of Registrable Securities representing not less than
50% of the Registrable Securities that the Company effect the registration
under the Securities Act of all or part of such Initiating Holders'
Registrable Securities, the Company will promptly give written notice of
such requested registration to all registered holders of Registrable
Securities, and thereupon the Company will use its best efforts to effect
the registration under the Securities Act, including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested
in such request and if the Company is then eligible to use such a
registration, of
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(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders, and
ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof (such holders
together with the Initiating Holders are hereinafter referred
to as the "Selling Holders") by written request given to the
Company within 30 days after the giving of such written notice
by the Company, all to the extent requisite to permit the
disposition of the Registrable Securities so to be registered.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.1 in
connection with an underwritten offering by one or more
Selling Holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the
securities covered by such registration unless (a) the
managing underwriter of such offering shall have advised each
Selling Holder of Registrable Securities to be covered by such
registration in writing that the inclusion of such other
securities would not adversely affect such offering or
(b) the Selling Holders of not less than 66-2/3% of
all Registrable Securities to be covered by such registration
shall have consented in writing to the inclusion of such other
securities.
(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of
the Commission as shall be selected by the Company and as shall
be reasonably acceptable to the Selling Holders of more than
50% of the Registrable Securities so to be registered. The
Company agrees to include in any such registration statement
all information which, in the opinion of counsel to
the Selling Holders of Registrable Securities so to be
registered and-counsel to the Company, is required to be
included.
(d) Expenses. The Company will pay the Registration Expenses in
connection with any registration requested pursuant to this
Section 2.1.
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(e) Effective Registration Statement. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been
effected (i) unless a registration statement with respect
thereto has become effective, (ii) if after it has become
effective, such registration is interfered with
by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any
reason not attributable to the Selling Holders and has not
thereafter become effective, or (iii) if the conditions to
closing specified in the underwriting agreement, if any,
entered into in connection with such registration are not
satisfied or waived, other than by reason of a failure
on the part of the Selling Holders.
(f) Selection of Underwriters. The underwriter or underwriters
of each underwritten offering of the Registrable Securities so
to be registered shall be selected by the mutual agreement of
the Company and the Selling Holders of more than 50% of the
Registrable Securities so to be registered.
(g) Priority in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the
Company in writing (with a copy to each Selling Holder of
Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in
such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Selling
Holders of 66-2/3% of the Registrable Securities requested to
be included in such registration, the Company will include in
such registration, to the extent of the number which the
Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such registration,
pro rata among the Selling Holders requesting such
registration on the basis of the percentage of the Registrable
Securities of such Selling Holders requested so to be
registered. In connection with any such registration to which
this Section 2.1(g) is applicable, no securities other than
Registrable Securities shall be covered by such
registration.
(h) Limitations on Registration on Request. Notwithstanding
anything in this Section 2.1 to the contrary, in no event will
the Company be required to effect, in the aggregate, without
regard to the holder of Registrable Securities making such
request, more than three registrations pursuant to
this Section 2.1.
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2.2 Incidental Registration. (a) Right to Include Registrable
Securities. If the Company at any time proposes to register any of its
securities under the Securities Act by registration on Forms S-1, S-2 or
S-3 or any successor or similar form(s) (except registrations on such forms
or similar form(s) solely for registration of securities in connection with
an employee benefit plan or dividend reinvestment plan or a merger or
consolidation), whether or not for sale for its own account, it will,
subject to Section 2.9 hereof, each such time give prompt written notice to
all registered holders of Registrable Securities of its intention to do so
and of such holders' rights under this Section 2.2. Upon the written
request of any such holder (a "Requesting Holder") made as promptly as
practicable and in any event within 15 days after the receipt of any such
notice (5 days if the Company states in such written notice or gives
telephonic notice to all registered holders of Registrable Securities, with
written confirmation to follow promptly thereafter, stating that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date) (which request shall specify the
Registrable Securities intended to be disposed of by such Requesting
Holder), the Company will, subject to Section 2.9 hereof, use its best
efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register
by the Requesting Holders thereof, provided that if, at any time after
giving written notice of its intention to register any securities and prior
to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Requesting
Holder of Registrable Securities and (i) in the case of a determination not
to register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from
any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 2.1, and
(ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve
the Company of its obligation to effect any registration upon request under
Section 2.1. Any such registration of Subordinated Debentures shall be for
not less than $25 million principal amount, in the aggregate; and any such
registration of New Preferred Shares shall be for not less than a number of
New Preferred Shares for which the Liquidation Preference (as defined in
the Certificate of Designation therefor) at the time would be $25 million
or more in the aggregate. The Company will pay all Registration Expenses
in connection with registration of Registrable Securities requested
pursuant to this Section 2.2.
