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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark
One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
COMMISSION FILE NUMBER 0-19058
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PLATINUM TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3509662
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1815 SOUTH MEYERS ROAD, OAKBROOK TERRACE, ILLINOIS 60181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
Registrant's telephone number, including area code: (630) 620-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of Class)
Preferred Stock Purchase Rights
(Title of Class)
6 3/4% Convertible Subordinated Notes due 2001
(Title of Class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
As of March 10, 1998, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrant (based upon the per share
closing sale price of $26 7/8 on March 10, 1998, and for the purpose of this
calculation only, the assumption that the registrant's directors and executive
officers are affiliates) was approximately $1,668,067,476.
The number of shares outstanding of the registrant's Common Stock as of
March 10, 1998 was 64,763,801.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement in connection with its
1998 Annual Meeting
of Stockholders are incorporated by reference into Part III hereof.
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PART I
ITEM 1. BUSINESS
The discussion below contains certain forward-looking statements (as such
term is defined in Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) that are based on the beliefs of the management
of PLATINUM technology, inc. and its subsidiaries (collectively, the "Company"
or "PLATINUM"), as well as assumptions made by, and information currently
available to, the Company's management. The Company's actual growth, results,
performance and business prospects and opportunities in 1998 and beyond could
differ materially from those expressed in, or implied by, such forward-looking
statements. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations--Special Note Regarding Forward-Looking
Statements" on page 25 for a discussion of risks, uncertainties and other
factors that could cause or contribute to such material differences.
OVERVIEW
The Company develops, markets and supports software products, and provides
related professional services, that help organizations manage and improve
their information technology ("IT") infrastructures, which consist of data,
systems and applications. The Company's products and services help IT
departments, primarily in large and data intensive organizations, minimize
risk, improve service levels, and leverage information to make better business
decisions. The Company's products typically perform fundamental functions,
such as automating operations, maintaining the operating efficiency of systems
and applications, and ensuring data access and integrity. The Company
currently develops software products through its four business units: database
management, systems management, application infrastructure management and data
warehousing and decision support. Addressing businesses' increasing demand for
simplified vendor relationships and complete solutions to IT problems, the
Company's goal is to become the leading provider of IT infrastructure
management solutions by offering a comprehensive set of "best in class" point
products, product bundles and integrated product suites. The Company also
offers a wide array of professional services, including consulting, systems
integration and educational programs, both in conjunction with and independent
of software product sales.
To achieve its goal, the Company identified key technologies and skill sets
required to better manage the IT infrastructure. Through a combination of an
aggressive acquisition program and vigorous internal product development
efforts, the Company assembled the competencies to create complete
infrastructure management solutions. Devoting substantial resources to
integrating its products and technologies, the Company is now leveraging the
breadth of its product lines and its professional services capabilities to
provide complete, customized solutions for IT infrastructure problems. These
solutions include single products; product suites, which are sets of
integrated products drawn together from multiple business units of the
Company; and product bundles, which are sets of software applications that are
packaged together but do not necessarily have the level of integration that
defines a suite; as well as design and implementation services provided by the
Company's professional services staff. These solutions also include ongoing
product upgrades, maintenance and support, sometimes pursuant to multi-year
contracts. Evidencing the increasing demand from the Company's customers for
comprehensive solutions, the Company completed 102 transactions of over $1
million during 1997, as compared to 55 such transactions during 1996 and only
two such transactions during 1995. Each of these large transactions included
licenses for software product bundles or suites, along with future upgrades
and maintenance; software consulting services; or both product licenses and
related consulting services.
The Company is focusing on the development of products and services that
offer its customers maximum flexibility and functionality. The Company's
products are designed to permit a customer to either purchase prepackaged
integrated suites or to choose individual products and later add other
products as needed. The cornerstone of the Company's integration efforts is
POEMS (PLATINUM Open Enterprise Management Services), an internally developed
set of shared components that give the Company's products a common look and
feel, common installation and distribution, and common communication, data and
events handling. POEMS integration is built into individual products so that,
as customers purchase additional PLATINUM products, the
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newly acquired and previously installed products can begin working together
immediately. In February 1998, the Company released for general availability
its ProVision suite of integrated systems and database management tools, which
is the Company's most significant POEMS-enabled integrated offering of
products to date. ProVision initially includes nine tools within the following
key IT management disciplines: job management, performance management and
analysis, software distribution, problem resolution, security, database
utilities and database administration.
The Company is also creating solutions for the needs of specific industries,
as well as general business needs. For example, during 1996, the Company
released PLATINUM RiskAdvisor, a data warehouse decision support application
developed specifically for the insurance industry. The Company also is
enabling its products and suites for application with intranets, the internet
and the web and offers a broad set of solutions for the Year 2000 problem.
Additionally, in late 1996, the Company formed specialty consulting practice
groups within its professional services business unit, including groups
dedicated to Year 2000 solutions and internet/intranet technologies.
MARKET OVERVIEW
Companies today rely on their IT infrastructures to keep their businesses
operating efficiently. As organizations have moved from host-based computing
systems to open systems environments, the deployment, management, maintenance
and productive use of IT has become increasingly complex. These open computing
environments service numerous end-users spread across various locations and
consist of a diverse set of applications, computing platforms (including
mainframes, minicomputers, workstations and desktop PCs/LANs), relational
database management systems ("RDBMS"), operating systems (including UNIX,
Windows, Windows NT, OS/400, OS/2, MVS and VMS) and media, including intranets
and the internet. These open environments are also dynamic; users, as well as
hardware and software resources, are frequently added, removed or changed; and
new, mission-critical applications are continually being developed and
deployed. The Company believes that, due to the complexities of these new
computing environments, organizations are increasingly seeking to purchase IT
management products and services from a smaller number of vendors that can
provide complete, flexible and integrated solutions for managing and improving
the IT infrastructures that run their businesses.
PRODUCTS
The Company provides software solutions that help organizations efficiently
operate and manage their complex IT infrastructures and related environments,
which contain multiple computing platforms, database management systems,
applications and operating systems. These tools increase the efficiency and
interoperability of these systems and applications in distributed environments
of any size. The Company's solutions support platforms and operating systems
that span mainframe, midrange and PC/LAN computing environments, including
MVS, UNIX, OS/2, OS/400, Windows and Windows NT. They also support multiple
database management systems, such as the DB2 family, Oracle, Sybase, Microsoft
SQL Service and Informix. In addition, the Company's solutions provide support
for packaged applications such as SAP, PeopleSoft and Oracle Financials.
The Company now offers over 160 robust and adaptable point products. While
point products are initially developed and supported through one of the
Company's four business units described below, the Company continues to build
integrated suites of products drawn from different business units, such as
ProVision, in order to provide comprehensive solutions to organizations' IT
needs.
Database Management Products -- The Company provides a leading set of tools
and utilities for centralized or distributed database administration,
performance analysis and monitoring and database backup and recovery for
heterogeneous database management systems. By automating administrative and
maintenance tasks, these software solutions enable users to achieve the
highest performance levels possible, increase data availability,
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automate arduous administrative tasks, and deliver new products or
enhancements to end-users faster and with more flexibility. Principal database
management products include the following:
. Database Analyzer -- a DB2 direct access storage device and database
monitoring, analysis, validation, forecasting and tuning tool. It
provides extensive statistical reporting capabilities, automated
maintenance and auditing of internal structures, as well as a DB2 page
editor.
. RC/Migrator -- a tool that automates DB2 object and data migrations and
alterations, while maintaining object dependencies and preserving data
security. Migrations may be performed on a one-to-one or one-to-many
basis.
. TSreorg -- a tablespace reorganization tool for heterogeneous databases
of any size. Tsreorg delivers fast reorganizations of entire
tablespaces, individual tables and indexes. It also provides efficient
fragmentation of used and free space and automatic data partitioning.
Tsreorg can run on UNIX, VMS or Windows NT-based server systems.
Systems Management Products -- The Company offers products that enable
organizations to automate routine systems maintenance tasks and processes,
thereby streamlining enterprise management, enhancing system reliability and
reducing costs. These products also simplify the management of disparate
systems and enterprise-wide applications, and increase end-user productivity.
Systems management product offerings span many disciplines, including job and
process management, enterprise automation, desktop management, output
management, problem resolution, security management, distribution management,
performance management, enterprise-wide resource management, storage
management, and networking and connectivity. The Company offers over 20
products that provide the functionality required by businesses, while scaling
across multiple platforms that include UNIX, Windows, Windows NT, OS/400,
OS/2, MVS and VMS. Principal systems management products include the
following:
. AutoSys -- a job scheduling and management tool that simplifies the task
of managing and monitoring multiple jobs in distributed environments. It
provides centralized control of job execution across heterogeneous
platforms and offers flexible features, such as self-correcting job
control and automated restart and recovery capabilities.
. DBVision -- a scaleable tool for continuous monitoring and centralized
management of heterogeneous databases in any size network. DBVision
collects and displays performance measurements in real time or
retrospect. It automatically detects and corrects performance problems
and predicts space shortages.
. AutoSecure -- a tool set that enables organizations to secure and manage
large, heterogeneous computing environments. It protects information by
preventing unauthorized access to data and system resources in
distributed environments; provides single sign-on for users to
applications and services they are authorized to use, whether they are
on mainframes, distributed systems or Pcs; and provides a single point
for user registration in other security systems.
Application Infrastructure Management Products -- The Company offers
products that enable organizations to establish an application development
process that is systematic, error-resistant and flexible to adapt to changing
business needs. These products include tools for integrated project and
process management, component modeling, construction, testing, application
deployment and software distribution, integrated change and configuration
management, help desk support and decision support. These products facilitate
the development of sophisticated, high-performance applications and improve
the overall productivity and quality of development efforts. Principal
application lifestyle management products include the following:
. ADvantage -- an integrated set of tools for managing the application
development infrastructure. ADvantage helps organizations automate and
improve the processes for building, managing and delivering applications
through solutions for component modeling (Paradigm Plus), integrated
project and process management (Process Continuum), integrated change
and configuration management (CCC/Harvest), rule-based application
development (AionDS) and decision support (ADvisor).
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. ADvisor -- a decision-support tool, and key component of ADvantage, that
helps IT executives and development managers minimize the risks and
costs associated with the applications that run their businesses by
providing the information needed to ensure on-time, on-budget delivery
of applications. ADvisor delivers the critical project information
organizations need to manage application development as a core business
process.
Data Warehousing and Decision Support Products -- The Company offers an
integrated set of solutions for all major data warehousing functions,
including data transformation and movement, data warehouse management,
metadata management and repository, and decision support. These comprehensive
solutions help organizations build, manage and maintain data warehouses. A
data warehouse is a data store that gives end-users full access to
periodically consolidated, historical data for making business decisions and
analyzing trends without jeopardizing the performance of mission-critical
operations. Warehousing tools can capture data in many forms on numerous
platforms, transfer it to multiple database platforms and provide users with
the means to access and manage such information. Repository tools play a key
role in data warehouses as places for centralized control and as collection
points for status information concerning the warehouses and their activities.
The Company's products enable organizations to better leverage their
corporate data investments by allowing end-users to derive maximum value and
insight from information. These products ensure enterprise-wide data access
and enable complex data analysis and reporting so that users can effectively
identify business trends and make informed decisions. Principal data warehouse
products include the following:
. InfoPump -- a bi-directional data movement tool, InfoPump automates the
process of replicating, transferring and integrating data in
heterogeneous environments on a scheduled or event-driven basis.
. Repository -- serves as a central point of control, enabling
organizations to easily manage, maintain and access vast amounts of
corporate data, applications, and systems in a heterogeneous
environment. Repository provides information such as where data is
located, who created and who maintains data, what application processes
the data drives, and what relationship the data has with other data.
. Forest & Trees -- a rapid decision-support system development tool which
enables IT departments to deliver customized desktop applications that
provide the necessary components for intuitive navigation and data
investigation. Forest & Trees applications can simultaneously access
multiple data sources and combine data into information that makes sense
to the knowledge worker. Forest & Trees applications can monitor key
strategic, tactical and operational indicators for the business and
automatically alert users to specific conditions via the corporate
network or via the web.
