As filed with the Securities and Exchange Commission on September 10, 1996
Registration Statement No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
InaCom Corp.
(Exact name of registrant as specified in its charter)
Delaware 47-0681813
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
10810 Farnam Drive
Omaha, Nebraska 68154
(402) 392-3900
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
David C. Guenthner
10810 Farnam Drive
Omaha, Nebraska 68154
(Name, address, including zip code, and telephone number, including area code,
of agent for service
----------------------
Copies to:
David L. Hefflinger Alexander Lynch
McGrath, North, Mullin & Kratz, P.C. Brobeck, Phleger & Harrison LLP
Suite 1400 1301 Avenue of the Americas
One Central Park Plaza New York, NY 10019
Omaha, NE 68102
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If the 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 being 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. |_|
<TABLE>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of each class of securities Proposed maximum Proposed
to be registered Amount to be offering price maximum aggregate Amount of
registered(1) per unit offering price(2) Registration Fee(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6% Convertible Subordinated
Debentures due June 15,2006........... $55,250,000 100% $55,250,000 $19,052
Common Stock ($.10 par value)......... 2,302,083(2) --- --- ---
===================================================================================================================================
- ----------
(1) Calculated pursuant to Rule 457(i) of the Securities Act of 1933, as
amended.
(2) Based on a conversion price of $24 per share, but deemed to include
additional shares that may be issuable pursuant to antidilution provisions. No
additional 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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
</TABLE>
<PAGE>
$55,250,000
InaCom Corp.
6% Convertible Subordinated Debentures due June 15, 2006
(Interest Payable June 15 and December 15)
-------------------
The 6% Convertible Subordinated Debentures due June 15, 2006 (the
"Debentures") of InaCom Corp., a Delaware corporation ("InaCom" or the
"Company"), and the shares of the Company's common stock, par value $.10 per
share (the "Common Stock" and, together with the Debentures, the "Securities"),
issuable upon conversion of the Debentures, may be offered for sale from time to
time for the account of certain holders of the Securities (the "Selling
Holders") as described under "Selling Holders." The Selling Holders may from
time to time sell the Securities offered hereby to or through one or more
underwriters, directly to other purchasers or through agents in ordinary
brokerage transactions, in negotiated transactions or otherwise, at prices
related to then prevailing market prices or at negotiated prices. See "Plan of
Distribution."
The Company will not receive any proceeds from the sale of the Debentures
or the shares of Common Stock by the Selling Holders.
The Debentures are convertible at any time, unless previously redeemed,
into Common Stock, at a conversion price of $24.00 per share, subject to
adjustment under certain circumstances. On September __, 1996, the last reported
sales price of the Common Stock on the Nasdaq National Market ("Nasdaq") was
$____ per share.
The Debentures are redeemable, in whole or in part, at the option of the
Company, at any time on or after June 16, 2000, at the redemption prices set
forth herein, plus accrued interest to the date of redemption. Each holder of
Debentures may require the Company to repurchase such holder's Debentures, in
whole or in part, in the event of a Change in Control (as defined herein) at a
purchase price equal to 100% of the principal amount of such Debentures plus
accrued interest to the date of repurchase.
The Debentures are general unsecured obligations of the Company issued
under an indenture dated June 14, 1996 between the Company and First National
Bank of Omaha (the "Indenture") and are subordinate in right of payment to all
Senior Debt (as defined herein) of the Company. The Indenture will not restrict
the incurrence of Senior Debt or other indebtedness by the Company or any of its
subsidiaries.
The Debentures were originally issued on June 19, 1996 in the principal
amount of $55,250,000 in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act").
See "Risk Factors" on pages 5 through page 7 for a discussion of certain
factors that should be considered by prospective purchasers of the Securities.
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 COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
September __, 1996
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<PAGE>
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 can 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. and at the Commission's regional
offices at 75 Park Place, New York, New York 10007 and Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material also can be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, such reports, proxy statements and other information
concerning the Company may be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006-1506. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov.
The Company has filed a registration statement on Form S-3 (together with
all amendments and exhibits filed or to be filed in connection therewith, the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the Securities offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Statements contained or incorporated by reference herein concerning
the provisions of documents are necessarily summaries of such documents, and
each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference: (i) Annual Report on
Form 10-K for the fiscal year ended December 30, 1995; (ii) Quarterly Reports on
Form 10-Q for the quarters ended March 30, 1996 and June 29, 1996, (iii) Current
Report on Form 8-K dated June 19, 1996, and (iv) Proxy Statement for the Annual
Meeting of Stockholders held on April 18, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which 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 will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to David C. Guenthner,
Chief Financial Officer, InaCom Corp., 10810 Farnam Drive, Omaha, Nebraska
68154, Telephone: (402) 392-3900.
---------------
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<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the more
detailed information and financial data appearing elsewhere, or incorporated by
reference, in this Prospectus.
The Company
InaCom is a leading provider of technology management services to the
end-user business client. The Company sells computer services, computer
products, and communication products and services to a targeted client base
consisting primarily of large and medium-sized corporate clients. InaCom's
products and services are offered both independently and in conjunction with one
another, thereby enabling the Company to provide a broad range of tailored
solutions to meet specific client needs. The Company is a single source,
long-term provider of products and services designed to help businesses optimize
information technology investments and control ongoing costs throughout the life
cycle of the client's technology systems.
The Company's headquarters are located at 10810 Farnam Drive, Omaha,
Nebraska 68154, and its telephone number is (402) 392-3900. The Company's
internet address on the world-wide web is "http://www.inacom.com."
Description of Debentures
The Debentures.................. $55,250,000 of 6% Convertible Subordinated
Debentures (the "Debentures") due June 15,
2006 issued under an indenture (the
"Indenture") between the Company and First
National Bank of Omaha as trustee (the
"Trustee").
Interest Payment Dates.......... June 15 and December 15, commencing
December 15, 1996.
Maturity Date................... June 15, 2006
Conversion Rights............... The holders of the Debentures are entitled
at any time, subject to prior redemption
or repurchase, to convert the Debentures,
or portions thereof (if the portions are
$1,000 or whole multiples thereof) into
shares of the Common Stock at the conversion
price of $24.00 per share (subject to certain
adjustments). See "Description of Debentures
- Conversion."
Optional Redemption............. The Debentures are not redeemable by the
Company prior to June 16, 2000. On or after
June 16, 2000 the Debentures are redeemable
on at least 20 days' notice at the option of
the Company, in whole or in part at any time,
at the redemption prices set forth herein,
in each case together with accrued interest.
See "Description of Debentures - Optional
Redemption."
Change in Control............... Upon a Change in Control, each holder of
Debentures will have the right (a "Repurchase
Right") to require the Company to repurchase
all of such holder's Debentures, or a portion
thereof (if the portions are $1,000 or whole
multiples thereof) at 100% of the principal
amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase.
See "Description of Debentures - Repurchase
at Option of Holders Upon Change in Control."
Subordination................... The payment of the principal of and premium,
if any, and interest on the Debentures is
subordinated in right of payment to the prior
payment in full of all existing and future
Senior Debt (as defined herein). The
Indenture contains no limitations on the
incurrence of additional Senior Debt or other
indebtedness by the Company. See "Description
of Debentures - Subordination."
- -------------------------------------------------------------------------------
3
<PAGE>
- -------------------------------------------------------------------------------
Events of Default............... An Event of Default with respect to the
Debentures includes the occurrence of
any of the following: default for 30 days in
payment of interest; default in payment of
principal at maturity, upon redemption or
exercise of a Repurchase Right or otherwise;
default in payment on Debt (as defined
herein) at maturity of at least $5,000,000
principal amount; default on Debt which
results in acceleration of maturity of at
least $5,000,000 principal amount of Debt;
failure by the Company for 60 days after
notice to it to comply in any material
respect with any of its other agreements in
the Indenture or the Debentures; and certain
events of bankruptcy or insolvency. If an
Event of Default occurs and is continuing,
the Trustee or the holders of at least 25%
in principal amount of the Debentures may
declare all the Debentures to be due and
payable immediately. See "Description of
Debentures - Defaults and Remedies"
Trading......................... There is no established market for the
Debentures. Dillon, Read & Co. Inc., the
initial purchaser of the Debentures, advised
the Company that it intended to make a market
in the Debentures but is not obligated to do
so. Any market in the Debentures which it
develops may be discontinued at any time
without notice.
Description of Common Stock
The Common Stock................ 2,302,083 shares of Common Stock are issuable
upon conversion of the Debentures. The
Debentures are convertible into Common Stock
at a conversion price of $24 per share,
subject to adjustment under certain
circumstances. See "Description of Capital
Stock" and "Description of Debentures -
Conversion."
Shares Outstanding.............. On June 29, 1996, there were 10,142,339
shares of Common Stock outstanding. As of
the date of this Prospectus, none of the
Debentures have been converted into shares of
Common Stock.
Shares Outstanding if all
Debentures are Converted........ 12,444,422 shares of Common Stock would be
outstanding if all of the Debentures were
converted into shares of Common Stock.
Dividend Policy................. The Company has never declared or paid a cash
dividend to stockholders. The Company's
Board of Directors presently intends to
retain all earnings to finance the expansion
of the Company's operations and does not
expect to authorize cash dividends in the
foreseeable future. Any payment of cash
dividends in the future will depend upon the
Company's earnings, capital requirements and
other factors considered relevant by the
Company's Board of Directors. Certain of the
Company's debt agreements restrict the amount
of dividends which may be paid.
Trading......................... The Common Stock is traded on the Nasdaq
National Market under the symbol "INAC."
- -------------------------------------------------------------------------------
4
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the specific risk
factors set forth below as well as the other information contained in this
Prospectus before deciding to invest in the Securities. This Prospectus contains
certain forward-looking statements and information relating to the Company that
are based on the beliefs of Company management as well as assumptions made by
and information currently available to Company management. Such statements
reflect the current view of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions, including the risk
factors described in this Prospectus. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as believed,
estimated or expected.
Dependence Upon Key Vendors
The Company's business is dependent in large measure upon its
relationship with key vendors. A substantial portion of the Company's computer
products revenue is derived from the sales of the products of key vendors,
including IBM, COMPAQ, and Hewlett-Packard. During the fiscal year ended
December 30, 1995, sales of IBM, COMPAQ and Hewlett-Packard products accounted
for approximately 22%, 20% and 15%, respectively, of the Company's revenues. A
substantial portion of the Company's communications products and services
revenue is derived from the sales of products of other key vendors, including
products from Lucent Technologies and services from AT&T. Although the Company
considers its relationships with its key vendors to be good, there can be no
assurance that these relationships will continue as presently in effect or that
changes in marketing by one or more such key vendors and other suppliers would
not adversely affect the Company. The Company's agreements with these vendors
are on a non-exclusive basis and may be terminated by the vendors on notice
typically ranging from 30 to 90 days. Termination of, or a material change to,
or a nonrenewal of the Company's agreements with IBM, COMPAQ, Hewlett-Packard,
Lucent Technologies or AT&T, a material decrease in the level of marketing
development programs offered by computer vendors, or an insufficient or
interrupted supply of vendors' product would have a material adverse effect on
the Company's business. See "Business - Computer Products Sourcing Vendors."
Impact of Vendor Incentive Funds
The key vendors of the Company provide various incentives for promoting
and marketing their product offerings. Funds received by the Company are based
either on the sales of the vendor's products through the independent reseller
and Company-owned channels, or on the Company's purchases from the respective
vendor. The three major forms of vendor incentives received by the Company are
coop funds, market development funds and vendor rebates. The funds are earned
through performance of specific marketing programs or upon completion of
objectives outlined by the vendors. These funds from the Company's primary
vendors typically range from 1% to 3% of purchases by the Company. A material
decrease in the level of vendor incentive funding would have a material adverse
effect on the Company's business. See "Business - Computer Products Sourcing -
Vendors."
Inventory Management Risks
The personal computer industry is characterized by rapid product
improvement and technological change resulting in relatively short product life
cycles and rapid product obsolescence, which can place inventory at considerable
valuation risk. The Company's suppliers generally provide price protection
intended to reduce the risk of inventory devaluation. There can be no assurance
that vendors will continue such policies or that unforeseen new product
developments and related inventory obsolescence will not materially adversely
affect the Company's business.
Funding Requirements; Interest Rate Sensitivity
The Company's business requires significant working capital to finance
product inventory and accounts receivable. The Company has funded its working
capital requirements through a working capital financing
5
<PAGE>
agreement involving sale of receivables, a revolving credit facility and private
placement notes. There can be no assurance that the existing creditors will
continue to finance the Company's operations at levels that are adequate or at
all. The borrowings under these agreements bear a floating rate of interest. The
Company's operating results are highly sensitive to changes in the interest
rate. Such a change in the interest rate could have a material adverse effect on
the Company's business. There can be no assurance that sufficient equity or debt
financing will be available on terms acceptable to the Company or that the
Company will be able to refinance its existing indebtedness. The inability of
the Company to refinance its existing indebtedness or to obtain a sufficient
amount of alternative financing would have a material adverse effect on the
Company's business.
Dependence Upon Key Management and Technical Personnel
The Company's success depends to a significant extent on its ability to
attract and retain key personnel. The Company is particularly dependent on its
senior management team and technical personnel. The Company's strategy for
growth in the sale of computer services and communication services depends on
its ability to attract and retain qualified technical personnel, including
systems engineers and communications specialists. Competition for technical
personnel is intense and no assurance can be given that the Company will be able
to recruit and retain such personnel. The failure to recruit and retain senior
management and technical personnel could have a material adverse effect on the
Company's business.
Acquisitions
The Company's strategy includes effecting acquisitions and strategic
relationships in selected geographic market and service areas. Acquisitions
involve a number of special risks, including the incorporation of acquired
products and services into the Company's offerings, the potential loss of key
employees of the acquired business and the valuation of the acquired business.
The Company expects to issue equity securities to consummate certain
acquisitions, which may cause dilution to investors acquiring Common Stock. No
assurance can be given that the Company will have adequate resources to
consummate acquisitions or that any such acquisitions will be successful in
enhancing the Company's business.
Proprietary Distribution Capabilities
The Company relies upon its proprietary distribution processes,
including Vision, Vista and Direct Express to provide it with a competitive
advantage. The Company seeks to protect these proprietary product procurement
processes. However, it is possible for third parties to replicate aspects of the
Company's software, systems and processes or to obtain and use information
similar to that which the Company regards as proprietary. No assurance can be
given that the protective measures taken by the Company will be sufficient to
preclude competitors from developing competing or similar proprietary software,
systems and processes. See "Business - Computer Services."
Operating Margin Risks
Gross margins from the sale of computer products have been declining
for several years as a result of computer product price reductions and intense
competition. The Company has responded with attempts to control operating costs
and with an expansion of sales of higher margin computer services and
communications services. See "Business - Strategy." There can be no assurance
that gross margins for computer products will not continue to decline or that
the Company will be successful in controlling operating costs. Furthermore,
there can be no assurance that gross margins for computer services and
communications services will not also decline or that the Company will be able
to successfully grow and compete in such service markets.
Competition
All aspects of the technology management services industry are highly
competitive. The Company's distribution network competes for potential clients,
including national accounts, with numerous other resellers and distributors.
Several computer manufacturers have expanded their channels of distribution,
pricing and product
6
<PAGE>
positioning and compete with the Company's distribution network for potential
clients. Additionally, several computer manufacturers during 1994 lessened or
eliminated requirements upon independent resellers to purchase products from a
single source resulting in "open sourcing" of their products; previously, such
manufacturers had typically required independent resellers having contractual
relationships with the Company to purchase their products from the Company.
