<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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ORBITAL SCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 06-1209561
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
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21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(703) 406-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAVID W. THOMPSON
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(703) 406-5000
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
------------------------
Copy to:
EVE N. HOWARD, ESQ.
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004
(202) 637-5600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITY TO BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE(1) FEES
<CAPTION>
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<S> <C> <C> <C> <C>
5% Convertible Subordinated Notes due
2002...................................... $100,000,000 100% $100,000,000 $30,303
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Common Stock, par value $0.01 per share..... (2) (2) (2) None
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Such indeterminate number of shares of Common Stock as shall be issuable
upon conversion of the Notes being registered hereunder. No additional
consideration will be received for the Common Stock and therefore no
registration fee is required pursuant to Rule 457(i).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED DECEMBER 15, 1997
PROSPECTUS
ORBITAL SCIENCES CORPORATION LOGO
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UP TO $100,000,000
5% CONVERTIBLE SUBORDINATED NOTES DUE 2002 AND SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
- --------------------------------------------------------------------------------
This Prospectus covers the resale from time to time by the holders (the "Selling
Securityholders") of up to $100,000,000 aggregate principal amount of 5%
Convertible Subordinated Notes due 2002 (the "Notes") of Orbital Sciences
Corporation, a Delaware corporation ("Orbital" or the "Company"). This
Prospectus also covers sales by the Selling Securityholders from time to time of
shares of common stock, par value $0.01 per share (the "Common Stock"), of the
Company into which the Notes are convertible (the "Conversion Shares").
Interest on the Notes is payable on October 1 and April 1 of each year,
commencing on April 1, 1998. The Notes will mature on October 1, 2002. The Notes
will be convertible into Common Stock of the Company on or prior to the close of
business on the maturity date, unless previously redeemed or repurchased, at a
conversion price of $28.00 per share (equivalent to a conversion rate of
approximately 35.71 shares per each $1,000 principal amount of Notes), subject
to adjustment under certain circumstances as described herein. See "Description
of Notes -- Conversion."
The Notes are not entitled to any sinking fund. On or after October 2, 2000, the
Notes will be redeemable at the option of the Company, in whole or, from time to
time, in part, at the redemption prices set forth in this Prospectus plus
accrued interest. In the event of a Fundamental Change (as defined), each Holder
(as defined) of the Notes may require the Company to repurchase its Notes, in
whole or in part, for cash, at prices set forth in this Prospectus, subject to
adjustment under certain circumstances as described herein, plus accrued and
unpaid interest. There can be no assurance that the Company will have the
financial resources necessary to repurchase the Notes in such circumstances. The
Notes are redeemable by the Company in the event of certain developments
involving withholding taxes of the United States. Otherwise, the Notes are not
redeemable prior to October 2, 2000. See "Description of Notes -- Repurchase at
Option of Holders Upon a Fundamental Change" and "Description of
Notes -- Redemption -- Optional Redemption."
The Notes are general, unsecured obligations of the Company and are subordinated
in right of payment to all existing and future Senior Indebtedness (as defined)
of the Company. As of September 30, 1997, the aggregate amount of Senior
Indebtedness was approximately $211 million, and there was approximately $225
million of indebtedness and other liabilities of subsidiaries of the Company
outstanding (including guarantees by direct and indirect subsidiaries of the
Company of the debt of ORBCOMM (as defined) in the amount of $170.0 million) to
which the Notes were structurally subordinated. The Indenture (as defined) does
not restrict the Company or its subsidiaries from incurring additional Senior
Indebtedness or other liabilities.
The Notes were issued by the Company on September 16, 1997 in a placement
through certain initial purchasers (the "Initial Purchasers") to qualified
institutional buyers in transactions exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), and in sales outside
the United States within the meaning of Regulation S under the Securities Act.
The Selling Securityholders, directly or through agents, broker-dealers or
underwriters, may sell the Notes or the Conversion Shares offered hereby from
time to time on terms to be determined at the time of sale. Such Notes or
Conversion Shares may be sold at market prices prevailing at the time of sale or
at negotiated prices. The Selling Securityholders and any agents, broker-dealers
or underwriters that participate in the distribution of the Notes or Conversion
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commission or discount received by them and any profit on the
resale of the Common Stock purchased by them may be deemed to be underwriting
discounts or commissions under the Securities Act. The Company will not receive
any proceeds from the sale of Notes or Conversion Shares by the Selling
Securityholders. See "Selling Securityholders" and "Plan of Distribution."
Application has been made to list the Notes on the Luxembourg Stock Exchange.
Prior to this offering, the Notes have been eligible for trading on the Private
Offerings, Resale and Trading through Automated Linkages ("PORTAL") Market.
Notes sold hereby are not expected to remain eligible for trading on the PORTAL
Market. The Common Stock is listed on the Nasdaq National Market under the
symbol "ORBI." The last reported sale price of the Common Stock on the Nasdaq
National Market on December 11, 1997 was $24.00 per share.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS IN
EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY, SEE "RISK FACTORS"
COMMENCING ON PAGE 4.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Expenses of preparing and filing the Registration Statement of which this
Prospectus is a part and all post-effective amendments will be borne by the
Company. No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are approximately $ . The aggregate
proceeds to the Selling Securityholders from the Notes or Conversion Shares will
be the price of the Notes or Conversion Shares sold less the aggregate agents'
commissions and underwriters' discounts, if any, and other expenses of issuance
and distribution not borne by the Company. The Company has agreed to indemnify
the Initial Purchasers, the Selling Securityholders and certain other persons
against certain liabilities, including liabilities under the Securities Act. See
"Plan of Distribution."
December , 1997
<PAGE> 3
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements included or incorporated by reference in this Prospectus
constitute "forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, general economic and business conditions, launch
success, product performance, market acceptance of new products, services and
technologies, the introduction of products and services by competitors and the
other factors set forth herein under the heading "Risk Factors." See "Important
Factors Regarding Forward-Looking Statements" filed as Exhibit 99 to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(incorporated herein by reference).
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 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. Reports, proxy statements and
other information filed electronically by the Company with the Commission are
available at the Commission's worldwide web site at http://www.sec.gov. The
Company's Common Stock is traded on the Nasdaq National Market and reports,
proxy statements and other information concerning the Company also may be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006. Such reports, proxy
statements and other information will also be made available at the office of
the Paying Agent, Banque de Luxembourg, at 14 Boulevard Royal, L-2449,
Luxembourg.
A registration statement on Form S-3 with respect to the Notes and
Conversion Shares offered hereby (together with all amendments, exhibits and
schedules thereto, the "Registration Statement") has been filed with the
Commission under the Securities Act. This Prospectus does not contain all of the
information contained in such Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission. For
further information with respect to the Company and the Notes and Conversion
Shares offered hereby, reference is made to the Registration Statement.
Statements contained in this Prospectus regarding the contents of any contract
or any other documents are not necessarily complete and, in each instance,
reference is hereby made to the copy of such contract or document filed as an
exhibit to the Registration Statement. The Registration Statement may be
inspected without charge at the Commission's principal office in Washington,
D.C., and copies of all or any part thereof may be obtained from the Public
Reference Section, Securities and Exchange Commission, Washington, D.C., 20549,
upon payment of the prescribed fees.
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been previously filed by the Company
(File No. 0-18287) with the Commission pursuant to the Exchange Act, are
incorporated by reference in this Prospectus and shall be deemed to be a part
hereof:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (along with Amendment No. 1 on Form 10-K/A dated April 8,
1997);
(ii) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997;
(iii) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed under Section 12 of the
Exchange Act, including any reports filed under the Exchange Act for the
purpose of updating such description;
(iv) The Company's Current Report on Form 8-K filed on July 28, 1997;
(v) The Company's Current Report on Form 8-K filed on September 2,
1997, as amended by Form 8-K/A filed on September 9, 1997;
(vi) The Company's Current Report on Form 8-K filed on September 12,
1997;
(vii) The Company's Current Report on Form 8-K filed on September 22,
1997;
(viii) The Company's Current Report on Form 8-K filed on October 1,
1997; and
(ix) The Company's Current Report on Form 8-K filed on December 8,
1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents
(such documents, and the documents enumerated above, being hereinafter referred
to as the "Incorporated Documents"). Any statement contained in an Incorporated
Document shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed Incorporated Document 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 TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH DOCUMENTS). SUCH REQUESTS SHOULD BE DIRECTED TO ORBITAL
SCIENCES CORPORATION, 21700 ATLANTIC BOULEVARD, DULLES, VIRGINIA 20166,
TELEPHONE NUMBER: (703) 406-5000, ATTENTION: GENERAL COUNSEL.
Copies of the Incorporated Documents, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents), the Indenture dated as of September 16, 1997 between the Company and
Deutsche Bank AG, New York Branch, as trustee (the "Indenture") and the
Registration Rights Agreement dated September 16, 1997 between the Company and
the Initial Purchasers (the "Registration Rights Agreement") will also be
available without charge at the office of the Company's Paying Agent in
Luxembourg.
3
<PAGE> 5
THE COMPANY
Orbital is a space and information systems company that designs,
manufactures, operates and markets a broad range of space-related products and
services. The Company's products and services are grouped into three business
sectors: space and ground infrastructure systems, satellite access products and
satellite-delivered services. Space and ground infrastructure systems currently
include launch vehicles, satellites, electronics and sensor systems, and ground
systems. Satellite access products include hand-held satellite-based navigation
and communications products and transportation management systems.
Satellite-delivered services include satellite-based two-way mobile data
communications and satellite-based remote imaging services. Orbital operates
launch vehicle, satellite and electronics engineering, manufacturing and test
facilities in Dulles and McLean, Virginia, Germantown and Greenbelt, Maryland
and Chandler, Arizona; a launch vehicle and satellite integration and test
facility at Vandenberg Air Force Base, California; a space sensors and
instruments facility in Pomona, California; a ground systems and software
facility in Vancouver, British Columbia; and facilities for its navigation and
communications products in San Dimas, California and Rochester Hills, Michigan.
Orbital's principal executive offices are located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166, and the Company's telephone number is (703)
406-5000.
RISK FACTORS
An investment in the Notes and the Common Stock issuable upon conversion
thereof involves a significant degree of risk. In determining whether to make an
investment in the Notes and the related Common Stock, potential investors should
consider carefully all the information set forth in this Prospectus and, in
particular, the risk factors described below. This Prospectus contains certain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth below and elsewhere in this Prospectus. See "Special Note Regarding
Forward-Looking Information."
TECHNOLOGICALLY ADVANCED PRODUCTS AND SERVICES
Most of the products developed and manufactured by Orbital are
technologically advanced and sometimes novel systems that must function under
demanding operating conditions. Even though Orbital believes it employs
sophisticated design, manufacturing and testing practices, there can be no
assurance that Orbital's products will be successfully launched or operated or
that they will be developed or will perform as intended. Certain of Orbital's
contracts require it to forfeit part of its expected profit, to receive reduced
payments, to provide a replacement launch or other product or service, or to
reduce the price of subsequent sales to the same customer, if any, if its
products fail to perform adequately. Performance penalties also may be imposed
should Orbital fail to meet delivery schedules or other measures of contract
performance. Orbital, like most organizations that have launch and satellite
programs, has experienced occasional product failures and other problems,
including with respect to certain of its launch vehicles and satellites. Orbital
will likely experience some product and service failures, schedule delays and
other problems in connection with its launch vehicles, satellites and other
products in the future. In addition to any costs resulting from product
warranties, contract performance or required remedial action, such failures may
result in increased costs or loss of revenues due to postponement of
subsequently scheduled launches or satellite operations or other product and
service deliveries. While the Company usually insures certain potential costs
related to product warranties and contract performance, the Company generally
does not insure potential costs resulting from any required remedial actions or
costs or loss of revenues due to postponement of subsequently scheduled
operations or product deliveries.
Orbital's products and services are and will continue to be subject to
significant technological change and innovation. Orbital's success will
generally depend on its ability to penetrate and retain markets for its existing
products and services and to continue to conceive, design, manufacture and
4
<PAGE> 6
market new products and services on a cost-effective and timely basis. Orbital
anticipates that it will incur significant expenses in the design and initial
manufacture and marketing of new products and services. There can be no
assurance that Orbital will be able to achieve the technological advances
necessary to remain competitive and profitable, that new products and services
will be developed and manufactured on schedule and on a cost-effective basis,
that anticipated markets will exist or develop for new products or services, or
that its existing products and services will not become technologically
obsolete.
U.S. GOVERNMENT CONTRACTS
During 1996, approximately 45% of the Company's total annual revenues, and
at December 31, 1996 approximately 60% of the Company's total firm contract
backlog were derived from contracts with the United States ("U.S.") Government
and its agencies or were derived from subcontracts with the U.S. Government's
prime contractors. Most of Orbital's U.S. Government contracts are funded
incrementally on a year-to-year basis. Changes in government policies,
priorities or funding levels through agency or program budget reductions by the
U.S. Congress or executive agencies or the imposition of budgetary constraints
could materially adversely affect Orbital's financial condition or results of
operations. Furthermore, contracts with the U.S. Government may be terminated or
suspended by the U.S. Government at any time, with or without cause. There can
be no assurance that these contracts will not be terminated or suspended in the
future, or that contract suspensions or terminations will not result in
unreimbursable expenses or charges or other adverse effects on the Company.
The accuracy and appropriateness of Orbital's direct and indirect costs and
expenses under its contracts with the U.S. Government are subject to extensive
regulation and audit by the Defense Contract Audit Agency or by other
appropriate agencies of the U.S. Government. These agencies have the right to
challenge Orbital's cost estimates or allocations with respect to any such
contract. Additionally, a substantial portion of payments to the Company under
U.S. Government contracts are provisional payments that are subject to potential
adjustment upon audit by such agencies. Orbital believes that any adjustments
likely to result from inquiries or audits of its contracts will not have a
material adverse impact on Orbital's financial condition or results of
operations. Since Orbital's inception, it has not experienced any material
adjustments as a result of any such inquiries or audits.
REGULATION
The ability of Orbital to pursue its business activities is regulated by
various agencies and departments of the U.S. Government and, in certain
circumstances, the governments of other countries. Commercial space launches
require licenses from the U.S. Department of Transportation ("DoT") and
operation by Orbital of its L-1011 aircraft requires licenses from certain
agencies of the DoT, including the Federal Aviation Administration.
Construction, launch and operation of commercial communications satellites,
including the satellite-based two-way data communications network to be provided
by ORBCOMM, require licenses from the U.S. Federal Communications Commission
("FCC") and frequently require the approval of international and individual
country regulatory authorities. In addition, commercial remote imagery satellite
systems such as ORBIMAGE require licenses from the U.S. Department of Commerce
("DoC") and the FCC for the operation of remote imaging satellites, such as the
OrbView-3 satellite, that Orbital is currently constructing for ORBIMAGE.
Exports of Orbital's products, services and technical information frequently
require licenses from the U.S. Department of State or the DoC. There can be no
assurance that the Company will continue to be successful in its efforts to
obtain necessary licenses or regulatory approvals. The inability of the Company
to secure any necessary licenses or approvals could have a material adverse
effect on its financial condition or results of operations.
5
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COMPONENTS, RAW MATERIALS AND CARRIER AIRCRAFT
Orbital purchases a significant percentage of its product components,
including rocket propulsion motors, structural assemblies, electronic equipment
and computer chips, from third parties. Orbital also occasionally obtains from
the U.S. Government parts and equipment that are used in the production of the
Company's products or in the provision of the Company's services. Orbital has
not experienced material difficulty in obtaining product components or necessary
parts and equipment and believes that alternative sources of supply would be
available, although increased costs and possible delays could be incurred in
securing alternative sources of supply. The Company's ability to launch its
Pegasus vehicle depends on the availability of an aircraft with the capability
of carrying and launching such space launch vehicle. In June 1997, Orbital
purchased the modified Lockheed L-1011 used for its Pegasus vehicle. Prior to
that date, Orbital had leased the L-1011 since 1991 from a commercial lending
institution. This L-1011 is also planned to be used for the launch of the X-34
reusable launch vehicle currently under development by Orbital for the National
Aeronautics and Space Administration ("NASA"). In the event that the L-1011 were
to be unavailable, Orbital would experience significant delays, expenses and
loss of revenues as result of having to acquire and modify a new carrier
aircraft.
INVESTMENTS IN SATELLITE-DELIVERED SERVICES BUSINESSES
As of September 30, 1997, the Company had invested, through its
majority-owned subsidiary, Orbital Communications Corporation ("OCC"),
approximately $75 million in ORBCOMM Global L.P. ("ORBCOMM") for the
development, construction and operation of a satellite-based, two-way mobile
communication network (the "ORBCOMM System"). Because the Company does not
control ORBCOMM's operational and financial affairs, the Company is accounting
for its investment in, and earnings and losses attributable to, ORBCOMM using
the equity method of accounting. In addition, as of September 30, 1997, the
Company had invested approximately $89 million in Orbital Imaging Corporation
("ORBIMAGE") for the development, construction and operation of a fleet of
digital imaging satellites and related ground systems. Because the Company does
not control ORBIMAGE's operational and financial affairs, the Company is
accounting for its investment in, and earnings and losses attributable to,
ORBIMAGE using the equity method of accounting. Start-up of the ORBCOMM and
ORBIMAGE businesses have produced significant operating losses for several
years, and most likely will continue to produce operating losses for several
more years.
The recoverability of the Company's investments in ORBCOMM and ORBIMAGE is
dependent on several factors, including, among other things, the successful
implementation of innovative and novel technologies, including, with respect to
ORBCOMM, the launch of 26 additional satellites, the establishment of commercial
markets for new services and the ability to maintain and expand these markets,
and the ability to raise sufficient capital to fund system implementation and
start-up operating losses. To the extent ORBCOMM cannot raise required capital
to fund its implementation and start-up operating losses, Orbital is committed
to provide up to an additional $15 million to ORBCOMM. ORBCOMM anticipates it
will require such funding in early 1998. To the extent ORBIMAGE cannot raise
required capital to fund its implementation and start-up operating losses,
Orbital is committed to provide up to an additional $42 million to ORBIMAGE.
There can be no assurance that the ORBCOMM or ORBIMAGE businesses will be fully
constructed, become fully operational or obtain all necessary licenses or
additional capital. Further, even if such businesses are fully constructed and
become operational, there can be no assurance that an adequate market will
develop for their products and services, that they will achieve profitable
operations or that Orbital will recover any of its investment in such ventures.
If such investments are at any time deemed unrecoverable, then the Company may
have to expense all or part of such investments.
LONG-TERM CONTRACTS
The majority of the Company's contracts are long-term contracts. Orbital
recognizes revenues on long-term contracts using the percentage of completion
method of accounting, whereby revenue, and therefore profit, is recognized based
on actual costs incurred in relation to total estimated costs
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<PAGE> 8
to complete the contract or based on specific delivery terms and conditions.
Revenue recognition and profitability, if any, from a particular contract may be
adversely affected to the extent that original cost estimates, estimated costs
to complete or incentive or award fee estimates are revised, delivery schedules
are delayed, or progress under a contract is otherwise impeded.
COMPETITION
Virtually all Orbital's products and services face significant competition
from existing and potential competitors, many of whom are larger and have
substantially greater resources than the Company. The primary domestic
competition for the Company's Pegasus and Taurus launch vehicles comes from the
Athena launch vehicles developed by Lockheed Martin Corporation ("Lockheed"). In
addition, Pegasus may face competition from launch systems derived from U.S.
Government surplus ballistic missiles. The Israeli Shavit vehicle and other
potential foreign launch vehicles could also pose competitive challenges to
Pegasus, although U.S. Government policy currently prohibits the launch of
foreign vehicles from U.S. territory. Competition for Taurus could come from
surplus Titan II launch vehicles, although a very limited inventory remains, and
from the Russian Cosmos SL-8 launch vehicle. Competition to Pegasus and Taurus
launch vehicles also exists in the form of partial or secondary payload capacity
on larger boosters including the Ariane, Titan and Delta launch vehicles.
The Company's satellites and satellite subsystems products compete with
products and services produced or provided by government entities and numerous
private entities, including TRW Inc., Ball Aerospace and Technology Corporation,
Lockheed, GM Hughes Electronics Corporation ("Hughes") and Spectrum Astro, Inc.
The Company's airborne and ground-based electronics, data management systems,
defense-oriented avionics products and software systems, aviation systems and
space sensors and instruments face competition from several established
manufacturers, including Smith Industries, Lockheed, Raytheon Company and
Hughes. The Company's satellite access products primarily face competition from
Trimble Navigation Ltd., Garmin International, Lowrance Electronics and several
other producers.
ORBCOMM, which provides satellite-based data communications services, may
face competition from numerous existing and proposed satellite-based and
terrestrial systems providing data and voice communications services. ORBIMAGE
may face competition from U.S. and foreign government entities, and private
entities including Space Imaging, Inc., EarthWatch Incorporated, Radarsat
International Inc. and SPOT Image, that provide or are seeking to provide
satellite-based or aerial imaging products.
ANTI-TAKEOVER EFFECTS OF RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND
DELAWARE LAW
The Company's Board of Directors has the authority to issue up to 9,999,999
shares of Preferred Stock and to determine the price, rights, preferences, and
privileges of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any Preferred Stock
that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock. In
addition, the Company is subject to the provisions of Section 203 of the
Delaware General Corporation Law, an anti-takeover law. Furthermore, certain
provisions of the Company's Restated Certificate of Incorporation and Bylaws may
have the effect of delaying or preventing changes in control or management of
the Company, which could adversely affect the market price of the Common Stock.
LEVERAGE; SUBORDINATION; ABSENCE OF FINANCIAL COVENANTS
In connection with the sale of the Notes, the Company incurred $100 million
of indebtedness which resulted in a ratio of long-term debt to total
capitalization at September 30, 1997 of approximately 26%. As a result of this
additional indebtedness, the Company's principal and interest
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<PAGE> 9
obligations have increased substantially. The degree to which the Company is,
and in the future may be, leveraged could materially and adversely affect the
Company's ability to obtain additional financing for working capital,
acquisitions or other purposes and could make it more vulnerable to industry
downturns and competitive pressures. The Company's ability to meet its debt
service obligations will be dependent upon the Company's future performance,
which will be subject to financial, business and other factors affecting the
operations of the Company, many of which are beyond its control.
The Notes are unsecured and subordinated in right of payment in full to all
existing and future Senior Indebtedness of the Company. As a result of such
subordination, in the event of bankruptcy, liquidation or reorganization of the
Company or certain other events, the assets of the Company will be available to
pay obligations on the Notes only after all Senior Indebtedness has been paid in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. The Notes also are structurally
subordinated to the liabilities, including trade payables, of the Company's
subsidiaries. The Indenture does not prohibit or limit the incurrence of Senior
Indebtedness or the incurrence of other indebtedness and liabilities by the
Company or its subsidiaries, and the incurrence of any such additional
indebtedness or liabilities could adversely affect the Company's ability to pay
its obligations on the Notes. As of September 30, 1997, the aggregate amount of
Senior Indebtedness was approximately $211 million, and there was approximately
$225 million of indebtedness and other liabilities of subsidiaries of the
Company outstanding (including guarantees by direct and indirect subsidiaries of
the Company of the debt of ORBCOMM in the amount of $170.0 million) to which the
Notes were structurally subordinated. The Company anticipates that from time to
time it will incur additional indebtedness, including Senior Indebtedness, and
that it and its subsidiaries will from time to time incur other additional
indebtedness and liabilities. See "Description of Notes -- Subordination."
The Indenture does not contain any financial covenants or restrictions on
the payment of dividends, the incurrence of indebtedness, including Senior
Indebtedness, by the Company or its subsidiaries or the issuance or repurchase
of securities by the Company. The Indenture contains no covenants or other
provisions designed to afford protection to holders of the Notes in the event of
a highly leveraged transaction or a change in control of the Company except to
the extent described under "Description of Notes -- Repurchase at Option of
Holders Upon a Fundamental Change."
LIMITATIONS ON REPURCHASE OF NOTES
Upon the occurrence of a Fundamental Change (as defined), each Holder of
Notes will have the right, at such Holder's option, to require the Company to
repurchase all or a portion of such Holder's Notes. If a Fundamental Change were
to occur, there can be no assurance that the Company would have or would be able
to obtain sufficient funds to pay the repurchase price for all Notes tendered by
Holders. Any future credit agreements or other agreements relating to
indebtedness (including other Senior Indebtedness) to which the Company becomes
a party may contain restrictions and provisions which prohibit the Company from
purchasing or repurchasing any Notes or may provide that a Fundamental Change
would constitute an event of default thereunder. Under Orbital's existing credit
facility with a syndicate of banks led by Morgan Guaranty Trust Company of New
York (the "Credit Facility"), a Fundamental Change would constitute an event of
default. In the event a Fundamental Change occurs at a time when the Company is
prohibited from purchasing or repurchasing Notes, the Company could seek the
consent of its lenders to the purchase of Notes or could attempt to refinance
the indebtedness that contains such prohibition. If the Company does not obtain
such a consent or repay such indebtedness, the Company would remain prohibited
from purchasing or repurchasing Notes. In such a case, the Company's failure to
redeem tendered Notes may constitute an Event of Default under the Indenture,
which may, in turn, constitute a further default under the terms of other
indebtedness that the Company has entered or may enter into from time to time,
including under any Senior Indebtedness. In such circumstances, the
subordination provisions in the Indenture would likely prohibit the repurchase
or redemption of the Notes. See "Description of Notes -- Repurchase at Option of
Holders upon a Fundamental Change."
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<PAGE> 10
RISKS ASSOCIATED WITH ACQUISITIONS
The Company has historically made strategic acquisitions of businesses and
routinely evaluates potential acquisition candidates that it believes would
enhance its business. The Company has also historically pursued strategic
alliances through joint ventures, and routinely evaluates similar opportunities.
Such transactions commonly involve certain risks including, among others,
assimilating the acquired operations, technologies and personnel and maintaining
appropriate standards, controls, procedures and policies, entering markets in
which the Company has little or no direct prior experience, potentially losing
key employees of acquired organizations and resolving potential disputes with
joint venture partners. There can be no assurance that the Company will be
successful in overcoming these risks in connection with its recent acquisitions
or any future transactions.
POSSIBLE VOLATILITY OF STOCK AND NOTES PRICES
The market price of the Notes and the Common Stock issuable upon conversion
thereof could be subject to significant fluctuations in response to various
factors and events, including technical performance of the Company's products,
market acceptance of the Company's new products and services, variations in the
Company's operating results, changes in reports of securities analysts, and
publicity regarding the industry or the Company. In addition, the stock market
in recent years has experienced broad price and volume fluctuations that often
have been unrelated to the operating performance of particular companies, which
may adversely affect the market price of the shares of Common Stock.
LIMITED PUBLIC MARKET FOR THE NOTES AND RESTRICTIONS ON TRANSFER
Prior to this offering, the Notes have been eligible for trading on the
PORTAL Market and application has been made to list the Notes on the Luxembourg
Stock Exchange. The Notes sold pursuant to the Registration Statement of which
this Prospectus forms a part are not expected to remain eligible for trading on
the PORTAL system. The Notes are not listed on any national securities exchange
in the United States and are not quoted on the Nasdaq Stock Market. Although the
Initial Purchasers have advised the Company that they currently intend to make a
market in the Notes, they are not obligated to do so and may discontinue such
market making 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. Accordingly, there can be no assurance that any market for the
Notes will develop or, if one does develop, that it will be maintained. If an
active market for the Notes fails to develop or be sustained, the trading price
of the Notes could be materially adversely affected.
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<PAGE> 11
RECENT DEVELOPMENTS
On November 28, 1997, Orbital and its subsidiary, Magellan Corporation
("Magellan"), signed an Agreement and Plan of Merger (the "Agreement") with
Ashtech Inc. ("Ashtech"), a privately-held developer and supplier of
high-performance Global Positioning System and related satellite navigation
products, components and technologies. Under the terms of the Agreement, shares
of Magellan common stock and $25 million in cash will be exchanged for all
issued and outstanding securities of Ashtech. In the aggregate, after giving
effect to the merger, Orbital and Ashtech security holders will own 66% and 34%,
respectively, of the equity ownership of Magellan. The transaction is expected
to close in December 1997, subject to customary closing conditions, including
review under the U.S. Government's Hart-Scott-Rodino procedures.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, ------------------------------
----------------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ---- ------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges (1)..... 1.54x 1.43x 1.58x --(2) 2.38x 2.38x 3.71x
</TABLE>
- ---------------
(1) The ratio of earnings to fixed charges is computed by dividing (a) earnings
before taxes plus fixed charges as adjusted for income (loss) attributed to
minority interests and equity method investments by (b) fixed charges. Fixed
charges consist of interest expense, capitalized interest and the estimated
portion of rental expense deemed by the Company to be a reasonable
approximation of the interest factor of rental payments under operating
leases.
(2) For 1995, earnings were inadequate to cover fixed charges; the amount of the
deficiency was $7.6 million.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Notes and
the Conversion Shares by the Selling Securityholders.
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<PAGE> 12
DESCRIPTION OF NOTES
The Notes were initially issued on September 16, 1997 under an indenture
dated as of September 16, 1997, between the Company and Deutsche Bank AG, New
York Branch, as trustee (the "Trustee"), as amended by a First Supplemental
Indenture dated as of December , 1997 (collectively, the "Indenture"). Copies
of the form of the Indenture and the Registration Rights Agreement (as defined
below) are available from the Trustee, the Company or the Luxembourg Paying
Agent upon request by a registered holder of Notes (a "Holder"). The following
summaries of certain provisions of the Notes, the Indenture and the Registration
Rights Agreement do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Notes,
the Indenture and the Registration Rights Agreement, including the definitions
therein of certain terms which are not otherwise defined in this Prospectus.
Wherever particular provisions or defined terms of the Indenture (or the form of
Note which is a part thereof) or the Registration Rights Agreement are referred
to, such provisions or defined terms are incorporated herein by reference.
References in this section to the "Company" are solely to Orbital Sciences
Corporation, a Delaware corporation, and not its subsidiaries. Any reference to
interest shall include Additional Amounts and Additional Interest (each as
defined below) as the context requires.
GENERAL
The Notes are unsecured subordinated obligations of the Company and are
limited to $100,000,000 aggregate principal amount. The Notes mature on October
1, 2002 and are payable at a price of 100% of the principal amount thereof. The
Notes bear interest at a rate of 5% per annum from September 16, 1997, payable
semiannually on October 1 and April 1 of each year, commencing on April 1, 1998.
Interest will be computed on the basis of a 360-day year, comprised of twelve
30-day months.
The Notes are convertible into Common Stock initially at the conversion
price of $28.00 per share, subject to adjustment upon the occurrence of certain
events described under "-- Conversion," at any time on or prior to the close of
business on the maturity date, unless previously redeemed or repurchased.
The Notes are redeemable (a) at the option of the Company in the event of
certain developments involving withholding taxes of the U.S. as described below
under "-- Redemption -- Redemption for Taxation Reasons" at a redemption price
of 100% of the principal amount of the Notes to be redeemed, plus accrued
interest to, but excluding, the Redemption Date and (b) at the option of the
Company on or after October 2, 2000 at the redemption prices set forth below
under "-- Redemption -- Optional Redemption," plus accrued interest to, but
excluding, the Redemption Date.
The Indenture does not contain any financial covenants or restrictions on
the payment of dividends by the Company, the incurrence of indebtedness,
including Senior Indebtedness (as defined), by the Company or its subsidiaries
or the issuance or repurchase of securities by the Company. The Indenture
contains no covenants or other provisions designed to afford protection to
Holders of the Notes in the event of a highly leveraged transaction or a change
in control of the Company except to the extent described below under
"-- Repurchase at Option of Holders Upon a Fundamental Change."
BOOK ENTRY, DELIVERY AND FORM
The Notes were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and integral multiples thereof.
Global Note; Book-Entry Form. Except in the limited circumstances set
forth below under "Certificated Notes," the Notes will be evidenced by a global
Note (the "Global Note") deposited with, or on behalf of, The Depository Trust
Company, New York, New York ("DTC") and registered in the name of Cede & Co.
("Cede"), as DTC's nominee. Except as set forth below, record
11
<PAGE> 13
ownership of the Global Note may be transferred, in whole or in part, only to
another nominee of DTC or to a successor of DTC or its nominee.
A beneficial owner may hold its interests in the Global Note directly
through DTC if such beneficial owner 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 Note to such persons may be limited.
Beneficial owners who are not Participants may beneficially own interests
in the Global Note held by DTC only through Participants, including the
Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"), 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 Note, Cede for all purposes will be
considered the sole holder of the Global Note. Except as provided below and
except in certain limited circumstances as provided in the Indenture, owners of
beneficial interests in the Global Note will not be entitled to have
certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and will not be
considered holders thereof.
Payment of interest on and principal of and the redemption price or
repurchase price of the Global Note will be made to Cede, the nominee for DTC,
as the registered owner of the Global Note, by wire transfer of immediately
available funds on each relevant payment date. Neither the Company nor the
Trustee (nor any registrar, paying agent or conversion agent under the
Indenture) will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Note, including for any delay by DTC or any Participant
or Indirect Participant in identifying the beneficial owners of the Notes, or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests, and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from DTC for all
purposes.
The Company has been informed by DTC that, with respect to any payment of
interest on, principal of, or the redemption price or repurchase price of, the
Global Note, DTC's practice is to credit Participants' accounts on the payment
date therefor with payments in amounts proportionate to their respective
beneficial interests in the Notes represented by the Global Note, as shown on
the records of DTC (adjusted as necessary so that such payments are made with
respect to whole Notes only), 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 Notes represented by the Global Note 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."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants, the ability of a person having a beneficial
interest in the principal amount represented by the Global Note 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 (nor any registrar, paying agent or
conversion agent under the Indenture) has any responsibility for the performance
of 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 Notes (including, without limitation, an exchange as described below)
only at the direction of one or more Participants to whose account with DTC
interests in the Global Note are credited and only in respect of the principal
amount of the Notes represented by the Global Note as to which such Participant
or Participants has or have given such direction.