. InfoBeacon -- a decision support tool that provides advanced online
analytical processing (OLAP) capabilities for data warehouse
environments. This product creates a virtual, multidimensional view on
top of the relational database. It provides end-users with advanced
analysis capabilities -- such as drill down, pivoting, ranking, ratios,
and exception- and date-handling -- without requiring the organization
to redundantly store and manage data in a proprietary multidimensional
database.
. Perspectives -- an environment for rapidly developing custom, server-
centric, OLAP-enabled decision-support systems. Combining the power of
tools with the speed of packaged applications, Perspectives provides the
benefits of rapid time to market without sacrificing flexibility for
future growth. Perspectives for Market Analysis helps profit/loss
managers (such as brand managers, product managers, VPs of marketing)
view and analyze complex relationships between multiple product
dimensions and measures so that they can understand and respond to
emerging trends.
New Product Suites -- In the past, businesses licensed products on a stand-
alone basis to address each of their needs as they arose. By combining tools
and technologies within and across its business units, the Company now
provides product suites that are complete solutions to businesses' IT
infrastructure problems. These integrated product offerings allow businesses
to experience comprehensive benefits without having to deal with multiple
products or multiple vendors. The Company has designed product suites that
address IT infrastructure
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problems that are shared by businesses from various industries, as well as
product suites that target IT infrastructure problems that are unique to
specific industries. The following provides a brief description of some of the
Company's recent product suite offerings:
. ProVision -- this integrated product suite, a combination of database
management and systems management tools, enables companies to reduce the
costs and risks associated with managing their IT infrastructures, while
improving service levels, availability, and productivity. ProVision
initially includes nine tools within the following key IT management
disciplines: job management, performance management and analysis,
software distribution, problem resolution, security, database utilities
and database administration. Because integration is built into each
ProVision tool, organizations can implement one or more tools, and add
more tools as needed, to solve their most immediate IT problems.
ProVision became generally available in February 1998.
. TransCentury -- this product suite, developed through a combination of
tools and technologies made available through internal development,
acquisitions and marketing agreements, provides an end-to-end solution
to the problem created by the century date change, commonly known as the
Year 2000 problem. TransCentury applies a "find-it, fix-it, test-it"
approach that enables businesses to analyze, plan, implement and test
century date changes in an integrated manner. It helps organizations
ensure business continuity and compliance by minimizing exposure,
helping them more effectively plan resources, and reducing costs and
time associated with the Year 2000 problem.
PRODUCT LICENSES
The Company provides its software products to customers under non-exclusive,
non-transferable license agreements (including standard shrink-wrap licenses
for certain products). As is customary in the software industry, in order to
protect its intellectual property rights, the Company does not sell or
transfer title to its software products to customers. Under the Company's
current standard form license agreement, licensed software may be used solely
for the customers' internal operations and only on designated hardware at
specified sites, which may be comprised of a stand-alone computer, a single
network server with multiple terminals or multiple network servers with
multiple terminals.
Licenses for the Company's software are almost exclusively perpetual,
although annual and monthly licenses are also offered. License fees may be due
upon execution by the customer of the applicable product agreement or may be
payable over time for contracts involving multi-year commitments for
maintenance and product upgrades. List prices are based upon the size of the
processor, number of servers and/or number of users, depending upon the type
of license and product being licensed. The Company's published list prices
include discounts for suite, enterprise and multi-site licenses. Licenses
generally include more than one product. Under the Company's current standard
form license agreement, maintenance is renewed on an annual basis by the
customer paying the current maintenance fee. See "--Technical Support and
Maintenance."
PRODUCT DEVELOPMENT
The Company is pursuing its strategy by continuing its emphasis on
internally developing new software products and product enhancements,
acquiring products, technologies and businesses complementary to the Company's
existing product lines; and forming alliances with leading technology
companies. The Company has formed separate in-house development teams to
efficiently integrate acquired products and technologies into existing product
lines. During 1995, 1996 and 1997, product development and support expenses of
the Company were $94,027,000, $155,277,000 and $187,383,000, respectively. As
of February 28, 1998, the Company employed approximately 1,660 persons in
product development and support.
Internal Development. The Company will continue to rely on the internal
development of products to expand its product lines. The Company believes its
RDBMS expertise and experience give it a competitive advantage in developing
products that address increasingly complex environments and that meet evolving
customer needs. In order to fully exploit acquired software development
personnel, and to access new sources of
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talent, the Company has established approximately 36 independent development
laboratories, generally at the locations of newly-acquired companies. These
development laboratories are interconnected via video conferencing, e-mail,
Lotus Notes and other communication technologies, and use various hardware,
operating systems and database systems which give the Company the ability to
simulate the environments of its customers. Laboratories have responsibility
for their product lines and receive guidance from POEMS teams to foster
interoperability.
Acquisitions. The Company continually reviews acquisition candidates with
leading-edge products and technologies that could enhance the Company's
product portfolio. The technologies associated with the products of the
acquired businesses are being incorporated into the Company's existing
internally developed products and are being used in developing new products.
In addition to providing the Company with new products and technologies, these
acquisitions have provided the Company with experienced teams of product
developers who now staff the Company's independent development laboratories.
The Company plans to continue to pursue acquisition opportunities because it
believes that acquisitions are an essential part of the Company's strategy to
compete effectively in its rapidly evolving marketplace. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Results of Operations--Costs and Expenses--Merger Costs" and "--Recent
Developments."
Technology Relationships. To reinforce its commitment to providing
interoperable solutions for managing IT infrastructures, the Company has
implemented its PLATINUM Partners Program, whereby the Company has established
strategic and technology relationships with other leading IT vendors. The
Company believes that in order to provide solutions for heterogeneous
computing environments, it will need to continue to establish and maintain key
relationships with leading technology companies. PLATINUM's current partners
include Intel, IBM, Hewlett-Packard, Oracle, Microsoft, SAP and Lucent
Technologies. These technical and marketing alliances provide the Company
early access to product information and pre-release software.
PROFESSIONAL SERVICES
As part of its strategy to provide complete solutions for Global 10,000 IT
organizations, the Company offers a range of professional services, including
consulting services, systems integration, and educational programs, in support
of and independent of its products. These services help businesses plan,
construct and manage infrastructures in which complex software products can be
used. These services can improve and accelerate customization, implementation
and deployment of the Company's software products. The Company believes that
more rapid and effective implementation of its software products will lead to
increased customer satisfaction and greater follow-on sales. For these
reasons, the Company is now packaging professional services as a standard
feature of its product sales. As of February 28, 1998, the Company employed
approximately 1,100 persons in professional services.
Consulting Services. The Company is focusing significant effort on
developing and expanding its consulting services group. Primarily developed
through recent acquisitions of consulting services companies, this group
provides consulting services that help Global 10,000 companies manage risks,
manage the implementation of new technologies and products, and optimize their
current computing environments. Areas of expertise span systems and database
management, information management, security, Year 2000 reengineering,
application lifecycle management, internet/intranet development, and
electronic commerce. The Company's consultants provide flexible, customizable
solutions as well as prepackaged solutions. They can save all of an
organization's software consulting needs, from strategy and organization to
implementation.
Educational Programs. The Company believes that its training and education
services play an important role in increasing market awareness of its software
products among IT personnel, including application developers, database
administrators and end-users. Offering a comprehensive curriculum that
supports leading technologies, the Company conducts a set of training courses
designed to deal with the critical issue of skills management. These courses
cover several key technology areas of IT infrastructure management and are
held at various training centers in the United States and throughout the
Company's international operations. The
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Company also offers on-site computer-based training courses and self-led
internet-based training courses that users may complete in their own offices
or homes.
The Company continually reviews acquisition candidates that are leading-edge
IT education service providers. Most recently, the Company entered into an
agreement to acquire Mastering, Inc., a leading provider of IT technology
training to Fortune 1000 companies, universities and large governmental
agencies. The Company believes that, upon consummation, this acquisition will
significantly enhance the Company's educational service offerings. The Company
is also expanding its professional services through internal growth. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Recent Developments."
SALES AND MARKETING
The Company employs a multi-faceted sales strategy. For software products,
the Company utilizes telemarketers, an inside sales force, an outside sales
force, product seminars, user group participation, direct mail, print and web-
based advertising, and web promotions. The Company also utilizes certain
indirect sales channels, such as distributors, VAR and OEM relationships for
selected products.
Domestic (U.S.) Software Sales. Since January 1, 1997, the Company has
organized its domestic direct sales force by regions throughout the United
States. The Company formerly combined the domestic and Canadian sales forces
to represent the North American sales force. As of February 28, 1998, the
Company had approximately 450 domestic direct sales representatives.
Generally, for domestic software product licenses, the Company's
telemarketing specialists call prospective customers to identify and qualify
leads. Once a lead has been qualified, the prospective client is turned over
to the inside sales force, which predominantly supports the direct sales force
by developing sales leads and arranging product evaluations. Established sales
leads are then typically forwarded to the direct sales force, which visits
customer sites to assist with trials, demonstrate product features and close
sales transactions. For certain sales to smaller customers, as well as the
licensing of standard shrink-wrap products, the inside sales force may handle
the full sales cycle for completing such transactions.
International Software Sales. The Company generally markets its products
overseas through a network of wholly-owned subsidiaries. Generally, these
subsidiaries use an approach similar to that used by the Company domestically.
As of February 28, 1998, the Company had approximately 220 international (non-
U.S.) direct sales representatives and had subsidiaries in Australia, Austria,
Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Hong Kong,
Indonesia, Italy, Japan, Korea, Malaysia, the Netherlands, Norway, Singapore,
South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand and the United
Kingdom. The Company expects that it will establish other foreign subsidiaries
in the future to meet its strategic objectives. In a few countries, primarily
in South America and the Middle East, the Company markets its products through
independent distributors.
Global Accounts. The Company now designates certain large, geographically
dispersed entities as "global accounts." Each of these accounts is managed, on
a worldwide basis, by a single executive who focuses his or her attention on
the diverse needs of the enterprise.
Professional Services. The Company's consulting services and educational
programs are marketed by a specialized direct sales force.
User Group Leadership. The Company believes that its sales and marketing
efforts have also been greatly enhanced by participation in domestic and
international user groups. The Company plays a major role in the activities of
the International DB2 Users Group, the International Oracle Users Group, the
International Sybase Users Group and other smaller user groups, and expects to
continue to do so in the future.
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TECHNICAL SUPPORT AND MAINTENANCE
The Company's in-house technical support group, situated at various sites
throughout the U.S., provides pre-sale, installation and post-sale support,
including toll-free telephone support during regular business hours, to
current users and potential customers evaluating the Company's products. The
technical support group also offers seven-day, 24-hour toll-free telephone
service for an additional fee. The Company believes that effective technical
support during product evaluation substantially contributes to product
acceptance and that post-sale support has been, and will continue to be, a
substantial factor in customer satisfaction.
The Company offers a maintenance program for its software products, which
consists of product enhancements, updated products and technical support.
Maintenance is typically provided without additional charge during the
warranty period defined in the Company's license agreements. Under the
Company's standard license agreement, customers renew maintenance support on
an annual basis by paying the current maintenance fee. Customers may also
commit for maintenance and product support over extended periods of time.
Maintenance revenue implicit in new product sales and recurring maintenance
charges are recognized ratably over the period the maintenance and support
services are to be provided.
COMPETITION
The Company operates in highly competitive markets and expects competition
to increase. The Company encountered substantially intensified competition as
it moved from the relational database tools market to the much larger IT
infrastructure products market and as it entered the consulting services
business. The Company also experienced many new competitors, including
relational database vendors and systems software companies. Many of the
Company's current and prospective competitors have significantly greater
financial, technical and marketing resources than the Company. In addition,
many prospective customers may have the internal capability to implement
solutions to their IT infrastructure problems.
The competitive factors affecting the market for the Company's software
products include the following: product functionality, integration,
performance and reliability; demonstrable economic benefits for users relative
to cost; quality of customer support and user documentation and ease of
installation; vendor reputation, experience and financial stability; and
price.