Other competitors operate mail-order or discount stores offering clones of major
vendor products. The Company also competes with other computer technology
sellers in the recruitment and retention of franchisees and independently-owned
resellers. The Company competes in the computer services division with a large
number of service providers, including IBM through ISSC, Andersen Consulting,
EDS and Vanstar. Competition in the communications products and services
division is also intense, and includes entities which are also significant
vendors of the Company, such as Lucent Technologies and AT&T. Certain
competitors and manufacturers are substantially larger than the Company and may
have greater financial, technical, service and marketing resources. The level of
future sales and earnings achieved by the Company in any period may be adversely
affected by a number of competitive factors, including an increase in direct
sales by vendors to independent resellers and/or clients and increased computer
client preference for mail-order or discount store purchases of clones of major
vendor products. See "Business - Competition."
Subordination
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company, or in a bankruptcy, insolvency, receivership or
similar proceeding relating to the Company or its property, the payment of the
principal and interest on the Debentures are subordinated to the prior payment
in full of all Senior Debt. No payment of principal or interest may be made by
the Company, directly or indirectly, on the Debentures at any time if a default
in payment of the principal or interest on Senior Debt exists, unless and until
such default shall have been cured or waived or shall have ceased to exist.
There are no restrictions in the Indenture upon the creation of additional
Senior Debt by the Company, or on the creation of any indebtedness by the
Company or any of its subsidiaries. See "Description of Debentures -
Subordination of Debentures."
Lack of Public Market
There is no established market for the Debentures. There can be no
assurance as to the continued eligibility or the liquidity of any markets that
may develop for the Debentures. If any such markets were to develop, the
Debentures may trade at prices that may be higher or lower than their principal
amount, depending on many factors, such as prevailing interest rates and the
markets for similar securities. Dillon, Read & Co., Inc. (the "Initial
Purchaser") advised the Company that it intended to make a market in the
Debentures. However, the Initial Purchaser is not obligated to do so, and any
market making with respect to the Debentures may be discontinued at any time
without notice. In addition, such market making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the pendency of the Registration Statement of which this Prospectus forms
a part. The Company does not intend to apply for listing of the Debentures on
any securities exchange or to seek approval for quotation through any automated
quotation system.
Certain Anti-Takeover Effects
Certain provisions of the Company's Certificate of Incorporation and
Delaware law may be deemed to have anti-takeover effects. The Company's
Certificate of Incorporation provides that the Board of Directors may issue
additional shares of Common Stock or establish one or more classes or a series
of Preferred Stock with such designations, relative voting rights, dividend
rights, liquidation and other rights that the Board of Directors fixes without
stockholder approval. In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law which
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
See "Description of Capital Stock - Preferred Stock" and "Description of Capital
Stock - Section 203 of the Delaware General Corporation Law."
7
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the
periods indicated is as follows:
Year Ended December Twenty-Six Weeks Ended
1991 1992 1993 1994 1995 June 24, 1995 June 29, 1996
- ---------------------------------------- --------------------------------
2.05 2.84 2.80 0.75 2.11 1.99 2.07
The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before interest expense, interest
income and income taxes plus fixed charges) by fixed charges. Fixed charges
consist of interest expense (including amortization of deferred financing costs)
and the portion of rental expense that is representative of the interest factor.
BUSINESS
General
InaCom is a leading provider of technology management services to the
end-user business client. The Company sells computer services, computer
products, and communication products and services to a targeted client base
consisting primarily of large and medium-sized corporate clients. InaCom's
products and services are offered both independently and in conjunction with one
another, thereby enabling the Company to provide a broad range of tailored
solutions to meet specific client needs. The Company is a single source,
long-term provider of products and services designed to help businesses optimize
information technology investments and control ongoing costs throughout the life
cycle of the client's technology systems.
Recent Events
The Company acquired Technology Express, a leading network integrator
in the Nashville, Tennessee market in April 1996 for consideration including
approximately $3,800,000 in cash and 89,286 shares of Common Stock; the business
provides network integration services in addition to procurement, help desk and
support services. The Company acquired the assets of Computer Access
International in August 1996 for consideration including approximately
$7,600,000 in cash and 238,209 shares of Common Stock; the business provides
computer sales, support and rental services in the Denver, Colorado, Chicago,
Illinois and Milwaukee, Wisconsin markets.
Technology Management Services
The Company provides a broad range of services and products which help
businesses manage the increasing complexity of information technology within
their organizations. The Company's services range from basic product sourcing to
complete life cycle management whereby the Company handles all aspects of
product procurement, configuration, distribution, integration, maintenance,
upgrades and end-of-life disposal.
Computer Products Sourcing
Computer products include microcomputers, workstations, servers,
monitors, printers and operating systems software. The Company currently
distributes computer products for leading vendors such as IBM, COMPAQ,
Hewlett-Packard, Toshiba, Apple, NEC, Epson, Okidata, Lexmark, NCR, Novell,
Banyan, Microsoft, Oracle, 3Com, SynOptics, SCO and Network General. The Company
believes it is one of IBM's largest customers on a world-wide basis. Sales of
computer products accounted for 93.0% of the Company's revenues and 46.3% of the
Company's earnings in 1995.
Procurement. Procurement involves all activities which precede transfer of
item ownership, including: business processes for purchase forecasting; needs
analysis; product specification and requisitions; purchase order
8
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management; order processing, tracking, and status reporting; financing; "build
to order;" shipment tracking; order receiving, lost item tracking; order
invoicing and invoice payments; and acceptance. As a result of its quantity
purchasing capability, the Company generally obtains volume discounts from its
vendors, enabling it to sell products on a more favorable basis than clients
could attain on their own. The Company's advanced distribution and configuration
capabilities allow the Company to fully configure (add enhancement boards,
networking products and software, and test the complete system) and ship
products directly to an end-user client. The Company believes it has a
competitive advantage in providing procurement services through the use of the
Company's proprietary Vision, Vista and Direct Express systems.
o Vision -- The Company's Vision 2000 software is an automated
catalog and configurator which allows a business client to
obtain product information from the client's desk top
computer. The client can determine product and specific
feature availability, product pricing and maintenance pricing
and can also determine component compatibility to configure
the client's systems.
o Vista -- The Company's Vista software enables a business
client to enter orders directly from the client's desk top
computer, track the order status from placement through
delivery, and obtain inventory, credit and cash flow
management information.
o Direct Express -- The Company's Direct Express delivery
program reduces the number of steps in the distribution
process by shipping products directly to the address selected
by the business client.
Distribution Network. Computer products are sold through a distribution
network of more than 950 business centers located throughout the United States.
The Company has international affiliations in Europe, Asia, Central and South
America, Canada and Mexico in order to satisfy the technology management needs
of its multinational clients.
The Company's direct sales force in the Company-owned stores enables
the Company to establish relationships with major corporate clients for purposes
of marketing the Company's technology management services and communication
products and services. Through its indirect division, the Company resells
products on a wholesale basis to a large base of franchisees, independent
dealers and value-added resellers and receives a mark-up fee or, in some cases,
a royalty.
Vendors. The Company has negotiated purchase arrangements, including
price, delivery, training and support, directly with most major vendors. The
Company's extensive vendor relationships allows it to offer over 35,000 products
in providing multiple vendor solutions to its business client's needs. During
the fiscal year ended December 30, 1995, sales of IBM, COMPAQ and
Hewlett-Packard products accounted for approximately 22%, 20% and 15%,
respectively, of the Company's revenues. The Company's agreements with its
vendors are generally on a non-exclusive basis and may be terminated by the
vendors on notice typically ranging from 30 to 90 days.
The agreements with vendors generally contain provisions with respect
to product cost, price protection, returns and product allocations; the Company
is entitled to price protection with all major vendors on eligible products in
the Company's inventory in the event of vendor price reductions. Certain vendors
also sponsor payment programs with several financial service organizations to
facilitate product sales through the business centers. In addition, the primary
vendors of the Company provide various incentives for promoting and marketing
their product offerings. Funds received by the Company are based either on the
sales of the vendor's products through the independent reseller and
Company-owned channels, or on the Company's purchases from the respective
vendor. These funds from the Company's primary vendors typically range from 1%
to 3% of purchases. The funds are earned through performance of specific
marketing programs or upon completion of objectives outlined by the vendors. The
three major forms of vendor incentives received by the Company are cooperative
funds, market development funds and vendor rebates. Coop funds are earned based
upon the sale of the vendor's products and generally must be utilized to offset
the costs associated with advertising and promotion pursuant to programs
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established by the respective vendor. Market development funds are earned based
upon the Company's purchases from the vendor and generally must be used for
market development activities approved by the respective vendor. Vendor rebates
are based upon the Company attaining purchase volume targets established with
the vendor. Rebates generally can be used at the Company's discretion.
Communication Products Sourcing
Communication products and services include phone systems, voice mail,
voice processing, data network equipment, multiple small office/home office
offerings and maintenance. The Company also offers network services including
long distance, 800 service, calling cards, wide area value-added data
networking, video conferencing and cellular communications. Communication
products and services accounted for 2.7% of the Company's revenues and 8.7% of
the Company's earnings in 1995.
Distribution Network. Communication products and services are provided
through a network of 15 direct sales offices and contractual relationships with
approximately 100 dealers.
Vendors. The products of Lucent Technologies and the services of AT&T
constitute approximately 90% of the voice and data systems sold by the Company.
The Company believes it is one of the nation's largest independent resellers of
Lucent Technologies business products and services.
Computer Services
The Company has developed a broad range of life cycle management
computer services to help its business clients manage the ever increasing
complexity of information technology. These services generally have higher gross
margins than procurement services. These services include logistics services,
support services, system integration services, and professional management
services and can be purchased individually or as components of a complete
package. The Company intends continually to add new services to further assist
its business clients with the management of information technology. Computer
services generated 4.3% of the Company's revenues and 45.0% of the Company's
earnings in 1995.
Logistics Services. Logistics services include those basic services
associated with the distribution of computer hardware and software to the
end-user client. These services include product configuration in which the
Company installs and tests the particular software and peripherals required by
the client, direct shipment of products to one or more locations for the client
and special order handling, such as electronic order entry and the management of
client-owned inventory.
Support Services. Support services include leasing, providing demo
equipment, help desk, training, maintenance, and installation for computers,
communication equipment and network cabling. The Company provides extensive
services which assist both its independent reseller and end-user clients manage
ongoing support and training including help desk management and on-site and
remote training classes. Help desk services include total call center
management, call receipt, classification and problem diagnosis, problem
resolution or dispatch, and performance monitoring. The Company offers a
toll-free hotline to professionals that manage computer networks using operating
systems from a number of leading vendors including Novell, Banyan, Microsoft,
IBM, Apple and SCO. The Company's program of hardware maintenance, installation
and support provides clients with options ranging from depot repair to on-site
"break and fix" support and service coverage at multiple locations and is
supported by a central service dispatch and service call tracking organizations.
System Integration Services. System integration services include
systems design and consulting which help clients design a system and select
products that are appropriate for their specific needs and project planning and
management services. These services permit the Company to assist a client in the
actual implementation of a system, and system management services in which the
Company works with a client to implement all aspects of
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network management, database management, security management, software
distribution and license control and data administration.
Professional Management Services. Professional management services
combine many of the services described above into a complete life cycle
management product portfolio. These services include service delivery, asset
management and procurement management. Service delivery comprises the labor and
management required actually to manage a client's service organization, such as
handling service requests, generating work orders, managing personnel (Company
and client), and managing service parts inventories. Asset management consists
of the registration, tracing and disposal of computer hardware and software as
it moves throughout an organization. Asset management services are becoming
increasingly important as businesses struggle to understand what capabilities
their existing computers have and whether, when and how to upgrade to the latest
technology. Under procurement management, the Company accepts responsibility for
the entire purchasing process for its client and generally has its own personnel
at a client location managing the process. This function draws upon the
Company's capabilities described above, including system design and planning,
needs analysis, product specification and requisitions, purchase order
management, order processing and tracking, financing and leasing, configuration,
testing and delivery and installation.
Communication Services
The Company provides communication services using its North American
Support Center as a single point of contact for all data and voice cabling and
wiring needs. The Company also offers project management, maintenance and
24-hour technical support through a network of independent certified technicians
and customer support personnel. The Company provides complete communication
system design, installation and maintenance.
Network Services. The Company provides network services with advanced
digital capabilities enabling voice, data and video communications utilizing
AT&T, Frontier and Westinghouse networks. Services include long distance,
inbound 800 service, calling cards and teleconferencing featuring account codes,
enhanced billing and customized call reports which allow business clients to
restrict and track telecommunications activity.
Convergent Technology Services. The Company offers convergence
solutions centered around wide area data networks, computer telephone
integration, desktop video conferencing and wireless data communications. These
services include specialized support programs, maintenance programs and
specialized software.
International Capabilities
To satisfy the technology management service needs of its multinational
clients, the Company has established affiliations with the International
Computer Group (Europe and Asia) and GE Hamilton Technology Services (Canada).
InaCom Latin America, the Company's 60% owned subsidiary, provides international
logistics and configuration services in Mexico, the Caribbean, Central and South
America.
Clients
The Company believes its client base of large and medium-sized
businesses is most likely to benefit from the cost savings obtainable through
the technology management services offered by the Company. The Company is not
dependent for a material part of its business upon a single or a few clients and
the loss of any one client would not have a material adverse effect on the
Company's business.
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Service Mark and Trademark
The Company holds United States service mark and trademark
registrations for the marks "Inacom", "ValCom" and "Inacomp." The Company also
has certain state registrations. The Company claims common law rights to the
marks based on adoption and use. To the Company's knowledge, there are no
pending interference, opposition or cancellation proceedings, or litigation
threatened or claimed, with respect to the marks in any jurisdiction.
Government Regulation
The Company is subject to a substantial number of state laws regulating
franchise relationships. The Company is also subject to Federal Trade Commission
rules governing disclosure requirements in the granting of franchises. Such laws
generally impose registration and/or disclosure requirements on the Company in
the offer and sale of franchises and also regulate related advertisements. The
Company believes it is in substantial compliance with all such regulations.
Competition
All aspects of the technology management services industry are highly
competitive. The Company's distribution network competes for potential clients,
including national accounts, with numerous other resellers and distributors.
Several computer manufacturers have expanded their channels of distribution,
pricing and product positioning and compete with the Company's distribution
network for potential clients. Additionally, several computer manufacturers
during 1994 lessened or eliminated requirements upon independent resellers to
purchase products from a single source resulting in "open sourcing" of their
products; previously, such manufacturers had typically required independent
resellers having contractual relationships with the Company to purchase their
products from the Company. Other competitors operate mail-order or discount
stores offering clones of major vendor products. The Company also competes with
other computer technology sellers in the recruitment and retention of
franchisees and independently-owned resellers. The Company competes in the
computer services division with a large number of service providers, including
IBM through ISSC, Andersen Consulting, EDS, ENTEX, CompuCom and Vanstar.
Competition in communication products and services is also intense, and includes
entities which are also significant vendors of the Company, such as Lucent
Technologies and AT&T. Certain competitors and manufacturers are substantially
larger than the Company and may have greater financial, technical, service and
marketing resources. The Company's distribution network competes primarily on
the basis of professionalism and client contact, quality of product line,
availability of products, service, after-sale support, price, and quality of
end-user training.
The computer manufacturers' expansion of their channels of distribution
including direct distribution, open sourcing, employment of selective resellers,
pricing and product positioning has put pressure on hardware gross margins. The
Company believes its ability to deliver technology management services which
consist of technology procurement services, system integration services and
support services provides its client base with value added services that will
differentiate the Company from alternative distribution channels and will
mitigate the impact of added competitive pressures caused by economic conditions
and manufacturers' continuing expansion of their channels of distribution,
pricing and product positioning.