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<PAGE> 14
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 to 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 include 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 Note among Participants, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will cause the Notes to be issued in
definitive form in exchange for the Global Note.
Certificated Notes. Certificated Notes may be issued in exchange for Notes
represented by the Global Note if no successor depositary is appointed by the
Company as set forth above or there has been and is continuing an Event of
Default with respect to the Global Note, in each case as described in the
Indenture.
CONVERSION
The Holder of any Note will have the right at the Holder's option to
convert any Note (in denominations of $1,000 or any multiple thereof) into
shares of Common Stock at any time on or prior to the close of business on
October 1, 2002, unless previously redeemed or repurchased, at an initial
conversion price of $28.00 per share of Common Stock (equivalent to a conversion
rate of approximately 35.71 shares per $1,000 principal amount of Notes). The
conversion price is subject to adjustment from time to time as described below.
The right to convert a Note called for redemption or delivered for repurchase
will terminate at the close of business on the Business Day prior to the
Redemption Date or the Repurchase Date (as defined) for such Note, as the case
may be.
Beneficial owners of interests in the Global Note may exercise their right
of conversion by delivering to DTC the appropriate instruction form for
conversion pursuant to DTC's conversion program and, in the case of conversions
through Euroclear or Cedel, in accordance with Euroclear's or Cedel's normal
operating procedures when application has been made to make the underlying
Common Stock eligible for trading on Euroclear or Cedel. To convert a Note held
in certificated form into shares of Common Stock, a Holder must (i) complete and
manually sign the conversion notice on the back of the Note (or complete and
manually sign a facsimile thereof) and deliver such notice to the Conversion
Agent in New York, New York or the Conversion Agent in Luxembourg, (ii)
surrender the Note to the Conversion Agent in New York, New York or to the
Conversion Agent in Luxembourg, as the case may be, (iii) if required, furnish
appropriate endorsements and transfer documents, (iv) if required, pay all
transfer or similar taxes, and (v) if required, pay funds equal to interest
payable on the next succeeding Interest Payment Date. Pursuant to the Indenture,
the date on which all of the foregoing requirements have been satisfied is the
date of surrender for conversion. Such notice of conversion can be obtained from
the Trustee at the Corporate Trust Office or the office of any Conversion Agent.
As promptly as practicable on or after the conversion date, the Company will
issue and deliver to the Trustee a certificate or certificates for the number of
full shares of Common Stock issuable upon conversion, together with payment in
lieu of any fraction of a share in an amount determined as set forth below. Such
certificate will be sent by the Trustee to the appropriate Conversion Agent for
delivery to the Holder entitled thereto. Such Common Stock
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<PAGE> 15
issuable upon conversion of the Notes will be fully paid and nonassessable. Any
Note surrendered for conversion during the period from the close of business on
any Regular Record Date to the opening of business on the next succeeding
Interest Payment Date must be accompanied by payment of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of Notes
being surrendered for conversion. In the case of any Note which has been
converted after any Regular Record Date, but on or before the next Interest
Payment Date, interest the Stated Maturity of which is on such Interest Payment
Date shall be payable on such Interest Payment Date notwithstanding such
conversion. Such interest shall be paid to the Holder of such Note on such
Regular Record Date. As a result, a Holder that surrenders Notes for conversion
on a date that is not an Interest Payment Date will not receive any interest for
the period from the Interest Payment Date next preceding the date of conversion
to the date of conversion or for any later period, even if the Notes are
surrendered after a notice of redemption or after notice has been received of a
Fundamental Change (as defined). No other payment or adjustment for interest, or
for any dividends in respect of Common Stock, will be made upon conversion.
Holders of Common Stock issued upon conversion will not be entitled to receive
any dividends payable to holders of Common Stock as of any record time before
the close of business on the conversion date. No fractional shares will be
issued upon conversion but, in lieu thereof, the equivalent amount will be paid
in cash by the Company based on the Current Market Price (as defined in the
Indenture) of Common Stock on the day of conversion.
Notes surrendered for conversion, in whole or in part, shall be forwarded
promptly by the Conversion Agent to the Trustee for cancellation. The Company
shall execute and the Trustee shall authenticate and deliver a new Note or Notes
in principal amount equal to the unconverted portion of Notes so surrendered, if
any. The Conversion Agent will deliver promptly to the Paying Agent in New York,
New York or Luxembourg, as applicable, all funds collected representing interest
payable on a Note converted between a Regular Record Date and the next
succeeding Interest Payment Date.
A Holder delivering a Note for conversion will not be required to pay any
documentary, stamp or similar duties in respect of the issue or delivery of
Common Stock on conversion but will be required to pay any tax or duty which may
be payable in respect of any transfer involved in the issue and delivery of the
Common Stock in a name other than that of the Holder of the Note. Certificates
representing Common Stock will not be issued or delivered unless all taxes and
duties, if any, payable by the Holder have been paid.
The initial conversion price of $28.00 per share of Common Stock
(equivalent to a conversion rate of approximately 35.71 shares per $1,000
principal amount of the Notes) is subject to adjustment (under formulae set
forth in the Indenture) in certain events, including: (i) the issuance of Common
Stock as a dividend or distribution on Common Stock; (ii) the issuance to all
holders of Common Stock of certain rights or warrants entitling them to
subscribe for or to purchase Common Stock at less than the Current Market Price
(as defined) of the Common Stock (determined in accordance with the Indenture);
(iii) certain subdivisions and combinations of the Common Stock; (iv) the
distribution to all holders of Common Stock of shares of capital stock of the
Company (other than Common Stock) or evidences of indebtedness of the Company or
assets (including securities, but excluding those dividends and distributions of
Common Stock, rights and warrants referred to above and dividends paid only in
cash), provided however that if such distribution is only exercisable upon the
occurrence of certain triggering events, then the Conversion Price will not be
adjusted until such triggering event occurs; (v) distributions consisting of
cash, excluding any quarterly cash dividend on the Common Stock to the extent
that the aggregate cash dividend per share of Common Stock in any quarterly
period does not exceed the greater of (x) the amount per share of Common Stock
of the next preceding quarterly cash dividend on the Common Stock to the extent
that such preceding quarterly dividend did not require an adjustment of the
conversion price pursuant to this clause (v), and (y) 7.00% of the average of
the daily Current Market Price of the Common Stock for the ten consecutive
Trading Days (as defined) immediately prior to the date of declaration of such
dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company; and (vi) payment in
respect of a tender or
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<PAGE> 16
exchange offer by the Company or any subsidiary of the Company for the Common
Stock to the extent that the cash and value of any other consideration included
in such payment per share of Common Stock exceeds the Current Market Price (as
defined) per share of Common Stock on the Trading Day next succeeding the last
date on which tenders or exchanges may be made pursuant to such tender or
exchange offer. If an adjustment is required to be made as set forth in clause
(v) above as a result of a distribution that is a quarterly dividend, such
adjustment would be based upon the amount by which such distribution exceeds the
amount of the quarterly cash dividend permitted to be excluded pursuant to such
clause (v). If an adjustment is required to be made as set forth in clause (v)
above as a result of a distribution that is not a quarterly dividend, such
adjustment would be based upon the full amount of the distribution. In the event
of a distribution to all holders of Common Stock of certain rights or warrants
to subscribe for additional shares of the Company's capital stock as provided in
clause (iv) above, the Company may, instead of making any adjustment in the
conversion price, make proper provision so that each Holder of a Note who
converts such Note after the record date for such distribution and prior to the
expiration or redemption of such rights or warrants will be entitled to receive
upon such conversion, in addition to shares of Common Stock, a number of such
rights or warrants determined in accordance with a formula set forth in the
Indenture. So long as the Notes are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange so require, notice of any adjustment
of the conversion price will be given to Holders of the Notes by publication in
a daily newspaper of general circulation in Luxembourg (which is expected to be
the Luxemberger Wort) or, if publication in Luxembourg is not practical,
elsewhere in Western Europe.
In the case of certain consolidations and mergers involving the Company
(other than a consolidation or merger that does not result in any
reclassification, conversion, exchange or cancellation of Common Stock) or a
sale or conveyance to another Person of the property and assets of the Company
as an entirety or substantially as an entirety, the Holders of the Notes then
outstanding will generally be entitled thereafter, during the period such Notes
shall be convertible as specified above, to convert such Notes for the kind and
amount of shares of stock, other securities or other property or assets
(including cash) which they would have owned or been entitled to receive upon
such reclassification, consolidation, merger, combination, sale or conveyance
had such Notes been converted into Common Stock immediately prior to such
reclassification, consolidation, merger, combination, sale or conveyance,
assuming that a Holder of Notes would not have exercised any rights of election
as to the stock, other securities or other property or assets (including cash)
receivable in connection therewith.
The Company from time to time may to the extent permitted by law reduce the
conversion price by any amount for any period of at least 20 days, in which case
the Company shall give at least 15 days' notice of such reduction, if the
reduction is irrevocable during the period and the Board of Directors of the
Company has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. The Company
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors of the Company deems advisable
to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution on Common
Stock (or rights to acquire Common Stock) or resulting from any dividend or
distribution of shares or issuance of rights or warrants to purchase or
subscribe for shares or from any event treated as such for income tax purposes.
See "Certain Federal Income Tax Considerations."
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect; provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
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.
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<PAGE> 17
SUBORDINATION
The indebtedness evidenced by the Notes is subordinated in right of payment
to the extent provided in the Indenture to the prior payment in full of all
existing and future Senior Indebtedness (as defined). As of September 30, 1997,
the aggregate amount of Senior Indebtedness was approximately $211 million, and
there was approximately $225 million of indebtedness and other liabilities of
subsidiaries of the Company outstanding (including guarantees of direct and
indirect subsidiaries of the Company of the debt of ORBCOMM in the amount of
$170.0 million) to which the Notes were structurally subordinated. The Indenture
does not prohibit or limit the incurrence of Senior Indebtedness or the
incurrence of other indebtedness and other liabilities by the Company or any of
its subsidiaries, and the incurrence of any such additional indebtedness and
other liabilities could adversely affect the Company's ability to pay its
obligations on the Notes. The Company expects that it will from time to time
incur additional indebtedness, including Senior Indebtedness, and other
liabilities. See "Risk Factors -- Leverage; Subordination; Absence of Financial
Covenants."
Upon any payment by the Company or distribution of assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization
(including any of the foregoing as a result of bankruptcy or moratorium of
payment or other similar proceeding), payment on account of the principal of,
redemption of, and interest on the Notes (including on account of a Fundamental
Change) is to be subordinated to the extent provided in the Indenture in right
of payment to the prior payment in full in cash or other payment of all Senior
Indebtedness. In the event of any acceleration of the Notes because of an Event
of Default (as defined), the holders of any Senior Indebtedness then outstanding
would be entitled to payment in full in cash or other payment of all obligations
in respect of such Senior Indebtedness before the Holders of the Notes are
entitled to receive any payment or other distribution in respect thereof. The
Indenture requires that the Company promptly notify holders of Senior
Indebtedness if payment of the Notes is accelerated because of an Event of
Default.
The Company also may not make any payment upon, redemption of, or payment
of Additional Interest, if any, on or repurchase or otherwise acquire the Notes
if (i) a default in the payment of the principal of, premium, if any, interest,
rent or other obligations in respect of Senior Indebtedness occurs and is
continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Senior Indebtedness (as
defined) that permits the holders of the Designated Senior Indebtedness as to
which such default relates to accelerate its maturity and the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the Company or other
person permitted to give such notice under the Indenture. Payments on the Notes
will be resumed (a) in case of a payment default, upon the date on which such
default is cured or waived or ceases to exist and (b) in case of a nonpayment
default, upon the earlier of the date on which such nonpayment default is cured
or waived or ceases to exist or 179 days after the date on which the applicable
Payment Blockage Notice is received if the maturity of the Designated Senior
Indebtedness has not been accelerated, unless the Indenture otherwise prohibits
payments on the Notes at such time. No new period of payment blockage may be
commenced pursuant to a Payment Blockage Notice unless and until 365 days have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee (unless such
default was waived, cured or otherwise ceased to exist and thereafter
subsequently reoccurred) shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
By reason of the subordination provisions described above, in the event of
the Company's bankruptcy, dissolution or reorganization, holders of Senior
Indebtedness may receive more, ratably, and Holders of the Notes may receive
less, ratably, than the other creditors of the Company. No provision contained
in the Indenture or the Notes will affect the obligation of the Company, which
is absolute and unconditional, to pay, when due, principal of, premium, if any,
and interest on, the Notes. The subordination provisions of the Indenture and
the Notes will not prevent the occurrence
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<PAGE> 18
of any default or Event of Default under the Indenture or limit the rights of
the Trustee or any Holder, subject to the preceding paragraphs, to pursue any
other rights or remedies with respect to the Notes.
In the event that, notwithstanding the foregoing, the Trustee or any Holder
of Notes receives any payment or distribution of assets of the Company of any
kind in contravention of any of the subordination provisions of the Indenture,
whether in cash, property or securities (including, without limitation, by way
of set-off or otherwise) in respect of the Notes before all Senior Indebtedness
is paid in full, then such payment or distribution will be held by the recipient
in trust for the benefit of, and paid over to, holders of Senior Indebtedness of
the Company or their representative or representatives to the extent necessary
to make payment in full of all Senior Indebtedness of the Company remaining
unpaid, after giving effect to any concurrent payment or distribution, or
provision therefor, to or for the holders of Senior Indebtedness of the Company.
The Company is obligated to pay reasonable compensation to the Trustee and
to indemnify the Trustee against any losses, liabilities or expenses (including
reasonable attorney's fees) incurred in connection with its duties relating to
the Notes. To the extent provided in the Indenture, the Trustee's claims for
such payments will be senior to those of Holders of the Notes in respect of all
funds collected or held by the Trustee.
The term "Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness (as defined) of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions or refundings of, or amendments, modifications
or supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Notes or expressly provides that such Indebtedness is
"pari passu" or "junior" to the Notes. Notwithstanding the foregoing, Senior
Indebtedness shall not include Indebtedness of the Company to any Subsidiary of
the Company arising by reason of a guarantee by the Company of Indebtedness of
such Subsidiary to a Person that is not a Subsidiary of the Company.
The term "Indebtedness" means, with respect to any Person (as defined), and
without duplication, (a) all indebtedness, obligations and other liabilities
(contingent or otherwise) of such Person for borrowed money (including
obligations of such Person in respect of overdrafts, foreign exchange contracts,
currency exchange agreements, interest rate protection agreements, and any loans
or advances from banks, or any similar agreement or instrument, whether or not
evidenced by notes or similar instruments) or evidenced by bonds, debentures,
notes or similar instruments (whether or not the recourse of the lender is to
the whole of the assets of such Person or to only a portion thereof) (other than
any account payable or other accrued current liability or obligation incurred in
the ordinary course of business in connection with the obtaining of materials or
services), (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank guarantees
or bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) in respect of leases of such Person required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person and all obligations and
other liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with the lease of real or
personal property or improvements thereon which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property and the obligations of such Person under such lease or related
document to purchase or to cause a third party to purchase such leased property,
(d) all obligations of such person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or
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<PAGE> 19
accrued liabilities arising in the course of business), (e) all obligations to
purchase, redeem or acquire any capital stock of such Person, (f) all direct or
indirect guarantees or similar agreements by such Person in respect of, and
obligations or liabilities (contingent or otherwise) of such Person to purchase
or otherwise acquire or otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another Person of the kind described
in clauses (a) through (e), (g) any indebtedness or other obligations described
in clauses (a) through (f) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by such Person,
regardless of whether the indebtedness or other obligation secured thereby shall
have been assumed by such Person, and (h) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability of the kind described in clauses (a)
through (g).
The term "Designated Senior Indebtedness" means any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which the
Company is a party) expressly provides that such Senior Indebtedness shall be
"Designated Senior Indebtedness" for purposes of the Indenture (provided that
such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness).
REDEMPTION
Optional Redemption
At any time on or after October 2, 2000, the Notes will be redeemable at
the Company's option on at least 20 and not more than 60 days' notice, in whole,
or from time to time, in part, at the following prices (expressed as percentages
of the principal amount), together with accrued and unpaid interest to, but
excluding, the Redemption Date:
If redeemed during the following periods:
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
-------------------------------------------------------------------- -----------------
<S> <C>
October 2, 2000 through and including September 30, 2001............ 102%
October 1, 2001 through and including September 30, 2002............ 101%
</TABLE>
and 100% at October 1, 2002; together, in each case, with accrued interest to,
but excluding the Redemption Date; provided that any semi-annual payment of
interest becoming due on the Redemption Date shall be payable to the Holders of
record on the Regular Record Date of the Notes being redeemed.
If fewer than all the Notes are to be redeemed, the Trustee will select the
Notes to be redeemed by lot or in such other manner it deems appropriate and
fair. If any Note is to be redeemed in part only, a new Note or Notes in
aggregate principal amount equal to the unredeemed principal portion thereof
will be issued at the Corporate Trust Office of the Trustee in The City of New
York or the Security Registrar in Luxembourg. If a portion of a Holder's Notes
is selected for partial redemption and such Holder converts a portion of such
Notes, such converted portion shall be deemed to be taken from the portion
selected for redemption.
Redemption for Taxation Reasons
If the Company determines that principally as a result of any change in, or
amendment to, the laws or regulations prevailing in the U.S. or any political
subdivision or taxing authority thereof or therein, which change or amendment
becomes effective on or after September 11, 1997 or as a result of any
application or official interpretation of such laws or regulations not generally
known before that date (a "Tax Law Change") the Company is or would be required
on the next succeeding Interest Payment Date to pay Additional Amounts (as
defined), and such obligation cannot be avoided by the Company taking reasonable
measures available to it, the Company may redeem the affected Notes in whole,
but not in part, at any time, on giving not less than 20 days' notice, at a
redemption price equal to 100% of the principal amount thereof plus accrued
interest to,
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<PAGE> 20
but excluding, the Redemption Date and any Additional Amounts then payable,
provided that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to withhold
or pay Additional Amounts were a payment in respect of the Notes then made.
Prior to the giving of any notice of redemption with respect to a Tax Law
Change, the Company shall deliver to the Trustee (a) a certificate stating that
the Company is entitled to effect such redemption and setting forth a statement
of facts showing that the conditions precedent to the right of the Company so to
redeem have occurred and (b) an opinion of counsel selected by the Company and
reasonably acceptable to the Trustee, to the effect that the Company has or will
become obligated to pay such Additional Amounts as a result of a Tax Law Change.
The Company's right to redeem the affected Notes shall continue as long as the
Company is obligated to pay such Additional Amounts, notwithstanding that the
Company shall have theretofore made payments of Additional Amounts.
PAYMENT AND CONVERSION
The principal of Notes will be payable in U.S. dollars, against surrender
thereof at the Corporate Trust Office of the Trustee in The City of New York,
or, subject to any applicable laws and regulations, at the office of any Paying
Agent, by dollar check drawn on, or by transfer to a dollar account (such
transfer to be made only to Holders of an aggregate principal amount of Notes in
excess of $2,000,000) maintained by the Holder with a bank in The City of New
York. Payment of any installment of interest on Notes will be made to the Person
in whose name such Notes or any predecessor Notes are registered at the close of
business on March 15 or September 15 (whether or not a Business Day) immediately
preceding the relevant Interest Payment Date (a "Regular Record Date"). Payments
of such interest will be made by a dollar check drawn on a bank in The City of
New York mailed to the Holder at such Holder's registered address or, upon
application by the Holder thereof to the Security Registrar not later than the
applicable Regular Record Date, by transfer to a dollar account (such transfer
to be made only to Holders of an aggregate principal amount of Notes in excess
of $2,000,000) maintained by the Holder with a bank in The City of New York. No
transfer to a dollar account will be made unless the Trustee has received
written wire instructions not less than 15 days prior to the relevant payment
date.
Any payment on the Notes due on any day which is not a Business Day need
not be made on such day, but may be made on the next succeeding Business Day
with the same force and effect as if made on such due date, and no interest
shall accrue on such payment for the period between such originally-scheduled
payment date and the next succeeding Business Day. "Business Day," when used
with respect to any place of payment, place of conversion or any other place, as
the case may be, means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in such place of payment, place
of conversion or other place, as the case may be, are authorized or obligated by
law or executive order to close; provided, however, that a day on which banking
institutions in New York, New York or Luxembourg are authorized or obligated by
law or executive order to close shall not be a Business Day for certain
purposes.
Notes may be surrendered for conversion at the Corporate Trust Office of
the Trustee in The City of New York. In addition, Notes may be surrendered for
conversion, subject to any applicable laws and regulations, at the office of any
Conversion Agent outside the United States. Notes surrendered for conversion
must be accompanied by appropriate notices and any payments in respect of
interest or taxes, as applicable, as described above under "-- Conversion."
The Company has initially appointed as Paying Agent and Conversion Agent
the Trustee at its Corporate Trust Office in The City of New York and Banque de
Luxembourg as the Paying Agent and Conversion Agent in Luxembourg. The Company
may at any time terminate the appointment of any Paying Agent or Conversion
Agent and appoint additional or other Paying Agents and Conversion Agents,
provided that until the Notes have been delivered to the Trustee for
cancellation, or moneys sufficient to pay the principal of, premium, if any, and
interest on the Notes have been
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<PAGE> 21
made available for payment and either paid or returned to the Company as
provided in the Indenture, it will maintain offices or agencies in The City of
New York, and so long as the Notes are listed on the Luxembourg Stock Exchange
and the rules of the Luxembourg Stock Exchange shall so require, in Luxembourg,
for payments with respect to the Notes and for the surrender of Notes for
conversion, registration of transfer or exchange and receipt of notices and
demands to or upon the Company. Notice of any such termination or appointment
and of any change in the office through which any Paying Agent or Conversion
Agent will act will be given in accordance with "-- Notices" below.
Interest payable on Notes on any Redemption Date or Repurchase Date that is
an Interest Payment Date will be paid to the Holders of record as of the
immediately preceding Regular Record Date.
All moneys deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of principal of, premium, if any, or
interest on any Notes which remain unclaimed at the end of the earlier of ten
days prior to the date on which such money would escheat to the state and two
years after such payment has become due and payable will be repaid to the
Company, and the Holder of such Note will thereafter look only to the Company
for payment thereof.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay to a Non-U.S. Holder (as defined in "Certain Federal
Income Tax Considerations" below) of any Note such additional amounts
("Additional Amounts") as may be necessary in order that every net payment of
the principal of, premium, if any, and interest on such Note, after deduction or
withholding for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the United
States or any political subdivision or taxing authority thereof or therein, will
not be less than the amount provided for in such Note to be then due and
payable; provided however, that the foregoing obligation to pay Additional
Amounts will not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such Non-U.S. Holder (or between a fiduciary, settlor,
beneficiary, member, shareholder of or possessor of a power over such
Non-U.S. Holder, if such Non-U.S. Holder is a trust, an estate, a
partnership or a corporation) and the United States or any political
subdivision or taxing authority thereof or therein, including, without
limitation, such Non-U.S. Holder (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) being or having been a citizen,
domiciliary or resident of the United States or treated as a resident
thereof, or being or having been engaged in a trade or business or present
therein, or having or having had a permanent establishment therein; or (ii)
such Non-U.S. Holder's present or former status as a personal holding
company, a foreign personal holding company with respect to the United
States, a controlled foreign corporation, a passive foreign investment
company, or a foreign private foundation or foreign tax exempt entity for
United States tax purposes, or a corporation which accumulates earnings to
avoid United States federal income tax;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the Non-U.S. Holder of
such Notes for payment on a date more than 15 days after the date on which
such payment became due and payable or the date on which payment thereof is
duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or governmental charge;
(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with any certification,
identification or other reporting requirement concerning the nationality,
residence, identity or connection with the United States of such Non-U.S.
Holder (or beneficial owner of such Note), if compliance is required or
imposed by a statute, treaty, regulation or administrative practice of the
United States as a
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<PAGE> 22
precondition to exemption from all or part of such tax, assessment or other
governmental charge;
(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of,
premium, if any, or interest on such Note;
(f) any tax, assessment or other governmental charge imposed on
interest received by a Non-U.S. Holder actually or constructively holding
10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote;
(g) any tax, assessment or other governmental charge imposed on a
Non-U.S. Holder that is a partnership or a fiduciary or other than the sole
beneficial owner of such payment, but only to the extent that any
beneficial owner or member of the partnership or beneficiary or settlor
with respect to the fiduciary would not have been entitled to the payment
of Additional Amounts had the beneficial owner, member, beneficiary or
settlor directly been the holder of the Note;
(h) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal of, premium, if
any, or interest on any Note, if such payment can be made without such
withholding by any other Paying Agent in Western Europe; or
(i) any combination of items (a), (b), (c), (d), (e), (f), (g) and
(h).
Notwithstanding the foregoing, the Company shall not be obligated to pay
Additional Amounts in respect of payments becoming due on the Notes more than 15
days after the Redemption Date with respect to any redemption of the Notes
described in the first paragraph under "Redemption -- Redemption for Taxation
Reasons" to the extent that the Company's obligation to pay such Additional
Amounts arises from the Tax Law Change that resulted in such redemption. Except
as specifically provided, the Company is not obligated to make any payment with
respect to any tax.
REPURCHASE AT OPTION OF HOLDERS UPON A FUNDAMENTAL CHANGE
If a Fundamental Change occurs, each Holder of Notes shall have the right,
at the Holder's option, to require the Company to repurchase all of such
Holder's Notes, or any portion of a Note that is $1,000 or an integral multiple
of $1,000 in excess thereof, on the date (the "Repurchase Date" ) that is 45
days after the date of the Company Notice (as defined), at a price (the
"Repurchase Price") (expressed as a percentage of the principal amount) equal to
102% if the Repurchase Date is during the period beginning September 17, 1997
and ending September 30, 2000, and thereafter at the redemption price set forth
under "-- Redemption -- Optional Redemption" which would be applicable to a
redemption at the option of the Company on the Repurchase Date; provided that,
if the Applicable Price (as defined) is less than the Reference Market Price (as
defined), the Company shall repurchase such Notes at a price equal to the
foregoing repurchase price multiplied by the fraction obtained by dividing the
Applicable Price by the Reference Market Price. In each case, the Company shall
also pay accrued interest on the redeemed Notes to, but excluding, the
Repurchase Date. Any Notes repurchased by the Company shall be canceled.
Within 30 days after the occurrence of a Fundamental Change, the Company is
obligated to give to all Holders of the Notes notice, as provided in the
Indenture (the "Company Notice") and in accordance with "-- Notices" below, of
the occurrence of such Fundamental Change and of the repurchase right arising as
a result thereof unless the Company has previously called for the redemption of
all the Notes. The Company must also deliver a copy of the Company Notice to the
Trustee. To exercise the repurchase right, a Holder of Notes must deliver on or
before the 30th day after the date of the Company Notice irrevocable written
notice to the Trustee or any Paying Agent of the Holder's exercise of such
right, together with the Notes with respect to which the right is being
exercised. Beneficial owners of an interest in the Global Note may exercise the
repurchase right by delivering the appropriate instruction form for repurchases
at the election of Holders pursuant to the DTC book-entry repurchase program.
21
<PAGE> 23
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which at least 90% of the then outstanding Common Stock
shall be exchanged for, converted into, acquired for or constitute solely the
right to receive, consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not, based on the aggregate fair market
value (as defined) of such consideration ("Aggregate Consideration"),
represented by common stock or other shares, having a fair market value equal to
at least 90% of the Aggregate Consideration, that are (or, upon consummation of
or immediately following such transaction or event, will be) listed on a United
States national securities exchange or approved for quotation on the Nasdaq
National Market or any similar United States system of automated dissemination
of quotations of securities prices. The term "Applicable Price" means (i) in the
event of a Fundamental Change in which the holders of Common Stock receive only
cash, the amount of cash received by the holder of one share of Common Stock and
(ii) in the event of any other Fundamental Change, the average of the last
reported sale price for the Common Stock during the ten Trading Days (as
defined) prior to the record date for the determination of the holders of Common
Stock entitled to receive cash, securities, property or other assets in
connection with such Fundamental Change or, if no such record date exists, the
date upon which the holders of the Common Stock shall have the right to receive
such cash, securities, property or other assets in connection with the
Fundamental Change. The term "Reference Market Price" shall initially mean
$15.13 (which is equal to 66 2/3% of the last sale price of the Common Stock on
September 10, 1997) and in the event of any adjustment to the conversion price
described above pursuant to the provisions of the Indenture, the Reference
Market Price shall also be adjusted so that the ratio of the Reference Market
Price to the conversion price after giving effect to any such adjustment shall
always be the same as the ratio of $15.13 to the conversion price specified on
the cover page of this Prospectus (without regard to any adjustment thereto).
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Notes. The Company will comply with this rule and any other securities laws
to the extent applicable at that time.
As described above and in the Indenture, upon a Fundamental Change, each
Holder of Notes will have certain rights, at the Holder's option, to require the
Company to repurchase all or a portion of such Holder's Notes. If a Fundamental
Change were to occur, there can be no assurance that the Company would have or
be able to obtain sufficient funds to pay the repurchase price for all Notes
tendered by the Holders thereof. Any future credit agreements or other
agreements relating to other indebtedness (including other Senior Indebtedness)
to which the Company becomes a party may contain restrictions and provisions
which prohibit the Company from repurchasing or redeeming any Notes or provide
that a Fundamental Change would constitute an event of default thereunder. Under
the Credit Facility, a Fundamental Change would constitute an event of default.
In the event a Fundamental Change occurs at a time when the Company is
prohibited from repurchasing or redeeming Notes, the Company could seek the
consent of its lenders to the repurchase of Notes or could attempt to refinance
the borrowings that contain such prohibition. If the Company does not obtain
such a consent or repay such borrowings, the Company would remain prohibited
from repurchasing or redeeming Notes. In such case, the Company's failure to
repurchase tendered Notes would constitute an Event of Default under the
Indenture, which could, in turn, constitute a further default under the other
Indebtedness (including Senior Indebtedness) that the Company has entered or may
enter into from time to time. In such circumstances, the subordination
provisions in the Indenture would likely restrict payments to the Holders of
Notes.
The repurchase option of Holders upon a Fundamental Change may in certain
circumstances make more difficult or discourage a takeover of the Company and,
thus, the removal of incumbent management. The Fundamental Change repurchase
feature, however, was not the result of management's knowledge of any specific
effort to accumulate the Company's stock or to obtain control of the Company by
means of a merger, tender offer, solicitation or otherwise, or part of a
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<PAGE> 24
plan by management to adopt a series of anti-takeover provisions. Instead, the
Fundamental Change repurchase feature was a result of negotiations between the
Company and Initial Purchasers. Management has no present intention to engage in
a transaction involving a Fundamental Change, although it is possible that the
Company could decide to do so in the future. Subject to the limitations on
mergers, consolidations and transfers of assets described herein, the Company
could, in the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Fundamental
Change under the Indenture, but that could increase the amount of indebtedness
(including Senior Indebtedness) outstanding at such time or otherwise affect the
Company's capital structure or credit ratings. The payment of the repurchase
price in the event of a Fundamental Change is subordinated to the prior payment
of Senior Indebtedness as described under "-- Subordination" above.
The term "Fundamental Change" is limited to certain specified transactions
and may not include other events that might adversely affect the financial
condition of the Company, and the repurchase right of holders of the Notes upon
a Fundamental Change would not necessarily afford holders protection in the
event of a highly leveraged transaction, reorganization, merger or similar
transaction involving the Company.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Person (in a
transaction in which the Company is not the surviving entity) or transfer its
properties and assets substantially as an entirety to any Person (other than to
its wholly owned subsidiaries) unless (i) the Person formed by such
consolidation or into which the Company is merged or the Person to which the
properties and assets of the Company are so transferred (the "Successor") shall
be a corporation, limited liability company, partnership or trust organized and
existing under the laws of the United States of America or any political
subdivision thereof and a resident for tax purposes therein, (ii) the Successor
shall expressly assume the due and punctual payment of the principal of,
premium, if any, and interest on the Notes, and the performance of the other
covenants of the Company under the Indenture, (iii) no default and no Event of
Default shall have occurred and be continuing as a result of such consolidation,
merger, transfer and (iv) certain other conditions are met.
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay principal of or premium, if any, on any Note when due; (b) failure to pay
any interest on, or Additional Amounts or Additional Interest with respect to,
any Note when due, continuing for 30 days; (c) failure to perform any other
covenant of the Company in the Indenture, continuing for 60 days after written
notice as provided in the Indenture; and (d) certain events of bankruptcy,
insolvency or reorganization. Subject to the provisions of the Indenture
relating to the duties of the Trustee in case an Event of Default shall occur
and be continuing, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions providing for the indemnification of the
Trustee and certain other conditions specified in the Indenture, the Holders of
a majority in aggregate principal amount of the Outstanding Notes will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.
If an Event of Default (other than as specified in clause (d) above) shall
occur and be continuing, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Notes may accelerate the maturity
of all Notes; provided, however, that after such acceleration, but before a
judgment or decree based on acceleration, the Holders of a majority in aggregate
principal amount of Outstanding Notes may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the non-payment
of accelerated principal, have been cured or waived as provided in the
Indenture. If an Event of Default as specified in clause (d) above occurs and is
continuing, then the principal of, and accrued interest on, all the Notes shall
23
<PAGE> 25
ipso facto become immediately due and payable without any declaration or other
act on the part of the Holders of the Notes or the Trustee. For information as
to waiver of defaults, see "-- Meetings, Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for the enforcement of payment of the principal of, premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note (on or after the relevant repurchase date or redemption date, as the case
may be) or of the right to convert such Note in accordance with the Indenture.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MEETINGS, MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of the Holders of
Notes to consider matters affecting their interests.
Modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, either (i) with the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Notes at the time Outstanding or (ii) by the adoption of a resolution, at a
meeting of Holders of the Notes at which a quorum is present, by the Holders of
at least the lesser of a majority in aggregate principal amount of the Notes at
the time Outstanding and 66 2/3% of the aggregate principal amount of the Notes
represented and entitled to vote at such meeting. However, no such modification
or amendment may, without the consent of the Holder of each Outstanding Note
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, (b) reduce the principal amount of, or the
rate of interest payable thereon or the premium, if any, on any Note, (c) reduce
the amount payable upon a redemption or repurchase, (d) modify the provisions
with respect to the repurchase right of the Holders in a manner adverse to the
Holders, (e) change the obligation of the Company to pay Additional Amounts
described above in a manner adverse to the Holders, (f) change the place or
currency of payment of principal of, or premium, if any, or interest on, or any
other amount payable on, any Note, (g) impair the right to institute suit for
the enforcement of any payment on or with respect to any Note on or after the
Stated Maturity thereof (or, in the case of redemption or repurchase, on or
after the Redemption Date or Repurchase Date), (h) modify the obligation of the
Company to maintain an office or agency in The City of New York and, so long as
the Notes are listed on the Luxembourg Stock Exchange, in a Western European
city, (i) adversely affect the right to convert Notes, (j) modify the
subordination provisions in a manner adverse to the Holders of the Notes, (k)
reduce the above-stated percentage of Outstanding Notes necessary to modify or
amend the Indenture, (l) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults, (m) reduce the percentage of
aggregate principal amount of Outstanding Notes required for the adoption of a
resolution or the quorum required at any meeting of Holders of Notes at which a
resolution is adopted, (n) modify the rights of the Holders to require
repurchase of the Securities in a manner adverse to the Holders, or (o) modify
the obligation of the Company to deliver information required under Rule 144A to
permit certain resales of Notes and Common Stock issuable upon conversion
thereof in the event the Company ceases to be subject to certain reporting
requirements under the United States securities laws in a manner adverse to the
Holders. The
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<PAGE> 26
quorum at any meeting called to adopt a resolution will be persons holding or
representing a majority in aggregate principal amount of the Notes at the time
Outstanding and, at any reconvened meeting adjourned for lack of a quorum, 25%
of such aggregate principal amount.
The Indenture may also be modified or amended without the consent of the
Holders: (i) to evidence the succession of another Person to the Company as
otherwise permitted by the Indenture; (ii) to add to the covenants of the
Company for the benefit of the Holders of the Notes or to surrender any power
conferred upon the Company; (iii) to add any Events of Default; (iv) to secure
the Notes; (v) to make provision for conversion rights and repurchase rights of
the Holders pursuant to the Indenture; (vi) to provide for successor or
additional trustees; (vii) to comply with the requirements of the U.S. Trust
Indenture Act of 1939, as amended; or (viii) to cure any ambiguity, to correct
or supplement any provision which may be inconsistent with any other provision
or to make any other provisions with respect to matters or questions arising
under the Indenture, provided such action shall not adversely affect the
interest of Holders of Notes in any material respect.
REGISTRATION RIGHTS
Pursuant to a registration rights agreement dated September 16, 1997
between the Company and the Initial Purchasers (the "Registration Rights
Agreement"), the Company filed with the Commission within 90 days after the date
of original issuance of the Notes, a registration statement, of which this
Prospectus forms a part (the "Shelf Registration Statement"), covering resales
of the Notes and the Conversion Shares (together, the "Registrable Securities")
and will use its reasonable efforts to cause the Shelf Registration Statement to
be declared effective under the Securities Act within 180 days after the date of
original issuance of the Notes. Pursuant to the Registration Rights Agreement,
the Company must use its reasonable efforts to keep effective the Shelf
Registration Statement until the second anniversary of the last date of original
issuance of the Notes or such earlier date as all Registrable Securities shall
have been disposed of pursuant to the Shelf Registration Statement or on which
all Registrable Securities held by Persons that are not affiliates of the
Company may be resold without registration pursuant to Rule 144(k) under the
Securities Act (the "Effectiveness Period"). The Company is permitted to suspend
the use of this Prospectus, which is part of the Shelf Registration Statement,
in connection with the sales of the Registrable Securities during certain
periods of time under certain circumstances relating to pending corporate
developments and certain other events. The Company will provide to each holder
of Registrable Securities copies of this Prospectus, notify each holder when the
Shelf Registration Statement has become effective and take certain other actions
as are required to permit public resales of the Registrable Securities. A holder
of Registrable Securities that sells such Registrable Securities pursuant to the
Shelf Registration Statement will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement, including certain
indemnification obligations.
The Registration Rights Agreement provides that if, on or prior to the
180th day following the date of original issuance of the Notes, such Shelf
Registration Statement has not been declared effective (a "Registration
Default"), additional payments ("Additional Interest") would accrue on the
affected Notes, from and including the day following such Registration Default
until such time as such Shelf Registration Statement is declared effective.
Additional Interest is paid semi-annually in arrears, with the first semi-annual
payment due on the first Interest Payment Date following the date on which such
Additional Interest begins to accrue, and accrues at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount, to and
including the 90th day following such Registration Default and equal to an
aggregate of one-half of one percent (0.50%) thereof from and after the 91st day
following such Registration Default. In the event that during the Effectiveness
Period the Shelf Registration Statement ceases to be effective for more than 90
days or the Company suspends the use this Prospectus for more than 90 days,
whether or not consecutive, during any 12-month period, then the interest rate
borne by affected Notes will increase by one-half of one percent (0.50%) per
annum from the 91st day of the applicable
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<PAGE> 27
12-month period during which such Shelf Registration Statement ceases to be
effective or the Company suspends the use of this Prospectus, as the case may
be, until the earlier of such time as (i) the Shelf Registration Statement again
becomes effective, (ii) the use of this Prospectus ceases to be suspended or
(iii) the Effectiveness Period expires. The Company agreed in the Registration
Rights Agreement to use its reasonable efforts to cause the Common Stock
issuable upon conversion of the Notes to be quoted on the Nasdaq National
Market, or, if the Common Stock is not then quoted on the Nasdaq National
Market, to be listed on such exchange or market in the United States as the
Common Stock is then listed, upon effectiveness of the Shelf Registration
Statement.
Any change in interest rate on the Notes as a result of the foregoing
provisions will be published in a daily newspaper of general circulation in
Luxembourg, and notice of any such change will be provided to the Luxembourg
Stock Exchange. In addition, notice will be published in a daily newspaper of
general circulation in Luxembourg prior to the eligibility for sale of
registered Notes. The results of sales of registered Notes also will be so
published. Certain services in connection with the sale of registered Notes will
be provided by Banque de Luxembourg, and information regarding the sale of
registered Notes will also be available at Banque de Luxembourg.
This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Registration Rights Agreement.
TRANSFER AND EXCHANGE
At the option of the Holder, Notes will be exchangeable at any time into an
equal aggregate principal amount of Notes of different authorized denominations
upon surrender of the Notes to be exchanged at any office maintained by the
Company for such purpose. See "-- Book Entry, Delivery and Form."
Notes may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the
Security Registrar, without service charge but, in the case of a transfer, upon
payment of any taxes and other governmental charges or insurance charges as
described in the Indenture. Any registration of transfer or exchange will be
effected upon the Security Registrar being satisfied with the documents of title
and identity of the Person making the request, and subject to such reasonable
regulations as the Company may from time to time agree upon with the Security
Registrar, all as described in the Indenture. Notes may be transferred in whole
or in part in authorized denominations at the Corporate Trust Office of the
Trustee in The City of New York or the Security Registrar in Luxembourg. Upon
any transfer or exchange of any Note (or portion thereof), a new Note may be
obtained at the Corporate Trust Office of the Trustee in The City of New York or
the Security Registrar in Luxembourg.
The Company has initially appointed the Trustee as Security Registrar in
New York, New York and Banque de Luxembourg as Security Registrar in Luxembourg.
The Company reserves the right to vary or terminate the appointment of the
Security Registrar or to appoint additional or other Security Registrars or to
approve any change in the office through which any Security Registrar acts,
provided that there will at all times be a Security Registrar, so long as the
Notes are listed on the Luxembourg Stock Exchange and the rules of the
Luxembourg Stock Exchange shall require, in Luxembourg.
In the event of a redemption of less than all of the Notes for any of the
reasons set forth above under "-- Redemption," the Trustee will not be required
(a) to register the transfer or exchange of Notes for a period of 15 days
immediately preceding the date notice is given identifying the serial numbers of
the Notes called for such redemption or (b) to register the transfer or exchange
of any Note, or portion thereof, called for redemption.
The Company may at any time purchase the Notes in the open market or
otherwise at any price, subject to applicable U.S. securities laws. See
"-- Cancellation"
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<PAGE> 28
TITLE
Prior to the registration of transfer of any Note, the Company, the
Trustee, any Paying Agent, any Conversion Agent and any Security Registrar may
treat the registered owner (as reflected in the Security Register) of such Note
as the absolute owner thereof (whether or not such Note shall be overdue) for
the purpose of making payment and for all other purposes.
NOTICES
Notice to Holders of Notes will be given by mail to the addresses of such
Holders as they appear on the Security Register. Such notices will be deemed to
have been given on the date of such mailing or on the date of the first such
publication, as the case may be.
In addition, so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange shall require, notices
to Holders of the Notes will be given by publication in a daily newspaper of
general circulation in Luxembourg or, if publication in Luxembourg is not
practical, in Western Europe. Such publication is expected to be made in the
Luxemberger Wort. Such notices will be deemed to have been given on the date of
such publication or, if published in such newspapers on different dates, on the
date of the first such publication.
Notice of a redemption of Notes will be given at least once not less than
20 nor more than 60 days prior to the Redemption Date (which notice shall be
published in accordance with the procedures described in the preceding
paragraphs) and shall be irrevocable and will specify the Redemption Date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced by
the Company at the expense of the Holder upon delivery to the Trustee or to a
Security Registrar outside the United States (or the Company in the case of
lost, stolen or destroyed certificates) of the mutilated Notes or evidence of
the loss, theft or destruction thereof satisfactory to the Company or the
Trustee or such Security Registrar, as the case may be. In the case of a lost,
stolen or destroyed Note, security or indemnity satisfactory to the Trustee and
the Company and such Security Registrar may be required from the Holder of such
Note before a replacement Note will be issued.
CANCELLATION
All Notes that are surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion will forthwith be cancelled
and may not be reissued or resold.
PAYMENT OF STAMP AND OTHER TAXES
The Company will pay all stamp and other similar duties, if any, which may
be imposed by the United States or any political subdivision thereof or taxing
authority thereof or therein with respect to the issuance of the Notes or the
issuance of Common Stock upon any conversion of Notes. Except as described in
the preceding sentence and under "-- Payment of Additional Amounts," the Company
will not be required to make any payment with respect to any other tax,
assessment or governmental charge imposed by any government or any political
subdivision thereof or taxing authority thereof or therein.
SATISFACTION AND DISCHARGE
The Company may discharge its payment obligations under the Indenture while
Notes remain outstanding if (a)(i) all outstanding Notes have become due and
payable or will become due and payable at their scheduled maturity within one
year, or (ii) all outstanding Notes are scheduled for redemption within one
year, and the Company has deposited with the Trustee an amount sufficient to pay
and discharge the entire indebtedness on all outstanding Notes on the date of
their scheduled maturity or the scheduled date of redemption and (b) the Company
has paid all other sums payable by the Company under the Indenture.
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<PAGE> 29
GOVERNING LAW
The Indenture, the Notes and the Registration Rights Agreement are governed
by the laws of the State of New York, United States of America.
INFORMATION CONCERNING THE TRUSTEE
Deutsche Bank AG, New York Branch is the Trustee under the Indenture. The
Company may maintain deposit accounts and conduct other banking transactions
with the Trustee and its affiliates in the normal course of business.
In case an Event of Default of which a Responsible Officer (as defined) of
the Trustee has actual knowledge shall occur and be continuing, the Trustee will
be required in the exercise of its powers to use the degree of care of a prudent
person in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the Holders of Notes, unless they
shall have offered to the Trustee reasonable security or indemnity.
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<PAGE> 30
SELLING SECURITYHOLDERS
The following table sets forth the name of each Selling Securityholder and
material relationship, if any, with the Company and (i) the amount of Notes
owned by each Selling Securityholder as of December 10, 1997, (ii) the maximum
amount of Notes which may be offered for the account of such Selling
Securityholder under this Prospectus, (iii) the amount of Common Stock owned by
each Selling Securityholder as of December 10, 1997, and (iv) the maximum amount
of Common Stock which may be offered for the account of such Selling
Securityholder under this Prospectus. This information with respect to each
Selling Securityholder is based upon information provided by or on behalf of
such Selling Securityholder. The Selling Securityholders may offer all, some or
none of their Notes or Conversion Shares.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL COMMON STOCK
AMOUNT OF AMOUNT OF NOTES OWNED PRIOR COMMON STOCK
NAME OF SELLING SECURITYHOLDER NOTES OWNED OFFERED HEREBY TO OFFERING(1) OFFERED HEREBY(2)
- ------------------------------------------------ ------------ --------------- -------------- -----------------
<S> <C> <C> <C> <C>
General Motors Employees Domestic Group Trust... $ 10,680,000 $ 10,680,000 381,428 381,428
Bankers Trust International..................... 5,000,000 5,000,000 178,571 178,571
Bond Fund Series Oppenheimer Bond Fund For
Growth........................................ 4,500,000 4,500,000 160,714 160,714
Delaware State Employees Retirement Fund........ 3,025,000 3,025,000 108,035 108,035
Deutsche Morgan Grenfell Inc.(3)................ 2,725,000 2,725,000 97,321 97,321
Paloma Securities L.L.C. ....................... 2,170,000 2,170,000 77,500 77,500
Allstate Insurance Company...................... 2,000,000 2,000,000 95,928(4) 71,428
Lipper Offshore Convertibles, L.P. ............. 2,000,000 2,000,000 71,428 71,428
Lipper Convertibles, L.P. ...................... 1,500,000 1,500,000 53,571 53,571
Silverton International Fund Limited............ 1,330,000 1,330,000 47,500 47,500
AAM/ZAZOVE Institutional Income Fund, L.P. ..... 1,300,000 1,300,000 46,428 46,428
Declaration of Trust for the Defined Benefit
Plan of ICI American Holdings, Inc. .......... 925,000 925,000 33,035 33,035
Thermo Electron Balanced Investment Fund........ 830,000 830,000 29,642 29,642
Declaration of Trust for the Defined Benefit
Plan of ZENECA Holdings Inc. ................. 640,000 640,000 22,857 22,857
Hudson River Trust Growth & Income Account...... 615,000 615,000 21,964 21,964
The J.W. McConnell Family Foundation............ 585,000 585,000 20,892 20,892
Hudson River Trust Balanced Account............. 550,000 550,000 19,642 19,642
Memphis Light, Water and Gas Retirement Fund.... 545,000 545,000 19,464 19,464
Hudson River Trust Growth Investors............. 440,000 440,000 15,714 15,714
Equitable Life Assurance Separate Account
Convertibles.................................. 400,000 400,000 14,285 14,285
Bancroft Convertible Fund, Inc. ................ 350,000 350,000 12,500 12,500
Ellsworth Convertible Growth and Income Fund,
Inc. ......................................... 350,000 350,000 12,500 12,500
Hillside Capital Incorporated Corporate
Account....................................... 275,000 275,000 9,821 9,821
First Church of Christ,
Scientist -- Endowment........................ 245,000 245,000 8,750 8,750
Christian Science Trustees for Gifts and
Endowments.................................... 225,000 225,000 8,035 8,035
Hotel Union and Industry of Hawaii.............. 180,000 180,000 6,428 6,428
The Frist Foundation............................ 140,000 140,000 5,000 5,000
Equitable Life Assurance Separate Account
Balanced Growth Fund.......................... 95,000 95,000 3,392 3,392
Summer Hill Global Partners, L.P. .............. 70,000 70,000 2,500 2,500
David Lipscomb University General Endowment..... 35,000 35,000 1,250 1,250
SUBTOTAL................................ $ 43,725,000 $ 43,725,000 1,586,095 1,561,595
------------ ------------ --------- ---------
Unnamed holders of Notes or any future
transferees, pledgees, donees or successors of
or from any such unnamed holders(5)........... $ 56,275,000 $ 56,275,000 2,009,833(6) 2,009,833
TOTAL................................... $100,000,000 $ 100,000,000 3,595,928 3,571,428
============ ============ ========= =========
</TABLE>
- ---------------
(1) Comprises the shares of Common Stock owned by each Selling Securityholder
prior to the offering, including the shares of Common Stock into which the
Notes held by such Selling Securityholder are convertible at the initial
conversion rate, excluding fractional shares. Fractional shares will not be
issued upon conversion of the Notes; rather, cash will be paid in lieu of
fractional shares, if any. The Conversion Rate and the number of shares of
Common Stock issuable upon conversion of the Notes are subject to adjustment
under certain circumstances. See "Description of Notes -- Conversion
Rights." Accordingly,
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<PAGE> 31
the number of shares of Common Stock issuable upon conversion of the Notes may
increase or decrease from time to time.
(2) Assumes conversion into Common Stock of the full amount of Notes held by the
Selling Securityholder at the initial conversion rate and the offering of
such shares by such Selling Securityholder pursuant to this Prospectus. The
Conversion Rate and the number of shares of Common Stock issuable upon
conversion of the Notes is subject to adjustment under certain
circumstances. See "Description of Notes -- Conversion Rights." Accordingly,
the number of shares of Common Stock issuable upon conversion of the Notes
may increase or decrease from time to time. Fractional shares will not be
issued upon conversion of the Notes; rather, cash will be paid in lieu of
fractional shares, if any. The Selling Securityholders may offer and sell
pursuant to the Prospectus, their Notes, their Conversion Shares or both.
(3) Deutsche Morgan Grenfell, Inc. ("DMG") acted as an Initial Purchaser in the
original placement of the Notes. In addition, Deutsche Bank AG, New York
Branch, an affiliate of DMG, is the trustee under the Indenture for the
Notes.
(4) Does not include (i) 5,800 shares of Common Stock owned by CTC Illinois
Trust Company, as trustee for the Allstate Retirement Plan, or (ii) 3,800
shares of Common Stock owned by CTC Illinois Trust Company, as trustee for
Agents Pension Plan.
(5) No such holder may offer Notes pursuant to this Prospectus until such holder
is included as a Selling Securityholder in a supplement to this Prospectus
in accordance with the Registration Rights Agreement.
(6) Assumes that the unnamed holders of Notes or any future transferees,
pledgees, donees or successors of or from any such unnamed holder do not
beneficially own any Common Stock other than the Common Stock issuable upon
conversion of the Notes at the initial conversion rate.
Because the Selling Securityholders may, pursuant to this Prospectus, offer
all or some portion of the Notes and Common Stock acquired or to be acquired
upon conversion of the Notes, they presently hold or, with respect to Common
Stock, have the right to acquire upon conversion of such Notes, no estimate can
be given as to the amount of the Notes and Common Stock that will be held by the
Selling Securityholders upon termination of any such sales. In addition, the
Selling Securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Notes and Common Stock since the date on
which they provided the information regarding their Notes and Common Stock, in
transactions exempt from the registration requirements of the Securities Act.
See "Plan of Distribution."
The Company will pay the expenses of registering the Notes and Common Stock
being sold hereunder.
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<PAGE> 32
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax considerations relating to the purchase, ownership and disposition of the
Notes and of Common Stock into which Notes may be converted, but does not
purport to be a complete analysis of all the potential tax considerations
relating thereto. This summary is based on the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated or proposed thereunder ("Treasury Regulations"),
judicial authority and current administrative rulings and practice, all of which
are subject to change, possibly on a retroactive basis. This summary deals only
with holders that will hold Notes and Common Stock into which Notes may be
converted as "capital assets" (within the meaning of Section 1221). This summary
does not purport to deal with all aspects of U.S. federal income taxation that
might be relevant to particular holders in light of their particular investment
circumstances or status, nor does it address tax considerations applicable to
investors that may be subject to special tax rules, such as certain financial
institutions, tax-exempt organizations, insurance companies, dealers in
securities or currencies, persons that will hold Notes as a position in a
hedging transaction, "straddle" or "conversion transaction" for tax purposes, or
persons that have a "functional currency" other than the U.S. dollar. Moreover,
the effect of any applicable state, local or foreign tax laws is not discussed.
The Company has not sought any ruling from the Internal Revenue Service with
respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the Internal Revenue Service will
agree with such statements and conclusions. THE FOLLOWING DISCUSSION IS FOR
GENERAL INFORMATION ONLY. INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means the beneficial owner
of a Note or Common Stock that for United States federal income tax purposes is
(i) a citizen or resident of the United States, (ii) treated as a domestic
corporation or domestic partnership or other domestic entity, (iii) an estate,
the income of which is subject to United States federal income taxation
regardless of its source, or (iv) a trust that is subject to the primary
supervision of a court within the United States and the control of a United
States person as described in Section 7701(a)(30) of the Code.
PAYMENT OF INTEREST. Interest on a Note generally will be included in the
income of a United States Holder as ordinary income at the time such interest is
received or accrued, in accordance with such Holder's method of accounting for
United States federal income tax purposes. The Notes will not have original
issue discount.
AMORTIZABLE BOND PREMIUM. If a United States Holder of a Note acquires the
Note at a cost that is in excess of the amount payable at maturity, the United
States Holder may elect under Section 171 of the Code to amortize the excess
cost (as an offset to interest income) on a constant interest rate basis over
the term of such Note. However, because the Notes may be redeemed at the option
of the Company at a price in excess of their principal amount, a United States
holder may be required to amortize any bond premium based on the earlier call
date and the call price payable at that time. If the United States Holder makes
an election to amortize bond premium, the tax basis of all such United States
Holder's Notes will be reduced by the allowable bond premium amortization. The
amortization election would apply to all debt instruments held or subsequently
acquired by the electing purchaser and cannot be revoked without permission from
the Service. On conversion of a Note into shares of Common Stock, no additional
amortization of any bond premium would be allowed, and any remaining premium
would be added to the United States Holder's basis in the Common Stock received.
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<PAGE> 33
MARKET DISCOUNT. Except as described below, gain recognized on the
disposition of a Note that has accrued market discount will be treated as
ordinary income, and not capital gain, to the extent of the accrued market
discount. "Market discount" is defined generally as the excess, if any, of (i)
the principal amount of the Note over (ii) the tax basis of the Note in the
hands of the United States Holder immediately after its acquisition.
Under a de minimis exception, there is no market discount if the excess of
the principal amount of the obligation over the United States Holder's tax basis
in the obligation is less than 0.25% of the principal amount multiplied by the
number of complete years after the acquisition date to the obligation's date of
maturity. Unless the United States Holder elects to accrue market discount on a
constant yield basis, the accrued market discount generally would be the amount
calculated by multiplying the market discount by a fraction, the numerator of
which is the number of days the obligation has been held by the United States
Holder and the denominator of which is the number of days after the United
States Holder's acquisition of the obligation up to and including its maturity
date.
If a United States Holder of a Note acquired with market discount disposes
of such Note in any transaction other than a sale, exchange or involuntary
conversion, such United States Holder will be deemed to have realized an amount
equal to the fair market value of the Note and will be required to recognize as
ordinary income any accrued market discount. See the discussion below under
"-- Sale, Exchange or Redemption of the Notes" for the tax consequences of a
sale or exchange. A partial principal payment (if any) on a Note will be
includable as ordinary income upon receipt to the extent of any accrued market
discount thereon. Although it is not free from doubt, any accrued market
discount not previously taken into income prior to a conversion of a Note into
shares of Common Stock should carry over to the Common Stock received on
conversion and be treated as ordinary income upon a subsequent disposition of
such Common Stock, to the extent of any gain recognized on such disposition. A
United States Holder of a Note acquired at a market discount also may be
required to defer the deduction of all or a portion of the interest on any
indebtedness incurred or maintained to purchase or carry the Note until the
maturity of the Note or the earlier disposition of the Note in a taxable
transaction.
A United States Holder of a Note acquired at a market discount may elect to
include the market discount in income as it accrues (on either a straight-line
basis or a constant yield basis). This election would apply to all market
discount obligations acquired by the electing United States Holder on or after
the first day of the first year to which the election applies. The election may
be revoked only with the consent of the Service. If a United States Holder of a
Note elects to include market discount in income currently, the rules discussed
above regarding (i) ordinary income recognition resulting from a sale and
certain other disposition transactions and (ii) deferral of interest deductions
would not apply.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES. Upon the sale, exchange or
redemption of a Note, subject to the market discount rules discussed above, a
United States Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash proceeds and the fair market value of
any property received on the sale, exchange or redemption (except to the extent
such amount is attributable to accrued and unpaid interest not previously
recognized by such Holder, which is taxable as ordinary income) and (ii) such
Holder's adjusted tax basis in the Note. A United States Holder's adjusted tax
basis in a Note generally will equal the cost of the Note to such Holder, less
any principal payments received by such Holder and increased by any market
discount previously included in income by such Holder. Such capital gain or loss
will be long-term capital gain or loss if the United States Holder's holding
period in the Note is more than one year at the time of sale, exchange or
redemption. The distinction between capital gain or loss and ordinary income is
important for purposes of the limitations on a United States Holder's ability to
offset capital losses against ordinary income and because United States Holders
that are individuals may be entitled to a preferential tax rate on long-term
capital gains. On August 5, 1997, legislation was enacted which, among other
things, reduces to 20% the maximum rate of tax on long-term capital
32
<PAGE> 34
gains on most capital assets held by an individual for more than 18 months. Gain
on most capital assets held by an individual more than one year and up to 18
months is subject to tax at a maximum rate of 28%.
CONVERSION OF THE NOTES. A United States Holder generally will not
recognize any income, gain or loss upon conversion of a Note into Common Stock,
except with respect to cash received in lieu of a fractional share of Common
Stock. Such Holder's tax basis in the Common Stock received on conversion of a
Note will be the same as such Holder's adjusted tax basis in the Note at the
time of conversion (reduced by any basis allocable to a fractional share
interest), and the holding period for the Common Stock received on conversion
will generally include the holding period of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon conversion
should be treated as a payment in exchange for the fractional share of Common
Stock. Accordingly, the receipt of cash in lieu of a fractional share of Common
Stock generally should result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the United
States Holder's adjusted tax basis in the fractional share).
ADJUSTMENT OF CONVERSION PRICE. The conversion price of the Notes is
subject to adjustment in certain circumstances. Under Section 305(c) of the
Code, adjustments that have the effect of increasing the proportionate interest
of holders of the Notes in the assets or earnings of the Company (for example,
an adjustment following a distribution of property by the Company to its
shareholders) may in some circumstances give rise to deemed dividend income to
United States Holders of such Notes; similarly, a failure to adjust the
conversion price of the Notes to reflect a stock dividend or other event
increasing the proportionate interest of the holders of outstanding Company
Common Stock can in some circumstances give rise to deemed dividend income to
United States Holders of such Common Stock.
DIVIDENDS ON THE COMMON STOCK. The amount of any distribution by the
Company in respect of the Common Stock generally will be treated as a dividend,
subject to a tax as ordinary income, to the extent of the Company's current or
accumulated earnings and profits, then as a tax-free return of capital to the
extent of the Holder's tax basis in the Common Stock and thereafter as gain from
the sale or exchange of such stock.
SALE OF COMMON STOCK. Upon the sale or exchange of Common Stock, a United
States Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash and the fair market value of any
property received upon the sale or exchange and (ii) such Holder's adjusted tax
basis in the Common Stock. Such capital gain or loss will be long-term if the
United States Holder's holding period in the Common Stock is more than one year
at the time of the sale or exchange. The distinction between capital gain or
loss and ordinary income is important for purposes of the limitations on a
United States Holder's ability to offset capital losses against ordinary income
and because United States Holders that are individuals may be entitled to a
preferential tax rate on long-term capital gains. On August 5, 1997, legislation
was enacted which, among other things, reduces to 20% the maximum rate of tax on
long-term capital gains on most capital assets held by an individual for more
than 18 months. Gain on most capital assets held by an individual more than one
year and up to 18 months is subject to tax at a maximum rate of 28%. A United
States Holder's basis and holding period in Common Stock received upon
conversion of a Note are determined as discussed above under "-- Conversion of
the Notes."
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. In general, certain
information is required to be reported by the payor to the Internal Revenue
Service ("IRS") with respect to payments of principal, premium, if any, and
interest on a Note (including the payment of additional interest under the
Registration Rights Agreement), payments of dividends on Common Stock, payments
of the proceeds of the sale of a Note, and payments of the proceeds of the sale
of Common Stock to certain noncorporate United States Holders. The payor will be
required to withhold backup withholding tax at the rate of 31% if (a) the payee
fails to furnish a taxpayer identification number ("TIN") to the payor or
establish an exemption from backup withholding,
33
<PAGE> 35
(b) the IRS notifies the payor that the TIN furnished by the payee is incorrect,
(c) there has been a notified payee underreporting with respect to interest,
dividends or original issue discount described in Section 3406(c) of the Code or
(d) there has been a failure of the payee to certify under the penalty of
perjury that the payee is not subject to backup withholding under the Code. Any
amounts withheld under the backup withholding rules from a payment to a United
States Holder will be allowed as a credit against such Holder's United States
federal income tax and may entitle the Holder to a refund, provided that the
required information is furnished to the IRS.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" or "Non-U.S. Holder"
means any beneficial owner of a Note or Common Stock that is not a United States
Holder.
PAYMENT OF INTEREST. Generally, interest income of a Non-United States
Holder that is not effectively connected with a United States trade or business
will be subject to a withholding tax at a 30% rate (or, if applicable, a lower
treaty rate). Interest paid on a Note (including any Additional Amounts) by the
Company or any Paying Agent to a Non-United States Holder will qualify for the
"portfolio interest exemption" and therefore, subject to the discussion of
backup withholding below, will not be subject to United States federal income
tax or withholding tax, provided that such interest income is not effectively
connected with a United States trade or business of the Non-United States Holder
and provided that the Non-United States Holder (i) does not actually or
constructively own (pursuant to the conversion feature of the Notes or
otherwise) 10% or more of the combined voting power of all classes of stock of
the Company entitled to vote, (ii) is not a controlled foreign corporation
related to the Company actually or constructively through stock ownership, and
(iii) either (a) provides a Form W-8 (or a suitable substitute form) signed
under penalties of perjury that includes its name and address and certifies as
to its non-United States status in compliance with applicable law and
regulations (or, with respect to payments made after December 31, 1998,
satisfies certain documentary evidence requirements for establishing that it is
a non-United States person), or (b) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business holds the Note and provides a statement to the
Company or its agent under penalties of perjury in which it certifies that such
a Form W-8 (or a suitable substitute) has been received by it from the
Non-United States Holder or qualifying intermediary and furnishes the Company or
its agent with a copy thereof.
Except to the extent that an applicable treaty otherwise provides, a
Non-United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United States
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest is subject to income tax, and
may be subject to the branch profits tax, it is not subject to withholding tax
if the Holder delivers a properly executed IRS Form 4224 (or applicable
successor form) to the payor.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES. A Non-United States Holder of a
Note generally will not be subject to United States federal income tax or
withholding tax on any gain realized on the sale, exchange or redemption of the
Note (including the receipt of cash in lieu of fractional shares upon conversion
of a Note into Common Stock but not including any amount representing interest
or accrued market discount) unless (1) the gain is effectively connected with a
United States trade or business of the Non-United States Holder, (2) in the case
of a Non-United States Holder who is an individual, such Holder is present in
the United States for a period or periods aggregating 183 days or more during
the taxable year of the disposition and certain other requirements are met, or
(3) the Holder is subject to tax pursuant to the provisions of the Code
applicable to certain United States expatriates.
CONVERSION OF THE NOTES. In general, no United States federal income tax
or withholding tax will be imposed upon the conversion of a Note into Common
Stock by a Non-United States Holder
34
<PAGE> 36
except with respect to the receipt of cash in lieu of fractional shares by
Non-United States Holders upon conversion of a Note where any of the conditions
described above under "-- Non-United States Holders -- Sale, Exchange or
Redemption of the Notes" is satisfied.
SALE OR EXCHANGE OF COMMON STOCK. A Non-United States Holder generally
will not be subject to United States federal income tax or withholding tax on
the sale or exchange of Common Stock unless any of the conditions described
above under "-- Non-United States Holders -- Sale, Exchange or Redemption of the
Notes" is satisfied.
DIVIDENDS. Distributions by the Company with respect to the Common Stock
that are treated as Dividends paid (or deemed paid), as described above under
"-- United States Holders -- Dividends" to a Non-United States Holder (excluding
dividends that are effectively connected with the conduct of a trade or business
in the United States by such Holder and are taxable as described below) will be
subject to United States federal withholding tax at a 30% rate (or lower rate
provided under any applicable income tax treaty). Except to the extent that an
applicable tax treaty otherwise provides, a Non-United States Holder will be
taxed in the same manner as a United States Holder on dividends paid (or deemed
paid) that are effectively connected with the conduct of a trade or business in
the United States by the Non-United States Holder. If such Non-United States
Holder is a foreign corporation, it may also be subject to a United States
branch profits tax on such effectively connected income at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. Even though
such effectively connected dividends are subject to income tax, and may be
subject to the branch profits tax, they will not be subject to U.S. withholding
tax if the Holder delivers IRS Form 4224 or applicable successor form to the
payor.
Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of the
Treasury Regulations, for purposes of determining the applicability of a tax
treaty rate. Under recently adopted Treasury Regulations that will be effective
for distributions after December 31, 1998 (the "New Regulations"), however, a
non-U.S. holder of Common Stock who wishes to claim the benefit of an applicable
treaty rate would be required to provide a Form W-8 (or suitable substitute
form) certifying such Non-United States Holder's entitlement to benefits under
the treaty. These certification requirements may be relaxed somewhat in the case
of a Non-United States Holder who holds common stock through an account
maintained at a non-U.S. office of a financial institution. In addition, under
the New Regulations, in the case of common stock held by an entity that is
fiscally transparent (e.g., a partnership) for U.S. federal income tax purposes,
the certification requirement would generally be applied to each of the ultimate
beneficial owners of the entity. Prospective investors should consult their tax
advisors regarding the effect, if any, of the New Regulations on an investment
in the Notes and Common Stock.