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(b) Priority in Incidental Registrations. If the managing
underwriter of any underwritten offering shall inform the Company by letter
of its belief that the number or type of Registrable Securities requested
to be included in such registration would materially adversely affect such
offering, then the Company will include in such registration, to the extent
of the number and type which the Company is so advised can be sold in (or
during the time of) such offering, first, all securities proposed by the
Company to be sold for its own account, second, such Registrable Securities
and other securities of the Company ranking senior to or on a parity with,
if Subordinated Debentures are requested to be included, the Subordinated
Debentures or, if New Preferred Shares are requested to be included, New
Preferred Shares (in each case, the "Senior or Parity Securities") or
securities of the Company issued upon exercise, conversion or exchange of
such Senior or Parity Securities ("Other Securities") requested to be
included in such registration, such Registrable Securities, Senior or
Parity Securities and Other Securities to be included in such registration
pro rata on the basis of the estimated gross proceeds from the sale
thereof, and third, any other securities of the Company requested to be
included in such registration.
2.3. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1
and 2.2, the Company will as expeditiously as possible:
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(i) prepare and (within 90 days after the end of the period
within which requests for registration may be given to the Company or in
any event as soon thereafter as practicable) file with the Commission the
requisite registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to become
effective; provided, however, that the Company may discontinue any
registration of its securities which are not Registrable Securities (and,
under the circumstances specified in section 2.2(a), its securities which
are Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement for such period as shall be required for the
disposition of all of such Registrable Securities, provided that except
with respect to any such registration statement filed pursuant to Rule 415
under the Securities Act, such period need not exceed 120 days;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement, such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request;
(iv) use its best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such States of
the United States of America where an exemption is not available and as the
sellers of Registrable Securities covered by such registration statement
shall reasonably request, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and
(z) to take any other action which may be reasonably necessary or advisable
to enable such sellers to consummate the disposition in such jurisdictions
of the securities to be sold by such sellers, except that the Company shall
not for any such purpose be required to qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
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(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other Federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the
Company and counsel to the seller or sellers of Registrable Securities
to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities and the
Significant Investors a signed counterpart of
(x) an opinion of counsel for the Company, which may be
the head in-house counsel of the Company, and
(y) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial
statements included or incorporated by reference in such
registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates such
opinions and comfort letters are customarily dated) and, in the case
of the accountants' comfort letter, such other financial matters,,
and, in the case of the legal opinion, such other legal matters, as
the sellers of more than 50% of the Registrable Securities covered by
such registration statement, the underwriters or the Significant
Investors may reasonably request;
(vii) notify each seller of Registrable Securities covered by such
registration statement and the Significant Investors, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as
a result of which, the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of any such
seller or Significant Investor promptly prepare and furnish to it a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
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(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act, and promptly furnish to each such seller of
Registrable Securities and to the Significant Investors a copy of any
amendment or supplement to such registration statement or prospectus;
(ix) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration;
(x) use its best efforts to list all Registrable Securities
covered by such registration statement on any national securities
exchange on which Registrable Securities of the same class and, if
applicable, series, covered by such registration statement are then
listed; and
(xi) consider in good faith any request by holders of any
Subordinated Debentures or New Preferred Shares that are Selling
Holders to list the Subordinated Debentures or New Preferred Shares to
be covered by such registration statement on a national securities
exchange identified by such Selling Holders and, if such request is
approved by the Company, use its best efforts to list such securities
on such exchange to the extent it is practicable to do so as promptly
as is practicable; and
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(xii) to the extent any such registration relates to the
Subordinated Debentures, (A) prepare and enter into an indenture with
a trustee, which shall be reasonably satisfactory to the Company and
the Selling Holders, not later than the date on which the applicable
registration statement becomes effective, (B) cooperate with the
trustee and the holders of Debentures to incorporate the terms of the
Subordinated Debentures in the indenture and effect such changes to
the indenture as may be required for the indenture to be qualified
under the Trust Indenture Act, and (C) execute, and use its best efforts
to cause the trustee to execute, all documents as may be required
to effect such changes, and all other forms and documents required
to be filed with the Commission to enable the indenture to be so
qualified in a timely manner. The indenture shall be in a form
reasonably satisfactory to the Company, the Selling Holders and
the Investors (so long as the Investors are holders of Subordinated
Debentures.)