The Company believes that it has competed effectively to date and that its
ability to remain competitive will depend, to a great extent, upon its ongoing
performance in the areas of product development and customer support. To be
successful in the future, the Company must respond promptly and effectively to
the challenges of technological change and its competitors' innovations by
continually enhancing its own product offerings. Performance in these areas
will, in turn, depend upon the Company's ability to attract and retain highly
qualified technical personnel in a competitive market for experienced and
talented software developers. The Company also expects to continue its
strategy of identifying and acquiring IT infrastructure products and
technologies and businesses which have developed such products and
technologies.
In addition, the Company encounters competition from a broader range of
firms in the market for professional services. Many of the Company's current
and prospective competitors in the professional services business have
significantly greater financial, technical and marketing resources than the
Company. The competitive factors affecting the market for the Company's
professional services include the following: breadth and quality of services
offered, vendor reputation and the ability to retain qualified technical
personnel.
INTELLECTUAL PROPERTY RIGHTS
The Company has historically relied upon a combination of contractual
rights, trademarks, trade secrets and copyright laws to establish and protect
its proprietary rights in its products. The Company also holds some patents
and believes that patents are becoming increasingly important to the software
industry. Consequently, the Company is taking actions to further protect its
proprietary rights through software patents. The Company's
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license agreements restrict a customer's use of the Company's software and
prohibit disclosure to third persons. Notwithstanding those restrictions, it
may be possible for unauthorized persons to obtain copies of the Company's
software products. The Company believes that because of the rapid pace of
technological change in the computer software industry, the legal protections
for its products are less significant factors in the Company's success than
the knowledge, ability and experience of the Company's employees, the
frequency of product enhancements, and the timeliness and quality of support
services provided by the Company. The Company registers its product names and
other trademarks in the United States and certain foreign countries.
EMPLOYEES
As of February 28, 1998, the Company employed approximately 4,330 persons,
including 1,280 in sales, marketing and related activities, 1,660 in product
development and support, 1,100 in professional services, and 290 in
management, administration and finance. The Company's success is highly
dependent on its ability to attract and retain qualified employees.
Competition for employees is intense in the software industry. None of the
Company's employees is represented by a labor union or is the subject of a
collective bargaining agreement. The Company has never experienced a work
stoppage and believes that its employee relations are good.
ITEM 2. PROPERTIES
The Company's principal administrative, marketing, training, and product
development and support facilities are located in Oakbrook Terrace, Illinois,
where the Company leases approximately 334,000 square feet under leases
terminating in April 2003, with plans to lease additional space in the near
future. The Company also leases approximately 164,000 square feet of
administrative, marketing, sales and product development space in Lisle,
Illinois, near the Company's headquarters, under leases terminating in January
and October 2003. In addition, the Company leases space for approximately 75
sales offices and product development laboratories throughout the United
States, ranging in size from approximately 1,000 to 45,000 square feet. In
conjunction with the restructuring plan executed during the second quarter of
1997, the Company closed certain sales offices and product development
laboratories in the United States and certain foreign countries. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations-- Restructuring Charges."
ITEM 3. LEGAL PROCEEDINGS
Computer Associates' International, Inc., and L'Agence pour la Protection
des Programmes v. La Societe Faster, S.A.R.L. (Commercial Court of Bobigny,
Paris, France). Altai, a wholly-owned subsidiary of the Company, is involved
in a suit in France which concerns copyright infringement claims identical to
those on which Altai previously prevailed against Computer Associates
International, Inc. ("CAI") in the United States. The French appellate court
granted Altai's request that the U.S. appellate court's copyright ruling
should bind the Commercial Court of Bobigny as a matter of law. In January
1995, the French appellate court issued a decision rejecting CAI's claim of
copyright infringement. CAI's subsequent appeal in the French appellate court
is still pending, as are motions from Altai that the U.S. court decisions are
binding with respect to the French case.
The Company is also subject to certain other legal proceedings and claims
which have arisen in the ordinary course of business and which have not been
fully adjudicated. Management currently believes the ultimate outcome of such
matters and those described above will not have a material adverse effect on
the Company's results of operations or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1997.
9
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, $.001 par value (the "Common Stock"), is traded
on the Nasdaq National Market under the symbol "PLAT." The following table
sets forth, for the quarters indicated, the range of high and low sales prices
for the Common Stock on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
--------- -------
<S> <C> <C>
Year Ended December 31, 1996:
First Quarter......................................... $18 3/4 $11 1/4
Second Quarter........................................ 18 3/4 12 3/4
Third Quarter......................................... 15 7/8 9 1/4
Fourth Quarter........................................ 15 1/2 10 5/8
Year Ended December 31, 1997:
First Quarter......................................... $17 7/8 $10 7/8
Second Quarter........................................ 14 13/16 10 1/2
Third Quarter......................................... 25 12 5/8
Fourth Quarter........................................ 30 13/16 20 1/8
</TABLE>
As of March 10, 1998, the Company's stock was held by approximately 927
holders of record.
The Company has never declared any cash dividends or distributions on its
capital stock. The Company currently intends to retain its earnings to finance
future growth and therefore does not anticipate paying any cash dividends in
the foreseeable future.
On December 16, 1997, the Company issued $150,000,000 principal amount of
convertible subordinated notes (the "1997 Notes") due December 15, 2002,
bearing interest at 6.25% annually. The holders of the 1997 Notes have the
option to convert them into shares of Common Stock, at any time prior to
maturity, at a conversion price of $36.05 per share. The 1997 Notes are
redeemable at the option of the Company, in whole or in part, at any time
during the twelve-month period commencing December 15, 2000 at 102.5% of their
principal amount and during the twelve-month period commencing December 15,
2001 at 101.25% of their principal amount. The Company sold the 1997 Notes to
Deutsche Morgan Grenfell Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchasers") at a price equal to the principal
amount of the 1997 Notes less a discount of 3% of such principal amount,
pursuant to an agreement between the Company and the Initial Purchasers dated
December 11, 1997. The 1997 Notes were issued to the Initial Purchasers in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended (the "Act"), in a transaction not involving
any public offering. The Notes were then resold by the Initial Purchasers to
"qualified institutional buyers" (as defined in Rule 144A under the Act) in
compliance with Rule 144A and to persons outside the United States, other than
United States persons, pursuant to Regulation S under the Act.
On December 23, 1997, the Company agreed to issue to Intel Corporation
("Intel") 1,768,421 shares of its Class II Series B Preferred Stock
("Preferred Stock"), which had a fair market value of approximately
$42,000,000 on such date, in exchange for certain product technologies and
other intangible assets. The holders of the Preferred Stock have the option to
convert, at any time, each share of Preferred Stock into one share of Common
Stock. Each share of Preferred Stock will automatically convert into one share
of Common Stock (subject to certain adjustments) upon the transfer by any
holder of Preferred Stock in a non-permitted transfer. In the event of a
liquidation of the Company, the holders of the Preferred Stock are entitled to
receive $23.75 per share plus the amount of any declared but unpaid dividends.
The conversion and liquidation terms are subject to adjustment based upon
subsequent changes in equity interests. The shares of Preferred Stock were
subscribed for as of December 31, 1997 and subsequently issued on January 14,
1998. The shares of Preferred Stock were issued to Intel in reliance upon the
exemption from registration provided by Section 4(2) of the Act.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data set forth below has been derived
from the historical financial statements of the Company. The selected
consolidated financial data should be read in conjunction with "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes
thereto contained elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
--------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND
RATIOS)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Total revenues........ $ 623,503 $468,065 $ 326,411 $243,607 $190,623
Operating income
(loss)............... (115,792)(2) (79,404)(3) (127,377)(4) (517)(5) 3,062(6)
Net income (loss)..... (117,784)(2) (64,922)(3) (111,567)(4) (1,562)(5) 126(6)
Net income (loss) per
share................ $ (1.90)(2) $ (1.14)(3) $ (2.50)(4) $ (0.04)(5) $ -- (6)
Shares used in per
share calculation.... 62,042 56,968 44,671 41,294 39,375
Other Operating Data:
Ratio of Earnings to
Fixed Charges(7)..... -- (2)(8) -- (3)(8) -- (4)(8) 7.49(5) 10.47(6)
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------------------
1997 1996(1) 1995(1) 1994(1) 1993(1)
--------- -------- --------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents
and investments...... $ 261,288 $185,673 $ 136,737 $126,215 $ 71,148
Working capital....... 288,349 217,157 127,990 90,500 43,672
Total assets.......... 834,177 618,572 452,267 273,333 176,064
Long-term obligations
and acquisition-
related payables,
less current portion. 285,144 118,305 11,389 9,080 3,465
Total stockholders'
equity............... $ 243,560 $295,760 $ 290,213 $160,126 $ 93,350
</TABLE>
- --------
(1) The selected consolidated financial data give retroactive effect to the
acquisitions of Australian Technology Resources Pty Limited ("ATR") as of
January 31, 1997 and I&S Informationstechnik and Services GmbH ("I&S") as
of February 28, 1997, each of which has been accounted for as a pooling of
interests for financial reporting purposes. As a result, the financial
position and results of operations are presented as if the combining
companies had been consolidated for all periods presented.
(2) Reflects a pre-tax charge for acquired in-process technology of
$67,904,000 relating to the Company's acquisitions of GEJAC, Inc.
("GEJAC") and ProMetrics Group Limited ("ProMetrics"), the purchase of
certain product technologies and other intangible assets from Intel and
the purchase of certain other product technologies. Also reflects a pre-
tax charge for merger costs of $8,927,000 relating to the Company's
acquisitions of ATR, I&S and Vayda Consulting, Inc. ("Vayda") and a pre-
tax charge of $57,319,000 for restructuring costs.
(3) Reflects a pre-tax charge for acquired in-process technology of
$48,456,000 relating to the Company's acquisitions of Advanced Systems
Technologies, Inc. ("AST"), Software Alternatives, Inc. (d/b/a System
Software Alternatives) ("Software Alternatives"), Grateful Data, Inc.
(d/b/a TransCentury Data Systems) ("Grateful Data") and VREAM, Inc.
("VREAM"); substantially all of the assets of the Access Manager business
unit of the High Performance Systems division of International Computers
Limited ("Access Manager"); and certain product technologies. Also
reflects a pre-tax charge for merger costs of $5,782,000 relating
primarily to the Company's acquisitions of Prodea Software Corporation
("Prodea"), Paradigm Systems Corporation ("Paradigm") and Axis Systems
International, Inc. ("Axis").
(4) Reflects a pre-tax charge for acquired in-process technology of
$88,493,000 relating primarily to the Company's acquisitions of Advanced
Software Concepts, Inc. ("ASC"), SQL Software Corporation
11
<PAGE>
("SQL"), RELTECH Group, Inc. ("Reltech"), Protellicess Software, Inc.
("Protellicess"), AIB Software Corporation ("AIB") and BMS Computer, Inc.
("BMS") and the net assets of ViaTech Development, Inc. ("ViaTech"),
BrownStone Solutions, Inc. ("BrownStone") and ProtoSoft, Inc. ("ProtoSoft")
and to certain product acquisitions. Also reflects a pre-tax charge for
merger costs of $30,819,000 relating to the Company's acquisitions of
Software Interfaces, Inc. ("SII"), Answer Systems, Inc. ("Answer"), Locus
Computing Corporation ("Locus"), Altai, Inc. ("Altai"), Trinzic Corporation
("Trinzic") and Softool Corporation ("Softool").
(5) Reflects a pre-tax charge for acquired in-process technology of
$24,594,000 relating primarily to the Company's acquisitions of Dimeric
Development, Inc. ("Dimeric") and the net assets of Aston Brooke Software,
Inc. ("Aston Brooke") and AutoSystems Corporation ("AutoSystems").
(6) Reflects a pre-tax charge for acquired in-process technology of $8,735,000
relating primarily to the Company's acquisition of Datura Corporation
("Datura") and a pre-tax charge of $4,659,000 relating to Trinzic and
Locus restructuring costs.