DEATH OF A NON-UNITED STATES HOLDER. A Note held by an individual who is a
Non-United States Holder at the time of his or her death will not be includable
in the decedent's gross estate for United States estate tax purposes, provided
that such Holder or beneficial owner did not at the time of death actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company entitled to vote, and provided that, at the time of death,
payments with respect to such Notes would not have been effectively connected
with the conduct by such Non-United States Holder of a trade or business within
the United States.
Common Stock actually or beneficially held (other than through a foreign
corporation) by a Non-United States Holder at the time of his or her death (or
previously transferred subject to certain retained rights or powers) will be
subject to United States federal estate tax unless otherwise provided by an
applicable estate tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. United States
information reporting requirements and backup withholding tax will not apply to
payments on a Note to a Non-United States Holder if the statement described in
"-- Non-United States Holders -- Payment of Interest"
35
<PAGE> 37
is duly provided by such Holder, provided that the payor does not have actual
knowledge that the Holder is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Note or any payment of the
proceeds of the sale of Common Stock effected outside the United States by a
foreign office of a "broker" (as defined in applicable Treasury Regulations),
unless such broker is (i) a United States person, (ii) a foreign person that
derives 50% of more of its gross income for certain periods from activities that
are effectively connected with the conduct of a trade or business in the United
States, (iii) a controlled foreign corporation for United States federal income
tax purposes or (iv) with respect to payments made after December 31, 1998, a
foreign partnership that, at any time during its taxable year, is 50% or more
(by income or capital interest) owned by U.S. persons or is engaged in the
conduct of a U.S. trade or business. Payment of the proceeds of any such sale
effected outside the United States by a foreign office of any broker that is
described in (i), (ii), (iii) or (iv) of the preceding sentence will not be
subject to backup withholding tax, but will be subject to information reporting
requirements unless such broker has documentary evidence in its records that the
beneficial owner is a Non-United States Holder and certain other conditions are
met, or the beneficial owner otherwise establishes an exemption. Payment of the
proceeds of any such sale to or through the United States office of a broker is
subject to information reporting and backup withholding requirements, unless the
beneficial owner of the Note provides the statement described in "-- Non-United
States Holders -- Payment of Interest" or otherwise establishes an exemption.
If paid to an address outside the United States, dividends on Common Stock
held by a Non-United States Holder will generally not be subject to the
information reporting and backup withholding requirements described in this
section, provided that the payor does not have actual knowledge that the Holder
is a United States person. With respect to payments made after December 31,
1998, however, the New Regulations may require a Non-United States Holder to
provide a Form W-8 (or satisfy certain documentary evidence requirements for
establishing that it is a non-United States person) or otherwise demonstrate an
exemption.
36
<PAGE> 38
PLAN OF DISTRIBUTION
The Notes were issued to the Selling Securityholders in connection with an
underwritten private placement and are convertible into Common Stock as
described in "Description of Notes -- Conversion Rights." The Company entered
into the Registration Rights Agreement with the Initial Purchasers for the
benefit of holders of the Notes to register their Notes and such Common Stock
under the Securities Act under certain circumstances and at certain times. The
Registration Rights Agreement provides for cross-indemnification of the Selling
Securityholders and the Company for losses, claims, damages, liabilities and
expenses arising, under certain circumstances, out of the registration of the
Notes and such Common Stock.
The Notes and the Conversion Shares offered hereby may be sold from time to
time directly by the Selling Securityholders or, alternatively, through
underwriters, broker-dealers or agents. If the Registrable Securities are sold
through underwriters or broker-dealers, the Selling Securityholder will be
responsible for underwriting discounts or commissions or agent's commissions.
Such Registrable Securities may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale, or at negotiated prices. The methods by which
the Registrable Securities may be sold include (i) transactions on any national
securities exchange or quotation service on which the Registrable Securities may
be listed or quoted at the time of sale, (ii) transactions in the
over-the-counter market, (iii) a block trade in which the broker or dealer so
engaged will attempt to sell the securities as agent but may position and resell
a portion of the block as principal to facilitate the transaction, (iv)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its own account, (v) ordinary brokerage transactions and transactions in
which the broker solicits purchasers, (vi) privately negotiated transactions and
(vii) through the writing of options.
The Company will not receive any of the proceeds from this offering. The
aggregate proceeds to the Selling Securityholders from the sale of the Notes or
Conversion Shares offered by them hereby will be the purchase price of such
Notes and Conversion Shares less discounts and commissions, if any.
The Company's outstanding Common Stock is listed for trading on the Nasdaq
National Market ("Nasdaq"). The Initial Purchasers have advised the Company that
they currently intend to make a market in the Notes; however, they are not
obligated to do so and any such market-making may be discontinued at any time
without notice, in the sole discretion of the Initial Purchasers. Prior to this
offering, the Notes were eligible for trading on the PORTAL market and
application has been made to list the Notes on the Luxembourg Stock Exchange.
The Notes sold pursuant to the Registration Statement of which this Prospectus
forms a part are not expected to remain eligible for trading on the PORTAL
system. The Company does not intend to list the Notes for trading on any
national securities exchange or on Nasdaq. Accordingly, no assurance can be
given as to the development of any trading market for the Notes. See "Risk
Factors -- Possible Volatility of Stock and Note Prices; Limited Public Market
for the Notes and Restrictions on Transfer."
In order to comply with the securities laws of certain states, if
applicable, the Notes and Conversion Shares may be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states the Notes and Conversion Shares may not be sold unless they have been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.
The Selling Securityholders and any underwriters, dealers or agents that
participate in the distribution of the Notes and Conversion Shares offered
hereby may be deemed to be underwriters within the meaning of the Securities
Act, and any discounts, commissions or concessions received by them and any
provided pursuant to the sale of such securities by them might be deemed to be
underwriting discounts and commissions under the Securities Act.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than
37
<PAGE> 39
pursuant to this Prospectus. There is no assurance that any Selling
Securityholder will sell any or all of the Notes or Conversion Shares described
herein, and any Selling Securityholder may transfer, devise or gift such
securities by other means not described herein.
The Company will use its best efforts to cause the Registration Statement
to which this Prospectus relates to become effective as soon as practicable and
to keep the Registration Statement effective for a period of two years from
September 16, 1997 (the latest date of original issuance of the Notes), or until
the Registration Statement is no longer required for transfer of the Notes or
the Conversion Shares. The Company is permitted to suspend the use of this
Prospectus in connection with the sales of Notes and the Conversion Shares by
holders upon the happening of certain events or if there exists any fact that
makes any statement of material fact made in this Prospectus untrue or that
requires the making of additions to or changes in the Prospectus in order to
make the statements herein not misleading until such time as the Company advises
the Selling Securityholders that use of the Prospectus may be resumed. See
"Description of Notes -- Registration Rights." Expenses of preparing and filing
the Registration Statement and all post-effective amendments will be borne by
the Company. Such expenses are estimated to be $ .
LEGAL MATTERS
The validity of the Notes and the Conversion Shares will be passed upon for
the Company by Hogan & Hartson L.L.P., Washington, D.C.
EXPERTS
The consolidated financial statements and schedules of Orbital,
incorporated by reference in this Prospectus from the Company's Form 10-K for
the fiscal year ended December 31, 1996, and the financial statements and
schedule of ORBCOMM, incorporated by reference in this Prospectus from the
Company's Form 10-K/A dated April 8, 1997, have been incorporated by reference
herein and in the registration statement in reliance upon the reports 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.
38
<PAGE> 40
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE 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 ANY SELLING
SECURITYHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE NOTES OR
COMMON STOCK OFFERED HEREBY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 3
The Company.......................... 4
Risk Factors......................... 4
Recent Developments.................. 10
Ratio of Earnings to Fixed Charges... 10
Use of Proceeds...................... 10
Description of Notes................. 11
Selling Securityholders.............. 29
Certain Federal Income Tax
Considerations..................... 31
Plan of Distribution................. 37
Legal Matters........................ 38
Experts.............................. 38
</TABLE>
- ------------------------------------------------------
ORBITAL SCIENCES CORPORATION LOGO
UP TO $100,000,000
5% CONVERTIBLE SUBORDINATED
NOTES DUE 2002
Prospectus
DECEMBER , 1997
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
registration of the Notes and Common Stock offered hereby. The Company will bear
all of such expenses, including those of the Selling Securityholders (other than
any underwriting discounts or commissions or any agent commissions). All amounts
are estimated except for the Securities and Exchange Commission registration fee
and Nasdaq quotation fee.
<TABLE>
<CAPTION>
PAYABLE BY
REGISTRANT
----------
<S> <C>
SEC registration fee...................................................... $ 30,303
Nasdaq quotation fee......................................................
Accounting fees and expenses.............................................. 5,000
Legal fees and expenses...................................................
Fees and expenses of Transfer Agent.......................................
Miscellaneous fees and expenses...........................................
----------
Total................................................................ $
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law sets forth provisions
that define the extent to which a corporation organized under the laws of
Delaware may indemnify directors, officers, employees or agents. Section 145
provides as follows:
(a) A corporation shall have power to 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 the person 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 the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person 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
the person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
the person 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 the person's conduct was
unlawful.
(b) A corporation shall have power to 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 the person 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) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or 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 the circumstances of the case, such person
is
II-1
<PAGE> 42
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(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 present or former director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in such person's official capacity and as to action in another
capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who 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
any liability asserted against such person and incurred by such person in
any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person
against such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner such person
II-2
<PAGE> 43
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of the corporation" as referred
to in this Section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
Paragraph Ten of the Company's Restated Certificate of Incorporation
provides that the Company shall, to the maximum extent permitted by Delaware
law, indemnify and, upon request, advance expenses to any person:
. . . who is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative, by reason of the fact
that such person is or was or has agreed to be a director or officer of
this Corporation or while a director or officer is or was serving at the
request of this Corporation as a director, officer, partner, trustee,
employee or agent of any corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
against expenses (including attorney's fees and expenses), judgments,
fines, penalties and amounts paid in settlement incurred in connection with
the investigation, preparation to defend or defense of such action, suit,
proceeding or claim, provided, however, that the foregoing shall not
require this Corporation to indemnify or advance expenses to any person in
connection with any action, suit, proceeding, claim or counterclaim
initiated by or on behalf of such person. Such indemnification shall inure
to the benefit of the heirs and legal representatives of such person. Any
person seeking indemnification under this Paragraph 10 shall be deemed to
have met the standard of conduct required for such indemnification unless
the contrary shall be established.
Section 102(b)(7) of the Delaware General Corporation Law permits
corporations to eliminate or limit the personal liability of their directors by
adding to the Certificate of Incorporation a provision eliminating or limiting
the personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director for (a) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(b) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) payment of dividends or repurchases or
redemptions of stock other than from lawfully available funds, or (d) any
transaction from which the director derived an improper personal benefit.
Paragraph Nine of the Company's Restated Certificate of Incorporation provides
that no director of the Company shall be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that exculpation from liability is not permitted under the
Delaware General Corporation Law as in effect at the time such liability is
determined.
In addition, the Company has entered into substantially identical
indemnification agreements with each of its directors and executive officers and
certain other officers. The Company has agreed, to the full extent permitted by
the Delaware General Corporation Law, as amended from time to time, to indemnify
each indemnitee against all loss and expense incurred by the indemnitee because
he was, is or is threatened to be made a party to any completed, pending or
threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he was a director, officer,
employee or agent of the Company or any of its affiliates, or because the
Company has a right to judgment in its favor because of his position with the
Company or any of its affiliates. The indemnitee will be indemnified so long as
he acted in good faith and in a manner reasonably believed by him to be in or
not opposed to the Company's best interests. The agreement further provides that
the indemnification thereunder is not exclusive of any other rights the
indemnitee may have under the Company's Restated Certificate of-Incorporation,
By-Laws or any agreement
II-3
<PAGE> 44
or vote of stockholders, nor may the Restated Certificate of Incorporation or
By-Laws be amended to affect adversely the rights of any indemnitee.
Reference is also made to Section 6 of the Registration Rights Agreement,
which is an exhibit hereto, which may provide for the indemnification of certain
directors and officers under certain circumstances.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ ------------------------------------------------------------------------------------
<C> <S>
4.1 Form of Certificate of Common Stock*
4.2 Indenture dated as of September 16, 1997 between the Company and Deutsche Bank AG,
New York Branch, as Trustee**
4.3 Form of Note (included in Exhibit 4.2)**
4.4 First Supplemental Indenture dated as of December , 1997 between the Company and
Deutsche Bank AG, New York Branch***
4.5 Form of Replacement Note***
4.6 Registration Rights Agreement dated as of September 16, 1997 among the Company and
the Initial Purchasers
5 Opinion of Hogan & Hartson L.L.P. regarding legality of shares being registered
12 Statements regarding computation of ratios
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5)
24 Power of attorney (included on Signature Page)
25 Form T-1
</TABLE>
- ---------------
* Incorporated herein by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File Number 33-33453) filed on February
9, 1990 and effective on April 24, 1990.
** Incorporated herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997.
*** To be filed by amendment.
(b) Financial Statement Schedules.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) or the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) 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;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
II-4
<PAGE> 45
(2) For purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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-5
<PAGE> 46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 County of Loudoun, Commonwealth of Virginia, on the 15th day
of December, 1997.
ORBITAL SCIENCES CORPORATION
By: /s/ DAVID W. THOMPSON
------------------------------------
DAVID W. THOMPSON,
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Each person whose signature appears below hereby constitutes and appoints
David W. Thompson, Bruce W. Ferguson and Leslie C. Seeman, or any of them, their
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for them and in their name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to file the same with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on December 15, 1997 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
/s/ DAVID W. THOMPSON Chairman of the Board, Principal Executive
- --------------------------------------------- Officer and Director
DAVID W. THOMPSON
/s/ JEFFREY V. PIRONE Senior Vice President and Chief Financial
- --------------------------------------------- Officer
JEFFREY V. PIRONE
/s/ MICHAEL P. KEEGAN Controller
- ---------------------------------------------
MICHAEL P. KEEGAN
/s/ FRED C. ALCORN Director
- ---------------------------------------------
FRED C. ALCORN
/s/ KELLY H. BURKE Director
- ---------------------------------------------
KELLY H. BURKE
/s/ BRUCE W. FERGUSON Director
- ---------------------------------------------
BRUCE W. FERGUSON
</TABLE>
II-6
<PAGE> 47
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
/s/ DANIEL J. FINK Director
- ---------------------------------------------
DANIEL J. FINK
/s/ LENNARD A. FISK Director
- ---------------------------------------------
LENNARD A. FISK
/s/ JACK L. KERREBROCK Director
- ---------------------------------------------
JACK L. KERREBROCK
/s/ DOUGLAS S. LUKE Director
- ---------------------------------------------
DOUGLAS S. LUKE
/s/ JOHN L. MCLUCAS Director
- ---------------------------------------------
JOHN L. MCLUCAS
/s/ JANICE I. OBUCHOWSKI Director
- ---------------------------------------------
JANICE I. OBUCHOWSKI
/s/ FRANK L. SALIZZONI Director
- ---------------------------------------------
FRANK L. SALIZZONI
/s/ HARRISON H. SCHMITT Director
- ---------------------------------------------
HARRISON H. SCHMITT
/s/ JAMES R. THOMPSON Director
- ---------------------------------------------
JAMES R. THOMPSON
/s/ SCOTT L. WEBSTER Director
- ---------------------------------------------
SCOTT L. WEBSTER
</TABLE>
II-7
<PAGE> 1
EXHIBIT 4.6
[Execution Copy]
ORBITAL SCIENCES CORPORATION
REGISTRATION RIGHTS AGREEMENT
Dated as of
September 16, 1997
Deutsche Morgan Grenfell Inc.
J.P. Morgan Securities Inc.
c/o Deutsche Morgan Grenfell Inc.
51 West 52nd Street
New York, New York 10019
Ladies and Gentlemen:
Orbital Sciences Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to Deutsche Morgan Grenfell Inc. and
J.P. Morgan Securities Inc. (the "Initial Purchasers") upon the terms set forth
in a purchase agreement dated September 10, 1997 (the "Purchase Agreement")
between the Initial Purchasers and the Company, its 5% Convertible Subordinated
Notes due 2002. As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company agrees with the Initial Purchasers,
(i) for the benefit of the Initial Purchasers and (ii) for the benefit of the
Holders (as defined below) from time to time of the Registrable Securities (as
defined below), including the Initial Purchasers, as follows:
1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in or pursuant to the
Purchase Agreement or the Offering Memorandum, dated September 11, 1997, in
respect of the Securities. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Additional Interest" has the meaning set forth in Section
2(c).
"Affiliate" of any specified Person means any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified Person. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by
<PAGE> 2
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" shall mean this Registration Rights Agreement as
the same may be amended, supplemented or modified from time to time in
accordance with the terms hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock, $0.01 par value, of
the Company and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section
2(b) hereof.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean any person that is the record owner of
Registrable Securities (and includes any person that has a beneficial interest
in any Registrable Security in book-entry form).
"Indenture" shall mean the Indenture, dated as of September
16, 1997, between the Company and the Trustee thereunder, pursuant to which the
Securities are being issued, as amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Issue Date" means September 16, 1997.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an
underwritten offering, if any, as set forth in Section 6 hereof.
"Person" shall mean an individual, partnership, limited
liability corporation, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Prospectus" means the prospectus, including all material or
documents incorporated by reference therein, included in any Shelf 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 under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities.
"Registrable Security" shall mean any Restricted Security and
any share of Common Stock issuable upon conversion thereof except any such
Restricted Security or share of Common Stock which (i) has been effectively
registered under the Securities Act and sold in a
2
<PAGE> 3
manner contemplated by the applicable Registration Statement and related
Prospectus, (ii) has been transferred in compliance with Rule 144 under the
Securities Act (or any successor provision thereto), or is transferable
pursuant to paragraph (k) of such Rule 144 (or any successor provision
thereto), or (iii) has otherwise been transferred and a new security or share
of Common Stock not subject to transfer restrictions under the Securities Act
has been delivered by or on behalf of the Company in accordance with the
Indenture.
"Registration Default" has the meaning set forth in Section
2(c) hereof.
"Restricted Securities" shall mean all Securities required
pursuant to the Indenture to bear any Restricted Securities Legend (as defined
in the Indenture).
"Rule 144" shall mean Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any successor rule or regulation.
"Rule 144A" shall mean Rule 144A promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any successor rule or regulation.
"Rule 415" shall mean Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any successor rule or regulation.
"Rule 430A" shall mean Rule 430A promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any successor rule or regulation.
"Securities" shall mean the $100,000,000 aggregate principal
amount of 5% Convertible Subordinated Notes due 2002 of the Company being
issued pursuant to the Indenture.
"Securities Act" means the United States Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
"Shelf Registration" means a registration effected pursuant
to Section 2 hereof.
"Shelf Registration Statement" means a shelf registration
statement of the Company pursuant to the provisions of Section 2 hereof filed
with the Commission which covers some or all the Registrable Securities, as
applicable, on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission, amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material or documents incorporated by reference
therein.
3
<PAGE> 4
"Special Counsel" means any special counsel to the Holders,
determined as provided in Section 4 hereof.
"Trust Indenture Act" has the meaning set forth in Section
1.1 of the Indenture.
"Trustee" means the Trustee under the Indenture.
"underwriter" means any underwriter of Registrable Securities
in connection with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION.
(a) The Company shall use its reasonable efforts to file with
the Commission, within 90 calendar days following the Issue Date of the
Securities, a Shelf Registration Statement relating to the offer and sale of
the Registrable Securities by Holders that comply with the requirements of
Section 3(n) hereof from time to time in accordance with the methods of
distribution elected by such Holders and set forth in such Shelf Registration
Statement and, thereafter, shall use its reasonable efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act as
soon as practicable, and in any event within 180 calendar days after the Issue
Date.
(b) The Company shall use its reasonable efforts:
(i) Subject to Section 2(a), to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period
that terminates upon the earlier to occur of (x) two years from the
Issue Date of the Securities or (y) the occurrence of any one of the
following events: (A) when all the Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement, (B) when all shares of Common Stock issued
upon conversion of any such Securities that had not been sold pursuant
to the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement and (C) when there shall cease to be
outstanding Registrable Securities (such period described above in
clauses (x) and (y) being herein called the "Effectiveness Period");
and
(ii) After the effectiveness of the Shelf Registration
Statement, promptly upon the request of any Holder that complies with
the requirements of Section 3(n) hereof, to take any action reasonably
necessary to register the sale of any Registrable Securities of such
Holder and to identify such Holder as a selling securityholder.
The Company shall be deemed not to have used its reasonable efforts to keep the
Shelf Registration Statement effective during the Effectiveness Period if the
Company voluntarily takes any action that would result in Holders of
Registrable Securities covered thereby not being able to offer and sell any
such Registrable Securities during the Effectiveness Period, unless (i) such
Company action is required by applicable law, (ii) the continued effectiveness
of the Shelf Registration Statement would require the Company to disclose a
material financing, acquisition or other transaction, and the Board of
Directors (or where due to the nature of the circumstances, timely consultation
with the Board of Directors is not, in the good faith determination of the
Chairman of the Board, the Chief Executive Officer or the Chief Financial
Officer of the Company, possible, then such officer) shall have determined in
good faith that such disclosure is not in the best interests of the Company and
the holders of its outstanding Common Stock, or (iii) the Board of Directors
(or where due to the nature of the
4
<PAGE> 5
circumstances, timely consultation with the Board of Directors is not, in the
good faith determination of the Chairman of the Board, the Chief Executive
Officer or the Chief Financial Officer of the Company, possible, then such
officer) shall have determined in good faith that there is a valid business
purpose or reason for such suspension, and (x) in the case of clause (i) above,
the Company thereafter promptly complies with the requirements of paragraph
3(j) below and (y) in the case of any clauses (i), (ii) or (iii) the Company
complies with its obligations, if any, to pay Additional Interest as described
in paragraph (c) below.
(c) (1) If (i) on or prior to 90 days following the Issue
Date a Shelf Registration Statement has not been filed with the Commission or
(ii) on or prior to the 180th day following the Issue Date, such Shelf
Registration Statement is not declared effective (each, a "Registration
Default"), additional interest ("Additional Interest") will accrue on the
Restricted Securities from and including the date following such Registration
Default until such time as such Shelf Registration Statement is filed or such
Shelf Registration Statement is declared effective, as the case may be.
Additional Interest will be paid semi-annually in arrears, with the first
semi-annual payment due on the first Interest Payment Date under the Indenture
following the date on which such Additional Interest begin to accrue, and will
accrue at a rate per annum equal to an additional one-quarter of one percent
(0.25%) of the principal amount to and including the 90th day following such
Registration Default and an aggregate of one-half of one percent (0.50%)
thereof from and after the 91st day following such Registration Default. In the
event that the Shelf Registration Statement ceases to be effective for more
than 90 days or the Company suspends the use of the prospectus which is a part
thereof for more than 90 days, whether or not consecutive, during any 12-month
period, then the interest rate borne by the Restricted Securities will increase
by one-half of one percent (0.50%) per annum from the 91st day of the
applicable 12-month period such Shelf Registration Statement ceases to be
effective or the Company suspends the use of the prospectus which is a part
thereof, as the case may be, until the earlier of such time as (i) the Shelf
Registration Statement again becomes effective, (ii) the use of the related
prospectus ceases to be suspended or (iii) the Effectiveness Period expires.
Following the cure of all Registration Defaults relating to any Restricted
Securities, the accrual of Additional Interest with respect to such Restricted
Securities will cease (without in any way limiting the effect of any subsequent
Registration Default). In no event shall the Company be required to pay
Additional Interest in excess of the applicable maximum amount of one-half of
one percent (0.50%) set forth above, regardless of whether one or multiple
Registration Defaults exist.
(2) Additional Interest on the Restricted Securities
shall be paid by the Company to the holders of record of such Restricted
Securities on each Interest Payment Date (as defined in the Indenture) in the
same manner as for interest on such Restricted Securities as provided in the
form of Securities set forth in Section 2.2 of the Indenture.
5
<PAGE> 6
(3) All the Company's obligations set forth in this
Section 2(c) which are unsatisfied to any extent with respect to any Restricted
Security at the time such security ceases to be a Restricted Security shall
survive until such time as all such obligations with respect to such security
have been satisfied in full (notwithstanding the earlier termination of this
Agreement).
(4) Any payments due and payable pursuant to this Section
2(c) shall be subordinated to Senior Indebtedness (as defined in the Indenture)
to the extent and in the manner set forth in the Indenture.
(5) The rights of the recordholders of Restricted
Securities to Additional Interest as set forth in this Section 2(c) is not
intended to be exclusive of any other right or remedy, and shall be in addition
to every other right and remedy given hereunder or under the Indenture or now
or hereafter existing at law or in equity or otherwise.
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to the Special Counsel and
Holders (if requested and if such Holders have provided the Company in
writing their address), prior to the filing thereof with the
Commission, a copy of any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein and shall use its reasonable efforts to
reflect in each such document, when so filed with the Commission, such
comments as the Special Counsel and Holders reasonably and in a timely
fashion may propose and to which the Company does not reasonably
object.
(b) The Company shall take such action as may be necessary so
that (i) any Shelf Registration Statement and any amendment thereto
and any Prospectus forming part thereof and any amendment or
supplement thereto (and each report or other document incorporated
therein by reference in each case) complies in all material respects
with the Securities Act and the Exchange Act, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, 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 (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise the Initial Purchasers, the
Holders (who have provided the Company with their respective
addresses) and the Special Counsel and, if requested by the Initial
Purchasers or any such Holder, confirm such advice in writing:
6
<PAGE> 7
(i) when a Shelf Registration Statement and
any amendment thereto has been filed with the Commission and
when the Shelf Registration Statement or any post effective
amendment thereto has become effective; and
(ii) other than to the Holders, of any request
by the Commission for amendments or supplements to the Shelf
Registration Statement or the Prospectus included therein or
for additional information.
(2) The Company shall advise the Special Counsel and
the Holders (who have provided the Company with their respective
addresses) and, if requested by the Special Counsel or any such
Holder, confirm such advice in writing of:
(i) the issuance by the Commission of any stop
order suspending effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) the receipt by the Company of any notification
with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or
the initiation of any proceeding for such purpose; and
(iii) the happening of any event that requires
the making of any changes in the Shelf Registration Statement
or the Prospectus so that, as of such date, the Shelf
Registration Statement and the Prospectus do not contain an
untrue statement of a material fact and do not omit to state
a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus,
in light of the circumstances under which they were made) not
misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the
requisite changes have been made).
(d) The Company shall use its reasonable efforts to prevent
the issuance, and if issued to obtain the withdrawal at the earliest
possible time of any order suspending the effectiveness of any Shelf
Registration Statement.
(e) The Company shall furnish to the Special Counsel and each
Holder (if requested in writing) with respect to a Shelf Registration
Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Special
Counsel and/or Holder so requests, all reports, other documents and
exhibits (including those incorporated by reference).
(f) The Company shall use its reasonable efforts to obtain
"cold comfort" letters and updates thereof from the independent public
accountants of the Company (and, if necessary, any other independent
public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Shelf Registration
Statement), addressed (where reasonably possible) to each selling
Holder of Restricted Securities or the
7
<PAGE> 8
Common Stock issued upon conversion thereof registered thereunder
(provided such Holder so requests and furnishes the accountants with
such representations as the accountants customarily require in similar
situations) and the underwriters, if any, in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with a shelf registration statement.
(g) The Company shall, during the Effectiveness Period,
deliver to each Holder who has complied with Section 3(n) hereof,
without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement
and any amendment or supplement thereto as such Holder may reasonably
request, and the Company consents (except during the continuance of
any event described in Section 3(c)(2)(iii)) to the use of the
Prospectus or any amendment or supplement thereto by each of the
Holders in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement
thereto during the Effectiveness Period.
(h) Prior to any offering of Registrable Securities pursuant
to any Shelf Registration Statement, the Company shall register or
qualify or cooperate with the Special Counsel and Holders who have
complied with Section 3(n) hereof in connection with the registration
or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any
such Holders reasonably request in writing and do any and all other
acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Registrable Securities covered by such Shelf
Registration Statement; provided, however, that in no event shall the
Company be obligated to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise
be required to so qualify but for this Section 3(h), (ii) file any
general consent to service of process in any jurisdiction where it is
not as of the date hereof then so subject or (iii) subject itself to
taxation in any jurisdiction if it is not so subject.
(i) Unless any Registrable Securities shall be in book-entry
only form, the Company shall cooperate with the Holders who have
complied with Section 3(n) hereof and, as applicable, the Trustee and
the transfer agent for the Common Stock, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to any Shelf Registration Statement
free of any restrictive legends and in such permitted denominations
and registered in such names as such Holders may request in connection
with the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, the Company shall promptly prepare a
post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of
the Registrable Securities included therein, the Prospectus will not
include an untrue statement of a material fact or omit to state any
material fact necessary to make the
8
<PAGE> 9
statements therein, in the light of the circumstances under which they
were made, not misleading. If the Company notifies the Holders (who
have provided the Company with their respective addresses) of the
occurrence of any event contemplated by paragraph 3(c)(2)(iii) above,
such Holders shall suspend the use of the Prospectus until the
requisite changes to the Prospectus or any other filings have been
made.
(k) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company shall obtain a CUSIP
number for the Securities registered under such Shelf Registration
Statement.
(l) The Company shall make generally available to its
securityholders or otherwise provide in accordance with Section 11(a)
of the Securities Act and Rule 158 thereunder as soon as practicable
after the effective date of the applicable Shelf Registration
Statement an earning statement satisfying the provisions of Section
11(a) of the Securities Act.
(m) The Company shall cause the Indenture and the Securities
to be qualified under the Trust Indenture Act in a timely manner; and
in connection with such qualification, the Company shall cooperate
with the Trustee under the Indenture and the Holders (as defined in
the Indenture) to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the
terms of the Trust Indenture Act; and the Company shall execute and
use all reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner.
(n) With respect to a Shelf Registration Statement that is to
include a Holder's Registrable Securities, such Holder shall furnish
to the Company such information regarding the Holder and the
distribution of Registrable Securities held by such Holder as may be
required by applicable law or regulation for inclusion in such Shelf
Registration Statement (including, without limitation, the information
required by Item 507 of Regulation S-K of the Securities Act), and the
Company may exclude from such registration the Registrable Securities
of any Holder that fails to furnish such information within a
reasonable time after receiving such request unless, and until such
time as, such information is furnished by such Holder. Each such
Holder agrees, by the acquisition of Restricted Securities, and agrees
to confirm such agreement in writing upon request of the Company, to
notify the Company as promptly as practicable of any inaccuracy or
change in information previously furnished by such Holder to the
Company or of the occurrence of any event as a result of which any
Prospectus relating to such Shelf Registration Statement contains or
would contain an untrue statement of a material fact regarding such
Holder or such Holder's intended method of distribution of such
Restricted Securities, or omits to state any material fact regarding
such Holder or such Holder's intended method of distribution of such
Restricted Securities, necessary to make the statements therein, in
light of the circumstances then existing, not misleading and promptly
to furnish to the Company any additional information required to
correct and update any previously
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<PAGE> 10
furnished information or required so that such Prospectus shall not
contain, with respect to such Holder or the distribution of such
Restricted Securities, an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
light of the circumstances then existing, not misleading.
(o) The Company shall enter into such customary agreements
(including an underwriting agreement in customary form) to take all
other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Registrable Securities, and in
connection therewith, if an underwriting agreement is entered into
pursuant to an underwritten offering in accordance with the provisions
of Section 6, cause the same to contain indemnification and
contribution provisions and procedures substantially similar to those
set forth in Section 5 (or such other provisions and procedures
acceptable to the Managing Underwriters, if any) with respect to all
parties to be indemnified pursuant to Section 5.
(p) The Company shall make reasonably available for
inspection by one representative of the Holders designated in writing
by the Holders of a majority of the Registrable Securities to be
registered thereunder (calculated based on the total of (x) the number
of shares of Common Stock constituting Registrable Securities to be
registered thereunder plus (y) the number of shares of Common Stock
obtainable at the time in question if the Restricted Securities to be
registered thereunder were converted), any underwriter participating
in any disposition pursuant to such Shelf Registration Statement, and
any attorney or other agent retained by such representative or any
such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries
as is customary for similar due diligence examinations; provided,
however, that such persons (other than any attorney, including the
Special Counsel, or any underwriter) shall, if requested by the
Company, first agree in writing with the Company that any information
that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information
shall be kept confidential by such persons, unless (i) disclosure of
such information is required by court or administrative order or is
necessary to respond to inquiries or regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to Federal or state securities laws
in connection with the filing of any Shelf Registration Statement or
the use of any Prospectus), (iii) such information becomes generally
available to the public other than as a result of a disclosure of
failure to safeguard by any such person or (iv) such information
becomes available to any such person from a source other than the
Company and such source is not bound by a confidentiality agreement.
(q) The Company shall cause the Company's officers, directors
and employees to make reasonably available for inspection all relevant
information reasonably requested by the representative designated in
accordance with paragraph (p) above and any such underwriter, attorney
or other agent in connection with any such Shelf Registration
Statement, in each case, as is customary for similar due diligence
examinations; provided, however, that such persons (other than any
attorney, including the Special Counsel, or
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<PAGE> 11
any underwriter) shall, if requested by the Company, first agree in
writing with the Company that any information that is reasonably and
in good faith designated by the Company in writing as confidential at
the time of delivery of such information shall be kept confidential by
such persons, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries
or regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to
Federal or state securities laws in connection with the filing of any
Shelf Registration Statement or the use of any Prospectus), (iii) such
information becomes generally available to the public other than as a
result of a disclosure of failure to safeguard by any such person or
(iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a
confidentiality agreement.
(r) The Company will use its reasonable efforts to cause the
Common Stock issuable upon conversion of the Securities to be admitted
for quotation on the Nasdaq National Market or other stock exchange or
trading system on which the Common Stock primarily trades on or prior
to the effective date of any Shelf Registration Statement hereunder.