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that upon receipt of any notice from the
Company of the happening of any event of the kind described in subdivision
(vii) of this Section 2.3, such holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (vii) of this Section 2.3 and, if so directed
by the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to such Registrable Securities that is to be so
supplemented or amended at the time of receipt of such notice.
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2.4. Underwritten Offerings. (a) Requested Underwritten
Offerings. If requested by the underwriters for any underwritten offering
by holders of Registrable Securities pursuant to a registration requested
under Section 2.1, the Company will use reasonable efforts to enter into an
underwriting agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the
Company, each such holder and the underwriters and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section
2.7. The holders of the Registrable Securities proposed to be distributed
by such underwriters will cooperate with the Company in the negotiation of
the underwriting agreement. Such holders of Registrable Securities shall
be parties to such underwriting agreement and may, at their option, require
that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with
the Company other than representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required by
law.
(b) Incidental Underwritten Offerings. If the Company proposes
to register any of its securities under the Securities Act as contemplated
by Section 2.2 and such securities are to be distributed by or through one
or more underwriters, the Company will, subject to Section 2.9 hereof, if
requested by any Requesting Holder of Registrable Securities use its best
efforts to arrange for such under writers to include all the Registrable
Securities to be offered and sold by such Requesting Holder among the
securities of the Company to be distributed by such underwriters. The
holders of Registrable Securities to be distributed by such underwriters
shall be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such
Requesting Holder of Registrable Securities shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such Requesting Holder, such Requesting Holder's Registrable Securities and
such Requesting Holder's intended method of distribution or as otherwise
required by law. Notwithstanding the foregoing provisions of this Section
2.4(b), the Company need not include any Registrable Securities of any such
Requesting Holder in an underwritten offering of the Company's securities
if the inclusion of such Registrable Securities, in the opinion of the
managing underwriter for such offering by the Company, might adversely
affect such offering by the Company.
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2.5. Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement the Company will give the holders
of Registrable Securities registered under such registration statement,
their underwriters, if any, the Significant Investors, and their respective
counsel and accountants the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed
with the Commission, and, to the extent practicable, each amendment thereof
or supplement thereto, and give each of them such access to its books and
records (to the extent customarily given to the underwriters of the
Company's securities), such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
such holders', such underwriters' and such Significant Investors'
respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
2.6 Limitations, Conditions and Qualifications to Obligations
Under Registration Covenants. The obligations of the Company to use its
best efforts to cause the Registrable Securities to be registered under the
Securities Act are subject to each of the following limitations, conditions
and qualifications:
(a) The Company shall not be obligated to file any registration
statement pursuant to Section 2.1 hereof at any time if the Company would
be required to include financial statements audited as of any date other
than the end of its fiscal year.
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(b) The Company shall be entitled to postpone for a reasonable
period of time (but not exceeding 90 days) the filing of any registration
statement otherwise required to be prepared and filed by it pursuant to
Section 2.1 if the Company determines, in its reasonable judgment, that
such registration and offering would interfere with any financing,
acquisition, corporate reorganization or other material transaction
involving the Company or any of its Affiliates or would require premature
disclosure thereof and promptly gives the holders of Registrable Securities
requesting registration thereof pursuant to Section 2.1 written notice of
such determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, such holders of
Registrable Securities requesting registration thereof pursuant to Section
2.1 shall have the right to withdraw the request for registration by giving
written notice to the Company within 30 days after receipt of the notice of
postponement and, in the event of such withdrawal, such request shall not
be counted for purposes of the requests for registration to which holders
of Registrable Securities are entitled pursuant to Section 2.1 hereof.