DESCRIPTION OF DEBENTURES
The Debentures were issued under an Indenture entered into between the
Company and First National Bank of Omaha, as trustee (the "Trustee") dated June
14, 1996. The following statements are subject to the detailed provisions of the
Indenture and are qualified in their entirety by reference to the Indenture, a
copy of which was previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 29, 1996 and incorporated herein
by reference and is also available for inspection at the office of the Trustee.
Wherever
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particular provisions of the Indenture are referred to, such provisions are
incorporated by reference as a part of the statements made, and the statements
are qualified in their entirety by such reference.
General
The Debentures are unsecured general obligations of the Company,
subordinate in right of payment to certain other obligations of the Company as
described under "Subordination of Debentures," and convertible into Common Stock
as described under "Conversion." The Debentures will mature on June 15, 2006.
The Debentures will be limited to $55,250,000 aggregate principal amount. The
Company will pay interest on the Debentures semi-annually on June 15 and
December 15 of each year, commencing December 15, 1996 at the rate of 6% per
annum and will pay interest on the Debentures (except defaulted interest) to the
persons who are registered holders of Debentures at the close of business on the
preceding June 1 and December 1, respectively (subject to certain exceptions in
the case of Debentures redeemed or repurchased upon a Change in Control between
a record date and the next succeeding interest payment date). The Company may
pay principal and interest by check and may mail an interest check to a holder's
registered address. Holders must surrender Debentures to the Paying Agent to
collect principal payments.
The Debentures were originally sold to Qualified Institutional Buyers
("QIBs") and are represented by a restricted global Debenture in definitive,
fully registered form, deposited with The Depository Trust Company ("DTC").
Beneficial interests in the global Debentures will be shown on, and transfers
thereof will be effected only through, records maintained by DTC and its
participants.
The Debentures are issued without coupons in denominations of $1,000
and whole multiples of $1,000. A holder may transfer or exchange Debentures in
accordance with the Indenture. No service charge will be made for any
registration of transfer, exchange or conversion of Debentures, except for any
tax or other governmental charges that may be imposed in connection with any
transfers, registration of transfers or exchanges. The registrar for the
Debentures need not transfer or exchange any Debentures selected for redemption.
Also, it need not transfer or exchange any Debentures for a period of 15 days
before selecting Debentures to be redeemed. The registered holder of a Debenture
may be treated as its owner for all purposes.
The Trustee currently acts as Registrar, Paying Agent and Conversion
Agent. The Company may appoint an additional, or change any, Paying Agent,
Registrar, Conversion Agent without notice. The Company may act in any such
capacity.
The Indenture does not contain any restrictions on the payment of
dividends or on the repurchase of securities of the Company or any financial
covenants, nor does the Indenture require the Company to maintain any sinking
fund or other reserves for repayment of the Debentures.
Conversion
The holders of the Debentures are entitled at any time before the close
of business on the date of maturity of the Debentures, subject to prior
redemption or repurchase, to convert the Debentures, or portions thereof (if the
portions are $1,000 or whole multiples thereof) into shares of Common Stock at
the conversion price of $24.00 per share (subject to adjustments as described
below). Except as described below, no payment or adjustment will be made for
accrued interest on a converted Debenture or for dividends on any Common Stock
issued on conversion. If any Debenture is converted between a record date for
the payment of interest and the next succeeding interest payment date, unless
such Debenture has been called for redemption on a redemption date between such
dates, such Debenture must be accompanied by funds equal to the interest payable
to the registered holder on such interest payment date on the principal amount
so converted. A Debenture converted on an interest payment date need not be
accompanied by any payment, and the interest on the principal amount of the
Debenture being converted will be paid on such interest payment date to the
registered holder of such Debenture on the immediately preceding record date.
The Company will not issue fractional shares of Common Stock upon conversion of
Debentures and
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instead will deliver a check in lieu of the fractional share based upon the
market value of the Common Stock on the last trading day prior to the conversion
date. In the case of Debentures called for redemption, conversion rights will
expire at the close of business on the business day preceding the redemption
date unless the Company defaults in the payment of the redemption price. In the
event any holder exercises its Repurchase Right (as defined below), such
holder's conversion right will terminate upon receipt of the written notice of
exercise of such Repurchase Right. See "Repurchase at Option of Holders Upon
Change in Control." In the case of Debentures called for redemption on a
redemption date between a record date and the opening of business on the next
succeeding interest payment date, no interest will be payable on any such
Debentures converted during such period.
The conversion price is subject to adjustment as set forth in the
Indenture in certain events, including the payment of dividends or distributions
on the Common Stock in shares of capital stock; subdivisions or combinations of
the Common Stock into a greater or smaller number of shares; a reclassification
of the Common Stock resulting in an issuance of any shares of the capital stock
of the Company; the distribution of rights or warrants to all holders of Common
Stock entitling them for a period of sixty days or less to purchase Common Stock
at less than the then current market price at that time; and the distribution to
all holders of Common Stock of assets or debt securities or any rights or
warrants to purchase securities, other than Common Stock, of the Company (other
than cash dividends or cash distributions payable out of consolidated net income
or retained earnings). No adjustment will be required for rights to purchase
Common Stock pursuant to any plan of the Company for reinvestment of dividends
or interest, or for a change in the par value of the Common Stock. To the extent
that Debentures become convertible into cash, no adjustment will be required
thereafter as to cash. No adjustment in the conversion price will be made unless
such adjustment would require a change of at least $.25 in the conversion price;
however, any adjustment that would otherwise be required to be made shall be
carried forward and taken into account at the earlier of any subsequent
adjustment or three years after the occurrence of the event giving rise to the
adjustment. The Company reserves the right to make such reductions in the
conversion price in addition to those required in the foregoing provisions as
the Company in its discretion shall determine to be advisable in order that
certain stock-related distributions hereafter made by the Company to its
stockholders shall not be taxable. Except as stated above, the conversion price
will not be adjusted for the issuance of Common Stock or any securities
convertible into or exchangeable for Common Stock, or carrying the right to
purchase any of the foregoing.
If the Company reclassifies the Common Stock or merges into, or
transfers or leases substantially all of its assets to, another corporation, the
holders of the Debentures then outstanding will be entitled thereafter to
convert such Debentures into the kind and amount of shares of capital stock,
other securities, cash or other assets which they would have owned immediately
after such event had such Debentures been converted immediately before the
effective date of the transaction.
Conversion price adjustments may in certain circumstances result in
constructive distributions that could be taxable as dividends under the Internal
Revenue Code of 1986, as amended, to holders of Debentures or to holders of
Common Stock issued upon conversion thereof.
Optional Redemption
The Debentures may be redeemed on at least 20 and not more than 60 days
notice at the option of the Company, in whole at any time or in part from time
to time, at the following redemption prices (expressed as percentages of
principal), together with accrued interest to the date fixed for redemption,
during the twelve month period beginning June 15 in the years set forth below:
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Year Percentage
2000 . . . . . . . 103.3%
2001 . . . . . . . 102.7
2002 . . . . . . . 102.0
2003 . . . . . . . 101.3
2004 . . . . . . . 100.7
and thereafter at 100% of the principal amount, plus accrued interest; provided,
that no redemption may be made prior to June 16, 2000. If less than all the
Debentures are to be redeemed, the Trustee will select the Debentures to be
redeemed on a pro rata basis, by lot or by any other method the Trustee, in its
discretion, deems fair.
Repurchase at Option of Holders Upon Change in Control
Upon any Change in Control (as defined below) with respect to the
Company, each holder of Debentures shall have the right (the "Repurchase
Right"), at the holder's option, to require the Company to repurchase all of
such holder's Debentures, or a portion thereof which is $1,000 or any integral
multiple thereof, on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined below) at a price equal to 100% of the
principal amount of the Debentures, plus accrued interest, if any, to the
Repurchase Date.
Within 30 days after the occurrence of a Change in Control, the
Company is obligated to mail to all holders of record of the Debentures a notice
(the "Company Notice") of the occurrence of such Change in Control and the
Repurchase Right arising as a result thereof. The Company shall deliver a copy
of the Company Notice to the Trustee and shall cause a copy of such notice to be
published in The Wall Street Journal or another newspaper of national
circulation. To exercise the Repurchase Right, a holder of Debentures must
deliver on or before the 30th day after the date of the Company Notice
irrevocable written notice to the Company (or an agent designated by the Company
for such purpose) and the Trustee of the holder's exercise of such right
together with the Debentures with respect to which the right is being exercised,
duly endorsed for transfer.
Change in Control
A "Change in Control" of the Company means (i) the acquisition by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, (excluding, for this purpose, the Company or its subsidiaries,
or any employee benefit plan of the Company or its subsidiaries which acquires
beneficial ownership of voting securities of the Company) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50% or more of either the then outstanding shares of common stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or (ii) individuals
who, as of the date of the Indenture, constitute the Board of Directors (as of
the date hereof the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors, provided that any person becoming a
director subsequent to the date hereof 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 person were a member of the Incumbent Board; or (iii)
approval by the stockholders of the Company of a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
stockholders of the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50% of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company's then outstanding voting
securities; or (iv) a liquidation or dissolution of the Company (other than
pursuant to the United States Bankruptcy Code) or of the conveyance, transfer or
leasing of all or substantially all of the assets of the Company.
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No quantitative or other established meaning has been given to the
phrase "all or substantially all" (which appears in the definition of Change in
Control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. To the extent the meaning of such phrase is uncertain, uncertainty
will exist as to whether or not a Change in Control may have occurred (and,
accordingly, whether or not the holders of Debentures will have the right to
require the Company to repurchase their Debentures).
The occurrence of a Change in Control would, in most cases, permit the
lenders to require prepayment of some or all amounts outstanding under the
Company's short-term and long-term debt agreements. In the event of a Change in
Control, any repurchase of the Debentures could, absent payment in full of any
amounts outstanding under such credit facilities or waiver, be prevented by the
subordination provisions of the Debentures. See "Subordination of Debentures."
Failure by the Company to repurchase the Debentures when required will result in
an Event of Default with respect to the Debentures whether or not such
repurchase is permitted by the subordination provisions. The right to require
the Company to repurchase the Debentures could delay or deter a Change in
Control of the Company, whether or not such Change in Control were supported by
the Board of Directors of the Company.
If a Change in Control occurs, there can be no assurance that the
Company would have sufficient funds or financing to repay any Senior Debt then
required to be repaid or to repurchase any or all Debentures then required to be
repurchased under the Indenture.
If an offer is made to repurchase Debentures as a result of a Change
in Control, the Company intends to comply with all tender offer rules, including
but not limited to Section 13(e) and 14(e) under the Exchange Act and Rules
13c-1 and 14c-1 thereunder, to the extent applicable to such offer.
Subordination of Debentures
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, the
payment of the principal of and premium, if any, and interest on the Debentures
will be subordinated, to the extent provided in the Indenture, in right of
payment to the prior payment in full of all Senior Debt.
No payment of principal of or premium, if any, or interest may be made
by the Company, directly or indirectly, on the Debentures (including any
repurchase pursuant to the exercise of the Repurchase Right) or to acquire any
of the Debentures at any time if a default in payment of the principal of or
premium, if any, or interest on Senior Debt exists, unless and until such
default shall have been cured or waived or shall have ceased to exist. During
the continuance of any event of default with respect to any Senior Debt, as such
event of default is defined under any such Senior Debt or in any agreement
pursuant to which any Senior Debt has been issued (other than default in payment
of the principal of, or premium, if any, or interest on any Senior Debt),
permitting the holders thereof to accelerate the maturity thereof, no payment
may be made by the Company, directly or indirectly, with respect to principal of
or premium, if any, or interest on the Debentures for 90 days following written
notice to the Company, from any holder or holders thereof or their
representative or representatives or the trustee or trustees under any indenture
under which any instrument evidencing any such Senior Debt may have been issued,
that such an event of default has occurred and is continuing. However, if the
maturity of such Senior Debt is accelerated, no payment may be made on the
Debentures until such Senior Debt that has matured has been paid or such
acceleration has been cured or waived.
Senior Debt is defined in the Indenture as Debt (as defined below) of
the Company outstanding at any time except Debt that by its terms is subordinate
in right of payment to the Debentures or Debt that is not otherwise senior in
right of payment to the Debentures. Senior Debt does not include Debt of the
Company to any of its subsidiaries. Debt is defined with respect to any person
as the principal of, and premium, if any, and interest on
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(a) all indebtedness of such person for borrowed money (including all
indebtedness evidenced by notes, bonds, debentures or other securities sold by
such person for money), (b) all indebtedness incurred by such person in the
acquisition (whether by way of purchase, merger, consolidation or otherwise and
whether by such person or another person) of any business, real property or
other assets (except assets acquired in the ordinary course of the conduct of
the acquiror's usual business), (c) guarantees by such person of indebtedness
described in clause (a) or (b) of any other person, (d) all renewals,
extensions, refundings, deferrals, restructurings, amendments and modifications
of any such indebtedness, obligation or guarantee (e) all reimbursement
obligations of such person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such person, (f) all
capital lease obligations of such person, and (g) all net obligations of such
person under interest rate swap or similar agreements of such person. There are
no restrictions in the Indenture upon the creation of additional Senior Debt by
the Company, or on the creation of any indebtedness by the Company or any of its
subsidiaries.
By reason of the subordination provisions described above, in the
event of insolvency, funds which would otherwise be payable to Debentureholders
will be paid to the holders of Senior Debt to the extent necessary to pay Senior
Debt in full. As a result of these payments, general creditors of the Company
may recover less, ratably, than holders of Senior Debt and such general
creditors may recover more, ratably, than holders of Debentures or other
subordinated indebtedness of the Company.
Merger or Consolidation
The Indenture will not permit the Company to consolidate with, or
merge into, or transfer or lease all or substantially all of its assets to,
another person unless such other person is a corporation organized under the
laws of the United States, any State thereof or the District of Columbia and
such person assumes by supplemental indenture all the obligations of the Company
under the Debentures and the Indenture, and immediately after giving effect to
the transaction, no default shall exist.
Defaults and Remedies
An Event of Default includes the occurrence of any of the following:
default for 30 days in payment of interest; default in payment of principal at
maturity, upon redemption or exercise of a Repurchase Right or otherwise;
default in payment on Debt at maturity of at least $5,000,000 principal amount
and continuance of such default for 30 days after notice given in accordance
with the Indenture; default on Debt which results in acceleration of maturity of
at least $5,000,000 principal amount of Debt without such acceleration having
been cured, waived, rescinded, or annulled for 30 days after notice given in
accordance with the Indenture; failure by the Company for 60 days after notice
to it to comply in any material respect with any of its other agreements in the
Indenture or the Debentures; and certain events of bankruptcy or insolvency. If
an Event of Default occurs and is continuing, the Trustee or the holders of at
least 25% in principal amount of the Debentures may declare all the Debentures
to be due and payable immediately, except for defaults due to certain events of
bankruptcy or insolvency in which case if an Event of Default occurs and is
continuing, automatically the principal of all the Debentures and the interest
thereon shall become immediately due and payable. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debentures.
Subject to certain limitations, holders of a majority in principal amount of the
Debentures may direct the Trustee in its exercise of any trust power. The
Trustee may withhold from Debentureholders notice of any default (except a
default in payment of principal or interest) if it determines that withholding
notice is in their interests. The Company is required to file with the Trustee
annually an officers' statement as to the absence of defaults in fulfilling any
of its obligations under the Indenture.