(s) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or
participate as a member of an underwriting syndicate or selling group
or "assist in the distribution" (within the meaning of the Rules of
Fair Practice and the By-Laws of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of
such Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise, the
Company shall assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without limitation,
by (A) if such Rules or By-Laws, including Section 2720, shall so
require, engaging a "qualified independent underwriter" (as defined in
Section 2720) to participate in the preparation of the Shelf
Registration Statement relating to such Registrable Securities and to
exercise usual standards of due diligence in respect thereto, (B)
indemnifying any such qualified independent underwriter to the extent
of the indemnification of underwriters provided in Section 5 hereof
and (C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the
requirements of the Rules of Fair Practice of the NASD.
(t) The Company shall use its reasonable efforts to take all
other steps necessary to effect the registration, offering and sale of
the Registrable Securities covered by the Shelf Registration Statement
contemplated hereby.
(u) Notwithstanding any provision of this Section 3 to the
contrary, the Company shall not be required to amend or supplement the
Shelf Registration Statement pursuant to the requirements of Sections
3(b), 3(c), 3(j) or 3(t) hereof if (i) such amendment or supplement
would require the Company to disclose a material financing,
acquisition or other transaction and the Board of Directors (or where
due to the nature of
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<PAGE> 12
the circumstances, timely consultation with the Board of Directors is
not, in the good faith determination of the Chairman of the Board, the
Chief Executive Officer or the Chief Financial Officer of the Company,
possible, then such officer) shall have determined that such
disclosure is not in the best interests of the Company and the holders
of its outstanding Common Stock or (ii) the Board of Directors (or
where due to the nature of the circumstances, timely consultation with
the Board of Directors is not, in the good faith determination of the
Chairman of the Board, the Chief Executive Officer or the Chief
Financial Officer of the Company, possible, then such officer) shall
have determined in good faith that there is a valid business purpose
or reason for suspending the use of the Prospectus included in such
Shelf Registration Statement in accordance with Section 3(j) hereof
instead of making such amendment or supplement, provided that in each
such case the Company complies with its obligations, if any, to pay
Additional Interest.
4. REGISTRATION EXPENSES. Except as otherwise provided in
Section 6, the Company shall bear all fees and expenses incurred in connection
with the performance of its obligations under Sections 2 and 3 hereof and shall
bear or reimburse the Holders for the reasonable fees and disbursements of a
Special Counsel designated by the Company. For purposes of this Agreement, the
Company initially appoints Cleary, Gottlieb, Steen & Hamilton, as Special
Counsel; provided that the Holders of a majority of the Registrable Securities
covered by the Shelf Registration Statement (calculated based on the total of
(x) the number of shares of Common Stock constituting Registrable Securities to
be registered thereunder plus (y) the number of shares of Common Stock
obtainable at the time in question if the Restricted Securities to be
registered thereunder were converted) have the right pursuant to this Agreement
to substitute another firm of counsel as Special Counsel under this Agreement
with the consent of the Company, which consent shall not be unreasonably
withheld.
5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with
any Shelf Registration Statement, the Company shall agree to indemnify and hold
harmless each Initial Purchaser, each Holder, each underwriter who participates
in an offering of Registrable Securities, the directors, officers, employees
and agents of each such party and each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which such party or such controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) any untrue statement or alleged untrue
statement of any material fact contained in any Shelf
Registration Statement covering Registrable Securities or any
amendment thereto, any Prospectus or any amendment or
supplement thereto, or
(ii) the omission or alleged omission to state
in any Shelf Registration Statement covering Registrable
Securities or any amendment thereto, any
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<PAGE> 13
Prospectus or any amendment or supplement thereto, a material
fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, each such indemnified party for any legal or
other costs or expenses reasonably incurred by it in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable (A) to any Initial Purchaser,
Holder or any person controlling such Initial Purchaser or Holder in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in any Shelf Registration Statement covering
Registrable Securities or any amendment thereto, any Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Initial Purchaser or Holder, as
the case may be, specifically for use therein or (B) to any underwriter or any
person controlling such underwriter in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Shelf Registration Statement covering Registrable Securities or any
amendment thereto, any Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by such underwriter specifically for use therein. The indemnity
provided for in this Section 5(a) shall be in addition to any liability which
the Company may otherwise have. The Company will not, without the prior written
consent of the persons the Company has agreed to indemnify and hold harmless
pursuant to this paragraph (a) (for purposes of this paragraph (a), the
"indemnified parties"), settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
such indemnified party is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of all of the indemnified parties from all liability arising out of such claim,
action, suit or proceeding.
(b) Each Holder shall agree, severally and not jointly, to
indemnify and hold harmless the Company, each Initial Purchaser, each
underwriter who participates in an offering of Registrable Securities, the
other Holders, the directors, officers (including each officer of the Company
who signed the Shelf Registration Statement), employees and agents of each such
party and each Person, if any, who controls any of such parties within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several,
to which such party or such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Shelf Registration Statement covering Registrable Securities or any
amendment thereto, any Prospectus or any amendment or supplement thereto, or
(ii) the omission or alleged omission to state in any Shelf Registration
Statement covering Registrable Securities or any amendment thereto, any
Prospectus or any amendment or supplement thereto, a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
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<PAGE> 14
reliance upon and in conformity with written information furnished to the
Company by such Holder specifically for use therein, and, subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses reasonably incurred by the Company or any
such Initial Purchaser, underwriter, other Holder or director, officer or
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or any action in respect thereof; provided, however, that, no
such Holder shall be liable for any claims hereunder in excess of the amount of
the net proceeds received by such Holder from the sale of Registrable
Securities pursuant to the Shelf Registration Statement.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a) or (b) of this Section 5,
such person (for purposes of this paragraph (c), the "indemnified party")
shall, promptly after receipt by such party of notice of the commencement of
such action, notify the person against whom such indemnity may be sought (for
purposes of this paragraph (c), the "indemnifying party"), but the omission so
to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this Section 5. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be one or more legal defenses available to
it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not
have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense of any such action
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 5 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that in connection with such
action the indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action or
separate but substantially similar actions in the same jurisdiction arising out
of the same general allegations or circumstances, it being further understood,
however, that in the case of paragraph (a) of this Section 5, the indemnifying
party's obligation shall extend to liability for the expenses of such separate
counsel for each of the Initial Purchasers and their related indemnified
parties, the Holders and their related indemnified parties and the underwriters
and their related indemnified parties to the extent any of the foregoing
indemnified parties are parties to such action or actions), or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party, or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the
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<PAGE> 15
expense of the indemnifying party. All fees and expenses reimbursed pursuant to
this paragraph (c) shall be reimbursed as they are incurred. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in the preceding
paragraphs of this Section 5 is unavailable or insufficient, for any reason, to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), as between the Company, on the one
hand, and the Holders, on the other, such parties shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and the Holders on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault of the parties
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 Company, on the
one hand, or the Holders, on the other, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in
the circumstances. The Company and the Holders agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), 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 Holders' obligations to
contribute hereunder are several in proportion to the respective principal
amount or number of shares, as the case may be, of Registrable Securities sold
pursuant to the Shelf Registration Statement, and not joint. For purposes of
this paragraph (d), each person, if any, who controls a Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Holder, and each director of
the Company, each officer of the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, shall have the same rights to contribution as the
Company.
(e) The remedies provided for in this Section 5 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The Company may require, as a condition to including any
Registrable Securities in any Registration Statement filed and to entering into
any underwriting agreement with respect thereto, that the Company shall have
received an undertaking reasonably satisfactory
15
<PAGE> 16
to it from the holder of such Registrable Securities and from each underwriter
named in any such underwriting agreement, severally and not jointly, to comply
with the provisions of paragraphs (a) through (e) of this Section 5.
6. UNDERWRITTEN OFFERING. The Holders who desire to do so may
sell Registrable Securities in an underwritten offering. In such underwritten
offering, the investment banker or bankers and manager or managers that will
administer the offering will be selected by, and the underwriting arrangements
with respect thereto will be approved by the Holders of a majority of the
Registrable Securities to be included in such offering (calculated based on the
total of (x) the number of shares of Common Stock constituting Registrable
Securities plus (y) the number of shares of Common Stock obtainable at the time
in question if the Restricted Securities to be included in such offering were
converted) provided, however, that (i) such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company, (ii)
the Company shall not be obligated to arrange for more than one underwritten
offering during the Effectiveness Period and (iii) the Company shall not be
obligated (but may agree) to participate in any "roadshow" or other marketing
activities with respect to such underwritten offering. No Holder may
participate in any underwritten offering contemplated hereby unless such Holder
(a) agrees to sell such Holder's Registrable Securities in accordance with any
approved underwriting arrangements, (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such approved
underwriting arrangements and (c) at least 51% of the outstanding Registrable
Securities (calculated based on the total of (x) the number of shares of Common
Stock constituting Registrable Securities plus (y) the number of shares of
Common Stock obtainable at the time in question if the outstanding Restricted
Securities were converted) are included in such underwritten offering. The
Holders participating in any underwritten offering shall be responsible for any
expenses customarily borne by selling securityholders, including underwriting
discounts and commissions and fees and expenses of Special Counsel to the
selling securityholders with respect to such underwritten offering.
The Company shall in connection with an underwritten offering
in accordance with the provisions of this Section:
(a) if requested and provided with the relevant information,
promptly include or incorporate in a Prospectus supplement or
post-effective amendment to a Shelf Registration Statement, such
information as the Managing Underwriters administering an underwritten
offering of Registrable Securities registered thereunder reasonably
request to be included therein and to which the Company does not
reasonably object and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after they are notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective
amendment;
(b) make such representations and warranties to the Holders
and the underwriters in form, substance and scope as are customarily
made by the issuer to underwriters in primary underwritten offerings;
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<PAGE> 17
(c) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the Managing Underwriters)
addressed to each Holder and the underwriters covering such matters as
are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
such Holders and underwriters (it being agreed that the matters to be
covered by such opinion or written statement by such counsel delivered
in connection with such opinions shall include in customary form,
without limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from
such Shelf Registration Statement and the prospectus included therein,
as then amended or supplemented, including the documents incorporated
by reference therein, of an untrue statement of a material fact or the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading);
(d) use its reasonable efforts to obtain "cold comfort"
letters and updates thereof from the independent public accountants of
the Company (and, if necessary, any other independent public
accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Shelf Registration
Statement), addressed (where reasonably possible) to each Holder
(provided such Holder furnishes the accountants with such
representations as the accountants customarily require in similar
situations) and the underwriters in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and
(e) deliver such documents and certificates as may be
reasonably requested by any such Holders and the Managing
Underwriters, including those to evidence compliance with Section 3(j)
and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
7. MISCELLANEOUS.
(a) Other Registration Rights. The Company may grant
registration rights that would permit any Person that is a third party the
right to piggy-back on any Shelf Registration Statement, provided that if the
Managing Underwriter, if any, of such offering delivers an opinion to the
Holders that the total amount of securities which they and the holders of such
piggy-back rights intend to include in any Shelf Registration Statement is so
large as to materially adversely affect the success of such offering (including
the price at which such securities can be sold), then only the amount, the
number or kind of securities to be offered for the account of holders of such
piggy-back rights will be reduced to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount, number or
kind recommended by the Managing Underwriter prior to any reduction in the
amount of Registrable Securities to be included.
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(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
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 at least a majority of the Registrable Securities
(calculated based on the total of (x) the number of shares of Common Stock
constituting Registrable Securities plus (y) the number of shares of Common
Stock obtainable at the time in question if the Restricted Securities then
outstanding were converted).
(c) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 7(c);
(2) if to the Initial Purchasers, initially at the
address set forth in the Purchase Agreement;
(3) if to the Company, initially at its address set
forth in the Purchase Agreement; and
(4) if to the Special Counsel, the address given by
such Special Counsel to the Company in accordance with the provisions
of this Section 7(c).
All such notices and communications shall be deemed to have been duly given
when received.
The Initial Purchasers or the Company by written notice to
the other may designate additional or different addresses for subsequent
notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties and the Holders, including, without the need for an express assignment
or any consent by the Company thereto, subsequent Holders of Registrable
Securities. The Company hereby agrees to extend the benefits of this Agreement
to any Holder of Registrable Securities and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
18
<PAGE> 19
(g) Governing Law. This agreement shall be governed by and
construed in accordance with the law of the State of New York, United States of
America, without giving effect to any provisions relating to conflicts of laws.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
19
<PAGE> 20
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
ORBITAL SCIENCES CORPORATION
By: /s/ JEFFREY V. PIRONE
---------------------------
Name: Jeffrey V. Pirone
Title: Senior Vice President and
Chief Financial Officer
The foregoing Registration Rights Agreement is hereby
confirmed and accepted as of the date first above written.
DEUTSCHE MORGAN GRENFELL INC.,
as Initial Purchaser
By: /s/ A. DAVID MILLER, JR.
----------------------------------
Name: A. David Miller, Jr.
Title: Managing Director
J.P. MORGAN SECURITIES INC.,
as Initial Purchaser
By: /s/ ERIK R. OKEN
----------------------------------
Name: Erik Oken
Title: Vice President
20
<PAGE> 1
EXHIBIT 5
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004
December 15, 1997
Board of Directors
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Ladies and Gentlemen:
This firm has acted as counsel to Orbital Sciences
Corporation, a Delaware corporation (the "Company"), in connection with its
registration statement on Form S-3 (the "Registration Statement"), filed with
the Securities and Exchange Commission, relating to resales of up to
$100,000,000 aggregate principal amount of the Company's 5% Convertible
Subordinated Notes due 2002 (the "Notes") and the 3,571,428 shares (as such
number may be adjusted as set forth in the Indenture, dated as of September 16,
1997 (the "Indenture"), between the Company and Deutsche Bank AG, New York
Branch, as trustee (the "Trustee")) of Common Stock, par value $0.01 per share,
of the Company (the "Common Stock") issuable upon conversion of the Notes in
accordance with the Indenture. This opinion letter is furnished to you at your
request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection with the
Registration Statement.
For purposes of this opinion letter, we have examined copies
of the following documents:
1. An executed copy of the Registration Statement.
2. An executed copy of the Indenture.
3. An executed copy of the Notes, dated as of September
16, 1997.
4. The Restated Certificate of Incorporation of the
Company, as amended, as certified by the Secretary of
State of the State of Delaware on September 4, 1997
and as certified by an Assistant Secretary of the
Company on the date hereof as being complete,
accurate and in effect.
<PAGE> 2
Orbital Sciences Corporation
December 12, 1997
Page 2
5. The Bylaws of the Company, as amended, as certified
by an Assistant Secretary of the Company on the date
hereof as being complete, accurate and in effect.
6. Certain resolutions of the Board of Directors of the
Company adopted at a meeting held on September 5,
1997 and resolutions of the Pricing Committee of the
Board of Directors adopted at a meeting held on
September 10, 1997, in each case as certified by an
Assistant Secretary of the Company on the date hereof
as being complete, accurate and in effect, relating
to the offering of the Notes and arrangements in
connection therewith.
7. A certificate of the Trustee dated September 16, 1997
as to the authentication of the Notes in accordance
with the terms of the Indenture.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to us and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic or reproduced copies. This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
For purposes of this opinion letter, we have assumed that (i)
the Trustee has all requisite power and authority under all applicable laws,
regulations and governing documents to execute, deliver and perform its
obligations under the Indenture, (ii) the Trustee has duly authorized, executed
and delivered the Indenture and is validly existing and in good standing in all
necessary jurisdictions and (iii) the Indenture constitutes a valid and binding
obligation of the Trustee, enforceable against the Trustee in accordance with
its terms. We also have assumed the receipt by the Company of the
consideration for the Notes as contemplated by the Board resolutions
authorizing the issuance thereof.
This opinion letter is based as to matters of law solely on
applicable provisions of (i) the General Corporation Law of the State of
Delaware and (ii) New York contract law (but not including any statutes,
ordinances, administrative decisions, rules or regulations of any political
subdivisions of the State of New York), and we express no opinion as to any
other laws, statutes, rules or regulations (such as federal or state securities
or "blue sky" laws).
Based upon, subject to and limited by the foregoing, we are
of the opinion that:
<PAGE> 3
Orbital Sciences Corporation
December 12, 1997
Page 3
(a) The Notes constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights (including, without limitation, the effect of statutory and other laws
regarding fraudulent conveyances, fraudulent transfers and preferential
transfers) and as may be limited by the exercise of judicial discretion and the
application of principles of equity, including, without limitation,
requirements of good faith, fair dealing, conscionability and materiality
(regardless of whether the security is considered in a proceeding at law or in
equity) and except that a waiver of rights under any usury law may be
unenforceable.
(b) The shares of Common Stock issuable upon conversion
of the Notes, when issued in accordance with the terms of the Notes, will be
validly issued, fully paid and non-assessable.
The opinion expressed in Paragraph (a) above shall be
understood to mean only that if there is a default in performance of an
obligation, (i) if a failure to pay or other damage can be shown and (ii) if
the defaulting party can be brought into a court which will hear the case and
apply the governing law, then, subject to the availability of defenses, and to
the exceptions set forth in Paragraph (a) above, the court will provide a money
damage (or perhaps injunctive or specific performance) remedy.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion
letter has been prepared solely for your use in connection with the filing of
the Registration Statement on the date of this opinion letter and should not be
quoted in whole or in part or otherwise be referred to, nor filed with or
furnished to any governmental agency or other person or entity, without the
prior written consent of this firm.
We hereby consent to the filing of this opinion letter as
Exhibit 5 to the Registration Statement and to the reference to this firm under
the caption "Legal Matters" in the Prospectus. In giving this consent, we do
not thereby admit that we are an "expert" within the meaning of the Securities
Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE> 1
EXHIBIT 12.
STATEMENT RE: RATIO OF EARNINGS TO FIXED CHARGES
AMOUNTS IN 000'S, EXCEPT RATIOS.
<TABLE>
<CAPTION>
For the Nine Month
Period Ended
For the Twelve Month Period Ended December 31, September 30,
--------------------------------------------------------------- -------------------------
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income before taxes and cumulative
effect of accounting change $ 7,303 $ 9,808 $10,364 $(1,990) $17,738 $12,692 $18,745
Add:
Adjustments related to equity in
losses on non-consolidated
subsidiaries(1) n/a n/a n/a n/a 8,268 7,147 13,937
Interest expense 397 1,409 1,740 3,815 2,486 2,327 88
Rent(2) 3,200 3,100 3,541 3,738 4,100 3,096 2,873
---------- ----------- ---------- ----------- ----------- ----------- ----------
Adjusted earnings A 10,900 14,317 15,645 5,563 32,592 25,262 35,643
FIXED CHARGES:
Interest Expense 397 1,409 1,740 3,815 2,486 2,327 88
Rent(2) 3,200 3,100 3,541 3,738 4,100 3,096 2,873
Interest Capitalized 3,500 5,492 4,599 5,654 7,084 5,209 6,637
---------- ----------- ---------- ----------- ------------ ----------- -----------
Total B 7,097 10,001 9,880 13,207 13,670 10,632 9,598
========== =========== ========== =========== =========== =========== ===========
RATIO OF EARNINGS TO FIXED
CHARGES: A/B 1.54 1.43 1.58 -- 2.38 2.38 3.71
========== =========== ========== =========== =========== =========== ==========
Deficiency of earnings
to fixed charges. -- -- -- 7,644 -- -- --
</TABLE>
(1) Equity in losses of non-consolidated subsidiaries are excluded from
earnings for computation of this ratio.
Non-consolidated subsidiaries are: ORBCOMM Global Partners, L.P.,
ORBCOMM International Partners, L.P., and Orbital Imaging Corporation.
(2) One-third of rent expense is assumed to be representative of the interest
factor included in such payments.
<PAGE> 1
Exhibit 23.1
Accountants' Consent
The Board of Directors
Orbital Sciences Corporation:
We consent to the use of our reports incorporated herein by reference, which
reports appear in the Company's 1996 annual reports on Form 10-K (along with
Amendment No. 1 on Form 10-K/A dated April 8, 1997), and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
McLean, Virginia
December 15, 1997
<PAGE> 1
COORDINATION WITH DELAYED OFFERING REGISTRATION STATEMENT
When the Form T-1 is used for applications to determine the eligibility of a
trustee pursuant to Section 305(b)(2), the following provisions shall apply:
1. The file number under the Securities Act of 1933 for the delayed offering
registration statements to which the application applies shall be placed in the
upper right hand corner of the cover page of the Form T-1.
2. The description of the indenture securities included under "Title of
Securities" should specify whether the application relates to a single tranche
or to all of the securities registered pursuant to the delayed offering
registration statement.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939,
AS AMENDED, OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
Deutsche Bank, AG, New York Branch
- --------------------------------------------------------------------------------
(Exact name of trustee as specified in its charter)
Federal Republic of Germany 13-2944988
- --------------------------------------------------------------------------------
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification Number)
31 West 52nd Street, New York, New York 10004
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Alfred Steffan, Deutsche Bank AG, New York Branch,
31 West 52nd Street, New York, New York 10004 (212) 469-8166
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for Service)
Orbital Sciences Corporation
- --------------------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 06-1209561
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
of incorporation or organization)
21700 Atlantic Boulevard, Dulles, Virginia 20166
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
$90,000,000 aggregate principal amount of 5% Convertible
Subordinated Notes due 2002
- --------------------------------------------------------------------------------
(Title of the indenture securities)
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.
New York State Banking Department
Two Rector Street
New York, New York
Federal Reserve Bank of New York
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
<PAGE> 2
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such affiliation.
The obligor is not an affiliate of the trustee.
Instructions.
1. The term "affiliate" is defined in Rule 0-2 of the General Rules and
Regulations under the Act. Attention is also directed to Rule 7a-26.
2. Include the name of each such affiliate and the names of all intermediary
affiliates, if any. Indicate the respective percentage of voting securities
or other bases of control giving rise to the affiliation.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting securities of the
trustee: As of December 1, 1997 (Insert date within 31 days).
Col. A. Col. B.
Title of Class Amount Outstanding
NOT APPLICABLE
Instructions. The term "voting security" is defined in Section 303(16)
of the Act.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other indenture.
NONE.
(b) A brief statement of the facts relied upon as a basis for the claim that
no conflicting interest within the meaning of Section 310(b)(1) of the Act
arises as a result of the trusteeship under any such other indenture,
including a statement as to how the indenture securities will rank as
compared with the securities issued under such other indenture.
Not Applicable.
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
If the trustee or any of the directors or executive officers of the trustee is
a director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.
Deutsche Morgan Grenfell Inc. was an underwriter for the obligor in
connection with the Notes to which this T-1 relates. Deutsche Bank AG
owns Deutsche Morgan Grenfell Inc. and the trustee is a licensed branch
of Deutsche Bank AG. The following individuals are officers and/or
employees of both Deutsche Bank AG, New York Branch and Deutsche Morgan
Grenfell Inc.:
Christopher Beaudet, David Bondy, John Cuttig, Kathy
DeRuggiero, Christine Fade, John Hamilton, Julie Harris, Howard Henick,
Donald Jones, Philip Kearns, Sean Kelleher, Doreen Kennedy, Charles W.
Kerner, Francisco R. Kraft, Robert M. Lupoli, Victor T. Mahoney, Lisa
Masone, Karen Meyer, Daniel Park, Dawn Patterson, Gergory Petretti,
Hilger Pothmann, Edward Rubin, Richard Uhlig, Joan Wang and Bernadette
Whitaker
Instructions.
1. Notwithstanding General Instruction F, the term "underwriter" as used in
this item does not refer to any person who is not currently engaged in the
business of underwriting.
2. The terms "employee," "appointee," and "representative," as used in this
item, do not include connections in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity or connections in the capacity
of trustee, whether under an indenture or otherwise.
<PAGE> 3
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner, and executive
officer of the obligor:
As of December 1, 1997 (Insert date within 31 days).
Instructions:
1. Names of persons who do not own beneficially any of the securities
specified may be omitted.
2. No information need be given in any case where the amount of voting
securities of the trustee, owned beneficially by the obligor and Its
directors, partners, and executive officers, taken as a group, does not
exceed 1 percent of the outstanding voting securities of the trustee.
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
<S> <C> <C> <C>
Percentage of Voting
Amount Owned Securities Represented by
Name of Owner Title of Class Beneficially Amount Given in Col. C
</TABLE>
NONE
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter:
As of December 1, 1997 (Insert date within 31 days).
Instructions.
1. Instruction 1 to Item 6 shall be applicable to this item.
2. The name of each director, partner, or executive officer required to be
given in Column A shall be set forth under the name of the underwriter of
which he is a director, partner, or executive officer.
3. No information need be given in any case where the amount of voting
securities of the trustee owned beneficially by an underwriter and its
directors, partners, and executive officers, taken as a group, does not
exceed 1 percent of the outstanding voting securities of the trustee.
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
<S> <C> <C> <C>
Percentage of Voting
Amount Owned Securities Represented by
Name of Owner Title of Class Beneficially Amount Given in Col. C
</TABLE>
NONE
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Furnish the following information as to securities of the obligor beneficially
or held as collateral security for obligations in default by the trustee:
As of December 1, 1997 (Insert date within 31 days).
Instructions.
1. As used in this item, the term "securities" includes only such securities as
are generally known as corporate securities, but shall not include any note
or other evidence of indebtedness issued to evidence an obligation to repay
monies lent to a person by one or more banks, trust companies, or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness.
2. For the purposes of this item the trustee shall not be deemed the owner or
holder of (a) any security which it holds as collateral security (as trustee
or otherwise) for an obligation which is not in default, or (b) any security
which it holds as collateral security under the indenture to be qualified,
irrespective of any default thereunder, or (c) any security which it holds
as agent for collection, or as custodian, escrow agent or depositary, or in
any similar representative capacity.
3. No information need be furnished under this item as to holdings by the
trustee of securities already issued under the indenture to be
3
<PAGE> 4
qualified or securities issued under any other indenture under which the
trustee is also trustee.
4. No information need be given with respect to any class of securities where
the amount of securities of the class which the trustee owns beneficially or
holds as collateral security for obligations in default does not exceed 1
percent of the outstanding securities of the class.
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
<S> <C> <C> <C>
Amount Owned Percentage of Class
Whether the Securities Beneficially or Held as Represented by
are Voting or Collateral Security for Amount Given
Title of Class Nonvoting Securities Obligations in Default in Col. C
</TABLE>
NONE
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee:
As of December 1, 1997 (Insert date within 31 days).
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
<S> <C> <C> <C>
Amount Owned
Beneficially or Held as
Collateral Security for Percentage of Class
Title of Issuer Obligations in Default Represented by Amount
and Title of Class Amount Outstanding by Trustee Given in Col. C
</TABLE>
Instruction. Instructions 1, 2, and 4 to Item 8 shall be applicable to
this item.
Deutsche Morgan Grenfell Inc. was an underwriter for the obligor in
connection with the Notes to which this T-1 relates.
Deutsche Bank AG owns Deutsche Morgan Grenfell Inc. and the trustee is
a licensed branch of Deutsche Bank AG.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the obligor
or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person:
As of December 1, 1997 (Insert date within 31 days).
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
<S> <C> <C> <C>
Amount Owned
Beneficially or Held as
Collateral Security for Percentage of Class
Title of Issuer Obligations in Default Represented by Amount
and Title of Class Amount Outstanding by Trustee Given in Col. C
</TABLE>
Instruction. Instructions 1, 2, and 4 to Item 8 shall be applicable to this
item.
NONE
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge
4
<PAGE> 5
of the trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee:
As of December 1, 1997 (Insert date within 31 days).
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
<S> <C> <C> <C>
Amount Owned
Beneficially or Held as
Collateral Security for Percentage of Class
Title of Issuer Obligations in Default Represented by Amount
and Title of Class Amount Outstanding by Trustee Given in Col. C
</TABLE>
Instruction. Instructions 1, 2 and 4 to Item 8 shall be applicable to this item.
NONE.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information: As of December 1, 1997 (Insert
date within 31 days).
Col. A Col. B Col. C
Nature of Indebtedness Amount Outstanding Date Due
NONE
Instructions.
1. No information need be provided as to: (a) the ownership of securities issued
under any indenture, or any security or securities having a maturity of more
than one year at the time of acquisition by the indenture trustee; (b)
disbursements made in the ordinary course of business in the capacity of trustee
of an indenture, transfer agent, registrar, custodian, paying agent, fiscal
agent or depositary, or other similar capacity; (c) indebtedness created as a
result of services rendered or premises rented; or indebtedness created as a
result of goods or securities sold in a cash transaction; (d) the ownership of
stock or of other securities of a corporation organized under Section 25(a) of
the Federal Reserve Act, as amended, which is directly or indirectly a creditor
of an obligor upon the indenture securities; or (e) the ownership of any drafts,
bills of exchange, acceptances, or obligations which fall within the
classification of self-liquidating paper.
2. Information should be given as to the general type of indebtedness, such as
lines of credit, commercial paper, long-term notes, mortgages, etc.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
NONE.
(b) If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
Not Applicable.
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
5
<PAGE> 6
Deutsche Morgan Grenfell Inc. was an underwriter for the obligor in
connection with the Notes to which this T-1 relates. Deutsche Bank AG
owns Deutsche Morgan Grenfell Inc. and the trustee is a licensed branch
of Deutsche Bank AG.
Instructions.
1. The term "affiliate" as defined in Rule 0-2 of the General Rules and
Regulations under the Act. Attention is directed to Rule 7a-26.
2. Include the name of each such affiliate and the names of all intermediate
affiliates, if any. Indicate the respective percentage of voting securities
or other bases of control giving rise to the affiliation
ITEM 15. FOREIGN TRUSTEE.
Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee under indentures qualified or to be qualified under the
Act.
Section 304(d) of the Trust Indenture Act of 1939
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
Instructions. Subject to Rule 7a-29 permitting incorporation of exhibits by
reference, the following exhibits are to be filed as a part of the statement of
eligibility of the trustee. Such exhibits shall be appropriately lettered or
numbered for convenient reference. Exhibits incorporated by reference may be
referred to by the designation given in the previous filing. Where exhibits are
incorporated by reference, the reference shall be made in the list of exhibits
called for under Item 16. If the certificate of authority to commence business
(Exhibit 2) and/or the certificate to exercise corporate trust powers (Exhibit
3) is contained in another exhibit, a statement to that effect shall be made,
identifying the exhibit in which such certificates are included. If an
applicable exhibit is not in English, a translation in English shall also be
filed. In response to Exhibit 7, foreign trustees shall provide financial
information sufficient to provide the information required by Section 310(a)(2)
of the Act.
1. A copy of the articles of association of Deutsche Bank AG.
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 or instruments corresponding
thereto, as amended to date. Not Applicable.
5. A copy of each Indenture referred to in Item 4, if the obligor is in default.
Not Applicable.
6. The consent of United States institutional trustees 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. A copy of any order pursuant to which the foreign trustee is authorized to
act as sole trustee under indentures qualified or to be qualified under the
Act.
9. Foreign trustees are required to furnish a consent to service of process (see
Rule 10a-4 under the Act). None
6
<PAGE> 7
SIGNATURE
(Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Deutsche Bank AG, New York Branch, a branch licensed to do business
as such under the Banking Law of the State of New York, being a branch of
Deutsche Bank AG, a corporation organized under the laws of the Federal Republic
of Germany, has duly caused this statement of eligibility and qualification to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York, and State of New York, on the 9th day of December , 1997.
DEUTSCHE BANK, AG, NEW YORK BRANCH
By: /s/George H. Gregor
---------------------
Name: George H. Gregor
Title: Vice President
By: /s/Peter C. Olsen
---------------------
Name: Peter C. Olsen
Title: Vice President
Instruction. The name of each person signing the statement of eligibility shall
be typed or printed beneath the signature.
7
<PAGE> 8
Exhibit 1
A copy of the articles of association of Deutsche Bank AG.
8
<PAGE> 9
ARTICLES OF ASSOCIATION OF DEUTSCHE BANK AG
In conformity with the resolutions of the General Meeting on May 20, 1997
Deutsche Bank
I. GENERAL PROVISIONS
Section 1
The stock corporation bears the name
Deutsche Bank
Aktiengesellschaft
It is domiciled in Frankfurt (Main).
Section 2
(1) The object of the enterprise is the transaction of banking business of every
kind, the provision of financial and other services, and the promotion of
international economic relations. The Company may realize this object itself or
through subsidiaries and affiliated companies.
(2) To the extent permitted by law, the Company is entitled to transact all
business and take all steps which appear likely to promote the object of the
Company, in particular to acquire and dispose of real estate, to establish
branches at home and abroad, to acquire, administer and dispose of
participations in other enterprises, and to conclude enterprise agreements.
Section 3
The Company's notices shall be published in the Federal Gazette
(Bundesanzeiger).
II. SHARE CAPITAL AND SHARES
Section 4
(1) The share capital is DM 2,509,233,675. It is divided into 501,846,735 shares
in the nominal amount of DM 5 each.
(2) The Company shall not obtain any lien pursuant to its General Business
Conditions in respect of the shares it has issued except by special pledging
agreements.
(3) Insofar as the Company is authorized under the following subparagraphs to
issue shares in the nominal amount of DM 50 each, it may also, instead of each
share in the nominal amount of DM 50, issue ten shares in the nominal amount of
DM 5 each.
(4) The share capital is increased conditionally by a further DM 225,000,000,
divided into 4,500,000 bearer shares in
<PAGE> 10
the nominal amount of DM 50 each. The conditional capital increase shall be
effected only to the extent that holders of warrants from participatory
certificates with warrants issued on or before April 30, 1996 by Deutsche Bank
Aktiengesellschaft exercise their option rights. The new shares should be
entitled to participate in profits from the beginning of the financial year in
which they are issued by virtue of the exercise of option rights.
(5) The Board of Managing Directors is authorized to increase the share capital
with the consent of the Supervisory Board once or more than once by up to a
total of DM 31,852,760 on or before April 30, 2001 through the issue of new
shares against cash payment. Shareholders' pre-emptive rights are excluded.