(c) Holders of Registrable Securities shall use all reasonable
efforts to effect as wide a distribution of such Registrable Securities as
reasonably practicable, and in no event shall any sale of Registrable
Securities be made knowingly to any Person (including its Affiliates and
any Person or entities which are to the knowledge of such holders (or to
the knowledge of any underwriter for such holders) part of any 13D Group
(as defined in the Exchange Agreement) which includes such purchaser or any
of its Affiliates) that, after giving effect to such sale, would
Beneficially Own (as defined in the Exchange Agreement) Voting Securities
(as defined in the Exchange Agreement) representing more than 5% of the
Total Voting Power (as defined in the Exchange Agreement). The holders of
such Registrable Securities shall secure the agreement of their underwriter
or underwriters, if any, for such offering to comply with the foregoing.
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2.7. Indemnification. (a) Indemnification by the Company. In
the event of any registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and hold
harmless, (i) in the case of any registration statement filed pursuant to
Section 2.1 or 2.2, each seller of any Registrable Securities covered by
such registration statement, its directors, officers, partners, agents and
affiliates and each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls such seller or any such underwriter within the meaning of the
Securities Act, and (ii) in the case of any registration statement of the
Company, each Significant Investor, its directors, officers, partners,
agents and affiliates and each other Person, if any, who controls such
Significant Investor within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
seller or Significant Investor or any such director, officer, partner,
agent or affiliate or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein in light
of the circumstances in which they were made not misleading, and the
Company will reimburse such seller, each such Significant Investor and each
such director, officer, partner, agent or affiliate, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on
behalf of such seller or underwriter, as the case may be, specifically
stating that it is for use in the preparation thereof and provided further
that the Company shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
such seller, Significant Investor or any such director, officer, partner,
agent or affiliate or controlling person and shall survive the transfer of
such securities by such seller.
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(b) Indemnification by the Sellers. As a condition to including
any Registrable Securities in any registration statement, the Company shall
have received an undertaking satisfactory to it from the prospective seller
of such Registrable Securities to indemnify and hold harm less (in the same
manner and to the same extent as set forth in subdivision (a) of this
Section 2.7) the Company, and each director of the Company, each officer of
the Company and each other Person, if any, who controls the Company within
the meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling person and shall
survive the transfer of such securities by such seller.
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(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
2.7, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 2.7, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party the indemnifying party shall be
entitled to participate in and, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written
consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under subparagraph (a) or (b) hereof in respect of any
loss, claim, damage or liability, or any action in respect thereof, then,
in lieu of the amount paid or payable under subparagraph (a) or (b) hereof,
the indemnified party and the indemnifying party under subparagraph (a) or
(b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reason ably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company, any Significant
Investor and the prospective sellers of Registrable Securities covered by
the registration statement which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as shall be appropriate
to reflect the relative benefits received by the Company, any Significant
Investor and such prospective sellers from the offering of the securities
covered by such registration statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this subparagraph (d) are several
in proportion to the relative value of their respective Registrable
Securities covered by such registration statement and not joint. In
addition, no Person shall be obligated to contribute hereunder any amounts
in payment for any settlement of any action or claim effected without such
Person's consent, which consent shall not be unreasonably withheld.
<PAGE>
16
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 2.7
(with appropriate modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required registration
or other qualification of securities under any Federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.7 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2.8. Adjustments Affecting Registrable Securities. (a) Prior
to any registration of any shares of New Preferred Shares, if the lowest
"Liquidation Preference" per New Preferred Share set forth in the
Certificate of Designation therefor is greater than $50, subject to the
availability of authorized but unissued New Preferred Shares, the Company
will use its best efforts to effect a stock-split in respect of the New
Preferred Shares to the extent reasonably requested by the holders of more
than 50% of the New Preferred Shares for the purpose of enhancing the
marketability of the New Preferred Shares.
(b) The Company will not effect or permit to occur, except
pursuant to Section 2.8(a), any combination or subdivision of Registrable
Securities which would materially adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in
any registration of its securities contemplated by this Section 2 or the
marketability of such Registrable Securities under any such registration.