(7) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (earnings before income taxes plus
fixed charges less capitalized interest) by fixed charges (interest
expense plus capitalized interest and the portion of rental expense which
represents interest).
(8) Earnings available for fixed charges of $(89,933,000), $(72,342,000) and
$(122,465,000) were inadequate to cover fixed charges of $9,130,000,
$1,825,000 and $782,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion and analysis below contains certain forward-looking
statements (as such term is defined in Section 21E of the Exchange Act) that
are based on the beliefs of the management of the Company, as well as
assumptions made by, and information currently available to, the Company's
management. The Company's actual growth, results, performance and business
prospects and opportunities in 1998 and beyond could differ materially from
those expressed in, or implied by, such forward-looking statements. See "--
Special Note Regarding Forward-Looking Statements" on page 25 for a discussion
of risks, uncertainties and other factors that could cause or contribute to
such material differences.
GENERAL
The Company develops, markets and supports software products, and provides
related professional services, that help organizations manage and improve
their IT infrastructures, which consist of data, systems and applications. The
Company's products and services help IT infrastructure departments, primarily
in large and data-intensive organizations, minimize risk, improve service
levels and leverage information to make better business decisions. As an
integral part of the Company's growth strategy, it has consummated a number of
significant business combinations, including acquisitions of SII, Answer,
Locus, Altai, Trinzic, Softool, Prodea, Paradigm, Axis, ATR and I&S, each of
which has been accounted for using the pooling-of-interests method. As a
result, the Company's consolidated financial statements are presented as if
the Company and such acquired companies had been consolidated for all periods
presented. Information regarding the Company in this Management's Discussion
and Analysis of Financial Condition and Results of Operations gives
retroactive effect to these acquisitions. In addition, the Company has
consummated a number of acquisitions accounted for as purchases, in which
cases the acquired businesses have been included in the Company's results of
operations beginning with the effective dates of the acquisitions.
13
<PAGE>
RESULTS OF OPERATIONS
The table below sets forth for the periods indicated: (1) line items from
the Company's consolidated statements of operations expressed as a percentage
of revenues, and (2) the percentage changes in these line items from the prior
period.
<TABLE>
<CAPTION>
PERCENTAGE OF YEAR-TO-YEAR
TOTAL REVENUES PERCENTAGE CHANGE
------------------ -----------------
YEARS ENDED
DECEMBER 31, 1997 1996
------------------ COMPARED COMPARED
1997 1996 1995 TO 1996 TO 1995
---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Software products.................... 57% 52% 49% 46% 54%
Maintenance.......................... 20 22 23 22 34
Professional services................ 23 26 28 16 33
--- --- ---
Total revenues..................... 100 100 100 33 43
--- --- ---
Costs and expenses:
Professional services................ 20 25 28 10 26
Product development and support...... 30 33 29 21 65
Sales and marketing.................. 37 39 35 25 60
General and administrative........... 10 9 11 58 15
Restructuring charges................ 9 -- -- * --
Merger costs......................... 2 1 9 54 (81)
Acquired in-process technology....... 11 10 27 40 (45)
--- --- ---
Total costs and expenses........... 119 117 139 35 21
--- --- ---
Operating loss......................... (19) (17) (39) * *
Other income, net...................... 3 1 1 219 27
--- --- ---
Loss before income taxes............... (16) (16) (38) * *
Income taxes........................... 3 (2) (4) * *
--- --- ---
Net loss............................... (19)% (14)% (34)% *% *%
=== === ===
</TABLE>
- --------
*Not meaningful.
REVENUES
The Company's revenues are derived from three sources: (1) license and
upgrade fees for licensing the Company's proprietary and other parties'
software products and providing additional processing capacity on already-
licensed products, (2) maintenance fees for maintaining, supporting and
providing updates and enhancements to software products, and (3) revenues from
the Company's professional services business. Total revenues for 1997 were
$623,503,000, an increase of $155,438,000, or 33%, over 1996 total revenues of
$468,065,000. Total revenues in 1996 increased $141,654,000, or 43%, over 1995
revenues of $326,411,000.
The Company has a diversified customer base, with no single customer
representing greater than 10% of its total revenues generated in 1997, 1996 or
1995. The Company estimates that sales to repeat customers represented over
90% of its revenues generated in 1997.
Revenues from domestic (U.S.) customers represented 71%, 70% and 68% of the
Company's total revenues in 1997, 1996 and 1995, respectively. Domestic
revenues are generated primarily by the Company's direct sales force (which
visits customer sites to assist with trials, demonstrate product features and
close sales transactions) and inside sales force (which predominantly supports
the direct sales force by developing sales leads and arranging product
evaluations), as well as a telemarketing organization. Since January 1, 1997,
the Company has
14
<PAGE>
organized its domestic direct sales force by regions throughout the United
States. The Company formerly combined the domestic and Canadian sales forces
to represent the North American sales force. The Canadian sales team is now
part of the Company's international sales force.
Revenues from international customers, principally in Western Europe,
represented 29%, 30% and 32% of the Company's total revenues in 1997, 1996 and
1995, respectively. The Company generates the majority of its international
revenues through a network of wholly-owned subsidiaries, primarily utilizing a
direct sales force. Over the past two years, the Company has invested
significantly in the global marketplace, increasing its focus on international
sales efforts and expanding its international operations.
The table below sets forth, for the periods indicated, the Company's primary
sources of revenues expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
---------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Software products:
Licenses.................................. 41% 39% 46%
Upgrades.................................. 16 13 3
--------- --------- ---------
Total software products................. 57 52 49
--------- --------- ---------
Maintenance................................ 20 22 23
Professional services...................... 23 26 28
--------- --------- ---------
Total revenues.......................... 100% 100% 100%
========= ========= =========
</TABLE>
Software Products. Software products revenues represented 57%, 52% and 49%
of total revenues in 1997, 1996 and 1995, respectively. In 1997, software
products revenues increased 46% to $357,223,000 from $243,938,000 in 1996, as
a result of increases of 48%, 56%, 25% and 48%, respectively, experienced by
the Company's database management, systems management, application
infrastructure management, and data warehousing and decision support business
units. From 1995 to 1996, software product revenues increased 54% from
$158,597,000. The Company believes the growth in software products revenues
over the past three years has resulted from the continued marketplace
acceptance of the Company's products across all business units and the
Company's aggressive expansion of its sales and marketing efforts. The Company
has continuously increased its product offerings over the past three years, in
part through the acquisitions of businesses and technologies, which also
contributed to the growth in software products revenues. The substantial
majority of the increases in software products revenues in 1997 and 1996
resulted from increases in the volume of sales of existing products. A
smaller, but still significant, portion of the increases related to sales of
newly introduced products, while only a small percentage was attributable to
price increases. During 1996 and 1997, the Company expanded its customer base,
increased sales of product bundles and integrated product suites, and executed
increasingly larger sales transactions. Additionally, TransCentury, the
Company's Year 2000 product suite, which was first introduced in the third
quarter of 1996, contributed significantly to the growth in revenues of the
data warehousing and decision support business unit during 1997. The Company's
database management (principally products relating to IBM's DB2 relational
database management software), systems management, application infrastructure
management and data warehousing and decision support business units
represented 40%, 30%, 10% and 20%, respectively, of total software products
revenues in 1997; 40%, 29%, 11% and 20%, respectively, of total software
products revenues in 1996; and 38%, 29%, 11% and 22%, respectively, of total
software products revenues in 1995.
Maintenance. Maintenance revenues in 1997 increased 22% over 1996 to
$125,245,000, and 1996 maintenance revenues of $102,364,000 represented an
increase of 34% over 1995 maintenance revenues of $76,498,000. Maintenance
revenues are derived from recurring fees charged to perpetual license
customers and the implicit first-year maintenance fees bundled in certain
software product sales. The Company provides
15
<PAGE>
maintenance customers with technical support and product enhancements.
Maintenance revenues are deferred and recognized ratably over the term of the
agreement. The increases during 1997 and 1996 were primarily attributable to
the expansion of the Company's installed customer base, from which maintenance
fees are derived. Because maintenance fees are implicit in certain new
software product licenses, the increase in software licensing transactions
also contributed to the increase in maintenance revenues. In 1997, the
Company's database management, systems management, application infrastructure
management, and data warehousing and decision support business units
represented 45%, 23%, 13% and 19%, respectively, of total maintenance
revenues.
Professional Services. Professional services revenues are associated with
the Company's consulting services business and educational programs. In 1997,
professional services revenues increased 16% over 1996 to $141,035,000 from
$121,763,000 in 1996. From 1995 to 1996, professional services revenues
increased 33% from $91,316,000. The growth in professional services revenues
during 1997 was primarily attributable to an increase in billable consultants,
as well as a higher ratio of billable hours to total hours worked. To a much
lesser extent, increases in rates charged per billable hour contributed to
this growth. Additionally, the revenues generated by the Company's new
specialty consulting services practices, established near the end of 1996,
contributed to the increase in professional services revenues during 1997. The
increase in professional services revenues during 1996 was primarily due to
the addition of established consulting practices through various acquisitions,
as well as the growth experienced within these acquired businesses.
COSTS AND EXPENSES
Total expenses for 1997 were $739,295,000, an increase of 35% over 1996
expenses of $547,469,000, which represented an increase of 21% over 1995
expenses of $453,788,000. Total expenses increased in 1997 due to greater
variable expenses related to higher revenue results, as well as increased
costs, including training and system-support expenses, associated with the
integration of recently acquired companies. Additionally, a restructuring
charge recorded in the second quarter of 1997 (as discussed below under "--
Restructuring Charges") contributed to the increase in total expenses.
Excluding restructuring charges, merger costs, acquired in-process technology
charges and the integration-related charges in 1997 discussed under "--General
and Administrative" below, total expenses for 1997 were $591,632,000 an
increase of $98,401,000, or 20%, compared to $493,231,000 for 1996. Total
expenses, excluding merger costs and acquired in-process technology charges,
increased 47% in 1996 as compared to $334,476,000 in 1995. Total expenses,
excluding restructuring charges (in 1997 only), merger costs, acquired in-
process technology charges and the integration-related charges, represented
95%, 105% and 102% of total revenues for 1997, 1996 and 1995, respectively. As
a percentage of total revenues, total expenses, excluding restructuring
charges, merger costs, acquired in-process technology charges and the
integration-related charges, decreased in 1997, as compared to 1996, primarily
due to overall cost containment efforts and the savings realized from the
restructuring plan.
During 1996 and 1995, the Company incurred significant costs in supporting
its development laboratories and in building the infrastructure to support the
significantly larger combined company that resulted from the Company's
acquisitions in those years. These costs were primarily associated with the
expansion of the inside and outside sales forces, hiring of product developers
and support technicians plus key management personnel, training all personnel
in IT infrastructure systems issues and new products, providing additional
financial and technical support to the international subsidiaries established
in those years, translating product materials into numerous foreign languages,
and augmenting internal support systems. Greater commission and bonus expenses
associated with the increase in revenues during 1996, as compared to 1995,
also contributed to the increase in total expenses in 1996.
Professional Services. Costs of professional services increased to
$127,499,000 in 1997, from $116,133,000 in 1996 and $92,374,000 in 1995. The
increases in these expenses during 1997 and 1996 were related to salaries and
other direct employment expenses resulting from the Company's continued hiring
to support this business, as well as the costs incurred to integrate the
numerous consulting practices acquired over the past three years. Greater
commission and bonus expenses associated with higher professional services
revenues in each year also contributed to the increases. Costs of professional
services represented 90%, 95% and 101% of professional
16
<PAGE>
services revenues in 1997, 1996 and 1995, respectively. During 1997, as part of
the Company's overall restructuring plan, the Company realigned its
professional services business through the consolidation of redundant
functions. The savings realized from the restructuring plan, as well as the
increased productivity of the consulting staff, contributed to the decrease in
professional services expenses as a percentage of professional services
revenues in 1997.