(6) The Board of Managing Directors is authorized to increase the share capital
with the consent of the Supervisory Board once or more than once by up to a
total of DM 500,000,000 on or before April 30, 1998 through the issue of new
shares against cash payment. At such time(s), pre-emptive rights shall be
granted to the shareholders, the Board of Managing Directors is, however,
authorized to except fractions from the shareholders' pre-emptive rights and
also to exclude the pre-emptive rights insofar as is necessary to provide the
holders of the warrants and convertible bonds issued by Deutsche Bank
Aktiengesellschaft and its subsidiaries with such pre-emptive rights to new
shares as they would be entitled to upon exercising the option or conversion
rights.
(7) The share capital is increased conditionally by a further DM 200,000,000
divided into 4,000,000 bearer shares of DM 50 par value each. The conditional
capital increase shall be effected only to the extent that holders of warrants
from the participatory certificates with warrants and the bonds with warrants to
be issued on or before April 30, 1998 by Deutsche Bank Aktiengesellschaft
exercise their option rights. The new shares shall be entitled to participate in
profits from the beginning of the financial year in which they are issued by
virtue of the exercise of option rights.
(8) The Board of Managing Directors is authorized to increase the share capital
with the consent of the Supervisory Board once or more than once by up to a
total of DM 100 million on or before April 30, 2000 through the issue of new
shares against cash payment. At such time(s), pre-emptive rights shall be
granted to the shareholders subject to the following restrictions. The Board of
Managing Directors is, however, authorized to except fractions from the
shareholders' pre-emptive rights and also to exclude the pre-emptive rights
insofar as is necessary to provide the holders of the warrants and convertible
bonds issued by Deutsche Bank Aktiengesellschaft and its subsidiaries with such
pre-emptive rights to new shares as they would be entitled to upon exercising
the option of conversion rights. Furthermore, the Board of Managing Directors is
authorized with the consent of the Supervisory Board to exclude shareholders'
pre-emptive rights when utilizing the authorization if the issue price of the
new shares is not substantially lower than the market price of the already
listed shares with the same terms and conditions at the time the issue price is
fixed.
(9) The Board of Managing Directors is authorized to increase the share capital
with the consent of the Supervisory Board, once or more than once, by up to a
total of DM 500,000,000 on or before April 30, 2002 through the issue of new
shares against cash payment. For this purpose, shareholders are to be granted
pre-emptive rights; however, the Board of Managing Directors is authorized to
except broken amounts from shareholders' pre-emptive rights and to exclude
pre-emptive rights, insofar as it is necessary to grant to the holders of
warrants, convertible bonds and convertible participatory rights issued by
Deutsche Bank Aktiengesellschaft or its subsidiaries pre-emptive rights to new
shares to the extent to which they would be entitled to such rights were they to
exercise their option or conversion rights.
(10) The share capital is increased conditionally by up to DM 300,000,000
through the issue of up to 60,000,000 new shares in the nominal amount of DM 5
each. This conditional capital increase will only be affected insofar as
a) the holders or creditors of conversion rights or warrants linked to the
participatory certificates or
2
<PAGE> 11
convertible bonds or bonds with warrants to be issued on or
before April 20, 2002 by Deutsche Bank Aktiengesellschaft or
its directly or indirectly majority-held affiliated companies
utilize their conversion or option rights, or
b) the holders or creditors with conversion duties relating to
convertible participatory certificates or convertible bonds to
be issued on or before April 30, 2002 by Deutsche Bank
Aktiengesellschaft or its directly or indirectly majority-held
affiliated companies fulfill their conversion duty.
The new shares shall be entitled to participate in profits from the
beginning of the financial year in which they are issued by virtue of the
exercise of conversion or option rights or by virtue of the fulfillment of
conversion duties.
Section 5
(1) The shares are bearer shares.
(2) If in the event of the capital being increased the resolution on the
increase does not provide that the new shares are to be made out to
bearer or registered in a name, they shall likewise be made out to
bearer.
(3) The form of the shares and the dividend coupons and talons shall be
determined by the Board of Managing Directors in agreement with the
Supervisory Board. The same shall apply to bonds and interest coupons.
Global certificates may be issued. The claim of shareholders to have
their shares issued in individual certificate form is excluded.
III. THE BOARD OF MANAGING DIRECTORS
Section 6
(1) The Board of Managing Directors shall consist of not less than three
members.
(2) The Supervisory Board shall appoint the members of the Board of
Managing Directors and determine their number. The Supervisory Board
may appoint deputy members of the Board of Managing Directors.
Section 7
(1) The Company shall be legally represented by two members of the Board of
Managing Directors or by one member jointly with a holder of
procuration (Prokurist).
(2) The deputy members of the Board of Managing Directors shall rank
equally with full members in respect of powers of representation.
Section 8
For the purpose of closer contact and business consultation with trade and
industry the Board of Managing Directors may form an Advisory Board and Regional
Advisory Councils, lay down rules of procedure for their business and fix the
remuneration of their members. The Supervisory Board shall be informed of any
changes in the membership of the Advisory Board and the Regional Advisory
Councils at the Supervisory Board meeting immediately following such changes.
3
<PAGE> 12
IV. THE SUPERVISORY BOARD
Section 9
(1) The Supervisory Board shall consist of 20 members. They are elected for
the period until conclusion of the Shareholders' Meeting which adopts
the resolutions concerning the ratification of acts of management for
the fourth financial year following the beginning of the term of
office. Here, the financial year in which the term of office begins is
not taken into account.
(2) In the election of shareholders' representatives to the Supervisory
Board and any substitute members, the Chairman of the Shareholders
Meeting shall be entitled to take a vote on a list of election
proposals submitted by management or shareholders. If substitute
members are elected on a list, they shall replace shareholders'
representatives prematurely leaving the Supervisory Board in the order
in which they were named, unless resolved otherwise at the vote.
(3) If a Supervisory Board member is elected to replace a member leaving
the Supervisory Board, the new member's term of office shall run for
the remainder of the replaced member's term. In the event that a
substitute member replaces the outgoing member, the substitute member's
term of office shall expire if a new vote to replace the outgoing
member is taken at the next Shareholders' Meeting or the next
Shareholders' Meeting but one, at the end of the said Shareholders'
Meeting, otherwise at the end of the outgoing member's residual term of
office.
(4) Any member of the Supervisory Board may resign from office without
being required to show cause subject to his giving one month's notice
by written declaration addressed to the Board of Managing Directors.
Section 10
(1) Following a Shareholders' Meeting in which all members of the
Supervisory Board to be elected by a Shareholders' Meeting have been
newly elected a meeting of the Supervisory Board shall take place, for
which no special invitation is required. At this meeting, the
Supervisory Board under the chairmanship of its oldest member elected
by the shareholders shall elect from among its members and for the
duration of its term of office the Chairman of the Supervisory Board
and his Deputy in accordance with Section 27 of the Co-determination
Act. In the event of the Chairman of the Supervisory Board or his
Deputy leaving before completion of his term of office, the Supervisory
Board shall forthwith elect a substitute.
(2) The Deputy Chairman of the Supervisory Board shall have the legal and
statutory rights and duties of the Chairman only if the latter is
indisposed. Sections 29 (2) 3 and 31 (4) 3 of the Co-determination Act
remain unaffected.
Section 11
(1) Meetings of the Supervisory Board shall be called by the Chairman or,
if the latter is indisposed, by his Deputy whenever so required by law
or business.
(2) The Supervisory Board shall be deemed to constitute a quorum if the
members have been invited in writing or by cable under their last given
address and not less than half the total members which it is required
to comprise take part in the voting in person or by written vote. The
chair shall be taken by the Chairman or his Deputy. The Chairman of the
meeting shall decide the manner of voting.
4
<PAGE> 13
(3) Resolutions may also be taken without a meeting being called, by way of
written or cabled or telephoned votes, if so ruled by the Chairman of
the Supervisory Board or his Deputy and provided no member of the
Supervisory Board objects to such procedure. This also applies to
second polls pursuant to Sections 29 (2) 1 and 31 (4) 1 of the
Co-determination Act.
(4) Resolutions of the Supervisory Board are taken with the simple majority
of the votes unless otherwise provided by law. If there is equality of
votes the Chairman shall have the casting vote pursuant to Sections 29
(2) and 31 (4) of the Co-determination Act; a second poll within the
meaning of these provisions can be demanded by any member of the
Supervisory Board.
(5) If not all the members of the Supervisory Board are present at the
voting and if absent members have not submitted written votes, the
voting shall be postponed at the request of at least two members of the
Supervisory Board who are present. In the event of such postponement,
the new vote shall be taken at the next regular Supervisory Board
meeting if no extraordinary meeting is called. At the new vote a
further minority call for postponement is not permitted.
(8) If the Chairman of the Supervisory Board is present at the meeting or
if a member of the Supervisory Board is in possession of his written
vote, subpara. 5 shall not apply if the same number of shareholders'
representatives and employees' representatives are personally present
or participate in the voting by written vote, or if any inequality is
balanced out by individual members of the Supervisory Board not
participating in the voting.
Section 12
(1) The Supervisory Board is authorized to appoint a Presiding Committee
and one or several other Committees from among its members; Section
27(3) of the Co-determination Act remains unaffected. The functions and
powers of the Committees and the relevant procedures to be adopted
shall be determined by the Supervisory Board. To the extent permitted
by law, the Supervisory Board's powers of decision may also be
delegated to the Committees. Section 11 subparas. 3 and 4 apply to
voting in the Committees unless mandatory provisions of law provide
otherwise. Subparas. 5 and 6 are not applicable.
(2) Declarations of intention on the part of the Supervisory Board and its
Committees shall be made in the name of the Supervisory Board by the
Chairman or his Deputy.
Section 13
(1) The approval of the Supervisory Board is required
a) for the granting of general powers of attorney;
b) for the acquisition and disposal of real estate insofar as the
object involves more than 0.5% of the Company's liable capital
and reserves;
c) for the establishment and closure of branches with more than
20 employees;
d) for the granting of credits, including the acquisition of
participations in other companies, for which approval of a
credit institution's Supervisory Board is required under the
German Banking Act;
e) for the acquisition, not only temporarily, of other
participations in other companies where the object
5
<PAGE> 14
exceeds 1% of the Company's liable capital and reserves.
(2) The Supervisory Board may specify further transactions which are to be
subject to its approval.
Section 14
(1) The members of the Supervisory Board shall receive, in addition to
reimbursement of their cash expenses and of turnover tax to be borne by
them in connection with their Supervisory Board activity, a fixed
remuneration payable upon expiration of the financial year. Such
remuneration shall be DM 12,000 for each member, DM 24,000 for the
Chairman and DM 18,000 for the Deputy Chairman.
(2) The Supervisory Board shall in addition be entitled to a remuneration
of DM 50,000 for each percent by which the dividend distribution to the
shareholders exceeds 4% of the share capital. The Supervisory Board
shall resolve on the apportionment of this amount among the members.
V. SHAREHOLDERS' MEETING
Section 15
The Shareholders' Meeting called to adopt the resolutions concerning the
ratification of acts of management of the Board of Managing Directors and the
Supervisory Board, the appropriation of profits, the appointment of the annual
auditor and, as the case may be, the establishment of the annual statement of
accounts (Ordinary Shareholders' Meeting) shall be held within the first eight
months of each financial year.
Section 16
(1) The Shareholders' Meeting shall be called by the Board of Managing
Directors or the Supervisory Board to take place in Frankfurt (Main),
Dusseldorf, or any other German city with over 500,000 inhabitants.
(2) Notice of the meeting must be given in the Federal Gazette
(Bundesanzeiger) not later than one month before the last day of
deposit (Section 17 subpara. 1), not counting the day of publication
and the last day of deposit.
Section 17
(1) All shareholders who have not later than the fifth working day before
the meeting deposited their shares with the Company or the other
agencies announced in the invitation until conclusion of the
Shareholders' Meeting shall be entitled to take part therein and to
exercise their voting rights; for the purpose of this provision
Saturday is not considered a working day. Deposit shall also be deemed
to have been properly effected when shares, with the approval of a
depositary, are held blocked for it with other credit institutions
until conclusion of the Shareholders' Meeting.
(2) Details regarding the depositing of shares and the issue of admission
cards must be given in the invitation.
Section 18
(1) The voting right of each share corresponds to its nominal amount.
6
<PAGE> 15
(2) In the event of shares not having been fully paid up, the voting right
shall commence, in accordance with Section 134(2) 3 and 5 of the German
Stock Corporation Act (Aktiengesez), when the minimum contribution
required by law has been paid.
Section 19
(1) The Chairman of the Supervisory Board or another member of the
Supervisory Board belonging to the Supervisory Board as a
representative of the shareholders shall preside over the Shareholders'
Meeting. In the event that none of these persons takes the chair, the
Chairman shall be elected by the Shareholders' Meeting under the
direction of the oldest shareholder present.
(2) The Chairman shall direct proceedings and determine the sequence in
which the items on the agenda shall be dealt with.
Section 20
(1) The resolutions of the Shareholders' Meeting may be taken by a simple
majority of votes and, insofar as a majority of capital stock is
required, by a simple majority of capital stock, except where law or
the Articles of Association determine otherwise with mandatory effect.
(2) The Chairman shall determine the form and further particulars of the
voting. The voting result shall be obtained by ascertaining the "yes"
and the "no" votes. The Chairman shall also determine the manner in
which the votes are to be ascertained, e.g. by deducting the "yes" or
"no" votes and the abstentions from the overall number of votes to
which the voters are entitled.
(3) The Supervisory Board shall be authorized to amend the Articles of
Association insofar as such amendments merely relate to the wording.
VI. ANNUAL STATEMENT OF ACCOUNTS AND APPROPRIATION OF PROFITS
Section 21
The financial year of the Company is the calendar year.
Section 22
(1) The Board of Managing Directors shall within the first three months of
each financial year, prepare the annual statement of accounts (balance
sheet, profit and loss account, notes to the annual statement of
accounts) and the management report for the preceding financial year,
and submit them to the auditor.
(2) The Supervisory Board shall submit its report to the Board of Managing
Directors within one month from the date of receipt of the statements
which must be presented to it. If the report is not submitted to the
Board of Managing Directors within this period, the Board of Managing
Directors shall promptly specify an additional period of not more than
one month within which the Supervisory Board must submit its report. If
the report is not submitted to the Board of Managing Directors prior to
the expiration of such additional period of time either, the annual
statement of accounts shall be deemed not to have been approved by the
Supervisory Board.
Section 23
7
<PAGE> 16
(1) The distributable profit shall be distributed among the shareholders
unless the Shareholders' Meeting determines otherwise.
(2) Insofar as the Company has issued participatory certificates and the
respective conditions of participatory certificates accord the holders
of the participatory certificates a claim to distribution from the
distributable profit, the claim of the shareholders to this portion of
the distributable profit is excluded (Section 58 (4) of the Joint Stock
Corporation Act).
(3) The dividends due to the shareholders shall always be distributed in
proportion to the contribution made on the nominal amount of the shares
and in proportion to the time which has elapsed since the date fixed
for contribution.
(4) In the event of new shares being issued, a different dividend
entitlement may be established for such shares.
VII. FORMATION OF DEUTSCHE BANK AG
Section 24
The Company was formed by the re-amalgamation of Norddeutsche Bank AG. Deutsche
Bank AG West and Suddeutsche Bank AG, which had been founded in 1952 as
successor institutions to the former Deutsche Bank, according to the Law on the
Regional Scope of Credit Institutions (Gesetz uber den Niedartassungabereich von
Kreddinstituten).
VIII. CONTRIBUTION AND ACQUISITION PROVISIONS CONTAINED IN THE DISINCORPORATION
AGREEMENT OF SEPTEMBER 27, 1952
Section 25
(1) Pursuant to Section 3 of the Big Bank Law, Deutsche Bank contributes to
the successor institution, Suddeutsche Bank Aktiengesellachaft, the
entire portion of its business which was previously transacted by
Bayerische Creditbank. Sudwestbank in Stuttgart and Mannheim,
Oberrheinische Bank, Wuvtembergische Vereinsbank, Hessische Bank and
Rheinische Kreditbank in the Federal States (Lander) of Bayem,
BadensWurtemberg (now Sudweststaat), Rheinland-Pfalz and Hessen. The
contribution includes all assets, including liabilities, acquired or
created in the course of this business.
(2) The assets include in particular:
a) all real estate and similar rights located in the Federal
States of Bayem, Baden/Wurtemberg (now Sudweststaat), Hessen
and Rheinland-Pfalz,
b) all mortgage rights (including pre-registrations) held for own
account on real estate in the Federal States of Bayem,
BadensWurtemberg (now Sudweststaat), Hessen and
Rheinland-Pfalz,
c) all claims and the related securities as well as all other
rights and assets recorded in the previous institutions' books
as at 31.12.51, in the Federal States of Bayem.
Baden/Wurtemberg (now Sudweststaat), Hessen or
Rheinland-Pfalz,
d) Deutsche Bank's equalization claims, allocated in accordance
with Section 8 of the 2nd Conversion Law
8
<PAGE> 17
Implementing Order, arising out of the contribution balance
sheet per 31.12.51. Should these equalization claims be
subsequently increased or reduced pursuant to a correction of
the conversion account, this amendment will be credited or
debited to the successor institution insofar as this
institution has acquired the respective asset or liability in
the conversion account.
(3) The liabilities include in particular:
a) all commitments recorded in the previous institutions' books
per 31.12.51,
b) all commitments resulting from the trusteeships mentioned
under 2 (d),
c) all foreign commitments resulting from Section 6(2) of the
35th Conversion Law Implementing Order, subject to the
provision of Section 7(2) of the Big Bank Law,
d) all pension liabilities towards entitled persons resident per
31.12.51 in the Federal States of Bayem, Baden/Wurtemberg (now
Sudweststaat), Hessen or Rheinland-Pfalz, subject to the
provision that all expenses under this heading are to be
shared between Suddeutsche Bank Aktiengesellschaft and its
sister institutions. Norddeutsche Bank Aktiengesellschaft and
Rheinische-Westfalische Bank Aktiengesellschaft, according to
the formula used so far, i.e. on the basis of staff
expenditure in the respective year. This does not include
retirements from the previous institutions after 31.12.51,
which must be borne by the institution concerned. Should the
aforementioned pension liabilities be otherwise regulated
following a change in the law in the Federal territory or in
West Berlin or in the rest of Germany, the above regulation
will cease to apply, with retroactive effect.
(4) The contribution of assets and the acquisition of liabilities takes
place as at and with effect from 1.152, subject to the provision that
the contributed business of the previous institutions shall be deemed
to have been transacted from the said date for the account of the new
successor institution. The basis for the contributed assets and
acquired liabilities is the balance sheet per 31.12.51 appended to this
document. The assets and liabilities shown in this balance sheet have
been valued provisionally. The definitive contribution will be effected
at the values established with legal validity in the balance sheet for
tax purposes drawn up for Deutsche Bank's business in the Federal
territory per 31.12.51, if, as a result of the values
established--whether by an increase in assets or a decrease in
liabilities--the value of the assets should rise, then the incremental
value--less a reasonable deduction on the assets side for depreciation
in the interim period--must be added to the successor institution's
legal reserve.
(5) According to the balance sheet over 31.12.51, the value of contributed
assets loss acquired liabilities amounts to a total of DM 56,195,000.
Deutsche Bank guarantees that this value exists. As a set-off against
this contribution, Suddeutsche Bank Aktiengesellschaft gives to
Deutsche Bank shares in the nominal amount of DM 39,996,000. Pursuant
to Section 8 and Section 9 of the Big Bank Law, these shares will be
transferred to the Bank deutscher Lander as trustee for the
shareholders of Deutsche Bank.
9
<PAGE> 18
Exhibit 2
A copy of the Certificate of Authority of the Trustee to Commence Business.
BANKING DEPARTMENT
[LOGO] FB NO 4066
STATE OF NEW YORK
WHEREAS, DEUTSCHE BANK AG A BANKING CORPORATION DULY INCORPORATED UNDER
THE LAWS OF THE Federal Republic OF Germany AND HAVING ITS PRINCIPAL OFFICE IN
THE CITY OF Frankfurt am Main, Federal Republic of Germany HAS MADE APPLICATION,
UNDER THE TERMS AND CONDITIONS SET FORTH IN SECTION 201 OF THE BANKING LAW, TO
MAINTAIN A BRANCH AT 9 West 57th Street IN THE BOROUGH OF Manhattan CITY OF NEW
YORK, FOR THE PURPOSE OF TRANSACTING THE BUSINESS OF BUYING, SELLING, PAYING OR
COLLECTING BILLS OF EXCHANGE, OR OF ISSUING LETTERS OF CREDIT OR OF RECEIVING
MONEY FOR TRANSMISSION OR TRANSMITTING THE SAME BY DRAFT, CHECK, NOTE OR
OTHERWISE, OR OF MAKING LOANS, OR OF RECEIVING DEPOSITS, OR ANY PART OF SUCH
BUSINESS, AND
WHEREAS, THE SAID CORPORATION HAS COMPLIED WITH THE CONDITIONS IMPOSED
BY THE BANKING LAW AND APPEARS TO BE DULY QUALIFIED TO MAINTAIN SUCH BRANCH
UNDER THE PROVISIONS THEREOF:
NOW, THEREFORE, BE IT KNOWN THAT THE SAID APPLICANT IS HEREBY AUTHORIZED
TO CARRY ON THE BUSINESS HEREINBEFORE SPECIFIED AT THE ABOVE LOCATION.
THIS LICENSE IS TO BE EFFECTIVE ON OR AFTER January 27, 1983 AND SHALL
REMAIN IN FULL FORCE AND EFFECT UNTIL SURRENDERED OR REVOKED.
WITNESS MY HAND AND OFFICIAL SEAL OF THE BANKING DEPARTMENT AT THE CITY
OF NEW YORK, 26th DAY OF January IN THE YEAR OF OUR LORD One thousand NINE
HUNDRED AND eighty-three.
[SEAL]
/s/
------------------------------------------
ACTING SUPERINTENDENT OF BANKS
<PAGE> 19
Exhibit 3
A copy of the Authorization of the Trustee to exercise corporate trust powers.
STATE OF NEW YORK
BANKING DEPARTMENT
WHEREAS, DEUTSCHE BANK AKTIENGESELLSCHAFT, a banking corporation duly
incorporated under the laws of The Federal Republic of Germany, having its
principal office in the City of Frankfurt Am Main Federal Republic of Germany,
and having been duly authorized and licensed pursuant to Article II of the
Banking Law to maintain a branch at 9 West 57 Street, in the borough of
Manhattan, City of New York, has made application to the Superintendent of Banks
for a certificate of authorization to exercise the fiduciary powers specified in
Section 201-b of the Banking Law; and
WHEREAS, the Superintendent of Banks is satisfied that said DEUTSCHE
BANK AKTIENGESELLSCHAFT will exercise such fiduciary powers in accordance with
the requirements of Article V of the Banking Law;
NOW, THEREFORE, I Muriel Siebert, Superintendent of Banks of the State
of New York, hereby issue this certificate authorizing DEUTSCHE BANK
AKTIENGESELLSCHAFT ("The Banking Corporation") to exercise at its authorized
branch at 9 West 57 Street, in the borough of Manhattan, City of New York, the
fiduciary powers specified in Section 201-b of the Banking Law.
WITNESS, MY HAND AND OFFICIAL SEAL OF THE BANKING DEPARTMENT AT THE CITY OF
NEW YORK, THIS 12TH DAY OF JANUARY IN THE YEAR OF OUR LORD ONE THOUSAND NINE
HUNDRED AND EIGHTY-TWO
/S/ MURIEL SIEBERT
-----------------------------------------
Superintendent of Banks.
<PAGE> 20
[DEUTSCHE BANK LETTERHEAD]
August 15, 1994
Superintendent of Banks of
the State of New York
New York State Banking Department
Two Rector Street
New York, New York 10006
Attention: Mr. Robert H. McCormick
Deputy Superintendent of Banks
Foreign Banks Division
Gentlemen:
Deutsche Bank AG is a banking corporation organized under the laws of
the Federal Republic of Germany and has been licensed pursuant to Article II of
the New York Banking Law (the "Banking Law") to maintain a branch in the State
of New York, which branch (the "Branch") is currently located at 31 West 52nd
Street, New York, New York 10019. Deutsche Bank hereby notifies the
Superintendent of Banks of the State of New York (the "Superintendent") of its
intention to expand the Branch's fiduciary activities permissible under Section
201-b of the Banking Law to the fullest extent authorized by Sections 100,
100-a, 100-b and 100-c of the Banking Law (the "Fiduciary Sections")
I. BACKGROUND
On January 12, 1982, Deutsche Bank received from the Superintendent an
authorization certificate to exercise, through and at the Branch, certain
limited fiduciary powers that were then exercisable by foreign banking
corporations under prior Section 201-b of the Banking Law.
Thereafter, in anticipation of the repeal of the old Section 201-b and
the adoption of the current Section 201-b that became effective on October 8,
1984, Mr. Edward P. Eustace of the New York State Banking Department notified
New York State-licensed branches of foreign banks with fiduciary powers
(including the Branch), in a letter dated July 31, 1984 (the "July 31, 1984
Letter"), that such branches were not required to submit a new application in
the event that they decided to expand their fiduciary activities into those
areas newly authorized by the Fiduciary Sections of the Banking Law. The July
31, 1984 Letter did require, however, that any New York State-licensed branch of
a foreign bank with fiduciary powers notify the Superintendent and provide
certain information described therein if such branch intends to expand the scope
of its fiduciary activities beyond those previously authorized and into areas
newly permitted by Section 201-b of the Banking Law.
In reliance on the notification-in-lieu-of-application procedure
provided for in the July 31, 1984 Letter, the Branch, in a letter dated November
5, 1984 to the Superintendent, requested authority under the new Section 201-b
of the Banking Law to engage in the fiduciary activities permitted under Section
100(2) of the Banking Law, including the power to act as a corporate trustee. In
that letter, the Branch undertook to notify the Superintendent if the Branch
<PAGE> 21
were to exercise fiduciary powers beyond those permitted under the
above-mentioned authorization certificate granted on January 12, 1982 or under
Section 100(2) of the Banking Law.
The Branch now wishes to expand its authority to engage in fiduciary
activities to the fullest extent permitted under the Fiduciary Sections of the
Banking Law. Set forth below in Part II of this notification is the information
relating to the proposed expanded fiduciary activates of the Branch required
under the July 31, 1984 Letter.
II. INFORMATION REQUIRED PURSUANT TO THE JULY 31, 1984 LETTER
A. TYPES OF FIDUCIARY ACTIVITIES TO BE UNDERTAKEN
In addition to continuing to exercise its existing fiduciary powers
pursuant to the authorization certificate granted by the Superintendent on
January 12, 1982 and under Section 100(2) of the Banking Law, the Branch intends
to perform all other fiduciary functions, and conduct all related activities,
that may be performed and conducted by a New York State-chartered trust company
pursuant to the Fiduciary Sections. Such functions and activities will include
activities of a fiduciary, agency or custodial nature and related activities.
The Branch intends, without limiting the generality of the preceding
paragraph, that its services to be provided to individuals, pension funds,
registered investment companies, and other clients will include the following:
- acting as attorney-in-fact or agent of any person or
corporation, foreign or domestic, for any lawful purpose,
including engaging in asset management activities;
- acting in the personal fiduciary capacities authorized by
Sections 100(3), (4) and (5) of the Banking Law, including
acting as trustee for INTER VIVOS and testamentary trusts and
estates; and
- securities lending in connection with the Branch's custodial
and safekeeping services.
B. Qualifications Of the Officers Of The Trust Department
The fiduciary activities of the Branch will be conducted or
supervised principally be Ms. Patricia B. Kelly, who will become a Vice
President and Chief Fiduciary Officer of the Branch. Attached hereto as Exhibit
A is a resume of Ms. Kelly, which describes her experience prior to joining the
Branch and her qualifications relating to fiduciary activities. Confidential
treatment of Exhibit A is hereby requested.
C. Organization Of Trust Department And Plans To Utilize Outside
Services
1. ORGANIZATION OF THE TRUST DEPARTMENT
Attached hereto as Exhibit B is an organizational chart
depicting the management of the proposed trust department of the Branch.
Deutsche Bank recognizes the importance of establishing and
enforcing an internal audit and control system for conducting the Branch's
fiduciary activities. In this regard, Deutsche Bank will develop, with the
advice and assistance of its accountants, KPMG Peat Marwick, adequate internal
control and auditing systems and procedures. It is the intention of Deutsche
Bank to establish for the Branch's fiduciary activities internal control systems
that effectively monitor daily transactions to ensure that they are conducted in
accordance with the applicable federal and state laws and regulations and with
appropriate managerial authorization. The internal control systems will comprise
such elements as (i) proper separation of official responsibilities and duties;
(ii) well-defined procedures for
2
<PAGE> 22
performance of tasks; and (iii) proper information channels between management
and staff. The legal and internal audit staff of Deutsche Bank North America
Holding Corp. will provide legal and internal audit functions for the Branch's
fiduciary activities.
2. PLANS TO UTILIZE OUTSIDE SERVICES
The Branch plans to utilize outside services to perform
ministerial, administrative, accounting and recordkeeping tasks to conduct its
fiduciary activities. It will also utilize the services of KPMG Peat Marwick,
White & Case, and Deutsche Asset Management GmbH in an advisory capacity.
The Branch wishes to commence immediately the fiduciary
activities described above. It is the Branch's understanding that the submission
of this notification to the Superintendent is sufficient to enable the Branch to
commence exercising its expanded authority to engage in fiduciary activities to
the fullest extent permitted under the Fiduciary Sections of the Banking Law.
Notwithstanding the foregoing, however, the Branch, for its internal
recordkeeping purposes, would appreciate receiving from you an acknowledgment of
receipt of this notification.
Please contact either of the undersigned or Kevin F. Barnard,
Esq. of White & Case, counsel to Deutsche Bank in this matter, at (212) 819-8483
if you have any questions or need further information.
Very truly yours,
DEUTSCHE BANK A.G. New York Branch
/s/ Detlev Staecker /s/ Nathan S. Muller
------------------------ ----------------------------
Detlev Staecker Nathan S. Muller
General Manager and Assistant Vice President and
Executive Vice PResident Counsel
ATTACHMENTS
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<PAGE> 23
The Superintendent of Banks
of the State of New York
New York State Banking Department
Two World Trade Center
New York, New York 10047
ATE.: Foreign Banks Division
Mr. Edward P. Eustace
Deputy Superintendent of Banks
LEX-CF-AR/me 8024 November 5, 1984
Gentlemen:
We refer to your letter of July 31, 1984 in which you informed us that
we are not required to submit a new application in case we decide to expand our
trust activities. We have been asked to be the trustee for an industrial revenue
bond issue for one of our customers. Therefore, it is necessary to expand our
trust activities beyond our previously limited fiduciary powers into the area
authorized by Section 100(2) of the New York Banking Law. This section would
enable us to act as a corporate trustee in general. Should we exercise fiduciary
powers beyond those permitted under our license granted January 12, 1982 and
such Section 100(2), we will notify you thereof.
The trust activities of Deutsche Bank AG New York Branch will
henceforth be managed by our Legal Department. The head of the Legal Department
is Me. Charles R. Fewell, Jr., Vice President and Counsel of Deutsche Bank AG
New York Branch. Me. Ewell has had extensive experience representing, as
counsel, corporate trustees such as Citibank, Chemical Bank and National
Westminster Bank USA. He is fully familiar with the legal and administrative
requirements of a corporate trustee. Please find enclosed a detailed resume of
Mr. Fewell. We have no plans to utilize outside services in connection with our
trust activities.
From your letter of July 31, 1984, we assume that we may begin
exercising our expanded fiduciary powers described above unless you promptly
notify us to the contrary. Because of the necessity of moving forward on this
industrial revenue bond transaction described above, we would kindly ask you to
give us this notice on or before November 9, 1984.
Please do not hesitate to contact either of the undersigned if you have
any questions or need further information.
Very truly yours,
Deutsche Bank AG New York Branch
/s/ /s/
------------------------ ------------------------
H. von Natzmer D. Staecker
Executive Vice President Executive Vice President
and General Manager and General Manager
Enclosure
<PAGE> 24
DEUTSCHE BANK AG
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that DEUTSCHE BANK AG, a corporation
duly incorporated under the laws of the Federal Republic of Germany, having its
principal office and place of business at 10-14 Grosse Gallusstrasse, Frankfurt
am Main, Federal Republic of Germany (hereinafter referred to as the
"Corporation"):
A. Pursuant to a resolution of its Board of Managing Directors
duly adopted on February 6th, 1978, has nominated, constituted
and appointed and by these presents does nominate, constitute
and appoint ANY TWO OF THE FOLLOWING, ACTING JOINTLY except as
hereinafter provided:
1. The Executive Vice President and Manager of the
office of the Corporation's New York Branch at 9 West
57th Street, New York; New York;
2. The Senior Vice President and Manager of the office
of said New York Branch;
3. The other officers of the office of said New York
Branch;
B. Confirms that any two Members of its Board of Managing
Directors are authorized under the law of the Federal Republic
of Germany acting jointly; and
C. Confirms that any two Assistant General Managers of the
Corporation (Generalvollmachtigte) are authorized under
general power of attorney granted by the Corporation
(Generalvollmacht);
whose specific identities and names shall be established and evidenced by
certificates of an appropriate official of the Corporation, from time to time as
such positions may be held by different persons, its true and lawful agents and
attorneys-in-fact (hereinafter sometimes referred to as the "Managers"),
generally to represent the New York Branch, located at 9 West 57th Street, New
York, New York (herein sometimes called the "New York Branch" or the "Branch"),
with broad authority to manage and conduct the business, property and affairs of
the office of the New York Branch, and without limiting the generality of such
powers, and by way of enumerating some of the powers which it is intended to
repose in such Managers, so acting jointly, but not severally, to do and perform
the following:
1. To manage and control the funds and assets of the Branch and
without limiting this general power, to invest and re-invest
the same, to purchase, arrange for the purchase of or
otherwise acquire, sell, arrange for the sale of, or otherwise
dispose of, own, hold, exchange, transfer, deliver, pledge, or
otherwise deal in and with bonds, stocks, bills of exchange,
acceptances, notes and other securities or property including,
but not limited to, all such securities and property at any
time held or controlled by the Branch, either as collateral,
in custody, or otherwise; to receive the delivery of any
securities, or other property, and if conditionally released
by any bank, or person, to execute trust receipts or security
agreements therefore.