Modifications of the Indenture
The Company and the Trustee may amend the Indenture without notice to
any Debentureholder but with the written consent of the holders of a majority in
principal amount of the outstanding Debentures. However, without the consent of
each Debentureholder affected, an amendment may not: (i) reduce the amount of
Debentures
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whose holders must consent to an amendment; (ii) reduce the rate or change the
time for payment of interest on any Debenture; (iii) reduce the principal of or
change the fixed maturity of any Debenture (including, without limitation, the
optional redemption provisions or the Repurchase Right); (iv) make any Debenture
payable in money, other than that stated in the Debenture; (v) change the
provisions of the Indenture regarding the right of a majority of the
Debentureholders to waive defaults under the Indenture or impair the right of
any Debentureholder to institute suit for the enforcement of any payment of
principal and interest on the Debentures on and after their respective due
dates; (vi) make any change that adversely affects the rights to convert any
Debenture; or (vii) make any change in the subordination provision that
adversely affects the rights of any Debentureholder.
Satisfaction and Discharge of Indenture
The Indenture will be discharged and cancelled upon the satisfaction
of certain conditions, including the payment of all the Debentures or the
deposit with the Trustee, within not more than six months prior to the maturity
or redemption of all of the Debentures, of funds sufficient for such payment or
redemption.
Reports to Holders of Debentures
The Company will regularly furnish to each holder of Debentures copies
of its annual report to stockholders, containing audited financial statements,
and any other financial reports which the Company furnishes to its stockholders.
Trustee and Transfer Agent
The Trustee and transfer agent for the Debentures is First National
Bank of Omaha. First National Bank of Omaha currently serves as the transfer
agent for the Common Stock.
Book Entry
The Depository Trust Company ("DTC"), New York, New York acts as
securities depository for the Debentures. The Debentures were issued as
fully-registered securities bearing the name of Cede & Co. (DTC's nominee) in
the form of one "Global Debenture" and deposited with DTC on June 19, 1996.
A purchaser of Debentures may hold its interest in the Global
Debenture directly through DTC if such purchaser is a participant in DTC, or
indirectly through organizations which are participants in DTC (the
"Participants"). Transfers between Participants will be effected in the ordinary
way in accordance with DTC rules and will be settled in same day funds. The laws
of some states require that certain persons take physical delivery of securities
in definitive form. Consequently, the ability to transfer beneficial interests
in the Global Debenture to such persons may be limited.
Purchasers of Debentures who are not Participants may beneficially own
interests in the Global Debenture held by DTC only through Participants or
certain banks, brokers, dealers, trust companies and other parties that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC,
is the registered owner of the Global Debenture, Cede for all purposes will be
considered the sole holder of the Global Debenture.
Payment of interest on and the redemption price of the Global
Debenture will be made to Cede, the nominee for DTC as the registered owner of
the Global Debenture by wire transfer of immediately available funds on each
interest payment date. Neither the Company, the Trustee nor any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of a beneficial ownership interest in the Global
Debenture or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
18
<PAGE>
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the principal amount represented by the Global
Debenture to pledge such interest to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Debentures (including, without limitation, the
presentation of Debentures for exchange as described below) only at the
direction of one or more Participants to whose account DTC interests in the
Global Debenture are credited and only in respect of the principal amount of the
Debentures represented by the Global Debenture as to which such Participant or
Participants has or have given such direction.
The Company has been informed by DTC that with respect to any payment
of the principal of, premium, if any, and interest on, the Global Debenture,
DTC's practice is to credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Debenture as shown on the records of DTC or its nominee, unless
DTC has reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in the principal
amount represented by the Global Debenture held through such Participants will
be the responsibility of such Participants, as is now the case with securities
held for the accounts of customers registered in "street name."
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Certain of such Participants (or their representatives), together
with other entities, own DTC. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Debenture among participants of
DTC, it is under no obligation to perform such procedures, and such procedures
may be discontinued at any time. Neither the Company nor the Trustee will have
any responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary
for the Global Debenture and a successor depositary is not appointed by the
Company, within 90 days, the Company will issue Debentures in definitive form in
exchange for the Global Debenture.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock, par value $.10 per share, and 1,000,000 shares of Class
A Preferred Stock, par value $1.00 per share. As of June 29, 1996, there were
10,142,339 shares of Common Stock outstanding and no shares of Class A Preferred
Stock outstanding.
19
<PAGE>
Common Stock
Holders of outstanding Common Stock are entitled to such dividends as
may be declared by the Company Board of Directors out of the assets legally
available for that purpose, and are entitled to one vote per share on all
matters submitted to a vote of the stockholders of the Company. The holders of
shares of Common Stock do not have cumulative voting rights. Therefore, the
holders of more than 50% of the Common Stock voting for the election of
directors can elect all the directors, and the remaining holders will not be
able to elect any directors. The holders of Common Stock have no pre-emptive or
other subscription rights, and there are no conversion or redemption or sinking
fund provisions with respect to such shares.
All of the outstanding shares of Common Stock will be, when issued
upon conversion of the Debentures, duly authorized, validly issued, fully paid
and nonassessable.
Preferred Stock
The Company Board of Directors is authorized to issue up to 1,000,000
shares of Class A Preferred Stock in one or more series, from time to time, with
such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations and restrictions thereof, as may
be provided in a resolution or resolutions adopted by the Company Board of
Directors. The authority of the Company Board of Directors includes, but is not
limited to, the determination or fixing of the following with respect to shares
of such class or any series thereof: (i) the number of shares; (ii) the dividend
rate and the date from which dividends are to be cumulative; (iii) whether
shares are to be redeemable and, if so, the terms and amount of any sinking fund
providing for the purchase or redemption of such shares; (iv) whether shares
shall be convertible, and, if so, the terms and provisions thereof; (v) what
restrictions are to apply, if any, on the issue or reissue of any additional
Class A Preferred Stock; and (vi) whether shares have voting rights. Shares of
Class A Preferred Stock may be issued with a preference over the Common Stock as
to the payment of dividends. No shares of Class A Preferred Stock have been
issued.
Classes of stock such as the Class A Preferred Stock may be used, in
certain circumstances, to create voting impediments on extraordinary corporate
transactions or to frustrate persons seeking to effect a merger or otherwise to
gain control of the Company. For the foregoing reasons, any shares of Class A
Preferred Stock issued by the Company could have an adverse effect on the rights
of the holders of the Common Stock. The Company has no present plans to issue
any shares of Class A Preferred Stock.
Liquidation and Other Rights
Upon liquidation, the holders of Common Stock are entitled to share
ratably in assets available for distribution to stockholders after satisfaction
of any liquidation preferences of any outstanding preferred stock. The issuance
of any shares of series of Class A Preferred Stock in future financings,
acquisitions or otherwise may result in dilution of voting power and relative
equity interest of the holders of shares of Common Stock and will subject the
Common Stock to the prior dividend and liquidation rights of the outstanding
shares of the series of preferred stock.
Advance Notice Requirements in Connection with Stockholder Meetings
The Company bylaws establish an advance notice procedure for bringing
business before an annual meeting of stockholders and for nominating (other than
by or at the direction of the Board of Directors) candidates for election as
directors at a meeting of stockholders. To be timely, notice of business to be
brought before an annual meeting or nominations of candidates for election of
directors at a meeting must be received by the Secretary of the Company not less
than 30 nor more than 60 days prior to the meeting. In the event that less than
40 days' notice or prior public disclosure of the date is given or made to
stockholders, notice by the stockholder must be received
20
<PAGE>
no later than the tenth day following the date on which notice of the date of
the meeting was mailed or public disclosure thereof was made.
Section 203 of the Delaware General Corporation Law
Section 203 of the General Corporation Law of the Delaware prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
upon consummation of such transaction the interested stockholder owned 85% of
the voting stock of the corporation outstanding at the time the transaction
commenced or unless the business combination is, or the transaction in which
such person became interested stockholder was, approved in a prescribed manner.
A "business combination" includes a merger, an asset sale and any other
transaction resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns 15% or more of the corporation's voting stock.
Transfer Agent
The transfer agent for the Common Stock is First National Bank of
Omaha, Omaha, Nebraska.
SELLING HOLDERS
The Debentures were initially issued and sold pursuant to a Purchase
Agreement dated as of June 14, 1996 between the Company and Dillon, Read & Co.
Inc., the Initial Purchaser. The Debentures were acquired from the Initial
Purchaser by the Selling Holders in compliance with Rule 144A under the
Securities Act, or in other permitted resale transactions from the Initial
Purchaser or holders who acquired such Debentures from the Initial Purchaser or
other prior holders thereof in further permitted resale transactions exempt from
registration under the Securities Act. The Company agreed to indemnify and hold
the Initial Purchaser harmless against certain liabilities under the Securities
Act that would arise in connection with the sale of the Debentures by the
Initial Purchaser.
Except as otherwise indicated, the table below sets forth certain
information with respect to the Securities as of September 6, 1996. The term
"Selling Holders" includes the beneficial owners of the Securities listed below
and their transferees, pledgees, donees or other successors.
Aggregate Principal Number of Shares
Amount of Debentures of Common Stock
Name That May Be Sold That May Be Sold*
Bank of New York $ 5,373,000 223,875
Bear Stearns Securities Corp. 2,127,000 88,625
Boston Safe Deposit & Trust Co. 10,800,000 450,000
Brown Bros Harriman & Co. 6,000,000 250,000
Citibank, N.A.3,000,000 125,000
Dillon, Read & Co. Inc. 3,280,000 136,667
First Interstate Bank of California 1,945,000 81,042
Glynn (J.A.) & Company 215,000 8,958
Lehman Brothers, Inc. 750,000 31,250
Lehman Brothers International 850,000 35,417
Mercantile, Safe Deposit and
Trust Company 480,000 20,000
NBD Bank, N.A. 1,500,000 62,500
Northern Trust Co.-Trust 1,185,000 49,375
PaineWebber Incorporated 500,000 20,833
Regional Operations Group Inc. 35,000 1,458
21
<PAGE>
Republic New York Securities Corp. 750,000 31,250
SSB Custodian 13,610,000 567,083
Wachovia Bank North Carolina 1,100,000 45,833
Wagner, Stott & Co. 1,750,000 72,917
*Assumes a conversion price of $24.00 per share.
The preceding table has been prepared based upon information furnished to the
Company by the Depository Trust Company and by or on behalf of the Selling
Holders.
The information concerning the Selling Holders may change from time to
time and will be set forth in Supplements to this Prospectus. In addition, the
per share conversion price and, therefore, the number of shares of Common Stock
issuable upon conversion of the Debentures is subject to adjustment under
certain circumstances as specified in the Indenture. Accordingly, the aggregate
principal amount of Debentures and the number of shares of Common Stock issuable
upon conversion of the Debentures may change. As of the date of this Prospectus,
the aggregate principal amount of Debentures outstanding is $55,250,000, which
may be converted into 2,302,083 shares of Common Stock.
Because the Selling Holders may offer all or some of the Debentures and
shares of Common Stock issued upon conversion thereof from time to time pursuant
to this Prospectus, no estimate can be given as to the principal amount of
Debentures or shares of Common Stock that will be held by the Selling Holders
after completion of this offering. See "Plan of Distribution."
PLAN OF DISTRIBUTION
Pursuant to a Registration Rights Agreement dated June 14, 1996 between
the Company and the Initial Purchaser, a Selling Holder may distribute
Securities under this Prospectus from time to time for a 45-day period (the
"Selling Period") only if the Selling Holder gives written notice to the Company
at least three business days prior to the Selling Period.
The Company may suspend the use of this Prospectus and any supplements
hereto in certain circumstances due to pending corporate developments, order of
the Commission or state authorities or similar events or to supplement or amend
the Prospectus. The Company is obligated in the event of such suspension to use
its best efforts to ensure that the use of the Prospectus may be resumed as soon
as practicable.
The Selling Holders may sell all or a portion of the Debentures and
shares of Common Stock beneficially owned by them and which may be offered
hereby from time to time during a Selling Period on any exchange or market on
which the securities are listed or quoted, as applicable, on terms to be
determined at the times of such sales. The Selling Holders may also make private
sales directly or through a broker or brokers. Alternatively, any of the Selling
Holders may from time to time offer the Debentures or shares of Common Stock
during a Selling Period which may be offered hereby and beneficially owned by
them through underwriters, dealers or agents, who may receive compensation in
the form of underwriting discounts, commissions or concessions from the Selling
Holders and the purchasers of the Debentures or shares of Common Stock for whom
they may act as agent. Such dealers may include the Initial Purchaser, which may
perform investment banking or other services for or engage in other transactions
with the Company from time to time in the future.
To the extent required, the aggregate principal amount of Debentures
and number of shares of Common Stock to be sold hereby, the names of the Selling
Holders, the purchase price, the name of any such agent, dealer or underwriter
and any applicable commissions, discounts or other terms constituting
compensation with respect to a particular offer during a Selling Period will be
set forth in an accompanying Prospectus Supplement. The aggregate proceeds to
the Selling Holders from the sale of the Debentures or shares of Common Stock
offered by
22
<PAGE>
them hereby will be the purchase price of such Debentures or shares of Common
Stock less discounts and commissions, if any.
The Debentures and the shares of Common Stock which may be offered
hereby may be sold from time to time during a Selling Period in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the holders of such securities or by agreement between such
holders and underwriters or dealers who may receive fees or commissions in
connection therewith.
The outstanding Common Stock is listed for trading on Nasdaq National
Market, and the shares of Common Stock issuable upon conversion of the
Debentures have been authorized for listing on Nasdaq National Market. There is
no assurance as to the development or liquidity of any trading market that may
develop for the Debentures.
In order to comply with the securities laws of certain states, if
applicable, the Debentures and shares of Common Stock offered hereby will be
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Debentures and shares of Common
Stock offered hereby may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and compliance with same is effected.
23
<PAGE>
The Selling Holders and any broker-dealers, agents or underwriters that
participate with the Selling Holders in the distribution of the Debentures or
shares of Common Stock offered hereby may be deemed to be "underwriters" within
the meaning of the Securities Act, in which event any commissions or discounts
received by such broker-dealers, agents or underwriters and any profit on the
resale of the Debentures or shares of Common Stock offered hereby and purchased
by them may be deemed to be underwriting commissions or discounts under the
Securities Act.
The Company and the Selling Holders have agreed to indemnify each other
against certain liabilities arising under the Securities Act. The Company has
agreed to pay all expenses incident to the offer and sale of the Debentures and
Common Stock offered hereby by the Selling Holders to the public, other than
selling commissions and fees.
LEGAL MATTERS
The validity of the Securities offered hereby have been passed upon for
the Company and the Selling Holders by McGrath, North, Mullin & Kratz, P.C.,
Omaha, Nebraska 68102.
EXPERTS
The consolidated financial statements and schedules of InaCom Corp. as
of December 30, 1995 and December 31, 1994, and for each of the years in the
three-year period ended December 30, 1995, have been incorporated by reference
herein and in the registration statement 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.
24
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company or the Selling Stockholders. This Prospectus does
not constitute an offer of any securities other than those to which it relates
or an offer to sell, or the solicitation of an offer to buy, the Securities in
any jurisdiction where, or to any person to whom, it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to the date
hereof.
-----------------
TABLE OF CONTENTS
Page
----
Available Information......................... 2
Incorporation of Certain
Documents By Reference....................... 2
Prospectus Summary............................ 3
Risk Factors.................................. 5
Ratio of Earnings to Fixed Charges............ 8
Business.. 8
Description of Debentures..................... 12
Description of Capital Stock.................. 19
Selling Holders............................... 21
Plan of Distribution.......................... 22
Legal Matters................................. 24
Experts....................................... 24
InaCom Corp.
--------------
PROSPECTUS
September __, 1996
-------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses and costs (other
than underwriting discounts and commissions) expected to be incurred in
connection with the sale and distribution of the securities being registered.
All of the amounts shown are estimated except the registration fees of the
Commission and the National Association of Securities Dealers, Inc.