Product Development and Support. Product development and support expenses
increased to $187,383,000 in 1997, from $155,277,000 in 1996 and $94,027,000 in
1995. The increases in these expenses in 1997 and 1996 were primarily
attributable to an increase in the number of product development and support
personnel, from approximately 1,215 at December 31, 1995 to approximately 1,400
at December 31, 1996 and approximately 1,625 at December 31, 1997, and to other
higher employee-related expenses associated with expanded product offerings in
each year, as well as continued product integration and internationalization
efforts in 1997 and, to a lesser extent, 1996; increased allocated charges for
office space and overhead; an increase in information technology costs to
support the expanded development efforts and product offerings; higher bonuses
and royalty expenses related to greater revenues; and higher travel expenses in
1997 and 1996 associated with the Company's product integration efforts and
expanded product offerings. Product development and support expenses
represented 30%, 33% and 29%, of total revenues in 1997, 1996 and 1995,
respectively. During 1997, the Company began consolidating certain product
development and support efforts to coincide with its product integration focus.
As a result of these consolidation efforts, the Company reduced product
development and support expenses as a percentage of total revenues during 1997.
In 1997, 1996 and 1995, the Company capitalized $41,143,000, $27,246,000 and
$13,591,000, respectively, of internal software development costs, net of
related amortization expense, in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed." Product development and
support expenses plus capitalized internal software development costs, net of
related amortization expense, were $228,526,000 in 1997, $182,523,000 in 1996
and $107,618,000 in 1995, which amounted to 47%, 53% and 46%, respectively, of
software product and maintenance revenues for these years.
Sales and Marketing. Sales and marketing expenses increased to $228,387,000
in 1997, from $182,597,000 in 1996 and $113,978,000 in 1995. The increase in
sales and marketing expenses during 1997 was primarily attributable to the
significant expansion of the domestic and international outside sales force and
higher commission expenses relating to the increase in software products
revenues. During 1996, as compared to 1995, the Company incurred higher
commission expenses associated with the increase in software products revenues
and greater marketing costs associated with the Company's expanded product
line. Sales and marketing expenses represented 37%, 39% and 35% of total
revenues in 1997, 1996 and 1995, respectively. During the second quarter of
1997, the Company realigned its inside sales force to be more compatible with
its strategy of providing complete IT infrastructure solutions and to
correspond with the restructuring plan. This realignment resulted in a
significant reduction in the inside sales force. The Company also consolidated
certain remote sales facilities. Consequently, sales and marketing expenses as
a percentage of total revenues decreased during 1997. The increase in sales and
marketing expenses as a percentage of total revenues in 1996, as compared to
1995, was primarily attributable to costs associated with the significant
expansion of the domestic and international outside and inside sales forces and
the telemarketing organization.
General and Administrative. General and administrative expenses increased to
$61,876,000 in 1997, from $39,224,000 in 1996 and $34,097,000 in 1995. General
and administrative expenses represented 10%, 9% and 11% of total revenues in
1997, 1996 and 1995, respectively. The increase in general and administrative
expenses during 1997 was primarily due to total charges of $13,513,000 recorded
during the second quarter of 1997 for write-offs of certain assets, as well as
severance and other employee-related expenses, related to the integration
procedures discussed below. In conjunction with the restructuring plan executed
during the second quarter of 1997, the Company performed additional integration
procedures related to past acquisition activity. The Company evaluated the fair
value of assets recorded through prior acquisitions and identified certain
trade receivables, prepaid expenses and intangible assets that had no future
value. The respective balances of these
17
<PAGE>
assets were written-off during the second quarter of 1997. Additionally, the
Company expensed severance and other employee benefits, including guaranteed
bonuses, for certain employees of acquired companies who were terminated as a
result of the integration efforts, but not specifically as part of the
restructuring plan. The increase in general and administrative expenses in
1997 was also attributable to the costs associated with integrating recently
acquired businesses and maintaining the infrastructure to support the
restructured company, including administrative system upgrade expenses and
associated consulting fees, as well as the amortization of intangible assets
relating to the Company's convertible debt offerings (see "--Liquidity and
Capital Resources"). Total general and administrative expenses in 1997,
excluding the charges related to the integration efforts, were $48,363,000,
representing 8% of total revenues. The Company believes the decrease in
general and administrative expenses as a percentage of total revenues,
excluding the integration charges, was the result of the Company's overall
cost containment efforts, as well as the savings realized by the restructuring
plan.
The increase in general and administrative expenses in 1996 was primarily
related to salaries and other direct employment expenses attributable to an
expanded administrative staff both in the U.S. and in international
subsidiaries, amortization of excess of cost over net assets acquired related
to the Company's acquisitions accounted for as purchases, and increased
professional fees. During 1996, a concerted effort to consolidate redundant
administrative functions at the Company's various domestic locations resulted
in a reduction in these expenses as a percentage of total revenues.
Restructuring Charges. During the second quarter of 1997, the Company
executed a restructuring plan to consolidate its sales, marketing, business
development and product development operations to achieve cost efficiencies
through the elimination of redundant functions. These redundancies resulted
primarily from businesses acquired over the last three years. The Company also
realigned its business units and inside sales force to redirect focus on its
strongest product lines and better integrate the efforts of certain product
development teams. As part of the plan, the Company reduced its worldwide work
force by approximately 10%, eliminating approximately 400 positions, primarily
in the areas of product development and support, marketing and inside sales
and, to a lesser extent, professional services and administration.
The Company recorded a one-time charge of $57,319,000 during the second
quarter of 1997 related to the restructuring plan. The restructuring charge
included the following expenses: $24,032,000 for facility-related costs,
including a reserve for estimated lease obligations associated with the
closing of office facilities; $3,510,000 for write-offs of excess equipment,
furniture and fixtures; $19,413,000 for write-offs of capitalized software
costs and other intangible assets related to the termination of development
efforts for certain discontinued products, as well as penalties for the
cancellation of distributorship agreements for such products; and $10,364,000
for severance and other employee-related costs of the terminated staff. Of the
$57,319,000 restructuring charge, the Company paid out approximately
$15,322,000 and wrote off $19,687,000 of non-cash charges during 1997.
Consequently, the Company had $22,310,000 of accrued restructuring costs
recorded as of December 31, 1997. The Company anticipates that approximately
$6,300,000 of these costs will be paid out during 1998. The Company estimates
that annual restructuring payments will be approximately $3,300,000 to
$4,000,000 for the years 1999 through 2002 and that the remaining
approximately $1,300,000 of cash disbursements related to the restructuring
plan will be paid out in 2003.
The Company currently expects to realize a reduction in annual operating
expenses of approximately $40,000,000 in 1998 and subsequent years as a result
of the restructuring, without an adverse impact on revenues. However, there
can be no assurance as to the ultimate effects of the restructuring on the
Company's operating results.
Merger Costs. Merger costs were $8,927,000, $5,782,000 and $30,819,000 in
1997, 1996 and 1995, respectively. Merger costs relate to acquisitions
accounted for as poolings of interests and include investment banking and
other professional fees, employee severance payments, costs of closing excess
office facilities and various other expenses. The Company from time to time
engages in, and is currently engaged in, discussions relating to acquisitions
that may be material in size and/or scope and may involve issuances by the
Company of a significant number of shares of Common Stock. The Company
continues to pursue merger and acquisition
18
<PAGE>
opportunities, because it believes that acquisitions are an essential part of
the Company's strategy to compete effectively in its rapidly evolving
marketplace. The Company expects to incur merger costs in connection with
future acquisitions accounted for as poolings of interests. These costs will
be expensed in the periods in which the transactions are consummated. See "--
Recent Developments" for a description of certain pending acquisitions.
Acquired In-Process Technology. Acquired in-process technology charges were
$67,904,000, $48,456,000 and $88,493,000 in 1997, 1996 and 1995, respectively.
Acquired in-process technology charges relate to acquisitions of software
companies and product technologies accounted for under the purchase method. In
these cases, portions of the purchase prices were allocated to acquired in-
process technology.
Prior to completing these acquisitions, the Company conducted reviews in
order to determine the fair market value of the organizations and technologies
to be acquired. These reviews consisted of an evaluation of existing products,
research and development in process (projects that had not reached
technological feasibility and had no alternative future use), customers,
financial position and other matters. The acquired in-process research and
development represents unique and emerging technologies, the application of
which is limited to the Company's IT infrastructure strategy. Accordingly,
these acquired technologies have no alternative future use. The Company
believes it has budgeted adequate research and development resources to
complete the contemplated projects over time periods generally ranging from
six to 18 months from the dates of acquisition.
The Company has already devoted substantial resources to the development of
products from research and development purchased in 1997. The Company
estimates that up to an additional 12 months and approximately $9,000,000 in
cash expenditures will be required to develop commercially viable products
from this acquired research and development. With respect to research and
development acquired prior to 1997, the Company has either completed the
development of commercially viable products or discontinued the product
development efforts.
The Company expects to continue to incur charges for acquired in-process
technology in connection with future acquisitions, which will reduce operating
and net income for the periods in which the acquisitions are consummated.
OPERATING LOSS
For the reasons discussed above, the Company incurred an operating loss of
$115,792,000 in 1997, as compared to an operating loss of $79,404,000 in 1996
and an operating loss of $127,377,000 in 1995. The Company had operating
margins of (19)%, (17)% and (39)% in 1997, 1996 and 1995, respectively. The
significant restructuring charges, merger costs, acquired in-process
technology charges and integration-related charges incurred in these years
contributed significantly to the operating losses and negative operating
margins experienced by the Company. Excluding restructuring charges, merger
costs, acquired in-process technology charges and the integration-related
charges in 1997 discussed under "--General and Administrative" below, the
Company would have reported operating income of $31,871,000 in 1997, an
operating loss of $25,166,000 in 1996 and an operating loss of $8,065,000 in
1995. Excluding such charges, the Company would have reported operating
margins of 5%, (5)% and (2)% in 1997, 1996 and 1995, respectively. During
1997, the Company improved its operating margin, excluding restructuring
charges, merger costs, acquired in-process technology charges and the
integration-related charges, through cost containment efforts and the savings
realized from the restructuring plan. The Company's operating margin,
excluding merger costs and acquired in-process technology charges, decreased
in 1996, as compared to 1995, due primarily to the significant costs incurred
to integrate the numerous acquisitions consummated during 1996 and 1995.
Because acquisitions remain an important part of the Company's growth
strategy, the Company expects to continue to incur acquisition-related
charges, as well as expenses related to the integration of acquired
businesses, which could materially adversely affect operating results in the
periods in which such acquisitions are consummated and in subsequent periods.
19
<PAGE>
OTHER INCOME
Other income was $16,729,000 in 1997 as compared to $5,237,000 in 1996 and
$4,130,000 in 1995. The increase in other income in 1997, as compared to 1996,
was primarily attributable to unrealized holding gains that resulted from the
reclassification of certain available-for-sale securities into the trading
classification; unrealized holding gains on trading securities, the market
values of which increased during 1997; and realized gains on the sales of
investment securities. The increase in other income during 1996, as compared to
1995, was primarily attributable to realized gains on the sales of investment
securities and unrealized holding gains on trading securities. Because
unrealized holding gains and losses for trading securities are reflected in
pre-tax earnings, fluctuations in the market value of these securities are
continuously recorded as additions to, or deductions from, other income until
the securities are sold. The increase in other income during 1997, as compared
to 1996, was partially offset by interest expense on the Company's convertible
subordinated notes issued in November 1996 and December 1997. To a lesser
extent, the interest expense on the convertible subordinated notes issued in
November 1996 reduced the increase in other income in 1996, as compared to
1995. See "--Liquidity and Capital Resources."
INCOME TAXES
The Company recognized income tax expense of $18,721,000 in 1997, and income
tax benefits of $9,245,000 in 1996 and $11,680,000 in 1995. The income tax
expense recorded in 1997 included an amount of $13,651,000 based on the
Company's 28% effective tax rate, plus an additional $5,070,000 recorded in the
second quarter of 1997 to reduce the Company's deferred tax asset balance. The
Company reduced its deferred tax asset balance so that it would reflect an
asset amount that will, more likely than not, be realized in future periods.