2. To purchase, or otherwise acquire, sell or otherwise dispose
of, own, hold, exchange, transfer, deliver, pledge, issue,
accept or otherwise deal in and with the currency of or
exchange on any country and spot and forward contracts
therefor; to purchase, or otherwise acquire, sell or otherwise
dispose of, own, hold, exchange, transfer, deliver, pledge,
export, import, transship, store, or otherwise deal in and
with, gold and silver coin or bullion and spot and forward
contracts therefor; to receive money for transmission, or to
transmit the same draft, check, letter payment, telegraph,
radio, cable, telex or otherwise, in United States dollars or
any other currency.
<PAGE> 25
3. To pay, or accept for payment at a future date or certify,
checks, drafts, bills of exchange and any other instruments
for the payment of money, whether expressed in United States
dollars or in any other currency, negotiable or
non-negotiable, drawn upon the Branch by its head office,
branches, correspondents, customers, or others; and to issue
letters of credit, including commercial or other letters of
credit and travelers letters of credit, authorizing the holder
thereof to draw drafts upon the Branch, its head office,
branches or its correspondents at sight, on time or otherwise
in United States dollars or in any other currency.
4. To purchase, or otherwise acquire, own, hold, sell, endorse,
negotiate, assign, transfer, exchange, deliver or otherwise
dispose of, make, draw, sign, issue, open, accept, pay, renew,
guarantee, discount, collect, transmit, protest, create a
security interest, mortgage, pledge, hypothecate, and
otherwise deal in and with, notes, drafts, bills of exchange
or other evidences of debt, acceptances, letters of credit,
including commercial or other letters of credit and travelers
letters of credit, checks, orders for the payment of money,
stocks, bonds, securities, bills of lading or other shipping
documents, insurance policies, warehouse receipts, trust
receipts, and other instruments, negotiable or non-negotiable,
of every kind and description; to waive presentment, notice of
non-payment and protest of any and all negotiable instruments.
5. To open, maintain, adjust, settle and close any deposit
account, foreign currency account, or other account, in the
United States of America or any other country, for the deposit
or collection of funds belonging to the Branch or to others,
with any bank, and to make any agreements or arrangements and
to issue any instruction relative to such accounts; to
designate one or more depositaries for said accounts; to
deposit such funds in said deposit accounts. All said funds
shall be subject to withdrawal or charge at any time and from
time to time, upon checks, notes, drafts, bills of exchange,
acceptances, undertakings or other instruments or orders for
the payment of money, when made, signed, drawn, accepted or
endorsed by the Managers, or one of the Managers and a
substitute designated by the management of the New York Branch
in the manner specified in Paragraph 37. Each depository be
and it hereby is authorized to pay, cash, certify, give credit
for, accept, or purchase, the same, or make any such charge,
without limit as to amount. Any and all endorsements for or on
account of the Branch upon such checks, notes, drafts, bills
of exchange, acceptances, undertakings and other instruments
or orders for the payment of money, tendered for deposit or
collection to any said bank, may be written or stamped
endorsements of the Branch.
6. To open, maintain, adjust, settle and close, custody,
safekeeping, collection, or other accounts with any bank,
trust company, or corporation in the United States of America
or any other country; to deliver to, transfer to, and deposit
with any such bank, trust company, or corporation for custody
and safekeeping, and to withdraw, any securities or other
property belonging to the Branch, its customers or others and
to execute, any agreements or other instruments and
instructions relative thereto or relative to any custody or
safekeeping account or the securities and property therein; to
have securities of the Corporation, its customers or others,
placed or registered in the name of the depositary's nominee.
The Managers may authorize each such bank, trust company, or
corporation to receive and hold in any such custody or
safekeeping account, as depositary, and to sell or arrange for
the sale of, or otherwise dispose of, checks, notes, drafts,
bills of exchange, acceptances, or other instruments for the
payment of money, negotiable or non-negotiable, stocks, bonds,
coupons and other securities and funds not subject to check,
to collect all interest, dividends and other income which may
become due and to credit the same to any account of the
Corporation, to receive the proceeds from the sale of
securities, redemption of bonds or other principal cash items
for credit to the account of the Corporation; to exchange
securities in temporary form for definitive securities; to
surrender securities matured or called for redemption
2
<PAGE> 26
upon receiving proper payment therefor for the account of the
Corporation; to execute on behalf of the Corporation all
necessary ownership certificates or other instruments that may
be required under any income tax or other laws or regulations
of any Government now or hereafter in effect; to sign, or
cause to be signed from time to time, any proxies received
with notices of meetings or otherwise, covering shares of
stock held from time to time for the account of the
Corporation in the name of a nominee, with respect to all
stockholders meetings, regular or special.
7. To hire deposit boxes, safes or other space in any vault of
any safe deposit company, bank or corporation, or in any
warehouse or other premises, subject to the terms, conditions,
rules and regulations of any such safe deposit company, bank
or corporation, warehouse or owner of any other premises, and
to execute any and all agreements and instruments required
therefor.
8. To borrow money, obtain advances, to obtain credit by means of
letters of credit or otherwise, and to borrow securities, upon
such terms and conditions as may be agreed upon between the
Managers and the lender, and to execute any and all notes,
collateral notes, undertakings, contracts, or other
instruments binding the Branch to the repayment thereof; and
as security for any obligations of the Branch to create a
security interest in, mortgage, pledge, hypothecate, entrust
or deposit any and all bonds, stocks, securities, bills of
exchange, bills of receivable, accounts, notes, drafts,
checks, bills of lading and other shipping documents,
insurance policies, warehouse receipts, other instruments, and
other property and assets owned or held by the Corporation or
in which the Corporation may have an interest; and to execute
deeds, conveyances, mortgages, bills of sale, conditional
bills of sale, security agreements, assignments, transfers, or
other instruments of assignment or transfer.
9. To make, or participate in, loans in dollars or in any other
currency, or establish, create, and issue mercantile or other
credits in favor of, or to lend the credit of the Corporation
by guaranty, endorsement or in any other manner, to, or for
the accommodation or benefit of, any bank, person or
Government, upon open account or upon real or personal
security or otherwise, and as evidence of such debts to accept
notes, collateral notes, acceptances, bills of exchange,
bonds, undertakings, instruments of guaranty, agreements or
other documents and as collateral security therefor to accept
securities, mortgages, pledges, security agreements, trust
receipts, warehouse receipts, bill of lading, insurance
policies, chattel mortgages or other instruments conveying and
transferring title to, or granting a lien upon or security
interest in, or pertaining to, any and all goods, wares and
merchandise and securities or other property, real or
personal, tangible or intangible, including but not limited to
any such property, imported, exported, purchased, or dealt
with under, or in connection with, such loans or credit, and
also to accept any such property in kind; to enter into
agreements with other lenders as to relative priorities in any
such security; and to subordinate any such loan to any loan
made or to be made by another lender to the same borrower.
10. To the extent permitted by law, to accept, receive, maintain
and manage deposits and safekeeping of custody accounts, or
other accounts, from any person or Government.
11. To receive personal property, both tangible and intangible, of
every kind and description for safekeeping, according to such
regulations as the Managers may prescribe.
12. To receive goods, wares and merchandise, which may be shipped
to or consigned to the Corporation by or for the account of
customers or others or for its own account, or in which the
Corporation may be interested, and to sell, assign, transfer
or otherwise dispose of, or deal with the same, or any part
thereof; to transport, store or warehouse the same or any part
thereof in the name of the Corporation or
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<PAGE> 27
otherwise. To do and perform any act or thing necessary or
proper, in order to obtain clearance through customs of goods,
wares and merchandise, or other property for the account of
the Corporation or its customers or others including but not
limited to the following: to make customs entries; to pay
customs duties; to challenge and contest any duty or tax; to
make delivery or other disposition of such property; to obtain
proper dutiable valuation and proper tariff classification for
any such property; to settle and determine all claims,
disputes and matters; and to execute bonds, reports and other
instruments in connection with the foregoing matters.
13. To act as fiscal agent, financial representative or depositary
for any Government, corporation or person, or under or with
respect to any issue of stock, bonds, or other securities, and
in such capacity, or otherwise, to receive and disburse money,
currency and gold and silver, either coin or bullion; to
collect, transmit, pay, distribute and otherwise deal with
interest, coupons, dividends, other income, moneys, stocks,
bonds and other securities and property; to transfer,
register, and countersign certificates of stock, bonds and
other securities; to underwrite, or participate in any
underwriting with respect to, any issue of bonds, stocks or
other securities, for the account of the Corporation or its
customers or others; to act as attorney-in-fact or agent for
any person for any lawful purpose.
14. To the extent permitted by law, (a) to act as the fiscal or
transfer agent of the Federal Republic of Germany or of any
subdivision, department, municipality, agency or
instrumentality thereof, or of any corporation organized under
the laws of the Federal Republic of Germany or which is doing
business in the Federal Republic of Germany or whose principal
business activity consists of investments in the Federal
Republic of Germany, provided such corporation shall have
filed with the New York Branch evidence satisfactory to the
Branch that it is so organized, is doing such business, or has
such principal business activity, as the case may be; and in
such capacity to receive and disburse money, to transfer,
register and countersign certificates of stock, bonds, or
other evidences of indebtedness or other securities, and to
act as attorney-in-fact or agent of any of the foregoing
entities, for any lawful purpose; (b) to act as trustee under
any notes, bonds, debentures or other evidences of
indebtedness issued or guaranteed by the Federal Republic of
Germany or by any subdivision, department, municipality,
agency, or instrumentality thereof, or issued by any
corporation organized under the laws of the Federal Republic
of Germany or which is doing business in the Federal Republic
of Germany or whose principal business activity consists of
investments in the Federal Republic of Germany; provided such
corporation shall have filed with the New York Branch evidence
satisfactory to the Branch that it is so organized, is doing
such business, or has such principal business activity, as the
case may be; (c) to take, accept and execute any and all such
trusts, duties and powers of whatever nature or description as
may be conferred upon or entrusted or committed to the New
York Branch (by grant, assignment, transfer or otherwise), by
the Federal Republic of Germany or by any subdivision,
department, municipality, agency or instrumentality thereof,
or by any corporation organized under the laws of the Federal
Republic of Germany or which is doing business in the Federal
Republic of Germany or whose principal business activity
consists of investments in the Federal Republic of Germany, or
by any charitable or religious organization organized under
the laws of the Federal Republic of Germany, or which is
engaged in a substantial activity in the Federal Republic of
Germany, provided such corporation or charitable or religious
organization shall have filed with the New York Branch
evidence satisfactory to the Branch that it is so organized,
is doing such business, has such principal business activity,
or is so engaged, as the case may be, and to receive, take,
manage, hold and dispose of according to the terms of such
trust, duty or power, any property or estate, real or
personal, which may be the subject of any such trust, duty or
power; provided, however, that the New York Branch shall not
have or exercise any right or power to make any contract, or
to accept or execute any trust whatever, which it would not be
lawful for any individual to make, accept or execute; and (d)
without limiting the
4
<PAGE> 28
generality of the foregoing, to exercise any and all fiduciary
powers which the New York Branch may now or hereafter be
entitled to exercise under Section 201-b of the Banking Law of
the State of New York as the same may be amended from time to
time.
15. To place or effect insurance of any kind upon any property or
assets of the Corporation or of its customers or others
including but not limited to fire, compensation, fidelity,
theft, credit, liability, and public liability; to obtain
binders for, contract for, renew, cancel or make other
disposition of, such insurance; in connection therewith and in
case of loss, to execute proofs of loss, statements,
affidavits, agreements or other documents, and to collect,
receive and acquit for any such insurance, or any sums which
may be due the Corporation, its customers or others in
connection therewith.
16. To purchase or otherwise acquire, own, hold, manage, alter,
remodel, repair, lease, rent, and make loans upon, real
estate, both improved and unimproved, and wheresoever located,
or any interest therein, and to construct, erect, build,
alter, improve, demolish buildings, and structures of every
kind, in the transaction of the business of the Branch.
17. To act as agents or attorneys-in-fact to any customers of the
Branch or others, either in the name of the Corporation or in
the name of a nominee, in any transaction in which such
customers or others may be interested, and for any purpose for
which the Managers might act under this Power of Attorney in
any transaction on behalf of the Corporation.
18. To retain attorneys; to appoint, engage, employ, make
contracts with, manage, and control such sub-managers, agents
and sub-agents, assistants, cashiers, accountants, tellers,
clerks, representatives, and other employees in any agency,
branch or other office of the New York Branch, as the said
Managers may deem necessary or advisable. Without limiting the
foregoing general powers, to fix their terms, conditions and
agreements of retainer or employment and salaries or other
compensation; to prescribe their duties, to terminate their
employment, and to dismiss or to suspend any of them, upon
such grounds as the said Managers may deem sufficient in the
best interests of the Corporation; to fill vacancies and to
increase or decrease the number of all such employees; to
assemble and maintain an adequate and proper staff; to
establish, alter or amend rules and regulations for the
control of such staff, agents and employees; and to make
contracts with the New York Branch's nominee or nominees.
19. To execute such leases, extensions and renewals of leases,
options, service contracts and such other instruments as may
be necessary or proper in the establishment and maintenance of
offices for the Corporation in the City of New York and
elsewhere; to purchase, acquire, sell, exchange or otherwise
dispose of such furniture, fixtures, supplies and other
personal property as may be necessary or convenient in
connection with the business of the New York Branch, or any
other office maintained by the Corporation.
20. To execute any and all instruments which may be required by
the Federal Reserve Bank of New York or any other Federal
Reserve Bank, in connection with the sale to or purchase by
any such Federal Reserve Bank, of any acceptances, bills of
exchange, other commercial paper or other instruments,
negotiable or non-negotiable, made, executed, issued,
accepted, endorsed, negotiated, assigned or delivered by the
Corporation or any agency or branch thereof.
21. To ask, demand, sue for, recover, receive and give
acquittances for any and all moneys, debts and demands, bonds,
stocks, securities and other property due or payable to, or
deliverable to the Corporation or which may hereafter become
due, or payable or deliverable to the Corporation, or to
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<PAGE> 29
which the Corporation may have the right of immediate
possession, either as principal, interest, dividends or
otherwise, and from any person or Government; to compromise,
adjust, settle, compound or otherwise dispose of all claims,
demands, disputes and controversies; to execute any
composition agreement or other debtor or creditor agreement or
to make any arrangement with debtors; to refer any dispute,
controversy or matter to arbitration and to appoint or consent
to the appointment of arbitrators or an umpire, either before
or subsequent to the commencement of legal proceedings;
without limiting to any extent the various rights and remedies
which are or might be available to the Corporation, to accept,
take possession of, hold or store any goods, wares or
merchandise, or other personal property whether belonging to
the Corporation or held by the Corporation as security or in
trust, or held by any bank or person as security or in trust
or for the account of the Corporation, or otherwise, and to
hold, manage, sell, assign, transfer, lease, create a security
interest in, mortgage, pledge or otherwise deal with the same,
or any part thereof.
22. To commence, prosecute, enforce, appear in, intervene in,
accept service of process in, defend, settle, adjust,
compromise or discontinue any action, suit, proceeding or
litigation at law or in equity, in any court, or before any
Government; to apply for or consent to the appointment,
removal or substitution of any Receiver, Trustee, Referee,
Master or Arbitrator.
23. To appear in and participate in any bankruptcy, insolvency,
arrangement, reorganization, equity or receivership or other
similar proceeding or suit, or in any matter relating to the
assets, estate or effects, or the winding up of the affairs
of, any person, indebted to the Corporation or its customers;
to execute proofs of claim and powers of attorney; to attend
and participate in any and all meetings of creditors, either
prior to the commencement of or in connection with any such
proceeding or suit; to vote in respect of any claim or other
matter at any such meeting; to appoint proxies; to withdraw,
compromise, settle, satisfy and deal with any claim; to
execute petitions in bankruptcy or applications for the
appointment of receivers in any court and under insolvency,
bankruptcy, reorganization or other laws; and to execute any
and all other petitions, answers, proofs of claim, pleadings
or other papers which may be necessary or proper.
24. To attend and vote at, or to appoint proxies or other
representatives to attend or vote at, any and all meetings of
stockholders, bondholders, creditors, noteholders, holders of
any other securities or obligations, or of committees
representing any class or kind of securities or property.
25. To execute applications, affidavits, petitions and other
instruments, in order to obtain licenses, permits, franchises
and rights from the Government of the United States of
America, the several States, territories and dependencies
thereof, the District of Columbia, or any other Government,
with reference to importing, exporting, selling, exchanging,
storing, transshipping, trucking, moving and otherwise dealing
in and with gold and silver, either coin or bullion, and with
reference to the performance of any act or thing or the
exercise of any power granted by this Power of Attorney.
26. To execute all such tax returns, information returns,
schedules, affidavits, waivers, petitions, applications for
refunds, and other instruments and documents as may be
required by or permitted under any tax law, income tax law or
other law, rule, regulation or requirement of any Government.
27. To execute, and file with the Superintendent of Banks of the
State of New York, any Federal Reserve Bank, or any Government
all applications, certificates, designations, financial
statements, powers of attorney and other instruments, or
renewals or substitutions thereof which may be necessary or
proper in order to enable the Corporation to establish an
agency, branch or other office in any other city in the
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<PAGE> 30
United States, or elsewhere, or which may be necessary or
proper in order to enable the Corporation to transact its
business and manage and control its assets, business and
affairs in connection with the New York Branch or any other
agency, branch or office which is or may be established as
aforesaid; to execute, deliver, file and amend any deposit
agreements and other agreements and instruments which may be
necessary or proper in order to enable the Corporation to
comply with any legal requirements for the maintenance of
assets or reserves in connection with the New York Branch and
any other agency, branch or office which is or may be
established as aforesaid; and to execute, and file with the
Superintendent of Banks of the State of New York, a
certificate of designation, specifying the name and address of
the officer, agent or other person to whom the Superintendent
of Banks shall forward any process served upon the
Superintendent of Banks in any action or proceeding against
the Corporation on a cause of action arising out of a
transaction with the New York Branch; and to execute,
acknowledge and file with the Superintendent of Banks of the
State of New York an application or applications (and renewals
or substitutions thereof) for a certificate or certificates of
authorization to exercise the fiduciary powers specified in
Section 201-b of the New York Banking Law at any or all of the
Corporation's authorized branches in the State of New York and
in connection therewith from time to time to take any and all
proceedings and to make, execute, acknowledge, deliver and
file any and all agreements, certificates, financial
statements, affidavits, powers of attorney, and other
documents, instruments or papers, and to take or cause to be
taken any and all further action, which may be necessary or
proper in order to enable any or all of the Corporation's said
branches to exercise, or to obtain a certificate of
authorization to exercise, said fiduciary powers.
28. Specifically, to sell and assign any and all bonds or
obligations of any description of the United States (or other
obligor of any sort) now or hereafter registered in the name
of the Corporation on the books of the Treasury Department (or
on the books of any obligor of any sort, or any registrar or
agent) or which may now or hereafter be assigned to the
Corporation; to exchange registered bonds, or obligations of
any description of the United States (or other obligor of any
sort) for coupon bonds or obligations, and to exchange any
such coupon bonds or obligations for registered bonds or
obligations.
29. To designate on any endorsement or separate power in which the
Corporation or any branch, agency or office thereof is
appointed attorney to transfer shares of stock or other
registered securities on the books of any such association,
company, or corporation, a substitute or substitutes (with
like power of substitution) to make such transfer.
30. To guarantee the signature or signatures of any person, firm
or corporation, including, without in any way limiting the
generality of the foregoing, the signature of any officers of
this Corporation, being known as Deutsche Bank AG located
outside the State of New York, on any shares of stock or other
registered securities or on any power of attorney executed to
secure the transfer of same, and, further, to guarantee the
correctness or authenticity of any instruments or other
documents or copies thereof required in connection with the
transfer of any stock or registered securities; and such
guarantee by the New York Branch shall constitute a guarantee
not only of the genuineness of the signatures of the persons
signing for the Corporation's officers, but also the guarantee
of their authority to endorse or assign shares of stock in
question; and such guarantee by the New York Branch is, under
all circumstances, to be considered as an unqualified
guarantee of the validity and propriety of each transfer even
though the person or persons so assigning the stock on behalf
of the Corporation may no longer be with the Corporation, or
their signatures do not appear in the most recent specimen
signature book or in any other specimen signature book on file
with the respective transfer agents. This authority, given to
the New York Branch, shall continue in full force and effect
and be binding on the Corporation until such time as notice
has been given in writing of its revocation.
7
<PAGE> 31
31. To endorse or guarantee any or all assignments or powers of
attorney for the transfer of any shares of stock or other
registered securities executed by any person, firm or
corporation whatsoever.
32. To do and perform any and all of the foregoing acts and things
and to exercise the broad general powers herein granted as
well as the specific powers mentioned in this instrument
within and throughout the State of New York, the District of
Columbia and the several states, territories, and dependencies
of the United States of America and within any other country
except as herein otherwise stated, provided only that the same
be not inconsistent with the laws, statutes, ordinances, rules
and regulations of any Government having valid jurisdiction in
the premises.
33. To transact, generally, any and all business on behalf of the
Branch, with full power and authority to do and perform all
acts and things incidental to the exercise of, or requisite,
necessary or proper to be done under and by virtue of the
general powers hereby granted as well as the specific powers
herein enumerated, and in and about the premises; to organize
and cause to be organized subsidiary corporations or other
corporations; to act as directors on the Board of Directors of
any corporation.
34. To do and perform any and all of the acts and things, and to
exercise all of the powers herein granted, to the extent that
the same shall be in accordance with the laws; rules or
regulations of the Government under whose jurisdiction the
same are performed or exercised; should the performance of any
act or thing or the exercise of any power herein granted, be
determined to be illegal or contrary to the laws, rules and
regulations of any such Government, as aforesaid, by any Court
of competent jurisdiction, or pursuant to the opinion of
counsel, or otherwise, it is the intention of the Corporation
that this Power of Attorney and all the powers herein granted,
nevertheless, shall be and continue at all times in full force
and effect as to all acts, things and powers the performance
and exercise of which shall not have been held or determined,
specifically, as aforesaid to be illegal or violative of such
laws, rules and regulations.
35. In the interpretation and construction of this Power of
Attorney, the several terms hereinafter mentioned shall be
defined to include the meanings indicated, but these
definitions shall not be deemed to limit in any way the
broader definitions or meanings that would otherwise be given
to them in law. The term "bank" shall be defined to include
any government bank, central bank, correspondent bank, agency
bank, branch bank, private bankers, banking partnership or
firm, or any other banking or financial organization or
institution, public or private. The term "person" shall be
defined to include any individual, firm, partnership,
corporation, public or private, or association, and also any
Government bank as herein defined. The term "execute" or
"make" shall be defined to include, make, draw, sign, swear
to, verify, acknowledge, certify, deliver, deposit, send, file
and record. The term "Government" shall be defined to include
any nation, country, principality, state, province, county,
dependency, territory, mandate, city, municipality, as well as
the Government thereof, de jure or de facto, and also any
foreign ministry, ministry of finance, department, bureau,
board, administrative authority, court, tribunal, any judicial
or semi-judicial body or authority, commission, sub-division,
agency, representative, corporate subsidiary or affiliate, or
officer thereof.
36. The Corporation for itself, its successors and assigns does
hereby ratify, confirm and approve all acts and transactions
which the Members of the Board of Managing Directors,
Assistant General Managers of the Corporation, General Manager
and Managers shall do or cause to be done by virtue of this
Power of Attorney. All acts and transactions of the Members of
the Board of Managing Directors, Assistant General Managers of
the Corporation, General Manager and Managers shall,
notwithstanding any prior
8
<PAGE> 32
revocation of this Power of Attorney or the revocation of the
appointment of any Members of the Board of Managing Directors,
Assistant General Managers of the Corporation, General Manager
or Managers thereunder, be valid, effectual and binding upon
the Corporation, unless notice in writing of such revocation
of this Power of Attorney as to any Members of the Board of
Managing Directors, Assistant General Managers of the
Corporation, General Manager or Managers shall have been
previously delivered to the bank, corporation or person to
whom a copy of this Power of Attorney shall have been
delivered.
37. Instead of two of the Managers acting jointly, any one officer
or employee of the New York Branch who shall be specifically
designated so to do by the management of the New York Branch,
which management is hereby authorized to so designate from
time to time, may act singly in instances where the office of
DEUTSCHE BANK AG, New York Branch, has occasion to
(a) guarantee the endorsement of any person in whose name
a share certificate or other corporate security
stands;
(b) sign a power of substitution in connection with the
transfer of any share certificate or other corporate
security;
(c) guarantee the signature of any of its nominee
partnerships or the nominee partnership of Deutsche
Bank AG; or
(d) certify that a transfer of a corporate security
(e.g., a stock certificate or a bond) from any name
into any other name, does not effectuate a change of
ownership.
38. Instead of two of the Managers acting jointly, any one officer
or employee who shall be specifically designated to do so by
the management of the New York Branch acting singly may sign:
(a) Debit and credit advices involving amounts not in excess
of $5,000 in connection with the routine operation of deposit accounts of any
depositor (including without limitation correspondent banks and branches,
agencies, offices and affiliates of the Corporation);
(b) Advices accompanying clean drafts or checks sent for
collection to domestic or foreign banks; advices
accompanying checks bearing two signatures, mailed in
settlement of collection items;
(c) Debit and credit advices addressed to any branch,
agency or office of the Corporation, confirming the
purchase or redemption of finance company commercial
paper or bankers' acceptances; and
(d) Form letters in connection with the routine
operations of the New York Branch (but which in no
event involve any liability or engagement on the part
of the Corporation or authorize payments or transfers
of funds or purchase or delivery of securities or
other property).
The New York Branch may be operated, and any paper or document may be
executed pursuant hereto, in the name of the Corporation with the addition of
the words "New York Branch".
9
<PAGE> 33
IN WITNESS WHEREOF, DEUTSCHE BANK AG has caused this Power of Attorney
to be executed by Dr. Wilfried Guth and Dr. Alfred Herrhausen, Members of its
Board of Managing Directors, they being thereunto duly authorized in accordance
with a resolution of the Board of Managing Directors, this 6th day of February,
1978.
DEUTSCHE BANK AG
By /s/ DR. WILFRIED GUTH
-------------------------------
Dr. Wilfried Guth
Member of Board of Managing
Directors
Dated: 6th of February 1978
By /s/ DR. ALFRED HERRHAUSEN
-------------------------------
Dr. Alfred Herrhausen
Member of Board of Managing
Directors
ACKNOWLEDGEMENT
FEDERAL REPUBLIC OF GERMANY )
LAND HESSE )
CITY OF FRANKFURT AM MAIN ) ss.:
CONSULATE GENERAL OF THE )
UNITED STATES OF AMERICA )
On this 9th day of February, 1978, before me personally came Dr. Alfred
Herrhausen, who, being by me duly sworn, deposes and says that he resides at
Solingen/Germany; that he is a Member of the Board of Managing Directors of
Deutsche Bank AG, the corporation described in and which executed the foregoing
Power of Attorney; that said corporation has no corporate seal; and that he
signed his name to said Power of Attorney in accordance with a resolution of the
Board of Managing Directors of said corporation.
/s/ J. Peter Becker
---------------------------------------
J. Peter Becker
Counsul of the United States of America
duly commissioned and qualified
(SEAL)
10
<PAGE> 34
ACKNOWLEDGEMENT
FEDERAL REPUBLIC OF GERMANY )
LAND HESSE )
CITY OF FRANKFURT AM MAIN ) ss.:
CONSULATE GENERAL OF THE )
UNITED STATES OF AMERICA )
On this 6th day of February, 1978, before me personally came Dr.
Wilfried Guth, who, being by me duly sworn, deposes and says that he resides at
Konigstein/Germany; that he is a Member of the Board of Managing Directors of
Deutsche Bank AG, the corporation described in and which executed the foregoing
Power of Attorney; that said corporation has no corporate seal; and that he
signed his name to said Power of Attorney in accordance with a resolution of the
Board of Managing Directors of said corporation.
/s/ J. Peter Becker
---------------------------------------
J. Peter Becker
Counsul of the United States of America
duly commissioned and qualified
(SEAL)
11
<PAGE> 35
Exhibit 6
The consent of United States institutional trustees required by Section 321(b)
of the Act.
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
December 10, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Wind River Systems,
Inc. and Deutsche Bank AG, New York Branch, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
Very truly yours,
Deutsche Bank AG, New York Branch
By: /s/George H. Gregor
---------------------------------
Name: George H. Gregor
By: /s/Peter C. Olsen
---------------------------------
Name: Peter C. Olsen
12
<PAGE> 36
Exhibit 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.
<PAGE> 37
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks
at close of business on September 30, 1997
FFIEC 002/002S
OMB No. 7100-0032/7100-0273
Approval of the FFIEC 002 expires June 30, 1997.
Approval of the FFIEC 002S expires December 31, 1999.
This report is required by law [12 U.S.C. 3105(b)(2); 12 U.S.C. 1817(a)(1) and
(3); and 12 U.S.C. 3102(b)].
Institution ID: 8365057000
Please read carefully "Instructions for Preparation of the Report of Assets and
Liabilities of U.S. Branches and Agencies of Foreign Banks" and instructions
for preparation of the supplement "Report of Assets and Liabilities of a
Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or Agency of a
Foreign (Non-U.S.) Bank."
Please indicate legal status: Branch
--------------------------------------------------
Indicate FDIC insurance Status (Y/N): N
------------------------------------------
If this report consolidates the statements for multiple branches or agencies of
a foreign bank, indicate the number of branches or agencies included in this
report:
-------------------------------------------------------------------------
DEUTSCHE BANK AG - NEW YORK BRANCH
- --------------------------------------------------------------------------------
Legal Title
31 WEST 52ND STREET
- --------------------------------------------------------------------------------
Street Address
NEW YORK NEW YORK
- --------------------------------------------------------------------------------
City County
NY 10019
- --------------------------------------------------------------------------------
State Zip Code
- --------------------------------------------------------------------------------
Legal Title
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City County
- --------------------------------------------------------------------------------
State Zip Code
- --------------------------------------------------------------------------------
Legal Title
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City County
- --------------------------------------------------------------------------------
State Zip Code
DEUTSCHE BANK AG
- --------------------------------------------------------------------------------
Legal Title of Foreign Bank Parent
FRANKFURT GERMANY
- --------------------------------------------------------------------------------
City Country
KAWAL PERSAUD - ASSOCIATE
- --------------------------------------------------------------------------------
Person to be contacted concerning this report
(212) 469-7551
- --------------------------------------------------------------------------------
Telephone Number (including area code and extension)
NOTE-
This report must be signed by an authorized officer and attested by the senior
executive officer.
I, DANIEL C. SOLENDORIO
----------------------------------------------------------------------------
Name of Officer Authorized to Sign Report
VICE PRESIDENT
- -------------------------------------------------------------------------------
Title of Officer Authorized to Sign Report
of the branch or agency specified do hereby declare that this Report of Assets
and Liabilities (including the supporting schedules and supplement) has been
prepared in conformance with the instructions issued of the Federal Financial
Institutions Examination Council and is true to the best of my knowledge and
belief.
/s/ Daniel C. Solendorio
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
[DEUTSCHE BANK STAMP]
I, GARY T. HANDEL
-----------------------------------------------------------------------------
Name of Senior Executive Officer
MANAGING DIRECTOR
- --------------------------------------------------------------------------------
Title of Senior Executive Officer
attest the correctness of this Report of Assets and Liabilities (including the
supporting schedules and supplement) and declare that it has been examined by
us, and to the best of our knowledge and belief, has been prepared in
conformance with the instructions issued by the Federal Financial Institutions
Examination Council and is true and correct.
/s/ Gary T. Handel
- --------------------------------------------------------------------------------
Signature of Senior Executive Officer
Public reporting burden associated with the FFIEC 002 and FFIEC 002S is
estimated to average 22.75 hours per response and 6.0 hours per response,
respectively, including time to gather and maintain data in the required form
and to review instructions and complete the information collection. A Federal
agency may not conduct or sponsor, and an organization (or a person) is not
required to respond to a collection of information, unless it displays a
currently valid OMB control number. Comments regarding this burden estimate or
any other aspect of this information collection, including suggestions for
reducing the burden, may be sent to Secretary, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551 and to Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503.
<PAGE> 38
REPORT OF ASSETS AND LIABILITIES OF
DEUTSCHE BANK AG - NEW YORK BRANCH
- ----------------------------------
Legal Title of Branch or Agency
at the close of business on September 30, 1997
------------------
SCHEDULE RAL - ASSETS AND LIABILITIES
All schedules are to be reported in thousands of U.S. dollars. Unless otherwise
indicated, report the amount outstanding as of the last calendar day of the
quarter.
<TABLE>
<CAPTION>
(COLUMN A) (COLUMN B)
TOTAL REPORTING
BRANCH OR AGENCY
ASSETS Dollar Amounts in Thousands INCLUDING ITS IBF IBF ONLY
- ------------------------------------------------------------------- --------------------- ----------------
<S> <C> <C>
1. Claims on Nonrelated Parties:
(Excludes all claims on related depository institutions
but includes claims on related nondepository institutions
See instructions for coverage and treatment on "nonrelated"
and "related" institutions.)
a. Cash and balances due from depository institutions RCFD RCFN
(from Schedule A, item 6).......................................0010.. 401,368 0010.. 0 1.a
------------- ---------
b. U.S. Government Securities:
(1) U.S. Treasury securities....................................0260.. 25,572 1.b.(1)
--------------
(2) U.S. Government agency and corporation obligations..........0371.. 2,150,763 1.b.(2)
--------------
c. Other bonds, notes, debentures, and corporate stock
(including state and local securities):
(1) Securities of foreign governments and official
Institutions................................................A003.. 241,070 A003.. 0 1.c.(1)
--------------- ----------
(2) All Other...................................................A004.. 70,877 A004.. 0 1.c.(2)
--------------- ----------
d. Federal Funds sold and securities purchased under
agreements to resell:
(1) With U.S. branches and agencies of other foreign banks......1631.. 141,500 1631.. 0 1.d.(1)
--------------- ----------
(2) With other commercial banks in the U.S. ....................1632.. 125,000 1632.. 0 1.d.(2)
--------------- ----------
(3) With others.................................................1390.. 2,780,547 1390.. 0 1.d.(3)
--------------- ----------
e. Loans and leases, net of unearned income (from Schedule C,
item 11)........................................................2122.. 6,617,220 2122.. 251,052 1.e.