===============================================================
Item Amount to be paid by
Company
- ---------------------------------------------------------------
SEC registration fee $ 19,052
- ---------------------------------------------------------------
NASD filing fee 17,500
- ---------------------------------------------------------------
Printing and engraving 25,000
expenses
- ---------------------------------------------------------------
Accounting fees and 10,000
expenses
- ---------------------------------------------------------------
Legal fees and expenses 20,000
- ---------------------------------------------------------------
Blue Sky fees and 10,000
expenses
- ---------------------------------------------------------------
Miscellaneous 3,448
- ---------------------------------------------------------------
Total 105,000
===============================================================
II-1
<PAGE>
Item 15. Indemnification of Directors and Officers.
Pursuant to Article VII of the Certificate of Incorporation of InaCom,
InaCom shall, to the extent required, and may, to the extent permitted, by
Section 102 and Section 145 of the General Corporation Law of the State of
Delaware, indemnify and reimburse all persons whom it may indemnify and
reimburse pursuant thereto. No director shall be liable to InaCom or its
stockholders for monetary damages for breach of fiduciary duty as a director
with respect to acts or omissions occurring on or after May 27, 1987. A director
shall continue to be liable for (i) any breach of a director's duty of loyalty
to InaCom or its stockholders; (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) paying a
dividend or approving a stock repurchase which would violate Section 174 of the
General Corporation Law of the State of Delaware; or (iv) any transaction from
which the director derived an improper personal benefit.
The by-laws of InaCom provide for indemnification of InaCom's officers
and directors against all expenses, liabilities or losses reasonably incurred or
suffered by them, including liability arising under the Securities Act of 1933,
to the extent legally permissible under section 145 of the General Corporation
Law of the State of Delaware where any such person was, is, or is threatened to
be made a party to or is involved in any action, suit or proceeding whether
civil, criminal, administrative or investigative, by reason of the fact such
person was serving InaCom in such capacity. Generally, under Delaware law,
indemnification may only be available where an officer or director can establish
that such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of InaCom.
Item 16. Exhibits.
Exhibit 4.1 Specimen Common Stock Certificate
4.2 Indenture dated June 14, 1996 by and between the Company and
First National Bank of Omaha, as trustee, and related
Debenture, incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 29,
1996.
4.3 Registration Rights Agreement dated June 14, 1996 between the
Company and Dillon, Read & Co. Inc.
4.4 Restated Certificate of Incorporation of the Company,
as amended, incorporated herein by reference to the
Company's Current Report on Form 8-K dated March 30,
1993.
4.5 Bylaws of the Company, as amended to date,
incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 24, 1994.
5.1 Opinion of McGrath, North, Mullin & Kratz, P.C.
12 Statement re Computation of Ratios
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McGrath, North, Mullin & Kratz, P.C.
(included in Exhibit 5.1)
24 Powers of Attorney
25 Statement of Eligibility of Trustee
II-2
<PAGE>
Item 17. Undertakings.
The undersigned registrant ("Registrant") hereby undertakes
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the Securities offered herein, and the offering of such
Securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) 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.
(d) That, for purposes of determining any liability under the
Securities Act of 1933 (the "Securities Act"), each filing of
the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to written agreements, Bylaw provisions or the Delaware Law,
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) 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, InaCom Corp., a Delaware corporation, certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Omaha,
State of Nebraska, on the 10th day of September, 1996.
INACOM CORP.
/s/ BILL L. FAIRFIELD
By:_____________________________
Bill L. Fairfield, President
Pursuant to the requirements of the Securities Act of 1933 this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 10th day of September, 1996.
Signature Title
/s/ BILL L. FAIRFIELD
_____________________________________ President (Principal
Bill L. Fairfield Executive Officer) and
Director
/s/ DAVID C. GUENTHNER
_____________________________________ Executive Vice President
David C. Guenthner and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Joseph Auerbach* Director
W. Grant Gregory* Director
Rick Inatome* Director
Joseph Inatome* Director
Gary Schwendiman* Director
Durward B. Varner* Director
* Bill L. Fairfield, by signing his name hereto, signs the Registration
Statement on behalf of each of the persons indicated. A Power-of-Attorney
authorizing Bill L. Fairfield to sign this Registration Statement on behalf of
each of the indicated Directors of InaCom Corp. is filed herewith as Exhibit 24.
By:/s/ BILL L. FAIRFIELD
________________________
Bill L. Fairfield
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
Exhibit Description
4.1 Specimen Common Stock Certificate
4.2 Indenture dated June 14, 1996 by and between the Company and
First National Bank of Omaha, as trustee, and related
Debenture, incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 29,
1996.
4.3 Registration Rights Agreement dated June 14, 1996 between the Company and
Dillon, Read & Co. Inc.
4.4 Restated Certificate of Incorporation of the Company, as amended,
incorporated herein by reference to the Company's Current Report on
Form 8-K dated March 30, 1993.
4.5 Bylaws of the Company, as amended to date, incorporated herein by
reference to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 24, 1994.
5.1 Opinion of McGrath, North, Mullin & Kratz, P.C.
12 Statement re Computation of Ratios
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McGrath, North, Mullin & Kratz, P.C.
(included in Exhibit 5.1)
24 Powers of Attorney
25 Statement of Eligibility of Trustee
- -----------
<PAGE>
II-5
EXHIBIT 4.1
INACOM CORP.
COMMON STOCK
Incorporated under the laws of the State of Delaware
No. Shares
See Reverse For Certain Definitions
CUSIP 45323G109
This Certifies that __________________________________________________
is the owner of Full paid and non-assessable shares, of the common stock, with a
par value of $.10 per share
of InaCom Corp.: transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all provisions of the Certificate
of Incorporation of the Corporation and all amendments thereto (copies of which
are on file with the Transfer Agent) to all of which provisions each holder by
acceptance of this Certificate assents.
This Certificate is not valid unless countersigned by the Transfer
Agent and registered by the Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be
signed by the facsimile signature of its duly authorized officers and a
facsimile of its corporate seal to be hereunto affixed.
Dated
Secretary President
Countersigned and registered:
First National Bank of Omaha (Omaha, Nebraska)
Transfer Agent and Registrar,
By_________________________________
Authorized Officer
(Corporate Seal)
<PAGE>
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM -- as tenants in common
UNIF GIFT MIN ACT --______Custodian________
(Cust) (Minor)
under Uniform Gifts to Minors Act _____________
(State)
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list.
__________________________________________________________________________
For value received ________________________ hereby sell, assign and
transfer unto________________________________________________________
Please insert social security or other identifying number of
assignee ___________________
__________________________________________________________________________
__________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________
shares of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
__________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated,______________________________
_______________________________
_______________________________
Signature of stockholder(s)
Notice: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE>
Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of June 14, 1996 by and among InaCom Corp., a Delaware corporation (the
"Company"), and Dillon, Read & Co. Inc. (the "Initial Purchaser") pursuant to
the Purchase Agreement, dated as of June 14, 1996 (the "Purchase Agreement"),
between the Company and the Initial Purchaser. In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution of
this Agreement is a condition to the closing under the Purchase Agreement.
The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the holders from time to time of
the Debentures (including the Initial Purchaser) and the holders from time to
time of the Common Stock issued upon conversion of the Debentures (each of the
foregoing a "Holder" and together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
Affiliate: "Affiliate" means, with respect to any specified
person, (i) any other person directly or indirectly controlling or controlled
by, or under direct or direct common control with, such specified person or
(ii) any executive officer or director of such other person. For purposes of
this definition, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of a person means the
possession, direct or indirect, of the power (whether or not exercised) to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
Common Stock: The shares of common stock, $.10 par value per
share, of the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, in each case, as issuable or
issued upon conversion of the Debentures.
Conversion Price: At any time, the then-prevailing Conversion
Price as defined in the Indenture.
<PAGE>
Damages Accrual Period: See Section 2(e) hereof.
Debentures: The 6% Convertible Subordinated Debentures due June
15, 2006 of the Company being issued and sold pursuant to the Purchase Agreement
and the Indenture.
Deferral Period: See Section 2(d) hereof.
Effectiveness Period: The period commencing with the date hereof
and ending on the earlier of the date that is three years after the latest date
of original issuance of the Debentures and the date that all Registrable
Securities have ceased to be Registrable Securities.
Event: See Section 2(e) hereof.
Event Date: See Section 2(e) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Filing Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement. For the
purpose of determining the number of Registrable Securities held by certain
Holders hereunder at any time, Holders of Debentures shall be deemed to be
Holders of the number of shares of Common Stock into which such Debentures are
convertible at such time.
Indenture: The Indenture, dated as of June 14, 1996, between the
Company and First National Bank of Omaha, as trustee, pursuant to which the
Debentures are being issued, as amended or supplemented from time to time in
accordance with the terms hereof.
Initial Shelf Registration: See Section 2(a) hereof.
Losses: See Section 6(a) hereof.
Managing Underwriters: The investment banking firm or firms that
shall manage or co-manage an Underwritten Offering.
Notice Holder: See Section 2(d)(i) hereof.
Purchase Agreement: See the first paragraph of this Agreement.
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<PAGE>
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Registrable Securities: The Debentures and the Common Stock of
the Company into which the Debentures are convertible or converted, whether or
not such Debentures have been converted, and any Common Stock issued with
respect thereto upon any stock dividend, split or similar event until, in the
case of any such Debentures or Common Stock, (i) it is effectively registered
under the Securities Act and disposed of in accordance with the Registration
Statement covering it, (ii) it is saleable by the holder thereof pursuant to
Rule 144(k) or (iii) it is sold to the public pursuant to Rule 144, and, as a
result of the event or circumstance described in any of the foregoing clauses
(i) through (iii), the legends with respect to transfer restrictions required
under the Indenture are removed or removable in accordance with the terms of the
Indenture.
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Selling Period: See Section 2(d)(i) hereof.
Shelf Registration: See Section 2(a) hereof.
Special Counsel: Brobeck, Phleger & Harrison LLP, or such other
successor counsel as shall be specified by the Holders of a majority of the
Registerable Securities.
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<PAGE>
Subsequent Shelf Registration: See Section 2(b) hereof.
Trustee: The Trustee under the Indenture.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Shelf Registration.
(a) Shelf Registration. The Company shall use its best efforts to
prepare and file with the SEC, as soon as practicable but in any event on or
prior to the date ninety (90) days following the first date of original issuance
of the Debentures (the "Filing Date"), a Registration Statement for an offering
to be made on a continuous basis pursuant to Rule 415 of the Securities Act (a
"Shelf Registration") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration").
The Initial Shelf Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in the manner or manners reasonably designated by them (including,
without limitation, one or more Underwritten Offerings). The Company shall use
its best efforts to cause the Initial Shelf Registration to be declared
effective under the Securities Act as soon as practicable and to keep the
Initial Shelf Registration continuously effective under the Securities Act until
the earlier of the expiration of the Effectiveness Period or the date a
Subsequent Shelf Registration, as defined below, covering all of the Registrable
Securities has been declared effective under the Securities Act.
(b) If the Initial Shelf Registration or any Subsequent Shelf
Registration, as defined below, ceases to be effective pursuant to any order
suspending the effectiveness thereof at any time during the Effectiveness Period
(other than because all Registrable Securities registered thereunder shall have
been sold or shall have ceased to be Registrable Securities), the Company shall
use its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty (30) days of such
cessation of effectiveness amend the Shelf Registration in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional Shelf Registration covering all of the
Registrable Securities (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Registration Statement continuously effective
until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
if required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration, if required
by the Securities Act, or if reasonably requested by the Initial Purchaser or by
the Trustee on behalf of the Holders of
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<PAGE>
the Registrable Securities covered by such Registration Statement or by any
Managing Underwriter of such Registrable Securities.
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell its Registrable Securities pursuant to a Shelf
Registration and related Prospectus, it will do so only in accordance with this
Section 2(d). Each Holder of Registrable Securities agrees to give written
notice to the Company at least three Business Days prior to any intended
distribution of Registrable Securities under the Shelf Registration, which
notice shall specify the date on which such Holder intends to begin such
distribution. As soon as practicable after the date such notice is provided, and
in any event within two Business Days after such date, the Company shall either:
(i) (A) prepare and file with the Commission any required post-effective
amendment to the Shelf Registration or any required supplement to the related
Prospectus or any required supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and so that, as thereafter delivered
to purchasers of the Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (B) provide the Holders of the Registrable Securities who gave
such notice copies of any documents filed pursuant to Section 2(d)(i)(A); and
(C) inform each such Holder that the Company has complied with its obligations
in Section 2(d)(i)(A) (or that, if the Company has filed a post-effective
amendment to the Shelf Registration which has not yet been declared effective,
the Company will notify each such Holder to that effect, will use its best
efforts to secure the effectiveness of such post-effective amendment and will
immediately notify each such Holder pursuant to Section 2(d)(i)(A) hereof when
the amendment has become effective); each Holder who has given notice of
intention to distribute such Holder's Registrable Securities in accordance with
Section 2(d) hereof (a "Notice Holder") will sell all or any of such Registrable
Securities pursuant to the Shelf Registration and related Prospectus only during
the 45-day period commencing with the date on which the Company gives notice,
pursuant to Section 2(d)(i)(C), that the Registration Statement and Prospectus
may be used for such purpose (such 45-day period is referred to as a "Selling
Period"). The Notice Holders will not sell any Restricted Securities pursuant to
such Registration Statement or Prospectus after such Selling Period without
giving a new notice of intention to sell pursuant to Section 2(d) hereof and
receiving a further notice from the Company pursuant to Section 2(d)(i)(C)
hereof.
(ii) in the event (A) of the happening of any event of the kind described
in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi) hereof or
(B) that, in the judgment of the Company, it is advisable to suspend use of the
Prospectus for a discrete period of time due to pending material corporate
developments or similar material events that have not yet been publicly
disclosed and as to which the Company believes public disclosure
5
<PAGE>
will be prejudicial to the Company, the Company shall deliver a certificate in
writing, signed by its Chief Executive Officer or Chief Financial Officer, to
the Notice Holders, the Special Counsel and the Managing Underwriters, if any,
to the effect of the foregoing and, upon receipt of such certificate, each such
Notice Holder's Selling Period will not commence until such Notice Holder's
receipt of copies of the supplemented or amended Prospectus provided for in
Section 2(d)(i)(A) hereof, or until it is advised in writing by the Company that
the Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The Company will use its best efforts to ensure that the use
of the Prospectus may be resumed, and the Selling Period will commence, as soon
as practicable and, in the case of a pending development or event referred to in
Section 2(d)(ii)(B) hereof, as soon as the earlier of (x) public disclosure of
such pending material corporate development or similar material event or (y) in
the judgment of the Company, public disclosure of such material corporate
development or similar material event would not be prejudicial to the Company.
Notwithstanding the foregoing, the Company shall not under any circumstances be
entitled to exercise its right under this Section 2(d)(ii) to defer the
commencement of a Selling Period for more than one (1) time not to exceed 45
days in any three (3) month period or for more than two (2) times not to exceed
90 days in the aggregate in any twelve (12) month period (a "Deferral Period").