The Company has available approximately $294,715,000 of net operating loss
carryforwards and $14,000,000 of tax credit carryforwards, which are available
to reduce future Federal income taxes, if any, through the year 2012. Some of
the Company's tax carryforwards are subject to limitations as to the amounts
that may be used in any particular future year.
NET LOSS
For the reasons discussed above, the Company incurred a net loss of
$117,784,000 in 1997, as compared to $64,922,000 in 1996 and $111,567,000 in
1995. The significant restructuring charges, merger costs and acquired in-
process technology charges incurred in these years contributed significantly to
the net losses experienced by the Company. See "--Operating Loss" above.
RECENT DEVELOPMENTS
On January 2, 1998, the Company entered into an agreement and plan of merger,
pursuant to which the Company has agreed to acquire Learmonth and Burchett
Management Systems PLC ("LBMS"), a leading provider of process management
solutions. Under the terms of this acquisition, LBMS will become a wholly-owned
subsidiary of the Company. The Company has agreed to exchange approximately
2,745,000 shares of Common Stock for all of the outstanding common shares of
LBMS and has offered to exchange options to purchase approximately 468,000
shares of Common Stock for the outstanding LBMS options. This acquisition,
which is expected to be consummated in the second quarter of 1998, is subject
to the sanction of the English High Court, the approval of the shareholders of
LBMS and customary legal and regulatory conditions.
On February 18, 1998, the Company entered into an agreement and plan of
merger, pursuant to which the Company has agreed to acquire Mastering, Inc.
("Mastering"), a leading provider of information technology training. Under the
terms of this acquisition, Mastering will become a wholly-owned subsidiary of
the Company. The Company has agreed to exchange approximately 6,165,000 shares
of Common Stock for all of the outstanding common shares of Mastering and to
assume stock options which will convert into options to purchase approximately
2,143,000 shares of Common Stock. This acquisition, which is expected to be
consummated in the second quarter of 1998, is subject to the filing of a
registration statement with the Securities
20
<PAGE>
and Exchange Commission, the approval of the stockholders of Mastering and
customary legal and regulatory conditions.
On March 14, 1998, the Company entered into an agreement and plan of merger,
pursuant to which the Company has agreed to acquire Logic Works, Inc.
("Logic"), a leading provider of data modeling tools. Under the terms of this
acquisition, Logic will become a wholly-owned subsidiary of the Company. The
Company has agreed to exchange approximately 7,240,095 shares of Common Stock
for all of the outstanding common stock of Logic and to assume stock options
which will convert into options to purchase approximately 1,325,716 shares of
Common Stock. This acquisition, which is expected to be consummated in mid-
1998, is subject to the filing of a registration statement with the Securities
and Exchange Commission, the approval of the stockholders of Logic and
customary legal and regulatory conditions.
The acquisitions of LBMS, Mastering and Logic are expected to be accounted
for as poolings of interests. Costs incurred in connection with these
transactions will be expensed in the periods in which the acquisitions are
consummated.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and investments were $261,288,000 and
$185,673,000 as of December 31, 1997 and 1996, respectively. For the year
ended December 31, 1997, cash and cash equivalents increased $37,355,000, from
$140,783,000 at the beginning of the year to $178,138,000 at the end of the
year. This increase was attributable primarily to net proceeds of $144,967,000
from the sale of $150,000,000 principal amount of 6.25% convertible
subordinated notes due 2002 (the "1997 Notes") and net cash provided by
operating activities of $32,586,000. The positive cash flow from operating
activities was reduced by an increase in trade and installment receivables,
net of proceeds from the sale of installment receivables. Previously, the
Company reported trade and installment receivables on a gross basis and the
sale of installment receivables as a financing activity. Of the $191,266,000
of cash provided by financing and operating activities, $153,911,000 was used
in investing activities. The principal components of investing activities were
purchases of marketable securities and the investment of resources in
purchased and developed software. For 1996, cash and cash equivalents
increased from $115,809,000 at the beginning of the year to $140,783,000 at
the end of the year, with the primary sources of cash being sales of
installment receivables and the net proceeds from the sale of $115,000,000
principal amount of 6.75% convertible subordinated notes due 2001 (the "1996
Notes"). For 1995, cash and cash equivalents increased from $80,110,000 at the
beginning of the year to $115,809,000 at the end of the year, with the
principal source of cash being the net proceeds from a public offering of
Common Stock.
In recent years, the Company's sources of liquidity have primarily been
funds from capital markets and sales of installment receivables. The Company
believes the funding available to it from these sources, as well as cash flows
from operations, will be sufficient to satisfy its working capital and debt
service requirements for the foreseeable future. The Company's capital
requirements are primarily dependent on management's business plans regarding
the levels and timing of investments in existing and newly acquired businesses
and technologies. These plans and the related capital requirements may change
based upon various factors, such as the Company's strategic opportunities,
developments in the Company's markets, the timing of closing and integrating
acquisitions and the conditions of financial markets.
The Company had trade and installment accounts receivable, net of
allowances, of $264,686,000 and $200,399,000 as of December 31, 1997 and 1996,
respectively. The Company sells software products and services to customers in
diversified industries and geographic regions and, therefore, has no
significant concentration of credit risk. Historically, a substantial amount
of the Company's revenues have been recorded in the third month of any given
quarter, with a concentration of such revenues in the last week of the third
month. This trend results in a high balance of accounts receivable relative to
reported revenues at the end of any quarterly reporting period.
21
<PAGE>
The Company sells a significant portion of its installment receivables to
third parties. Installment receivables represent amounts collectible on long-
term financing arrangements and include fees for product licenses, upgrades
and maintenance, sometimes also bundled with professional services contracts.
Installment receivables are generally financed over three to five years, with
interest payable on the license and upgrade portions only. Over the past two
years, the Company executed an increasingly greater number and higher dollar
value of sales transactions having long-term financing arrangements, primarily
attributable to sales of product bundles and integrated product suites.
Consequently, the Company's volume of installment receivable sales increased
significantly over the past two years. However, the Company expects to reduce
the volume of installment receivable sales, as a percentage of total revenues,
in 1998 as compared to 1997.
The Company receives proceeds equal to the entire installment receivable
balance sold to a third party finance company, net of an amount representing
the interest to be earned by the finance company. The finance company collects
customer remittances over the term of the agreement. Proceeds from the sale of
receivables were $206,916,000, $129,328,000 and $2,903,000 for the years ended
December 31, 1997, 1996 and 1995, respectively. Accounts receivable sold with
recourse were $19,373,000 and $2,993,000 for the years ended December 31, 1996
and 1995, respectively, and as of December 31, 1996 and 1995, potential
obligations for accounts receivable sold with recourse were $16,817,000 and
$5,177,000, respectively. There were no accounts receivable sold with recourse
for the year ended December 31, 1997, and as of December 31, 1997, there were
no remaining potential recourse obligations for accounts receivable sold with
recourse. The Company has an agreement with a third party that provides for
potential recourse obligations in the form of a loss pool based on the
performance of the related accounts receivable portfolio. Under the terms of
that agreement, potential recourse obligations at December 31, 1997 and 1996
were $14,600,000 and $9,300,000, respectively. There were no potential
recourse obligations in the form of a loss pool as of December 31, 1995. Based
on the credit ratings of the underlying obligors to the accounts receivable
and the performance history of the accounts receivable portfolio, the Company
has assessed the exposure related to these recourse obligations and determined
the potential liability to be minimal.
The Company's installment receivables are recorded net of unamortized
discounts and deferred maintenance fees. When these receivables are sold, the
Company reduces the gross installment receivable balance. Additionally, the
Company reclassifies the deferred maintenance, which was previously reflected
as a reduction of the related installment receivable balance, to an
obligation. The deferred maintenance is recognized into income ratably over
the term of the maintenance agreement.
The Company had long-term acquisition-related payables of $18,320,000 and
$2,502,000 and other long-term obligations of $266,824,000 and $115,803,000 as
of December 31, 1997 and 1996, respectively. The significant increase in long-
term obligations from December 31, 1996 to December 31, 1997 was attributable
to the 1997 Notes issued by the Company in December 1997. The 1997 Notes bear
interest at 6.25% annually and mature on December 15, 2002. The holders of the
1997 Notes have the option to convert them into shares of Common Stock, at any
time prior to maturity, at a conversion price of $36.05 per share. The Company
received proceeds, net of issuance costs, of $144,967,000 from the offering of
the 1997 Notes. The Company completed an offering of convertible subordinated
notes due November 15, 2001 in November 1996 (the "1996 Notes"). The 1996
Notes bear interest at 6.75% annually and the holders of the 1996 Notes have
the option to convert them into shares of Common Stock, at any time prior to
maturity, at a conversion price of $13.95 per share. The Company received
proceeds, net of issuance costs, of $110,783,000 from the offering of the 1996
Notes. The Company currently has total debt service obligations of
approximately $35,000,000 for 1998, consisting primarily of obligations to pay
interest on the 1996 Notes and the 1997 Notes, as well as acquisition-related
payables. Based on current outstanding indebtedness, the Company estimates its
debt service requirements to be approximately $36,000,000, $18,000,000,
$132,000,000 and $160,000,000 for 1999, 2000, 2001 and 2002, respectively,
which amounts include the outstanding principal balance of the 1996 Notes in
2001 and the outstanding principal balance of the 1997 Notes in 2002.
The Company currently has an unsecured bank line of credit of $55,000,000,
under which borrowings bear interest at rates ranging from approximately LIBOR
plus 1% to the bank's prime rate. As of March 10, 1998, the
22
<PAGE>
Company had no outstanding borrowings under this line of credit, but had
aggregate letters of credit outstanding for approximately $2,598,000, with
expiration dates ranging from April 1998 to May 1999. These letters of credit
reduce the available line of credit balance. Under this credit agreement, the
Company has agreed: (i) to maintain a ratio of current assets to current
liabilities of at least 1.0 to 1.0; (ii) to maintain a tangible net worth of
not less than $100,000,000; and (iii) not to permit its ratio of total
liabilities to tangible net worth to at any time exceed 1.0 to 1.0.
FOREIGN CURRENCY EXCHANGE RATES
To date, fluctuations in foreign currency exchange rates have not had a
material effect on the Company's results of operations or liquidity. However,
the Company closely monitors its foreign operations and net asset position to
ascertain the need for hedging foreign currency exchange risk. Since 1997, the
only exposure related to foreign currency exchange for which the Company has
considered hedging appropriate has been related to short-term intercompany
balances. These non-functional currency balances are hedged by purchases and
sales of forward exchange contracts to reduce this exchange rate exposure. At
December 31, 1997, the Company held an aggregate of approximately $26,800,000
in notional amount of forward exchange contracts. As the Company's operations
expand in international regions outside Western Europe, where the Company's
international operations are currently concentrated, the Company may
increasingly hedge foreign currency exchange risk.
YEAR 2000 CONSIDERATIONS
During 1997, the Company substantially completed the implementation of an
enterprise-wide financial accounting system which is Year 2000 compliant.
Further, the Company has evaluated its internal software and computer systems
and believes its potential liability relating to the Year 2000 problem is
minimal.
The Company believes that certain of its customers may allocate a substantial
portion of their 1998 and 1999 IT budgets to products and services addressing
the Year 2000 problem. The Company is unable to determine whether this trend
will negatively impact sales of its traditional product offerings, but believes
that it may lead to increased sales of its Year 2000 products and services. The
Company believes that, in 1997, sales of its Year 2000 products and services
were favorably affected by this trend. All of the Company's current software
product offerings are Year 2000 compliant.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." The Company is required to adopt SFAS No. 130
for periods beginning after December 15, 1997. This statement establishes
standards for reporting comprehensive income and its components in a full set
of general-purpose financial statements. The standard requires all items that
are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed in
equal prominence with the other financial statements. The standard is not
expected to have a material impact on the Company's current presentation of
income.
In June 1997, the Financial Accounting Standards Board also issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." The
Company is required to adopt the disclosures of SFAS No. 131 beginning with its
December 31, 1998 annual financial statements. This statement establishes
standards for the way companies are to report information about operating
segments. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. The Company is currently
evaluating the impact of this standard on its financial statements.