--------------- ----------
f. Trading Assets..................................................3545.. 5,704,021 3545.. 0 1.f.
--------------- ----------
g. Customers' liability to this branch or agency on
acceptances outstanding:
(1) U.S. addressees (domicile)..................................2156.. 141,000 1.g.(1)
---------------
(2) Non-U.S. addressees (domicile)..............................2157.. 113,652 1.g.(2)
---------------
h. Other assets including other claims on nonrelated parties.......2151.. 2,479,197 2151.. 4,609 1.h.
--------------- -----------
i. Total claims on nonrelated parties
(sum of items 1.a through 1.h)..................................2171.. 20,991,787 2171.. 255,661 1.i.
--------------- -----------
2. Net Due from Related Depository Institutions:
a. For the reporting branch or agency including its IBF: Net
due from head office and other related depository
institutions (items 4.g minus item 1.f of Column A if
item 4.g is greater than item 1.i; otherwise
enter -0-)......................................................2154.. 4,119,408 2.a.
---------------
b. For the IBF of the reporting branch or agency: Net due from
establishing entity, head office and other related
depository institutions (item 4.g minus item 1.i of
Column B if item 4.g is greater than item 1.i; otherwise
enter -0-)...................................................... 2154.. 184,698 2.b.
-----------
3. Total Assets (for Column A, sum of items 1.i and 2.a;
for Column B, sum of items 1.i and 2.b)..............................2170.. 25,111,195 2170.. 440,359 3.
--------------- -----------
</TABLE>
<PAGE> 39
FFIEC 002
Page 02
Schedule RAL - continued
<TABLE>
<CAPTION>
(Column A) (Column B)
Total Reporting
Branch or Agency
LIABILITIES Dollar Amounts in Thousands including its IBF IBF Only
- -------------------------------------------------------------------- ------------------ -------------
<S> <C> <C>
4. Liabilities to nonrelated parties:
(Excludes all liabilities to related depository institutions
but includes all liabilities to related nondepository
institutions. See instructions for coverage and treatment
of "nonrelated" and "related" institutions.) RCFD RCFN
a. Total deposits and credit balances (from Schedule E, ---- ----
item 7).........................................................2205..13,628,321 2205..243,981 4.a.
---------- -------
b. Federal funds purchased and securities sold under
agreements to repurchase:
(1) With U.S. branches and agencies of other foreign banks......2317.. 177,000 2317.. 0 4.b.(1)
---------- -------
(2) With other commercial banks in the U.S. ....................2318.. 254,563 2318.. 0 4.b.(2)
---------- -------
(3) With others.................................................2820.. 4,804,472 2820..177,000 4.b.(3)
---------- -------
c. Other borrowed money (from Schedule F, item 4)..................3190.. 118,448 3190.. 18,000 4.c.
---------- -------
d. Branch or agency liability on acceptances executed and
outstanding.....................................................2920.. 274,869 4.d.
---------- -------
e. Trading liabilities.............................................3548.. 3,888,832 3548.. 0 4.e.
---------- -------
f. Other liabilities to nonrelated parties.........................2916.. 1,964,690 2916.. 1,378 4.f.
---------- -------
g. Total liabilities to nonrelated (sum of items 4.a through 4.f)..2927..25,111,195 2927..440,359 4.g.
5. Net due to related depository institutions: ---------- -------
a. For the reporting branch or agency including its IBF: Net
due to head office and other related depository
institutions (item 1.i minus item 4.g of Column A if item
1.i is greater than item 4.g; otherwise enter -0-)..............2944.. 0 5.a.
---------- -------
b. For the IBF of the reporting branch of agency:
Net due to establishing entity, head office and other
related depository institutions (item 1.i minus item 4.g
of Column B if item 1.i is greater than item 4.g;
otherwise enter -0-)............................................ 2944.. 0 5.b.
-------
6. Total liabilities (for Column A, sum of items 4.g and 5.a;
for Column B, sum of items 4.g and 5.b)............................2950..25,111,195 2950..440,359 6.
---------- -------
<CAPTION>
MEMORANDA
- -------------------------------------------------------------------- ------------------ -------------
1. Fair value of held-to-maturity securities.........................1771.. 295,447 1771.. 0 M.1.
---------- -------
2. Amortized cost of held-to-maturity securities.....................1754.....289,220 1754.. 0 M.2.
---------- -------
3. Fair value of available-for-sale securities.......................1773...2,199,062 1773.. 0 M.3.
---------- -------
4. Amortized cost of available-for-sale securities...................1772...2,280,500 1772.. 0 M.4.
---------- -------
5. Fair value of high-risk mortgage securities.......................8781.. 0 8781.. 0 M.5.
---------- -------
6. Amortized cost of high-risk mortgage securities...................8780.. 0 8780.. 0 M.6.
---------- -------
7. Fair value of structured notes....................................8783.. 0 8783.. 0 M.7.
---------- -------
8. Amortized cost of structured notes................................8782.. 0 8782.. 0 M.8.
---------- -------
9. Mutual funds and annuity sales during the quarter.................A005.. 0 A005.. 0 M.9.
---------- -------
10. Revaluation gains on interest rate, foreign exchange rate, and
other commodity and equity contracts..............................3543.. 2,344,174 RVD 3543.. 0 M.10.
---------- -------
11. Revaluation losses on interest rate, foreign exchange rate, and
other commodity and equity contracts..............................3547.. 2,657,253 RVD 3547.. 0 M.11.
---------- -------
12. Amount of assets netted against nondeposit liabilities on the
balance sheet in accordance with generally accepted accounting
principles........................................................A526.. 1,942,965 A526.. 0 M.12.
---------- -------
13. If other assets including other claims on nonrelated parties
(item 1.h) exceeds 5 percent of total assets (item 3), itemize
and describe amounts that exceed 25 percent of item 1.h.
TEXT RCFD
a. A539: ACCRUED INTEREST RECEIVABLE A539..1,363,005 M.13.a
---------
b. A540: A540.. 0 M.13.b
---------
c. A541: A541.. 0 M.13.c
---------
</TABLE>
<PAGE> 40
Schedule RAL - continued
14. If other liabilities to nonrelated parties (item 4.f) exceeds 5 percent of
total liabilities (item 6), itemize and describe amounts that exceed 25
percent of Item 4.f.
<TABLE>
<CAPTION>
TEXT RCFD
<S> <C> <C>
a. A542: Accrued Interest Payable A542..985,073 M.14.a
-------
b. A543: A543.. 0 M.14.b
-------
c. A544: A544.. 0 M.14.c
-------
</TABLE>
15. Number of full-time equivalent employees of the
branch or agency at the end of current period
(round to the nearest whole number).................. 4150.. 1,040 M.15.
------
To be reported only with the March Report
16. 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 branch or agency by, or on RCFD Number
behalf of, the parent organization during the ------ ------
preceding year....................................... 6724.. N/A M.16.
-------
1=Independent annual audit of the branch or agency conducted in accordance with
U.S. generally accepted auditing standards by a certified public accounting
firm
2=Independent annual audit of the branch or agency conducted in accordance with
home country auditing standards by an independent accounting firm
3=Review of the financial statements of the branch or agency by external
auditors, as part of the audit of the parent organization
4=Review of the financial statements of the branch or agency by internal
auditors
5=Compilation of the financial statements of the branch or agency by external
auditors
6=Other audit procedures
7=No audit or independent review
Schedule RAL - Memoranda
<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
STATUTORY OR REGULATORY REQUIREMENT Dollar Amounts in Thousands Including Its 1BF
- -------------------------------------------------------------------- -----------------
as appropriate for the reporting institution (see Instructions)
<S> <C> <C> <C>
RCFD
------
1. Asset maintenance requirement... 3343.. 0 S.1.
---------
2. Asset pledge requirement/Capital equivalency deposit... 3349.. 1,785,522 S.2.
---------
3. FDIC asset maintenance requirements (for FDIC insured
branches only):
a. Average liabilities... 2334.. N/A S.3.a.
---------
b. Eligible assets... 2387.. N/A S.3.b.
---------
</TABLE>
<PAGE> 41
SCHEDULE A - CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
NOTE: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
----(Column A)---- ----(Column B)----
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF IBF Only
- ---------------------------------------------------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
RCFD RCFN
1. Cash items in process of collection ---- ----
and unposted debits............................................0020.. 125 0020.. 0 1.
------------- ------------
2. Currency and coin (U.S. and foreign)...........................0080.. 90 2.
-------------
3. Balances due from depository institutions in the U.S.:
a. U.S. branches and agencies of other foreign banks
(including their IBFs).....................................0083.. 286,000 0083.. 0 3.a.
------------- -----------
b. Other depository institutions in the U.S.
(including their IBFs).....................................0085.. 72,069 0085.. 0 3.b.
------------- -----------
4. Balances due from banks in foreign countries and
foreign central banks:
a. Foreign branches of U.S. banks..............................0073.. 544 0073.. 0 4.a.
------------- -----------
b. Other banks in foreign countries and foreign central banks..1884.. 10,506 1884.. 0 4.b.
------------- -----------
5. Balances due from Federal Reserve Banks........................0090.. 32,034 5.
-------------
RCXX RCXY
6. Total (sum of items 1 through 5) (must equal Schedule RAL, ---- ----
item 1.a)......................................................0010 401,368 0010.. 0 6.
------------- -----------
MEMORANDUM RCFD RCFN
1. Noninterest-bearing balances due from commercial banks in the ---- ----
U.S. (including their IBFs)(included in item 3 above)..........0050.. 22,069 0050.. 0 M.1.
------------- -----------
</TABLE>
<PAGE> 42
Schedule C - Loans
Part I. Loans and Leases
Net of unearned income.
NOTE: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
---(COLUMN A)--- ---(COLUMN B)---
TOTAL REPORTING
BRANCH OR AGENCY
DOLLAR AMOUNTS IN THOUSANDS INCLUDING ITS IBF IBF ONLY
- ------------------------------------------------------------- ----------------- ----------------
<S> <C> <C> <C>
RCFD RCFN
---- ----
1. Loans secured by real estate................................. 1410.. 301,044 1410.. 0 1.
---------- ----------
2. Loans to depository institutions:
a. To commercial banks in the U.S. (including their IBFs):
(1) To U.S. branches and agencies of other foreign banks.. 1506.. 397,600 1506.. 7,800 2.a.(1)
---------- ----------
(2) To other commercial banks in the U.S.................. 1507.. 0 1507.. 0 2.a.(2)
---------- ----------
b. To other depository institutions in the U.S. (including
their IBFs)............................................... 1517.. 0 1517.. 0 2.b.
---------- ----------
c. To banks in foreign countries:
(1) To foreign branches of U.S. banks..................... 1513.. 0 1513.. 0 2.c.(1)
---------- ----------
(2) To other banks in foreign countries................... 1516.. 320,926 1516.. 227,635 2.c.(2)
---------- ----------
3. Loans to other financial institutions........................ 1520.. 2,871,049 1520.. 0 3.
---------- ----------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)............................. 1763.. 1,842,012 1763.. 0 4.a.
---------- ----------
b. To non-U.S. addressees (domicile)......................... 1764.. 142,818 1764.. 15,056 4.b.
---------- ----------
5. Acceptances of other banks:
a. Of U.S. banks............................................. 1756.. 308 1756.. 0 5.a.
---------- ----------
b. Of foreign banks.......................................... 1757.. 1,603 1757.. 0 5.b.
---------- ----------
6. Loans to foreign governments and official institutions
(including foreign central banks)............................ 2081.. 561 2081.. 561 6.
---------- ----------
7. Loans for purchasing or carrying securities (secured and
unsecured)................................................... 1545.. 436,332 1545.. 0 7.
---------- ----------
8. All other loans (include state and local obligations other
than securities and loans to individuals).................... 1885.. 166,520 1885.. 0 8.
---------- ----------
9. Lease financing receivables (net of unearned income):
a. Of U.S. addressees (domicile)............................. 2182.. 136,447 2182.. 0 9.a.
---------- ----------
b. Of non-U.S. addressees (domicile)......................... 2183.. 0 2183.. 0 9.b.
---------- ----------
10. Less: Any unearned income on loans reflected in items 1-8
above........................................................ 2123.. 0 2123.. 0 10.
--------- -------
11. Total loans and leases, net of unearned income (sum of RCXX RCXY
items 1 through 9 minus item 10) ---- ----
(must equal Schedule RAL, item 1.e.)......................... 2122.. 6,617,220 2122.. 251,052 11.
--------- -------
MEMORANDA
RCFD
1. Not applicable. ----
2. Holdings of own acceptances included in Schedule C, pt I,
item 4......................................................... 3341.. 142,199 M.2.
----------
3. Commercial and industrial loans with remaining maturity of
one year or less:
a. With predetermined interest rates........................... 6119.. 752,840 M.3.a.
----------
b. With floating interest rates................................ 6120.. 82,877 M.3.b.
----------
4. Commercial and industrial loans with remaining maturity of
more than one year:
a. With predetermined interest rates........................... 6122.. 1,137,613 M.4.a.
----------
b. With floating interest rates............................... 6123.. 11,500 M.4.b.
----------
</TABLE>
<PAGE> 43
Schedule E - Deposit Liabilities and Credit Balances
NOTE: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
- Total Deposit Liabilities and Credit Balances, Excluding IBF-
--------- Transaction Accounts------- Nontransaction Accts.
(Column A) (Column B) (Column C) (Column D)
Total
Total transaction nontransaction
accounts and Memo: Total demand accounts
credit balances deposits (included (including MMDAs) IBF deposit
Dollar Amounts in Thousands (excluding IBF) in Column A) (excluding IBF) liabilities
- --------------------------- --------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C>
1. Individuals, partnerships, and
corporations:
RCON RCON RCON RCFN
---- ---- ---- ----
a. U.S. addressees (domicile)........... 1641.. 46,341 2223.. 46,341 2242.. 10,201,735 1666.. 0 1.a
------- ------- ----------- --------
b. Non-U.S. addressees (domicile)....... 1642.. 46,716 2224.. 46,716 2251.. 287,240 1447.. 40,089 1.b
------- ------- ----------- --------
2. Commercial banks in the U.S.
(including their IBFs):
a. U.S. branches and agencies of
other foreign banks.................. 1643.. 0 2313.. 0 2347.. 1,528,100 1668.. 5,000 2.a
------- ------- ----------- --------
b. Other commercial banks in the U.S. .. 1645.. 0 2316.. 0 2348.. 22,804 1669.. 0 2.b
------- ------- ----------- --------
3. Banks in foreign countries:
a. Foreign branches of U.S. banks....... 1646.. 0 2323.. 0 2367.. 10,000 1671.. 0 3.a
------- ------- ----------- --------
b. Other banks in foreign countries..... 1647.. 6,431 2326.. 6,431 2373.. 98,734 1672.. 13,000 3.b
------- ------- ----------- --------
4. Foreign governments and official
institutions (including foreign
central banks).......................... 1649.. 6,407 2300.. 6,407 2377.. 884,672 2650.. 185,892 4.
------- ------- ----------- --------
5. All other deposits and credit
balances................................ 1650.. 15,247 1654.. 0 2259.. 225,000 2261.. 0 5.
------- ------- ----------- --------
RCKZ
----
6. Certified and official checks........... 2330.. 4,913 2330.. 4,913 6.
------- -------
7. Total deposits and credit balances
(sum of columns A, C, and D must
equal Schedule RAL, item 4.a, Column RCON RCON RCON RCXY
A. Column D must equal Schedule RAL, ---- ---- ---- ----
item 4.a, Column B)..................... 1653.. 126,055 2210.. 110,808 2385.. 13,258,285 2205.. 243,981 7.
-------- --------- ----------- ---------
- ----------
* Amounts in this column should exclude those IBF liabilities to be reported as
"Federal funds purchased and securities sold under agreements to repurchase" or
as "Other borrowed money."
</TABLE>
MEMORANDA
- ---------
<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
Dollar Amount in Thousands Excluding its IBF
-------------------------- -----------------
RCON
----
<S> <C>
1. Components of total nontransaction accounts (included in items 7, Column C):
a. Time deposits of $100,000 or more......................................... 2604.. 13,258,210 M.1.a.
-----------
b. Not applicable.
c. Time certificates of deposit of $100,000 or more with
remaining maturity of more than 12 months................................. 6643.. 365,000 M.1.c.
-----------
</TABLE>
<PAGE> 44
SCHEDULE K -- QUARTERLY AVERAGES(1)
NOTE: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
TOTAL REPORTING
BRANCH OR AGENCY
DOLLAR AMOUNT IN THOUSANDS INCLUDING ITS IBF
- ---------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C>
ASSETS RCFD
- ------ ----
1. Interest-bearing balances due from depository institutions (corresponds
to part of Schedule RAL, item 1.a, Column A)..................................3381.. 231,308 1.
----------
2. Federal funds sold and securities purchased under agreements to resell
(corresponds to Schedule RAL, item 1.d, Column A).............................3365.. 704,463 2.
----------
3. Total loans, net of unearned income (corresponds to Schedule RAL, item 1.e,
Column A).....................................................................3360.. 5,415,465 3.
----------
4. Loans to banks in foreign countries (corresponds to Schedule C, item 2.c,
Column A).....................................................................3105.. 333,609 4.
----------
5. Total claims on nonrelated parties (corresponds to Schedule RAL, item 1.i,
Column A).....................................................................3106..19,214,223 5.
----------
LIABILITIES
- -----------
6. Time certificates of deposit of $100,000 or more (corresponds to Schedule E,
Memorandum item 1.a)..........................................................3345..14,101,379 6.
----------
7. Interest-bearing deposits and credit balances (corresponds to part of
Schedule RAL, item 4.a, Column A).............................................3107..15,817,803 7.
----------
8. Federal funds purchased and securities sold under agreements to repurchase
(corresponds to Schedule RAL, item 4.b, Column A).............................3353.. 2,616,440 8.
----------
9. Other borrowed money (corresponds to Schedule RAL, item 4.c, Column A)........3355.. 102,326 9.
----------
</TABLE>
- --------------
(1) For all items, branches and agencies have the option of reporting either (1)
an average of daily figures for the quarter or (2) an average of weekly
figures (i.e., the Wednesday of each week of the quarter).
<PAGE> 45
Schedule L - Off-Balance-Sheet Items
Note: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF
- -------------------------------------------------------------------------------------------- -----------------
<S> <C>
RCFD
1. Commitments to make or ----
purchase loans..............................................................................3423..23,995,679 1.
----------
2. Spot foreign exchange contracts.............................................................8765..28,190,397 2.
----------
3. Standby letters of credit:
a. Total....................................................................................3375.. 3,363,552 3.a.
----------
(1) To U.S. addresses (domicile).........................................................3376.. 2,673,302 3.a.(1)
----------
(2) To non-U.S. addresses (domicile).....................................................3377.. 690,250 3.a.(2)
----------
b. Amount of total standby letters of credit in item 3.a conveyed to others through
participations...........................................................................3378.. 1,139,742 3.b.
----------
4. Commercial and similar letters of credit....................................................3411.. 174,919 4.
----------
5. Participations in acceptances conveyed to others by the reporting branch or agency (as
described in the instructions)..............................................................3428.. 0 5.
----------
6. Participations in acceptances acquired by the reporting (non-accepting) branch or agency
(as described in the instructions)..........................................................3429.. 0 6.
----------
7. All other off-balance-sheet contingent liabilities greater than or equal to 1/2 percent
of total claims on nonrelated parties as reported on Schedule RAL, item 1.i.................5602.. 5,268,613 7.
----------
List below each component of this item greater than or equal to 1 percent of total claims
on nonrelated parties as reported on Schedule RAL, item 1.i:
TEXT RCFD
---- ----
a. 5598: BOOK VALUE OF WRAP CONTRACTS 5598..4,920,273 7.a.
---------------------------- ---------
b. 5600: OUTSTANDING INDEMNITIES 5600.. 348,340 7.b.
----------------------- ---------
c. 5601: 5601.. 0 7.c.
---------
8. All other off-balance-sheet contingent claims (assets) greater than or equal
to 1/2 percent of total claims or nonrelated parties as reported on
Schedule RAL, item 1.i......................................................................5603.. 0 8.
List below each component of this item greater than or equal to 1 percent of total claims ----------
on nonrelated parties as reported on Schedule RAL, item 1.i:
TEXT RCFD
---- ----
a. 5604: 5604.. 0 8.a.
-------------------------------- ---------
b. 5605: 5605.. 0 8.b.
-------------------------------- ---------
c. 5606: 5606.. 0 8.c.
-------------------------------- ---------
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Equity Commodity
Off-Balance-Sheet Derivatives Position Interest Rate Foreign Exchange Derivative and Other
Indicators(1) Contracts Contracts(2) Contracts Contracts
- ---------------------------------------- ------------------ ----------------- ----------------- ---------------
9. Gross amounts (e.g., notional RCFD RCFD RCFD RCFD
amounts): ---- ---- ---- ----
a. Futures contracts...................8693.. 71,229,464 8694.. 1,128,874 8695.. 0 8696.. 235,730 9.a.
----------- ----------- ----------- ---------
b. Forward contracts...................8697.. 61,739,254 8698..236,320,512 8699.. 0 8700..4,735,148 9.b.
----------- ----------- ----------- ---------
c. Exchange-traded option contracts:
(1) Written options.................8701.. 2,529,096 8702.. 0 8703.. 0 8704.. 217,525 9.c1
----------- ----------- ----------- ---------
(2) Purchased options...............8705.. 6,608,745 8706.. 0 8707.. 0 8708.. 128,945 9.c2
----------- ----------- ----------- ---------
d. Over-the-counter option contracts:
(1) Written options.................8709..278,641,324 8710.. 3,605,402 8711.. 0 8712..1,594,000 9.d1
----------- ----------- ----------- ---------
(2) Purchased options...............8713..281,414,584 8714.. 1,988,731 8715.. 0 8716..1,489,491 9.d2
----------- ----------- ----------- ---------
e. Swaps...............................3450..551,532,405 3826.. 7,400,707 8719.. 0 8720.. 33,475 9.e.
----------- ----------- ----------- ---------
</TABLE>
- ------------
(1) For each column, sum of items 9.a through 9.e must equal sum of items 10,
11.a, and 11.b.
(2) Spot foreign exchange is reported in Schedule L, item 2.
<PAGE> 46
FFIEC 002
Page 09
SCHEDULE L - Continued
NOTE: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Equity Commodity
Off-Balance-Sheet Derivatives Position Interest Rate Foreign Exchange Derivative and Other
Indicators Contracts Contracts(1) Contracts Contracts
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10. Total gross notional amount of RCFD RCFD RCFD RCFD
derivative contracts held for ---- ---- ---- ----
trading........................... A126.. 1,247,136,412 A127 .. 250,351,339 8723.. 0 8724 .. 8,434,314 10.
------------- ----------- --------- --------------
11. Total gross notional amount of
derivative contracts held for
purposes other than trading:
a. Contracts marked to market .... 8725.. 0 8726 .. 0 8727.. 0 8728 .. 0 11.a.
------------- ----------- --------- --------------
b. Contracts not marked to market. 8729.. 6,558,460 8730 .. 92,887 8731.. 0 8732 .. 0 11.b.
------------- ----------- --------- --------------
</TABLE>
The following items should be completed by those branches or agencies with Total
assets of $100 million or more.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12. Gross fair values of derivative
contracts: RCFD RCFD RCFD RCFD
a. Contracts held for trading: ---- ---- ---- ----
(1) Gross positive fair value.. 8733.. 6,583,795 8734 .. 5,332,500 8735.. 0 8736 .. 76,911 12.a1
------------- ----------- --------- --------------
(2) Gross negative fair value.. 8737.. 6,616,140 8738 .. 5,713,532 8739.. 0 8740 .. 166,913 12.a2
------------- ----------- --------- --------------
b. Contracts held for purposes
other than trading that are
marked to market:
(1) Gross positive fair value.. 8741.. 0 8742 .. 0 8743.. 0 8744 .. 0 12.b1
------------- ----------- --------- --------------
(2) Gross negative fair value.. 8745.. 0 8746 .. 0 8747.. 0 8748 .. 0 12.b2
------------- ----------- --------- --------------
c. Contracts held for purposes
other than trading that are
not marked to market:
(1) Gross positive fair value.. 8749.. 130,728 8750 .. 0 8751.. 0 8752 .. 0 12.c1
------------- ----------- --------- --------------
(2) Gross negative fair value.. 8753.. 30,127 8754 .. 9,138 8755.. 0 8756 .. 0 12.c2
------------- ----------- --------- --------------
</TABLE>
<TABLE>
<CAPTION>
MEMORANDA
- ---------
<S> <C> <C> <C>
1. Notional amount of all credit derivatives on which the reporting branch or agency
is the guarantor ................................................................................ A534 .. 15,000 M.1.
-------------
2. Notional amount of all credit derivatives on which the reporting branch or agency
is the beneficiary .............................................................................. A535 .. 107,500 M.2.
-------------
</TABLE>
- ---------------
(1) Spot foreign exchange is reported in Schedule L, item 2.
<PAGE> 47
SCHEDULE O - Other Data for Deposit Insurance Assessments
This schedule is to be completed only by branches whose deposits are insured by
the FDIC.
<TABLE>
<CAPTION>
Reporting Branch
Dollar Amounts in Thousands Excluding its IBF
- ------------------------------------------------- ------------------
<C> <C> <C> <C>
1. Total deposits of the branch (excluding IBF): RCXZ
----
a. Total demand deposits (excluding IBF)........ 2210.. N/A 1.a.
-------
RCON
b. Total time and savings deposits ----
(excluding IBF).............................. 3511.. N/A 1.b.
-------
c. Interest accrued and unpaid on deposits
(excluding IBF).............................. 5763.. N/A 1.c.
-------
2. Unposted debits:
a. Actual amount of all unposted debits......... 0300.. N/A 2.a.
-------
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to
demand deposits.......................... 0031.. N/A 2.b.(1)
-------
(2) Actual amount of unposted debits to
time and savings deposits................ 0032.. N/A 2.b.(2)
-------
3. Unposted credits (see instructions):
a. Actual amount of all unposted credits........ 3510.. N/A 3.a.
-------
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to
demand deposits.......................... 3512.. N/A 3.b.(1)
-------
(2) Actual amount of unposted credits to
time and savings deposits................ 3514.. N/A 3.b.(2)
-------
4. Deposits of majority-owned depository
subsidiaries of the parent foreign bank
(not included in total deposits):
a. Demand deposits of majority-owned
depository subsidiaries...................... 3141.. N/A 4.a.
-------
b. Time and savings deposits of majority-owned
depository subsidiaries...................... 3142.. N/A 4.b.
-------
c. Interest accrued and unpaid on deposits of
majority owned depository subsidiaries....... 5764.. N/A 4.c.
-------
5. Deposits of wholly-owned nondepository
subsidiaries of the parent foreign bank
(included in total deposits):
a. Demand deposits of wholly-owned
nondepository subsidiaries................... 3143.. N/A 5.a.
-------
b. Time and savings deposits of wholly-owned
nondepository subsidiaries................... 3144.. N/A 5.b.
-------
c. Interest accrued and unpaid on deposits of
wholly-owned nondepository subsidiaries...... 5765.. N/A 5.c.
-------
6. Reserve balances actually passed through to
the Federal Reserve by the reporting branch on
behalf of its respondent depository institutions
that are also reflected as deposit liabilities
of the reporting branch:
a. Amount reflected in demand deposits
(included in item 1.a above)................. 2314.. N/A 6.a.
-------
b. Amount reflected in time and savings
deposits (included in item 1.b above)........ 2315.. N/A 6.b.
-------
7. Deposits in Lifeline accounts................... 5596.. ///// 7.
-------
MEMORANDA
1. Total deposits of the branch (excluding IBF)
(sum of Memorandum items 1.a(1) and 1.b(1)
must equal sum of items 1.a and 1.b above):
a. Deposit accounts of $100,000 or less: RCON
(1) Amount of deposit accounts of ----
$100,000 or less......................... 2702.. N/A M.1.a.(1)
-------
(2) Number of deposit
accounts of RCON NUMBER
$100,000 or less ---- ------
(June report only)......... 3779.. N/A M.1.a.(2)
------
b. Deposit accounts of more than
$100,000: (1) Amount of deposit
accounts of more than $100,000............... 2710.. N/A M.1.b.(1)
-------
(2) Number of deposit RCON NUMBER
accounts of more ---- ------
than $100,000...............2722.. N/A M.1.b.(2)
------
</TABLE>
<PAGE> 48
Schedule O - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------
<S> <C> <C> <C>
MEMORANDA - Continued
- ---------------------
2. Estimated amount of uninsured deposits in the branch (excluding IBF):
a. An estimate of your branch's uninsured deposits can be determined
by multiplying the number of deposit accounts of more than $100,000
reported in Memorandum item 1.b.(2) above by $100,000 and subtracting
the result from the amount of deposit accounts of more than $100,000
reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your branch has YES NO
a method or procedure for determining a better estimate of uninsured --- --
deposits than the estimate described above..............................6861 X M.2.a.
b. If the box marked YES has been checked, report the estimate of
uninsured deposits determined by using your branch's method or
procedure...............................................................5597.. N/A M.2.b.
-----------------------------------
3. Preferred deposits.........................................................5590.. N/A M.3.
-----------------------------------
4. Adjustments to demand deposits: (excluding IBF) reported in
Schedule E for certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if reciprocal
demand balances between the reporting branch and savings
associations were reported on a net basis rather than a gross
basis in Schedule E.....................................................8785.. N/A M.4.a.
----------------------------------
b. Amount by which demand deposits would be increased if reciprocal
demand balances between the reporting branch and U.S. banks were
reported on a gross basis rather than a net basis in Schedule E.........A181 N/A M.4.b.
----------------------------------
c. Amount by which demand deposits would be reduced if cash items in
process of collection were included in the calculation of net
reciprocal demand balances between the reporting branch and U.S. banks
and savings associations in Schedule E..................................A182 N/A M.4.c.
----------------------------------
5. Amount of assets netted against deposit liabilities on the balance sheet in
accordance with generally accepted accounting principles (exclude amounts
related to reciprocal demand balances):
a. Amount of assets netted against demand deposits.........................A527 N/A M.5.a.
----------------------------------
b. Amount of assets netted against time and savings deposits...............A528.. N/A M.5.b.
----------------------------------
</TABLE>
Schedule P - Other Borrowed Money
NOTE: Exclude all transactions with related depository institutions.
<TABLE>
<CAPTION>
----(Column A)---- ----(Column B)----
Total Reporting
Branch or Agency
Dollar Amounts in Thousands Including its IBF IBF Only
- -------------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
RCFD RCFN
1. Owed to nonrelated commercial banks in the U.S. (including their IBFs): ---- ----
a. Owed to U.S. offices of nonrelated U.S. banks...........................3312.. 0 3312.. 0 1.a.
------------ -----------
b. Owed to U.S. branches and agencies of nonrelated foreign banks..........3313.. 0 3313.. 0 1.b.
------------ -----------
2. Owed to nonrelated banks in foreign countries:
a. Owed to foreign branches of nonrelated U.S. banks.......................3314.. 0 3314.. 0 2.a.
------------ -----------
b. Owed to foreign offices of nonrelated foreign banks.....................3315.. 247 3315.. 0 2.b.
------------ -----------
3. Owed to others.............................................................2869.. 118,201 2869.. 18,000 3.
------------ -----------
RCXX RCXY
4. Total (sum of items 1 through 3) (must equal Schedule RAL, ---- ----
item 4.c)..................................................................3190.. 118,448 3190.. 18,000 4.
------------ -----------
RCFD
MEMORANDUM ----
1. Immediately available funds, with a maturity greater than one day included
in other borrowed money....................................................2805.. 18,000 M.1.
------------
</TABLE>
<PAGE> 49
Exhibit 8
A copy of any order pursuant to which the foreign trustee is authorized to act
as sole trustee under indentures qualified or to be qualified under the Act.
39-2359
SECURITIES AND EXCHANGE COMMISSION
(File No. 22-27860)
Order Granting Application; Deutsche Bank AG, New York Branch
November 26, 1997
Deutsche Bank AG, New York Branch ("Applicant") has filed an application
("Application") pursuant to Section 304(d) of the Trust Indenture Act of 1939
("Act") for the issuance by the Securities and Exchange Commission
("Commission") of an order conditionally exempting the Applicant from the
requirement of Section 310(a) of the Act for United States domicile of a bank
eligible to serve as indenture trustee on indentures qualified under the Act.
The Applicant is authorized under the laws of the State of New York to exercise
corporate trust powers and is subject to supervision and examination by the New
York Banking Department substantially equivalent to the supervision and
examination applicable to domestic banks performing similar equivalent
services, as more fully described in the Application dated November 25, 1997,
which is on file in the Commission's Public Reference Section, File 22-27860,
450 Fifth Street, N.W., Washington D.C. 20549.
It appears to the Commission, upon consideration of the Application, that
a conditional exemption from the requirement of United States domicile in
Section 310(a) of the Act is necessary or appropriate in the public interest
and consistent with the protection of investors and the purposes fairly
intended by the Act to the extent such requirement would otherwise apply.
IT IS ORDERED that the Applicant shall be conditionally exempted from the
United States domicile requirement of Section 310(a) of the Act if and so long
as the Applicant remains authorized by the State of New York to exercise
corporate trust powers and subject to supervision and examination by the New
York Banking Department substantially equivalent to the supervision and
examination applicable to domestic banks performing equivalent services, as
more fully described in the Application.
For the Commission, by the Division of Corporate Finance, pursuant to
delegated authority.
Jonathan G. Katz
Secretary