<PAGE>
17
2.9. Conditions and Limitations on Registrations of Registrable
Securities. (a) The Company shall not be required to effect any
registration of Registrable Securities pursuant to Section 2 hereof until
after January 30, 1993; provided, however, that the Company shall be
required at any time to effect registration pursuant to Section 2 hereof of
Debenture Conversion Shares issued to the Investors upon conversion of any
Subordinated Debentures called for redemption by the Company pursuant to
the terms of the Subordinated Debentures or Preferred Conversion Shares
issued to the Investors upon conversion of any New Preferred Shares called
for redemption by the Company pursuant to the terms of the New Preferred
Shares.
(b) The Company shall not be required to effect any registration
of Registrable Securities pursuant to Section 2.2 hereof if it shall
deliver to the holder or holders requesting such registration an opinion of
counsel (which opinion and counsel shall be reasonably satisfactory to such
holder or holders) to the effect that the Registrable Securities requested
to be registered may be sold by such holder without registration under the
Securities Act.
2.10. Certain Rights of Investors If Named in a Registration
Statement. If any statement contained in a registration statement under
the Securities Act refers to any of the Investors by name or otherwise as
the holder of any securities of the Company, then such Investor shall have
the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Investor and the Company, to the
effect that the holding by such Investor of such securities does not
necessarily make such Investor a "controlling person" of the Company within
the meaning of the Securities Act and is not to be construed as a
recommendation by such Investor of the investment quality of the Company's
debt or equity securities covered thereby and that such holding does not
imply that such Investor will assist in meeting any future financial
requirements of the Company or (ii) in the event that such reference to
such Investor by name or otherwise is not required by the Securities Act or
any of the rules and regulations promulgated thereunder, the deletion of
the reference to such Investor.
<PAGE>
18
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Affiliate" has the meaning set forth in the Exchange Agreement.
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Debenture Conversion Shares" means the shares of Common Stock
issuable upon conversion of Subordinated Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include a reference to the comparable section, if any, of
any such similar Federal statute.
"Initiating Holder" is defined in Section 2.1.
"New Preferred Shares" means shares of the
Company's Preferred Stock issuable in exchange for Subordinated Debentures.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a governmental or political
subdivision thereof, or a governmental agency.
"Preferred Conversion Shares" means the shares of Common Stock
issuable upon conversion of shares of New
Preferred Shares.
<PAGE>
19
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2, including, without
limitation, all registration, filing and NASD fees, all fees and expenses
of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the
fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of "cold comfort" letters
required by or incident to such performance and compliance, any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, any fees and disbursements of trustees customarily paid by
issuers or sellers of securities in connection with qualifying an indenture
under the Trust Indenture Act and, in the case of a registration pursuant
to Section 2.1, the reasonable fees and expenses of one counsel to any of
the Selling Holders (selected by Selling Holders representing at least 50%
of the Registrable Securities covered by such registration); provided,
however, that Registration Expenses shall exclude and the sellers of the
Registrable Securities being registered shall pay the fees and
disbursements of counsel and accountants to such sellers, underwriters'
fees and expenses and underwriting discounts and commissions and transfer
taxes in respect of the Registrable Securities being registered, except
that in the case of a registration pursuant to Section 2.1, the Company
shall pay the reasonable fees and expenses of one counsel to the Selling
Holders (selected by Selling Holders representing at least 50% of the
Registrable Securities covered by such registration).
"Registrable Securities" means (i) the Subordinated Debentures,
(ii) Debenture Conversion Shares, (iii) New Preferred Shares and (iv)
Preferred Conversion Shares, and in each case, any Related Registrable
Securities. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall
have been sold as permitted by Rule 144 (or any successor provision) under
the Securities Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent public distribution
of them shall not require registration of them under the Securities Act, or
(d) they shall have ceased to be outstanding.
"Related Registrable Securities" means with respect to the
Subordinated Debentures, Debenture Conversion Shares, New Preferred Shares
or Preferred Conversion Shares, any securities of the Company (including,
without limitation, the Rights) issued or issuable with respect to any
Subordinated Debentures, Debenture Conversion Shares, New Preferred Shares
or Preferred Conversion Shares, as the case may be, by way of a dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
<PAGE>
20
"Requesting Holder" is defined in Section 2.2.