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
has not been filed on or prior to the Filing Date, (ii) prior to the end of the
Effectiveness Period, the SEC shall have issued a stop order suspending the
effectiveness of the Shelf Registration or proceedings have been initiated with
respect to the Shelf Registration under Section 8(d) or 8(e) of the Securities
Act, (iii) the aggregate number of days in any one Deferral Period exceeds the
periods permitted pursuant to Section 2(d)(ii) hereof or (iv) the number of
Deferral Periods exceeds the number permitted pursuant to Section 2(d)(ii)
hereof (each of the events of a type described in any of the foregoing clauses
(i) through (iv) are individually referred to herein as an "Event," and the
Filing Date in the case of clause (i), the date on which the effectiveness of
the Shelf Registration has been suspended or proceedings with respect to the
Shelf Registration under Section 8(d) or 8(e) of the Securities Act have been
commenced in the case of clause (ii), the date on which the duration of a
Deferral Period exceeds the periods permitted by Section 2(d)(ii) hereof in the
case of clause (iii), and the date of the commencement of a Deferral Period that
causes the limit on the number of Deferral Periods under Section 2(d)(ii) hereof
to be exceeded in the case of clause (iv), being referred to herein as an "Event
Date"). Events shall be deemed to continue until the "Event Termination" which
shall be the following dates with respect to the respective types of Events: the
date the Initial Registration Statement is filed in the case of an Event of the
type described in clause (i), the date that all stop orders suspending
effectiveness of the Shelf Registration have been removed and the proceedings
initiated with respect to the Shelf Registration under Section 8(d) or 8(e) of
the Securities Act have terminated, as the case may be, in the case of Events of
the types described in clause (ii), termination of the Deferral
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<PAGE>
Period which caused the periods permitted by Section 2(d)(ii) to be exceeded in
the case of the commencement of an Event of the type described in clause (iii),
and termination of the Deferral Period the commencement of which caused the
number of Deferral Periods permitted by Section 2(d)(ii) to be exceeded in the
case of Events of the type described in clause (iv).
Accordingly, upon the occurrence of any Event and until such time as there
are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages Amount"): (i) to each Holder of a
Debenture that is a Notice Holder, accruing at a rate equal to one-half of one
percent per annum (50 basis points) on the aggregate principal amount of
Debentures held by such Notice Holder and (ii) to each Holder of Common Stock
that is a Notice Holder, accruing at a rate equal to one-half of one percent per
annum (50 basis points) calculated on an amount equal to the product of (x) the
Conversion Price, times (y) the number of shares of Common Stock held by such
Holder. Notwithstanding the foregoing, no Liquidated Damages Amounts shall
accrue as to any Registrable Securities from and after the earlier of (x) the
date such securities are no longer Registrable Securities, and (y) expiration of
the Effectiveness Period. The rate of accrual of the Liquidated Damages Amount
with respect to any period shall not exceed the rate provided for in this
paragraph notwithstanding the occurrence of multiple concurrent Events.
The Company shall pay the liquidated damages due on any Debentures or
Common Stock by depositing with the Trustee under the Indenture, in trust, for
the benefit of the Holders of Debentures or Common Stock or Notice Holders, as
the case may be, entitled thereto, at least one business day prior to the
applicable payment date, sums sufficient to pay the liquidated damages accrued
or accruing since the last preceding payment date through such payment date. For
these purposes, subject to the proviso set forth in the next sentence, payment
dates will be the same dates as the interest payment dates with respect to the
Debentures under the Indenture. The Liquidated Damages Amount due shall be
payable to the Holder of Registrable Securities entitled thereto on such payment
date to the holders of record thereof on the applicable record date
(corresponding to the record dates for interest payments on the Debentures),
provided that accrued Liquidated Damages Amounts shall be paid on the applicable
redemption date upon the redemption of any Debenture (to the extent accrued with
respect to such Debenture) and, in the event of redemption of all Debentures,
shall also be paid on such redemption date to the Holders of Common Stock (to
the extent accrued with respect to such Common Stock). The Trustee shall be
entitled, on behalf of the Holders of Debentures, Common Stock and Notice
Holders, to seek any available remedy for the enforcement of this Agreement,
including for the payment of such liquidated damages. Notwithstanding the
foregoing, the parties agree that the sole damages payable for a violation of
the terms of this Agreement with respect to which liquidated damages are
expressly provided shall be such liquidated damages. Nothing shall preclude a
Notice Holder or Holder of Registrable Securities from pursuing or obtaining
specific performance or other equitable relief with respect to this Agreement.
7
<PAGE>
All of the Company's obligations set forth in this Section 2(e) which are
outstanding with respect to any Registrable Securities at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement pursuant to Section 8(o)).
The parties hereto agree that the liquidated damages provided for in this
Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration to be filed or declared effective or unavailable (absolutely
or as a practical matter) for effecting resales of Registrable Securities, as
the case may be, in accordance with the provisions hereof.
3. Registration Procedures. In connection with the Company's registration
obligations under Section 2 hereof, the Company shall effect such registrations
to permit the sale of the Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) Use its best efforts to prepare and file with the SEC a
Registration Statement or Registration Statements on any appropriate form under
the Securities Act available for the sale of the Registrable Securities by the
Holders thereof in accordance with the intended method or methods of
distribution thereof, and use its best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein; provided,
that before filing any such Registration Statement or Prospectus or any
amendments or supplements thereto (other than documents that would be
incorporated or deemed to be incorporated therein by reference and that the
Company is required by applicable securities laws or stock exchange requirements
to file) the Company shall furnish to the Initial Purchaser, the Special Counsel
and the Managing Underwriters of such offering, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review of
the Initial Purchaser, the Special Counsel and such Managing Underwriters, and
the Company shall not file any such Registration Statement or amendment thereto
or any Prospectus or any supplement thereto (other than such documents which,
upon filing, would be incorporated or deemed to be incorporated by reference
therein and that the Company is required by applicable securities laws or stock
exchange requirements to file) to which the Holders of a majority of the
Registrable Securities covered by such Registration Statement, the Initial
Purchaser or the Special Counsel shall reasonably object in writing within two
full Business Days. If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
that will administer the offering shall be selected by the Holders of a majority
of the Registrable Securities included in such offering, subject to the consent
of the Company (which shall not be unreasonably withheld). No Holder may
participate in any underwritten registration unless such Holder (i) agrees to
sell such Holder's Registrable Securities on the basis reasonably provided in
any underwritten arrangements approved by the persons entitled hereunder to
approve such arrangements and (ii) completes and executes all questionnaires,
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<PAGE>
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
(b) Use its best efforts to prepare and file with the SEC such
amendments and post-effective amendments to each Registration Statement as may
be necessary to keep such Registration Statement continuously effective for the
applicable period specified in Section 2; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
as so amended or such Prospectus as so supplemented.
(c) Notify the selling Holders, the Initial Purchaser, the
Special Counsel and the Managing Underwriters, if any, promptly, and (if
requested by any such person) confirm such notice in writing, (i) when a
Prospectus, any Prospectus supplement, a Registration Statement or a
post-effective amendment to a Registration Statement has been filed with the
SEC, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC or
any other federal or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the existence of any fact
or happening of any event which makes any statement of a material fact in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue or which would require the
making of any changes in the Registration Statement or Prospectus in order that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and (vi) of the Company's
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(d) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment.
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<PAGE>
(e) If reasonably requested by the Initial Purchaser, the Special
Counsel, the Managing Underwriters, if any, or the Holders of a majority of the
Registrable Securities being sold, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement such
information as the Initial Purchaser, the Special Counsel, the Managing
Underwriters, if any, or such Holders, in connection with any offering of
Registrable Securities, agree should be included therein as required by
applicable law, and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, that the Company shall not be
required to take any actions under this Section 3(e) that are not, in the
reasonable opinion of counsel for the Company, in compliance with applicable
law.
(f) Furnish to each selling Holder, the Special Counsel and the
Initial Purchaser, and each Managing Underwriter, if any, without charge, at
least one conformed copy of the Registration Statement or Statements and any
amendment thereto, including financial statements but excluding schedules, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits (unless requested in writing by such Holder, counsel, Initial Purchaser
or underwriter).
(g) Deliver to each selling Holder, the Special Counsel and the
Initial Purchaser and each Managing Underwriter, if any, in connection with any
offering of Registrable Securities, without charge, as many copies of the
Prospectus or Prospectuses relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
persons may reasonably request; and the Company hereby consents to the use of
such Prospectus or each amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the Underwriters, if any, in connection
with any offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Holders,
the Managing Underwriters, if any, and the Special Counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or Managing Underwriter reasonably requests in writing; keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement; provided, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action that would subject it to general
service of process in suits or to taxation in any such jurisdiction where it is
not then so subject.
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(i) Use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States, except as may be required solely as a consequence of the nature of such
selling Holder, in which case the Company will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of such
approvals, as may be necessary to enable the selling Holder or Holders thereof
or the Managing Underwriters, if any, to consummate the disposition of such
Registrable Securities.
(j) During any Selling Period (other than during a Deferral
Period), immediately upon the existence of any fact or the occurrence of any
event as a result of which a Registration Statement shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or a
Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, promptly prepare and file a post-effective amendment to
each Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
(such as a Current Report on Form 8-K) that would be incorporated by reference
into the Registration Statement so that the Registration Statement shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and so that the Prospectus will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
and, in the case of a post-effective amendment to a Registration Statement, use
its best efforts to cause it to become effective as soon as practicable.
(k) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including, in the event of an underwritten offering, those
reasonably requested by the Managing Underwriters, if any, or the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into, and if the
registration is an underwritten registration, (i) make such representations and
warranties, subject to the Company's ability to do so, to the Holders of such
Registrable Securities and the underwriters with respect to the business of the
Company and its subsidiaries, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (ii) use its best efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be
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<PAGE>
reasonably satisfactory to the Managing Underwriters, if any, Special Counsel
and the Holders of a majority of the Registrable Securities being sold)
addressed to each of the underwriters covering the matters customarily covered
in opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such Special Counsel and Managing Underwriters;
(iii) use its best efforts to obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of the Company (and, if
necessary, any other certified public accountants of any subsidiary of the
Company or any business acquired or to be acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the Managing Underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with Underwritten
Offerings; and (iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority of the Registrable Securities being sold,
the Special Counsel and the Managing Underwriters, if any, to evidence the
continued validity of the representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence compliance with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The above shall be done at each closing
under such underwriting or similar agreement as and to the extent required
thereunder.
(l) If requested in connection with a disposition of Registrable
Securities pursuant to a Registration Statement, make available for inspection
by a representative of the Holders of Registrable Securities being sold, any
Managing Underwriter participating in any disposition of Registrable Securities,
if any, and any attorney or accountant retained by such selling Holders or
underwriter, financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the executive
officers, directors and employees of the Company and its subsidiaries to supply
all information reasonably requested by any such representative, Managing
Underwriter, attorney or accountant in connection with such disposition; subject
to reasonable assurances by each such person that such information will only be
used in connection with matters relating to such Registration Statement.
(m) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements (which
need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering, and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(n) Cooperate with the selling Holders of Registrable Securities
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities
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<PAGE>
to be sold and not bearing any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
Holders may request.
(o) Provide a CUSIP number for all Registrable Securities not
later than the effective date of the Registration Statement and provide the
Trustee under the Indenture and the transfer agent for the Registrable
Securities with printed certificates for the Registrable Securities which are in
a form eligible for deposit with the Depository Trust Company.
(p) Use its best efforts to cause all Registrable Securities that
are Common Stock and are covered by the Registration Statement to be listed on
each securities exchange or quotation system on which any of the Company's
Common Stock is then listed no later than the date the Registration Statement is
declared effective and, in connection therewith, to the extent applicable, to
make such filings under the Exchange Act (e.g., the filing of a Registration
Statement on Form 8-A) and to have such filings declared effective thereunder.
(q) Cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc.
4. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with the notice required pursuant to Section 2(d) hereof
and, promptly after the Company's request, such other information regarding such
Holder and the distribution of such Registrable Securities as may be required to
be included in the Registration or the Prospectus or the Company may from time
to time reasonably request. The Company may exclude from such registration the
Registrable Securities of any Holder who does not furnish such information
provided above for so long as such information is not so furnished. Each Holder
of Registrable Securities as to which any Registration Statement is being
effected agrees promptly to furnish to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not misleading. Any sale of any Registrable Securities by
any Holder shall constitute a representation and warranty by such Holder that
the information relating to such Holder and its plan of distribution is as set
forth in the Prospectus delivered by such Holder in connection with such
disposition, that such Prospectus does not as of the time of such sale contain
any untrue statement of a material fact relating to such Holder or its plan of
distribution and that such Prospectus does not as of the time of such sale omit
to state any material fact relating to such Holder or its plan of distribution
necessary to make the statements in such Prospectus, in light of the
circumstances under which they were made, not misleading.
5. Registration Expenses. Except as otherwise provided herein, all fees and
expenses incident to the Company's performance of or compliance with this
Agreement
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<PAGE>
shall be borne by the Company whether or not any of the Registration Statements
become effective. Such fees and expenses shall include, without limitation,
(i) all registration and filing fees (including, without limitation, fees and
expenses (x) with respect to filings required to be made with the National
Association of Securities Dealers, Inc. and (y) of compliance with federal
securities or Blue Sky laws (including fees and disbursements of Special Counsel
in connection with Blue Sky qualifications of the Registrable Securities laws of
such jurisdictions as the Managing Underwriters, if any, or Holders of a
majority of the Registrable Securities being sold may designate, which fees and
expenses, together with the reasonable fees and disbursements of its counsel in
connection with the state qualifications pursuant to the Purchase Agreement,
shall not exceed $10,000), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the Special Counsel
or the Holders of a majority of the Registrable Securities included in any
Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) reasonable fees and disbursements of counsel for the Company in connection
with the Shelf Registration, (v) fees and disbursements of all independent
certified public accountants referred to in Section 3(k)(iii) hereof (including
the expenses of any special audit and "cold comfort" letters required by or
incident to such performance) and (vi) Securities Act liability insurance
obtained by the Company in its sole discretion. In addition, the Company shall
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
on which similar securities issued by the Company are then listed and the fees
and expenses of any person, including special experts, retained by the Company.
Notwithstanding the provisions of this Section 5, each seller of Registrable
Securities shall pay (i) all registration expenses to the extent that the
Company is prohibited by applicable Blue Sky laws from paying for or on behalf
of such seller of Registrable Securities, (ii) all underwriting discounts and
commissions with respect to Registrable Securities sold by such seller, and
(iii) fees and expenses of special counsel except as provided in Section 5(i)
above.
6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify
and hold harmless each Holder and each person, if any, who controls any Holder
(within the meaning of either Section 15 of the Securities Act or Section 20(a)
of the Exchange Act) from and against all losses, liabilities, claims, damages
and expenses (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) (collectively, "Losses"), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such Losses arise out of or are
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<PAGE>
based upon the information relating to any Holder furnished to the Company in
writing by such Holder expressly for use therein; provided, that the Company
shall not be liable to any Holder of Registrable Securities (or any person
controlling such Holder) to the extent that any such Losses arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if either (A)(i) such Holder
failed to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale by such Holder to the person asserting the
claim from which such Losses arise and (ii) the Prospectus would have corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission, or (B)(x) such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the Prospectus
and (y) having previously been furnished by or on behalf of the Company with
copies of the Prospectus as so amended or supplemented, such Holder thereafter
fails to deliver such Prospectus as so amended or supplemented, with or prior to
the delivery of written confirmation of the sale of a Registrable Security to
the person asserting the claim from which such Losses arise. The Company shall
also indemnify each underwriter and each person who controls such person (within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) to the same extent and with the same limitations as provided above with
respect to the indemnification of the Holders of Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. Each
Holder agrees severally and not jointly to indemnify and hold harmless the
Company, its directors, its officers who sign a Registration Statement, and each
person, if any, who controls the Company (within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act), from and against
all Losses arising out of or based upon any untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary prospectus or
arising out of or based upon any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information relating to such Holder so furnished in writing by
such Holder to the Company expressly for use in such Registration Statement or
Prospectus. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any
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<PAGE>
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Holders and all persons, if any, who control any Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and (b) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, its directors, its officers who sign a
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses, (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement (before deducting expenses) of the
Debentures pursuant to the Purchase Agreement. Benefits received by the Initial
Purchaser shall be deemed to be equal to the total purchase discounts and
commissions received by them pursuant to the Purchase Agreement and benefits
received by any other Holders shall be deemed to be equal to the
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<PAGE>
value of the Debentures and/or Common Stock registered under the Securities Act.
Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. The relative fault of the Holders on the one hand and the Company on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Holders
or by the Company and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this paragraph are
several in proportion to the respective number of Registrable Securities they
have sold pursuant to a Registration Statement, and not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages which such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations of the
Company hereunder shall be in addition to any liability the Company may
otherwise have hereunder, under the Purchase Agreement or otherwise. The
provisions of this Section 6 shall survive so long as Registrable Securities
remain outstanding, notwithstanding any transfer of the Registrable Securities
by any Holder or any termination of this Agreement.
The indemnity and contribution provisions contained in this Section 6 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of any Holder or
any person controlling any Holder, or the Company, its officers or directors or
any person controlling the Company and (iii) the sale of any Registrable
Securities by any Holder.
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7. Information Requirements.
(a) The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act, and if
at any time the Company is not required to file such reports, it will, upon the
request of any Holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A under the Securities Act. The Company further covenants that it will
cooperate with any Holder of Registrable Securities and take such further
reasonable action as any Holder of Registrable Securities may reasonably request
(including, without limitation making such reasonable representations as any
such Holder may reasonably request), all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 and Rule 144A under the Securities Act. Upon the request of any Holder
of Registrable Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such filing requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities under any section of the
Exchange Act.
(b) The Company shall use its best efforts to file the reports
required to be filed by it under the Exchange Act and shall use its best efforts
to comply with all other requirements set forth in the instructions to Form S-3
in order to allow the Company to be eligible to file registration statements on
Form S-3.
8. Miscellaneous.
(a) Remedies. Subject to Section 2(e) hereof, in the event of a
breach by the Company of its obligations under this Agreement, each Holder of
Registrable Securities, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.
(b) No Conflicting Agreements. The Company has not, as of the
date hereof, and shall not, on or after the date of this Agreement, enter into
any agreement with respect to its securities which conflicts with the rights
granted to the Holders of Registrable Securities in this Agreement. The Company
represents and warrants that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
Holders of the Company's securities under any other agreements.
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<PAGE>
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders;
provided, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier or
(iii) one business day after being deposited with a reputable next-day courier,
postage prepaid, to the parties as follows:
(a) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in accordance with the provisions of
Section 8(e);
(b) if to the Company, to:
InaCom Corp.
10810 Farnam Drive
Omaha, NE 68154
Attention: Chief Financial Officer
Telecopy No.: (402) 392-3619
with a copy to:
McGrath, North, Mullin & Kratz, P.C.
1400 One Central Park Plaza
Omaha, NE 68102
Attention: David L. Hefflinger
Telecopy No.: (402) 341-0216
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<PAGE>
(c) if to the Initial Purchaser, to:
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022
Attention: Syndicate Department
Telecopy No.: (212) 486-6233
(d) if to the Special Counsel, to:
Brobeck, Phleger & Harrison LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Alexander D. Lynch
Telecopy No.: (212) 586-7878
or to such other address as such person may have furnished to the other persons
identified in this Section 8(d) in writing in accordance herewith.
(e) Owner of Registrable Securities. The Company will maintain,
or will cause the Trustee and/or its registrar and transfer agent to maintain, a
register with respect to the Registrable Securities in which all transfers of
Registrable Securities of which the Company has received notice will be
recorded. The Company may deem and treat the person in whose name Registrable
Securities are registered in such register of the Company as the owner thereof
for all purposes, including, without limitation, the giving of notices under
this Agreement.
(f) Approval of Holders. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) (other than the Initial
Purchaser or subsequent Holders of Registrable Securities if such subsequent
Holders are deemed to be such affiliates solely by reason of their holdings of
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(g) Successors and Assigns. Any person who purchases any
Registerable Securities from the Initial Purchaser shall be deemed, for purposes
of this Agreement, to be an assignee of the Initial Purchaser. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so
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<PAGE>
executed shall be deemed to be original and all of which taken together shall
constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
(k) Severability. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, illegal, void or unenforceable.
(l) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company to Holders of the Registrable Securities sold pursuant to
the Purchase Agreement. Except as provided in the Purchase Agreement, there are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein, with respect to the registration rights granted by
the Company to the Holders of the Registrable Securities. This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such registration rights.
(m) Attorneys' Fees. In any action or proceeding brought to
enforce provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(n) Further Assurances. Each of the parties hereto shall use all
best efforts to take, or cause to be taken, all appropriate action, do or cause
to be done all things reasonably necessary, proper or advisable under applicable
law, and execute and deliver such documents and other papers, as may be required
to carry out the provisions of this Agreement and the other documents
contemplated hereby and consummate and make effective the transactions
contemplated hereby.
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(o) Termination. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Sections 4, 5 or 6 hereof and
the obligations to make payments of and provide for liquidated damages under
Section 2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each which shall remain in effect in accordance with their
terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
INACOM CORP.
By: /s/ BILL L. FAIRFIELD
Name: Bill L. Fairfield
Title: President and C.E.O.
Accepted as of the date first
above written:
DILLON, READ & CO. INC.
By: /s/ JOHN M. BOYLE
Name: John M. Boyle
Title: Vice President
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Exhibit 5.1
McGrath, North, Mullin & Kratz, P.C.
Suite 1400 One Central Park Plaza
222 South Fifteenth Street
Omaha, Nebraska 68102
(402) 341-3070
September 10, 1996
TO THE BOARD OF DIRECTORS
OF INACOM CORP.
Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended, of $55,250,000 6% Convertible Subordinated Debentures due June 15, 2006
(the "Debentures") and the 2,302,083 shares of common stock, $.10 par value (the
"Common Shares"), of InaCom Corp., a Delaware corporation ("InaCom"), with
respect to the proposed sale by certain selling holders thereof from time to
time, we have examined such corporate records and other documents including the
registration statement on Form S-3, to be filed with the Securities and Exchange
Commission, relating to such matters of law as we have deemed necessary for this
opinion. Based on such examination and subject to the proceedings as are now
being contemplated being duly taken and completed by you prior to the issuance
of the Company shares, we advise you that in our opinion:
1. InaCom is a corporation duly organized and existing under the laws of
the state of Delaware.
2. All necessary corporate action on the part of InaCom has been taken to
authorize the registration of the Debentures and the Company Shares by InaCom.
3. The Debentures and the Common Shares are duly authorized, legally
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Yours very truly,
McGrath, North, Mullin &
Kratz, P.C.
By /s/ DAVID L. HEFFLINGER
-----------------------
David L. Hefflinger
<PAGE>
Exhibit 12
<TABLE>
Inacom Corp.
Computation of Ratio of Earnings to Fixed Charges
==================================================================================================================================
Year Ended December Twenty-Six Weeks Ended
- ----------------------------------------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 June 24, 1995 June 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Before
Taxes 5,700 17,959 19,693 (3,750) 19,833 7,947 12,566
- ----------------------------------------------------------------------------------------------------------------------------------
Fixed Charges
- ----------------------------------------------------------------------------------------------------------------------------------
Interest 4,146 7,964 8,596 12,055 14,634 6,480 9,919
- ----------------------------------------------------------------------------------------------------------------------------------
Rents & Leases 1,292 1,770 2,345 2,851 3,266 1,562 1,844
- ----------------------------------------------------------------------------------------------------------------------------------
Total Fixed 5,438 9,734 10,941 14,906 17,900 8,042 11,763
Charges
- ----------------------------------------------------------------------------------------------------------------------------------
Adjusted Earnings 11,138 27,693 30,634 11,156 37,733 15,989 24,329
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Earnings 2.05 2.84 2.80 0.75 2.11 1.99 2.07
to Fixed Charges
==================================================================================================================================
</TABLE>
<PAGE>
KPMG Peat Marwick LLP
Two Central Park Plaza 233 South 13th Street
Suite 1501 Suite 1600
Omaha, NE 68101 Lincoln, NE
Telephone 402 348-1450 Telephone 402 476-1216
Telefax 402 348-0152 Telefax 402 476-1944
ACCOUNTANTS' CONSENT
The Board of Directors
InaCom Corp.:
We consent to the use of our reports incorporated herein by
reference and to the reference to our Firm under the heading
"Experts" in the Prospectus.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Omaha, Nebraska
September 9, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned Director of InaCom Corp.
constitutes and appoints each of Bill L. Fairfield and David C. Guenthner as his
true and lawful attorney-in-fact and agent, with each having full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to execute a registration statement on Form S-3 for the
registration under the Securities Act of 1933 of $55,250,000 of 6% Convertible
Subordinated Debentures due June 15, 2006 and upon conversion of the Debentures
and, as adjusted under certain circumstances, such additional shares of InaCom
Common Stock as may be issuable upon conversion of the Debentures, and any and
all amendments and post-effective amendments and supplements to the registration
statement and any and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto each of such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
22nd day of August, 1996.
/s/ DURWARD B. VARNER
---------------------
Durward B. Varner
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned Director of InaCom Corp.
constitutes and appoints each of Bill L. Fairfield and David C. Guenthner as his
true and lawful attorney-in-fact and agent, with each having full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to execute a registration statement on Form S-3 for the
registration under the Securities Act of 1933 of $55,250,000 of 6% Convertible
Subordinated Debentures due June 15, 2006 and upon conversion of the Debentures
and, as adjusted under certain circumstances, such additional shares of InaCom
Common Stock as may be issuable upon conversion of the Debentures, and any and
all amendments and post-effective amendments and supplements to the registration
statement and any and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto each of such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
22nd day of August, 1996.
/s/ W. GRANT GREGORY
---------------------
W. Grant Gregory
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned Director of InaCom Corp.
constitutes and appoints each of Bill L. Fairfield and David C. Guenthner as his
true and lawful attorney-in-fact and agent, with each having full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to execute a registration statement on Form S-3 for the
registration under the Securities Act of 1933 of $55,250,000 of 6% Convertible
Subordinated Debentures due June 15, 2006 and upon conversion of the Debentures
and, as adjusted under certain circumstances, such additional shares of InaCom
Common Stock as may be issuable upon conversion of the Debentures, and any and
all amendments and post-effective amendments and supplements to the registration
statement and any and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto each of such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
22nd day of August, 1996.
/s/ RICK INATOME
---------------------
Rick Inatome
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned Director of InaCom Corp.
constitutes and appoints each of Bill L. Fairfield and David C. Guenthner as his
true and lawful attorney-in-fact and agent, with each having full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to execute a registration statement on Form S-3 for the
registration under the Securities Act of 1933 of $55,250,000 of 6% Convertible
Subordinated Debentures due June 15, 2006 and upon conversion of the Debentures
and, as adjusted under certain circumstances, such additional shares of InaCom
Common Stock as may be issuable upon conversion of the Debentures, and any and
all amendments and post-effective amendments and supplements to the registration
statement and any and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto each of such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
22nd day of August, 1996.
/s/ JOSEPH AUERBACH
---------------------
Joseph Auerbach
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned Director of InaCom Corp.
constitutes and appoints each of Bill L. Fairfield and David C. Guenthner as his
true and lawful attorney-in-fact and agent, with each having full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to execute a registration statement on Form S-3 for the
registration under the Securities Act of 1933 of $55,250,000 of 6% Convertible
Subordinated Debentures due June 15, 2006 and upon conversion of the Debentures
and, as adjusted under certain circumstances, such additional shares of InaCom
Common Stock as may be issuable upon conversion of the Debentures, and any and
all amendments and post-effective amendments and supplements to the registration
statement and any and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto each of such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
22nd day of August, 1996.
/s/ JOSEPH INATOME
---------------------
Joseph Inatome
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, the undersigned Director of InaCom Corp.
constitutes and appoints each of Bill L. Fairfield and David C. Guenthner as his
true and lawful attorney-in-fact and agent, with each having full power of
substitution and resubstitution, for him and in his name, place and stead in any
and all capacities, to execute a registration statement on Form S-3 for the
registration under the Securities Act of 1933 of $55,250,000 of 6% Convertible
Subordinated Debentures due June 15, 2006 and upon conversion of the Debentures
and, as adjusted under certain circumstances, such additional shares of InaCom
Common Stock as may be issuable upon conversion of the Debentures, and any and
all amendments and post-effective amendments and supplements to the registration
statement and any and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission,
granting unto each of such attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
22nd day of August, 1996.
/s/ BILL L. FAIRFIELD
---------------------
Bill L. Fairfield
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
-------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
------------------------------------------
FIRST NATIONAL BANK OF OMAHA
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 47-0259043
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL CENTER, OMAHA, NEBRASKA 68102-1596
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
FIRST NATIONAL BANK OF OMAHA
ONE FIRST NATIONAL CENTER
OMAHA, NEBRASKA 68102-1596
ATTN: JAMES MORAN (402)633-7404
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
--------------------------------------------
INACOM CORP.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 47-0681813
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
10810 FARNAM DRIVE 68154
OMAHA, NEBRASKA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
6% CONVERTIBLE SUBORDINATED DEBENTURES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
-------------------
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of governors of
the Federal Reserve System, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate
trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
-----------------------------
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
----------------
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the
trustee now in effect.
2. A copy of the certificate of authority of the
trustee to commence business.
3. A copy of the authorization of the trustee to
exercise corporate trust powers.
4. A copy of the existing by-laws of the trustee.
5. Not Applicable.
6. The consent of the trustee required by Section
321(b) of the Act.
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.
8. Not Applicable.
9. Not Applicable.
2
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, First National Bank of Omaha, a national banking association organized
and existing under the laws of the United States of America, has duly caused
this Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Omaha and State of Nebraska, on
the 9th day of September, 1996.
FIRST NATIONAL BANK OF OMAHA,
TRUSTEE
BY /S/ JOHN E. LENIHAN
JOHN E. LENIHAN
TRUST OFFICER
3
<PAGE>
THE AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
FIRST NATIONAL BANK OF OMAHA
FIRST: The title of this Association, which shall carry on the business of
banking under the laws of the United States shall be FIRST NATIONAL BANK OF
OMAHA.
SECOND: The place where the main banking house or office of this
Association shall be located, its operations of discount and deposit carried on,
and its general business conducted, shall be Omaha, County of Douglas and State
of Nebraska.
THIRD: The Board of Directors of this Association shall consist of not less
than five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the votes to which
all of its shareholders are at the time entitled to vote at any annual or
special meeting thereof. Each Director shall own stock of the Association or of
a holding company controlling the Association, with an aggregate par, fair
market or equity value of not less than $1,000, as of either (i) the date of
purchase, (ii) the date the person becomes a Director, or (iii) the date of that
person's most recent election to the Board of Directors, whichever is more
recent. A majority of the Board of Directors shall be necessary to constitute a
quorum for the transaction of business. The Board of Directors, in any year
between Annual Meetings of shareholders, may by the vote of a majority of the
full Board increase the number of Directors by not more than two, and may
appoint Directors to fill the vacancies thereby created.
FOURTH: The regular Annual Meeting of the shareholders of this Association
shall be held at its main banking house or other convenient place duly
authorized by the Board of Directors on such day of each year as is specified
therefor in the By-Laws, at which meeting a Board of Directors shall be elected;
but, if no such election shall be held on that day, it may be held on any
subsequent day, in accordance with the provisions of the banking laws of the
United States.
FIFTH: The amount of capital stock of this Association shall be FIVE
MILLION THREE HUNDRED THIRTY THOUSAND NINETY AND NO/100 DOLLARS ($5,330,090.00),
divided into One Million Sixty-Six Thousand Eighteen (1,066,018) shares of
common stock of the par value of FIVE AND NO/100 DOLLARS ($5.00) each; but said
capital stock may be increased or decreased from time to time in accordance with
the provisions of the laws of the United States.