In November 1997, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 97-2, "Software Revenue Recognition." The
Company is required to adopt SOP 97-2 on January 1, 1998. SOP 97-2 is intended
to reduce diversity in current revenue recognition practices within the
software industry. The Company is currently evaluating the effects of SOP 97-2
on its operations.
23
<PAGE>
QUARTERLY COMPARISONS
The following tables set forth an unaudited summary of quarterly financial
data. This quarterly information has been prepared on the same basis as the
annual consolidated financial statements and, in management's opinion,
reflects all adjustments necessary for a fair presentation of the information
for the periods presented. The operating results for any quarter are not
necessarily indicative of results for any future period.
The Company has experienced a seasonal pattern in its operating results,
with the fourth quarter typically having the highest total revenues and
operating income in a given year. For example, 34% and 32% of the Company's
total revenues in 1997 and 1996, respectively, were generated in the fourth
quarter. Further, revenues for the fourth quarter of 1996 were higher than
revenues for the first quarter of 1997. The Company believes the seasonality
of its revenue results primarily from the budgeting cycles of its software
product customers and the structure of the Company's sales commission and
bonus programs. In addition, the Company's software products revenues may vary
significantly from quarter to quarter depending upon other factors, such as
the timing of new product announcements and releases by the Company and its
competitors. The Company operates with relatively little backlog, and
substantially all of its software products revenues in each quarter result
from sales made in that quarter.
<TABLE>
<CAPTION>
1997
-----------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Total revenues............. $115,623 $136,438 $160,201 $211,241
Operating income (loss).... (33,086)(1) (77,336)(2) 10,553 (15,923)(3)
Net income (loss).......... (25,269)(1) (78,933)(2) 10,160 (23,742)(3)
Net income (loss) per
share..................... $ (0.41)(1) $ (1.28)(2) $ 0.16 $ (0.37)(3)
Shares used in computing
net income (loss) per
share..................... 60,947 61,477 65,328 63,615
<CAPTION>
1996
-----------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Total revenues, as
previously reported(4).... $ 82,471 $100,485 $113,430 $142,804
Adjustments(5)............. 6,588 6,712 6,884 8,691
Total revenues........... 89,059 107,197 120,314 151,495
Operating loss, as
previously reported(4).... (32,374)(6) (10,072) (10,636)(7) (29,411)(8)
Adjustments(5)............. 293 271 209 2,316
Operating loss........... (32,081)(6) (9,801) (10,427)(7) (27,095)(8)
Net loss, as previously
reported(4)............... (24,504)(6) (5,791) (7,693)(7) (29,974)(8)
Adjustments(5)............. 283 235 208 2,314
Net loss................. (24,221)(6) (5,556) (7,485)(7) (27,660)(8)
Net loss per share, as
previously reported(4).... $ (0.45)(6) $ (0.10) $ (0.14)(7) $ (0.53)(8)
Net loss per share....... (0.43)(6) (0.10) (0.13)(7) (0.48)(8)
Shares used in computing
net loss per share, as
previously reported....... 54,915 55,214 55,678 56,419
Shares used in computing
net loss per share...... 56,341 56,625 57,070 57,823
</TABLE>
- --------
(1) Reflects a pre-tax charge for acquired in-process technology of
$10,417,000 relating to the Company's acquisition of GEJAC and the
purchase of certain product technologies. Also reflects a pre-tax charge
for merger costs of $3,706,000 relating to the Company's acquisitions of
ATR and I&S.
(2) Reflects a pre-tax charge for acquired in-process technology of $6,747,000
relating to the Company's acquisition of certain product technologies.
Also reflects a pre-tax charge of $57,319,000 for restructuring costs.
24
<PAGE>
(3) Reflects a pre-tax charge for acquired in-process technology of $50,740,000
relating to the Company's acquisition of ProMetrics, the purchase of
certain product technologies and other intangible assets from Intel and the
purchase of certain other product technologies. Also reflects a pre-tax
charge for merger costs of $5,221,000 relating primarily to the Company's
acquisition of Vayda.
(4) As reported under "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Comparisons" in
the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
(5) Adjustments reflect the effects of the acquisitions of ATR and I&S, each of
which has been accounted for using the pooling-of-interests method. See
Note 2 of the notes to the Company's consolidated financial statements
included elsewhere herein for a more detailed discussion of these
transactions.
(6) Reflects a pre-tax charge for acquired in-process technology of $7,005,000
relating to the Company's acquisition of AST and the purchase of certain
product technologies. Also reflects a pre-tax charge for merger costs of
$5,782,000 relating primarily to the Company's acquisitions of Prodea,
Paradigm and Axis.
(7) Reflects a pre-tax charge for acquired in-process technology of $4,090,000
relating to the Company's acquisitions of Software Alternatives and
Grateful Data.
(8) Reflects a pre-tax charge for acquired in-process technology of $37,361,000
relating to the Company's acquisitions of VREAM and substantially all of
the assets of Access Manager.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K contains certain "forward-looking statements" (as defined in
Section 21E of the Exchange Act) that reflect the Company's expectations
regarding its future growth, results of operations, performance and business
prospects and opportunities. Words such as "anticipates," "believes," "plans,"
"expects," "estimates" and similar expressions have been used to identify these
forward-looking statements, but are not the exclusive means of identifying
these statements. These statements reflect the Company's current beliefs and
are based on information currently available to the Company. Accordingly, these
statements are subject to known and unknown risks, uncertainties and other
factors that could cause the Company's actual growth, results, performance and
business prospects and opportunities to differ from those expressed in, or
implied by, these statements. These risks, uncertainties and other factors
include the Company's ability to develop and market existing and acquired
products for the IT infrastructure market; the Company's ability to
successfully integrate its acquired products, services and businesses and
continue its acquisition strategy; the Company's ability to adjust to changes
in technology, customer preferences, enhanced competition and new competitors
in the IT infrastructure and professional services markets; currency exchange
rate fluctuations, collection of receivables, compliance with foreign laws and
other risks inherent in conducting international business; risks associated
with conducting a consulting services business; general economic and business
conditions, which may reduce or delay customers' purchases of the Company's
products and services; charges and costs related to acquisitions; and the
Company's ability to protect its proprietary software rights from infringement
or misappropriation, to maintain or enhance its relationships with relational
database vendors, and to attract and retain key employees. The Company is not
obligated to update or revise these forward-looking statements to reflect new
events or circumstances.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information in response to this item is included in the Company's
consolidated financial statements, together with the report thereon of KPMG
Peat Marwick LLP, appearing on pages F-1 through F-26 of this Form 10-K, and in
Item 7 under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Quarterly Comparisons."
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
25
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information in response to this item is incorporated by reference from
the sections captioned "PROPOSAL NO. 1--ELECTION OF DIRECTORS" and "EXECUTIVE
OFFICERS" of the definitive Proxy Statement to be filed in connection with the
Company's 1998 Annual Meeting of Stockholders (the "1998 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information in response to this item is incorporated by reference from
the section of the 1998 Proxy Statement captioned "EXECUTIVE COMPENSATION."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in response to this item is incorporated by reference from
the section of the 1998 Proxy Statement captioned "SECURITY OWNERSHIP OF
MANAGEMENT AND PRINCIPAL STOCKHOLDERS."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in response to this item is incorporated by reference from
the sections of the 1998 Proxy Statement captioned "EXECUTIVE COMPENSATION--
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" and "CERTAIN
TRANSACTIONS."
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following consolidated financial statements and notes thereto,
and the related independent auditors' report, are included on pages F-1
through F-26 of this Form 10-K:
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Operations for the Years Ended December 31,
1997, 1996 and 1995
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
Independent Auditors' Report
2. The following financial statement schedule of the Company and the related
report of independent auditors are included on pages S-1 and S-2 of this Form
10-K:
Report of Independent Auditors
Schedule II--Valuation and Qualifying Accounts
All other financial statement schedules are omitted because such schedules
are not required or the information required has been presented in the
aforementioned financial statements.
26
<PAGE>
3. The following exhibits are filed with this Form 10-K or incorporated by
reference as set forth below:
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of the Company, as
amended, incorporated by reference to Exhibit 3.1(d) to
the Company's Registration Statement on Form S-1, Regis-
tration No. 333-07783.
3.2 Bylaws of the Company, incorporated by reference to Ex-
hibit 3.2 to the Company's Registration Statement on Form
S-1, Registration No. 33-39233 (the "IPO S-1 Registration
Statement").
4.1 Specimen stock certificate representing Common Stock, in-
corporated by reference to Exhibit 4.1 to the IPO S-1
Registration Statement.
4.2 Rights Agreement dated as of December 21, 1995 between
the Company and Harris Trust and Savings Bank, incorpo-
rated by reference to Exhibit 1 to the Company's Regis-
tration Statement on Form 8-A, filed December 26, 1995
(the "1995 8-A").
4.3 Certificate of Designations of the Class II Series A Ju-
nior Participating Preferred Stock, incorporated by ref-
erence to Exhibit 4.3 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 (the "1995
10-K").
4.4 Indenture between the Company and American National Bank
and Trust Company, as Trustee, dated as of November 18,
1996.
4.5 Form of Note for the Company's convertible subordinated
notes due 2001 (included in Exhibit 4.4).
4.6 Indenture between the Company and American National Bank
and Trust Company, as Trustee, dated as of December 15,
1997.
4.7 Form of Note for the Company's convertible subordinated
notes due 2002 (included in Exhibit 4.6).
10.1 1989 Stock Option Plan, incorporated by reference to Ex-
hibit 10.1 to the IPO S-1 Registration Statement.*
10.2 Forms of Stock Option Agreements, incorporated by refer-
ence to Exhibit 10.2 to the IPO S-1 Registration State-
ment.*
10.3 Chief Executive Stock Option Plan, incorporated by refer-
ence to Exhibit 10.3 to the IPO S-1 Registration State-
ment.*
10.4 Chief Executive Stock Option Agreement, incorporated by
reference to Exhibit 10.4 to the IPO S-1 Registration
Statement.*
10.5 1991 Stock Option Plan, incorporated by reference to Ex-
hibit 10.5 to the IPO S-1 Registration Statement.*
10.6 Amended and Restated Employment Agreement between Andrew
J. Filipowski and the Company, dated as of January 1,
1996.*
10.7 Amended and Restated Employment Agreement between Michael
P. Cullinane and the Company, dated as of January 1,
1996.*
10.8 Amended and Restated Employment Agreement between Paul L.
Humenansky and the Company, dated as of October 28,
1997.*
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
10.9 Form of Indemnification Agreement between the Company and
each of Andrew J. Filipowski, Michael P. Cullinane, Paul
L. Humenansky, Casey G. Cowell, James E. Cowie, Steven D.
Devick and Gian Fulgoni, incorporated by reference to Ex-
hibit 10.10 to the IPO S-1 Registration Statement.*
10.10 Forms of Affiliate Agreements, incorporated by reference
to Exhibit 10.11 to the IPO S-1 Registration Statement.
10.11 Form of Master Product License Agreement, incorporated by
reference to Exhibit 10.11 to the 1995 10-K.
10.12 Office Lease, dated May 6, 1992, between the Company and
LaSalle National Trust N.A. as Trustee (the "Oakbrook
Terrace Lease"), incorporated by reference to Exhibit
10.20 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992.
10.13 PLATINUM technology, inc. 1993 Directors' Stock Option
Plan, incorporated by reference to Exhibit 10.18 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994 (the "June 1994 10-Q").*
10.14 PLATINUM technology, inc. 1994 Stock Incentive Plan, in-
corporated by reference to Exhibit 10.19 to the June 1994
10-Q.*
10.15 Amendments to the PLATINUM technology, inc. 1994 Stock
Incentive Plan, incorporated by reference to Exhibit 4.3
to the Company's Registration Statement on Form S-8, Reg-
istration No. 33-85798 (the "1994 S-8").*
10.16 Form of Option Agreement under the PLATINUM technology,
inc. 1993 Director's Stock Option Plan, incorporated by
reference to Exhibit 4.4 to the 1994 S-8.*
10.17 Form of Option Agreement under the PLATINUM technology,
inc. 1994 Stock Incentive Plan, incorporated by reference
to Exhibit 4.5 to the 1994 S-8.*
10.18 Amendment Number One, dated as of May 3, 1993, to the
Oakbrook Terrace Lease, incorporated by reference to Ex-
hibit 10.19 to the 1994 10-K.