"Securities Act" means the Securities Act of 1933,
or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933 shall
include a reference to the comparable section, if any, of any such similar
Federal statute.
"Selling Holder" is defined in Section 2.1.
"Significant Investor" means each Investor named in the first
paragraph of this Agreement (and not any other holder of Registrable
Securities or any other Person) so long as, at a time in question (i) such
Investor holds Registrable Securities and (ii) all the Investors (together
with partners of Corporate Partners and partners of Corporate Offshore
Partners) hold Registrable Securities representing (or then convertible
into) at least 10% of the Common Stock then outstanding.
"Trust Indenture Act" means the Trust Indenture Act of 1939, or
any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to
time.
4. Rule 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such
Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by the Commission
including, without limiting the generality of the foregoing, filing on a
timely basis all reports required to be filed by the Exchange Act. Upon
the request of any holder of Registrable Securities, the Company will
deliver to such holder a written statement as to whether it has complied
with such requirements.
5. Amendments and Waivers. This Agreement may be amended with
the consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the holder or holders of at least
66-2/3% of the Registrable Securities. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
<PAGE>
21
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election in writing
delivered to the Company, be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or
holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. Notices. All communications provided for hereunder shall be
sent by postage-prepaid first-class mail, shall be deemed to be received
three days after being sent, or, if earlier, the date of actual receipt,
and shall be addressed as follows:
(a) if to any Investor, addressed to it in the manner set forth
in the Exchange Agreement, or at such other address as such party
shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in
writing, or, until any such other holder so furnishes to the Company
an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set forth in
the Exchange Agreement, or at such other address as the Company shall
have furnished to each holder of Registrable Securities at the time
outstanding.
<PAGE>
22
8. Assignment; Calculation of Percentage Interests in
Registrable Securities. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and, with
respect to the Company, its respective successors and assigns and, with
respect to the Investors, any holder of any Registrable Securities, subject
to the provisions respecting the minimum numbers of percentages of shares
of Registrable Securities required in order to be entitled to certain
rights, or take certain actions, contained herein. The Investors named in
the first paragraph of this Agreement (and not any other holder of
Registrable Securities or any other Person) shall be permitted, in
connection with a transfer or disposition of Registrable Securities
permitted by the Exchange Agreement, to impose conditions or constraints on
the ability of the transferee, as a holder of Registrable Securities, to
request a registration pursuant to Section 2.1 and shall provide the
Company with copies of such conditions or constraints and the identity of
such transferees.
(b) For purposes of this Agreement, all references to a
percentage of the Registrable Securities shall be calculated based upon the
number of shares of Registrable Securities outstanding at the time such
calculation is made, assuming the conversion of all Subordinated Debentures
and New Preferred Shares into shares of Common Stock.
9. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning hereof.
10. Entire Agreement. This Agreement and the Exchange Agreement
(including the other documents set forth in the Exhibits to the Exchange
Agreement) contain the entire understanding of the parties with respect to
the transactions contemplated hereby and thereby. Without limiting the
generality of the foregoing, the parties hereby agree that upon the
execution and delivery of this Agreement, the Registration Rights Agreement
dated as of January 30, 1989, between the Investors and the Company shall
be cancelled and of no further force or effect.
11. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the laws of the State of Delaware.
<PAGE>
23
12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
POLAROID CORPORATION
by
William J. O'Neill, Jr.
-----------------------
Name: William J. O'Neill, Jr.
Title: Group Vice President and
Chief Financial Officer
CORPORATE PARTNERS, L.P.
by Corporate Advisors, L.P.
General Partner
by LFCP Corp.
General Partner
by Lester Pollack
--------------
Name: Lester Pollack
Title: Chairman
CORPORATE OFFSHORE PARTNERS, L.P.
by Corporate Advisors,L.P.
General Partner
by LFCP Corp.
General Partner
by Lester Pollack
--------------
Name: Lester Pollack
Title: Chairman
<PAGE>
24
STATE BOARD OF ADMINISTRATION
OF FLORIDA
by Corporate Advisors, L.P.
Attorney-in-Fact
by LFCP Corp.
General Partner
by Lester Pollack
--------------
Name: Lester Pollack
Title: Chairman