If the capital stock is increased by the sale of
4
<PAGE>
additional shares thereof, each shareholder shall be entitled to subscribe for
such additional shares in proportion to the number of shares of said capital
stock owned by him at the time the increase is authorized by the shareholders,
unless another time subsequent to the date of the shareholders' meeting is
specified in a resolution adopted by the shareholders at the time the increase
is authorized. The Board of Directors shall have the power to prescribe a
reasonable period of time within which the preemptive rights to subscribe to the
new shares of capital stock must be exercised.
If the capital stock is increased by a stock dividend, each shareholder
shall be entitled to his proportionate amount of such increase in accordance
with the number of shares of capital stock owned by him at the time the increase
is authorized by the shareholder, unless another time subsequent to the date of
the shareholders' meeting is specified in a resolution adopted by the
shareholders at the time the increase is authorized.
SIXTH: There shall be an Executive Committee consisting of not less than
three nor more than five Directors elected by the shareholders at the election
of Directors. The Executive Committee shall have authority to elect and dismiss
officers, fix their salaries, define their duties and the manner in which the
affairs of the Association shall be conducted. The Executive Committee shall
have power to authorize the seal of the Association to be affixed to all papers
which may require it. Any vacancy in the Executive Committee shall be filled by
the remaining members of the Executive Committee until the next election by the
shareholders.
SEVENTH: The Board of Directors shall have the power to change the location
of the main office to any other place within the limits of Omaha, without the
approval of the shareholders but subject to the approval of the Comptroller of
the Currency; and shall have the power to establish or change the location of
any branch or branches of the Association to any other location, without the
approval of the shareholders but subject to the approval of the Comptroller of
the Currency.
EIGHTH: This Association shall have succession from the date of its
organization certificate until such time as it be dissolved by the act of its
shareholders in accordance with the provisions of the banking laws of the United
States, or until its franchise becomes forfeited by reason of violation of law,
or until its affairs be placed in the hands of a receiver and finally wound up
by him.
NINTH: The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten per centum of the stock
of this Association, may call a special meeting of shareholders at any time:
Provided, however, that, unless otherwise provided by law, not less than ten
days prior to
5
<PAGE>
the date fixed for any such meeting, a notice of the time, place and purpose of
the meeting shall be given by first-class mail, postage prepaid, to all
shareholders of record of this Association at their respective addresses as
shown upon the books of the Association. These Articles of Association may be
amended at any regular or special meeting of the shareholders by the affirmative
vote of the shareholders owning at least a majority of the stock of this
Association, subject to the provisions of the banking laws of the United States.
The notice of any shareholders' meeting, at which an Amendment to the Articles
of Association of this Association is to be considered, shall be given as herein
above set forth.
TENTH: Any person may be indemnified or reimbursed by the Association for
reasonable expenses actually incurred by him in connection with any suit or
proceeding to which he is made a party by reason of his being or having been a
director, officer or employee of the Association: PROVIDED, HOWEVER, that no
person shall be so indemnified or reimbursed in relation to any action, suit or
proceeding in which he shall finally be adjudged guilty of, or found liable for,
gross negligence, willful misconduct or criminal acts: and
PROVIDED, FURTHER that no person shall be so indemnified or reimbursed in
relation to any action, suit or proceeding which has been made the subject of a
compromise settlement, except with the approval of the holders of record of a
majority of the outstanding shares of said Association. The foregoing right of
indemnification or reimbursement shall not be exclusive of other rights to which
such person may be entitled as a matter of law.
RESTATED to reflect amendments through November 28, 1995.
6
<PAGE>
TREASURY DEPARTMENT )
Office of ) ss:
Comptroller of the Currency )
I, Dean E. Miller, Deputy Comptroller for Trust and Securities, do hereby
certify that the records in this Office indicate that on May 5, 1919, the
Federal Reserve Board (now the Board of Governors of the Federal Reserve System)
granted to the "First National Bank of Omaha", Omaha, Nebraska the right to act,
when not in contravention of state or local law, as trustee, executor,
administrator, and registrar of stocks and bonds. On February 14, 1929 the bank
was granted the authority to act as guardian of estates, assignee, receiver,
committee of estates of lunatics or in any other fiduciary capacity in which
state banks, trust companies or other corporations which come into competition
with national banks are permitted to act under the laws of the State of
Nebraska. The authority granted remains in full force and effect.
Authority to grant trust powers to national banks was, under the provisions
of the Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a,
transferred from the Board of Governors of the Federal Reserve System to the
Comptroller of the Currency. Section 2 of the Act states in Part: "Nothing
contained in this Act shall be deemed to affect or curtail the right of any
national bank to act in fiduciary capacities under a permit granted before the
date of enactment of this Act by the Board of Governors of the Federal Reserve
System, nor to affect the validity of any transactions entered into at any time
by any national bank pursuant to such permit. . ."
IN TESTIMONY WHEREOF, I have hereunto subscribed my
name and caused the seal of Office of the Comptroller of the
Currency to be affixed to these presents at the Treasury
Department, in the City of Washington and District of
Columbia this twenty-ninth day of June 1983.
/s/ DEAN E. MILLER
Dean E. Miller
Deputy Comptroller
for Trust and Securities
7
<PAGE>
RESTATED BY-LAWS
OF
FIRST NATIONAL BANK OF OMAHA
I.
MEETINGS OF SHAREHOLDERS
------------------------
The regular annual meeting of the shareholders of this Bank for the election of
Directors and the transaction of such other business as may properly come before
said meeting, shall be held on such day during the first one hundred eighty days
(180 days) of the year as the Directors may select and designate. It shall be
the duty of the Board of Directors to appoint three Directors or employees of
the Bank to be judges of said election, who shall hold and conduct the same and
who shall, after the election has been held, notify under their hands the
Cashier of the Bank of the result thereof and the names of the Directors elect.
Notice of such meeting shall be given in such manner as may be required by the
laws of the United States pertaining to national banks or by the Regulations of
the Comptroller of the Currency.
If for any cause the annual election of directors is not held on the date fixed
in these Bylaws, the directors in office shall order an election to be held on
some other day, of which special election notice shall be given in accordance
with the requirements of Section 5149, United States Revised Statutes, judges
appointed, returns made and recorded, and the directors elect notified according
to the foregoing provisions of these Bylaws.
II.
OFFICERS
--------
The officers of the Bank shall be a President and a Cashier and such other
officers as from time to time may appear to the Executive Committee to be
required or desirable for the conduct of the affairs of the Bank, which officers
shall be appointed by the Executive Committee and by which Committee their
several duties shall be prescribed.
III.
CORPORATE SEAL
--------------
The following is an impression of the Seal adopted by the Board of Directors of
this Bank.
IV.
TRANSFERS AND CONVEYANCES
-------------------------
<PAGE>
All transfers and conveyances of real estate and all contracts and leases shall
be made by the Association under Seal in accordance with the orders of the Board
of Directors and shall be signed by the President or any member of the Executive
Committee and attested by the Cashier, or any operations officer.
All assignments of mortgages and trust deeds, and all releases of mortgages and
deeds of reconveyance shall be executed under the Seal of the Association by any
Member of the Executive Committee, any Executive Vice President, Senior Vice
President, or Vice President, or any person so designated by resolution, and
shall be attested to by any Member of the Executive Committee, any Executive
Vice President, Senior Vice President, or Vice President, or any person so
designated by resolution.
V.
INCREASE OF STOCK
-----------------
Whenever an increase of stock shall be determined upon in accordance with law,
it shall be the duty of the Board of Directors to notify all shareholders of the
same and to cause a subscription to be opened for such increase of capital. In
the increase of capital, each shareholder shall have the privilege of
subscribing for such number of shares of the new stock as he may be entitled to
subscribe for according to his existing stock in the Bank. If any shareholder
shall fail to subscribe for the amount of stock to which he may be entitled, the
Board of Directors may determine what disposition shall be made of the privilege
of subscribing for the unsubscribed stock.
VI.
MEETINGS OF DIRECTORS
---------------------
The regular meeting of the Board of Directors shall be held on the third
Wednesday of each month. When any regular meeting of the Board of Directors
falls upon a holiday, meetings shall be held on the following day. Special
meetings may be called by the President, any member of the Executive Committee,
or at the request of a majority of the Board of Directors.
A majority of all Directors is required to constitute a quorum to do business.
Should there be no quorum at any regular or special meeting, the members present
may adjourn from day to day until a quorum is in attendance. In the absence of a
quorum no business shall be transacted.
VII.
STOCK AND STOCK CERTIFICATES
----------------------------
The stock of the Bank shall be assignable and transferable only on the books of
the Bank, subject to the restrictions and
<PAGE>
provisions of the laws of the United States pertaining to national banks. A
transfer book shall be provided in which all assignments and transfers of stock
shall be made.
VIII.
COMMITTEES
----------
The Executive Committee may appoint from time to time such Committees of one or
more Directors for such purposes and with such powers as the Executive Committee
may determine.
IX.
AMENDMENTS TO BYLAWS
--------------------
These Bylaws may be changed or amended by the vote of a majority of the members
of the Board of Directors at any regular meeting or at any special meeting
called for that purpose.
X.
EXECUTIVE COMMITTEE
-------------------
The Executive Committee shall have authority to elect and dismiss officers, fix
their salaries, define their duties, and the manner in which the affairs of the
Association shall be conducted. The Executive Committee shall have power to
authorize the seal of the Association to be affixed to all papers which may
require it.
XI.
INDEMNIFICATION
---------------
Section 1. The corporation 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 corporation, by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the
corporation, as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorneys' fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit, or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit, or proceeding by judgment, order, settlement, conviction, or
upon plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that
<PAGE>
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 2. The corporation 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 corporation to procure a judgment in its favor
by reason of the fact that he or she is or was director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against expenses, including attorneys'
fees, actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, 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 for any negligence or misconduct in the performance
of his or her duty to the corporation unless and only to the extent that the
court in which such action or suit was brought shall determine upon application
that despite the adjudication of liability but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
Section 3. To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in Sections 1 and 2 of this Article, or
in defense of any claim, issue, or matter therein, he or she shall be
indemnified against expenses, including attorneys' fees, actually and reasonably
incurred by him or her in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this Article, unless
ordered by a court, shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he or she has
met the applicable standard or conduct set forth in Sections 1 and 2 of this
Article. Such determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding, or if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or by the shareholders.
Section 5. Expenses incurred in defending a civil or criminal action, suit, or
proceeding may be paid by the corporation in
<PAGE>
advance of the final disposition of such action, suit, or proceeding as
authorized in the manner provided in Section 4 of this Article upon receipt of
an undertaking by or on behalf of the director, officer, employee, or agent to
repay such amount unless it shall ultimately be determined that he or she is
entitled to be indemnified by the corporation as authorized in this Article.
Section 6. Nothing contained in this Article shall limit the corporation's
ability to reimburse expenses incurred by a director, officer, employee or agent
of the corporation in connection with his or her appearance as a witness in a
proceeding at a time when he or she has not been made a named defendant or
respondent in the proceeding.
Section 7. Any indemnification of a director in accordance with this Article,
including any payment or reimbursement of expenses, shall be reported in writing
to the shareholders with the notice of the next shareholders' meeting or prior
to such meeting.
RESTATED to reflect amendments through April 17, 1996.
<PAGE>
THE CONSENT OF THE TRUSTEE
REQUIRED BY 321(b) OF THE ACT
First National Bank of Omaha, the Trustee executing the statement of
eligibility and qualification to which this Exhibit is attached, does hereby
consent that reports of examinations of the undersigned by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor in accordance with the
provisions of 321(b) of the Trust Indenture Act of 1939.
FIRST NATIONAL BANK OF OMAHA
September 9, 1996 BY: /s/ JOHN E. LENIHAN
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Date John E. Lenihan
Trust Officer
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Legal Title of Bank: FIRST NATIONAL BANK OF OMAHA Call Date: 6/30/96 ST-BK: 31-2730 FFIEC 032
Address: 16TH AND DODGE STREETS Page RC-1
City, State Zip: OMAHA, NE 68102
FDIC Certificate No.: 05452
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
C300
Dollar Amounts in Thousands................ RCON Bil Mil Thou
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<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)........................... 0081 203,852 1.a.
b. Interest-bearing balances(2).................................................... 0071 0 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)...................... 1754 401,648 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).................... 1773 100,846 2.b.
3. Federal funds sold and securities purchased under agreements to resell:
a. Federal funds sold ........................................... 0276 33,090 3.a.
b. Securities purchased under agreements to resell................................. 0277 0 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C) RCON 2122 2,153,873..... 4.a.
b. LESS: Allowance for loan and lease losses RCON 3123 42,208..... 4.b.
c. LESS: Allocated transfer risk reserve RCON 3128 0..... 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c).................................. 2125 2,111,665 4.d.
5. Trading assets (from Schedule RC-D)...................................................... 3545 0 5.
6. Premises and fixed assets (including capitalized leases)................................. 2145 67,387 6.
7. Other real estate owned (from Schedule RC-M)............................................. 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)......................................................................... 2130 4,233 8.
9. Customers' liability to this bank on acceptances outstanding............................. 2155 329 9.
10. Intangible assets (from Schedule RC-M)................................................... 2143 0 10.
11. Other assets (from Schedule RC-F)........................................................ 2160 86,974 11.
12. Total assets (sum of items 1 through 11)................................................. 2170 3,010,024 12.
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(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: FIRST NATIONAL BANK OF OMAHA Call Date: 6/30/96 ST-BK: 31-2730 FFIEC 032
Address: 16TH AND DODGE STREETS Page RC-2
City, State Zip: OMAHA, NE 68102
FDIC Certificate No.: 05452
Schedule RC--Continued
Dollar Amounts in Thousands................ RCON Bil Mil Thou
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LIABILITIES
13. Deposits
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E)....... 2200 2,601,589 13.a.
(1) Noninterest-bearing(1)...........RCON 6631 387,796............. 13.a.(1)
(2) Interest-bearing.................RCON 6636 2,213,793............. 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs...................
(1) Noninterest-bearing.........................................................
(2) Interest-bearing............................................................
14. Federal funds purchased and securities sold under agreements to repurchase:
a. Federal funds purchased......................................................... 0278 108,561 14.a.
b. Securities sold under agreements to repurchase ................................. 0279 5,714 14.b.
15. a. Demand notes issued to the U.S. Treasury........................................ 2840 3,007 15.a.
b. Trading Liabilities (from Schedule RC-D)........................................ 3548 0 15.b.
16. Other borrowed money:
a. With a remaining maturity of one year or less .................................. 2332 0 16.a.
b. With a remaining maturity of more than one year................................. 2333 0 16.b.
17. Mortgage indebtedness and obligations under capitalized leases...................... 2910 6,445 17.
18. Bank's Liability on acceptances executed and outstanding............................ 2920 329 18.
19. Subordinated notes and debentures................................................... 3200 75,000 19.
20. Other Liabilities (from Schedule RC-G).............................................. 2930 38,969 20.
21. Total Liabilities (sum of items 13 through 20)...................................... 2948 2,839,614 21.
22. Limited-Life preferred stock and related surplus.................................... 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus....................................... 3838 0 23.
24. Common stock........................................................................ 3230 5,330 24.
25. Surplus (exclude all surplus related to preferred stock)............................ 3839 9,867 25.
26. a. Undivided profits and capital reserves.......................................... 3632 155,571 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities.......... 8434 (358) 26.b.
27. Cumulative foreign currency translation adjustments.................................
28. Total equity capital (sum of items 23 through 27)................................... 3210 170,410 28.
29. Total Liabilities, Limited-Life preferred stock, and equity capital
(sum of items 21, 22, and 28)....................................................... 3300 3,010,024 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1995................................................. RCON 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other ex-
with generally accepted auditing standards by a certified ternal auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted audit- auditors
ing standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accor- 8 = No external audit work
dance with generally accepted auditing standards by a
certified public accounting firm (may be required by state
chartering authority)
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(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
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