10.19 Amendment Number Two, dated as of October 26, 1993, to
the Oakbrook Terrace Lease, incorporated by reference to
Exhibit 10.20 to the 1994 10-K.
10.20 Amendment Number Three, dated as of December 22, 1994, to
the Oakbrook Terrace Lease, incorporated by reference to
Exhibit 10.21 to the 1994 10-K.
10.21 Office Lease, dated August 8, 1994, between the Company
and L.J. Sheridan & Co. as court appointed receiver, in-
corporated by reference to Exhibit 10.22 to the 1994 10-
K.
10.22 PLATINUM technology, inc. Employee Incentive Compensation
Plan, incorporated by reference to Exhibit 10.23 to the
Company's Registration Statement on Form S-4, Registra-
tion No. 33-94410 (the "1995 S-4").*
10.23 Lease Agreement, dated as of March 30, 1995, between the
Company and Lisle Property Venture, Inc. (the "March 1995
Lisle Lease"), incorporated by reference to Exhibit 10.24
to the 1995 S-4.
10.24 First Amendment, dated as of September 15, 1995, to the
March 1995 Lisle Lease, incorporated by reference to Ex-
hibit 10.25 to the 1995 10-K.
10.25 Second Amendment, dated as of September 15, 1995, to the
March 1995 Lisle Lease, incorporated by reference to Ex-
hibit 10.26 to the 1995 10-K.
10.26 Third Amendment, dated as of January 3, 1996, to the
March 1995 Lisle Lease, incorporated by reference to Ex-
hibit 10.27 to the 1995 10-K.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
10.27 Lease Agreement, dated as of October 31, 1995, between
Lisle Property Venture, Inc. and the Company (the "Octo-
ber 1995 Lisle Lease"), incorporated by reference to Ex-
hibit 10.28 to the 1995 10-K.
10.28 Amendment Number Four, dated as of March 9, 1995, to the
Oakbrook Terrace Lease, incorporated by reference to Ex-
hibit 10.29 to the 1995 10-K.
10.29 Loan Agreement, dated as of December 31, 1995, between
the Company and American National Bank and Trust Company
of Chicago (the "Loan Agreement"), incorporated by refer-
ence to Exhibit 10.30 to the 1995 10-K.
10.30 First Amendment, dated as of December 31, 1996, to the
Loan Agreement, incorporated by reference to Exhibit
10.30 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 (the "1996 10-K").
10.31 First Amendment, dated as of May 23, 1996, to the October
31, 1995 Lisle Lease, incorporated by reference to Ex-
hibit 10.31 to the 1996 10-K.
10.32 Second Amendment, dated as of May 24, 1996, to the Octo-
ber 31, 1995 Lisle Lease, incorporated by reference to
Exhibit 10.32 to the 1996 10-K.
10.33 Lease Agreement, dated as of July 17, 1996, between the
Company and Oakbrook Tower Limited Partnership, incorpo-
rated by reference to Exhibit 10.33 to the 1996 10-K.
10.34 PLATINUM technology, inc. 1996 Stock Purchase Plan, in-
corporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8, Registration No. 333-
03284 (the "April 1996 S-8").*
10.35 PLATINUM technology, inc. Amended and Restated 1993 Di-
rectors' Stock Option Plan, incorporated by reference to
Exhibit 4.2 to the April 1996 S-8.*
10.36 Amendment to the PLATINUM technology, inc. 1994 Stock In-
centive Plan, incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1996 (the "June 1996 10-Q").*
10.37 First Amendment to the PLATINUM technology, inc. Employee
Incentive Compensation Plan, incorporated by reference to
the June 1996 10-Q.*
10.38 Second Amendment to the PLATINUM technology, inc. Em-
ployee Incentive Compensation Plan, incorporated by ref-
erence to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997 (the
"June 1997 10-Q").*
10.39 Amendment Number Five, dated as of December 1, 1996, to
the Oakbrook Terrace Lease, incorporated by reference to
Exhibit 10.2 to the June 1997 10-Q.
10.40 Amendment Number Six, dated as of April 30, 1997, to the
Oakbrook Terrace Lease, incorporated by reference to Ex-
hibit 10.3 to the June 1997 10-Q.
10.41 Amendment Number Seven, dated as of September 16, 1997,
to the Oakbrook Terrace Lease, incorporated by reference
to Exhibit 10.42 to the Company's Registration Statement
on Form S-1, Registration No. 333-40075.
10.42 Credit Agreement, dated as of December 22, 1997, between
the Company and American National Bank and Trust Company
of Chicago, as Agent.
12 Computation of Ratios of Earnings to Fixed Charges.
21 Subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP with respect to the
Company's financial statements and financial statement
schedule.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
27 Financial Data Schedule.
</TABLE>
- --------
* Management contract or compensatory plan or arrangement required to be
included as an exhibit to this Annual Report on Form 10-K.
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K, dated October 17, 1997, to
report the Company's issuance of 364,396 shares of Common Stock pursuant to
its acquisition of ProMetrics. Such shares were issued pursuant to Regulation
S under the Act.
The Company filed a Current Report on Form 8-K, dated December 11, 1997, to
report the Company's issuance of the 1997 Notes and the Company's issuance of
a press release relating thereto. The 1997 Notes were issued pursuant to the
exemption from registration provided by Section 4(2) of the Act, in a
transaction not involving any public offering. The Notes were then resold to
"qualified institutional buyers" (as defined in Rule 144A under the Act) in
compliance with Rule 144A and to persons outside the United States, other than
United States persons, pursuant to Regulation S under the Act.
30
<PAGE>
PLATINUM TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
ASSETS 1997 1996
----------------------------------------------------- --------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 178,138 $ 140,783
Short-term investment securities....................... 57,597 42,755
Trade accounts receivable, net of allowances of $1,613
and $2,503............................................ 212,731 165,131
Installment accounts receivable, net of allowances of
$878 and $395......................................... 30,043 13,603
Accrued interest and other current assets.............. 32,132 11,729
Refundable income taxes................................ 547 629
--------- ---------
Total current assets................................. 511,188 374,630
--------- ---------
Non-current investment securities........................ 25,553 2,135
Property and equipment, net.............................. 77,842 72,750
Purchased and developed software, net.................... 116,717 82,438
Excess of cost over net assets acquired, net of
accumulated amortization of $15,975 and $10,610......... 52,759 37,382
Non-current installment receivables, net of allowances of
$1,616 and $816......................................... 21,912 21,665
Other assets............................................. 28,206 27,572
--------- ---------
Total assets......................................... $ 834,177 $ 618,572
========= =========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------
<S> <C> <C>
Current liabilities:
Acquisition-related payables........................... $ 15,717 $ 7,872
Income taxes payable................................... 3,698 2,420
Accounts payable....................................... 16,091 15,436
Accrued commissions and bonuses........................ 13,357 10,622
Accrued royalties...................................... 7,070 3,913
Accrued restructuring costs............................ 6,308 --
Other accrued liabilities.............................. 42,905 29,798
Current maturities of long-term obligations............ 1,319 3,246
Deferred revenue....................................... 116,374 84,166
--------- ---------
Total current liabilities............................ 222,839 157,473
--------- ---------
Acquisition-related payables............................. 18,320 2,502
Deferred revenue......................................... 60,435 38,674
Deferred rent............................................ 6,197 8,360
Accrued restructuring costs.............................. 16,002 --
Long-term obligations, net of current maturities......... 266,824 115,803
--------- ---------
Total liabilities.................................... 590,617 322,812
--------- ---------
Stockholders' equity:
Class II preferred stock, $.01 par value; authorized
10,000, none issued and outstanding................... -- --
Subscribed Class II preferred stock, $.01 par value;
1,768 shares subscribed in 1997....................... 18 --
Common stock, $.001 par value; authorized 180,000,
issued and outstanding 63,860 and 60,577.............. 64 61
Paid-in capital........................................ 565,371 487,417
Accumulated deficit.................................... (325,558) (208,788)
Unrealized holding gains on marketable securities...... 8,262 17,805
Foreign currency translation adjustment................ (4,597) (735)
--------- ---------
Total stockholders' equity........................... 243,560 295,760
--------- ---------
Total liabilities and stockholders' equity........... $ 834,177 $ 618,572
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-1
<PAGE>
PLATINUM TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
Revenues:
Software products............................. $ 357,223 $243,938 $ 158,597
Maintenance................................... 125,245 102,364 76,498
Professional services......................... 141,035 121,763 91,316
--------- -------- ---------
Total revenues.............................. 623,503 468,065 326,411
--------- -------- ---------
Costs and expenses:
Professional services......................... 127,499 116,133 92,374
Product development and support............... 187,383 155,277 94,027
Sales and marketing........................... 228,387 182,597 113,978
General and administrative.................... 61,876 39,224 34,097
Restructuring charges......................... 57,319 -- --
Merger costs.................................. 8,927 5,782 30,819
Acquired in-process technology................ 67,904 48,456 88,493
--------- -------- ---------
Total costs and expenses.................... 739,295 547,469 453,788
--------- -------- ---------
Operating loss.................................. (115,792) (79,404) (127,377)
Other income, net............................... 16,729 5,237 4,130
--------- -------- ---------
Loss before income taxes........................ (99,063) (74,167) (123,247)
Income taxes.................................... 18,721 (9,245) (11,680)
--------- -------- ---------
Net loss........................................ $(117,784) $(64,922) $(111,567)
========= ======== =========
Net loss per share.............................. $ (1.90) $ (1.14) $ (2.50)
========= ======== =========
Shares used in computing per share amounts...... 62,042 56,968 44,671
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
PLATINUM TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995
---------------- ---------------- ----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Preferred stock:
Balance at beginning of
year................... -- $ -- -- $ -- -- $ --
Stock subscribed........ 1,768 18 -- -- -- --
------ --------- ------ --------- ------ ---------
Balance at end of year.. 1,768 $ 18 -- $ -- -- $ --
====== ========= ====== ========= ====== =========
Common stock:
Balance at beginning of
year................... 60,577 $ 61 54,598 $ 55 39,670 $ 40
Exercise of stock
options................ 939 1 517 1 803 1
Issuance of common
stock under Stock
Purchase Plan.......... 882 1 197 -- -- --
Issuance of common
stock.................. 1,461 1 5,265 5 14,125 14
Conversion of
subordinated notes..... 1 -- -- -- -- --
------ --------- ------ --------- ------ ---------
Balance at end of year.. 63,860 $ 64 60,577 $ 61 54,598 $ 55
====== ========= ====== ========= ====== =========
Paid-in capital:
Balance at beginning of
year................... $ 487,417 $ 433,856 $ 191,194
Exercise of stock
options................ 7,067 2,380 4,754
Issuance of common
stock under Stock
Purchase Plan.......... 11,540 1,801 --
Issuance of common
stock.................. 17,514 49,515 237,907
Preferred stock
subscribed............. 41,848 -- --
Amortization of shelf
registration costs..... (25) (135) --
Conversion of
subordinated notes..... 10 -- --
Adjustment to conform
fiscal years of pooled
businesses............. -- -- 1
--------- --------- ---------
Balance at end of year.. $ 565,371 $ 487,417 $ 433,856
========= ========= =========
Notes receivable:
Balance at beginning of
year................... $ -- $ (515) $ (333)
Issuance of notes
receivable............. -- -- (200)
Repayment of notes
receivable............. -- -- 18
Reclassification to
other assets........... -- 515 --
--------- --------- ---------
Balance at end of year.. $ -- $ -- $ (515)
========= ========= =========
Accumulated deficit:
Balance at beginning of
year................... $(208,788) $(143,771) $ (30,958)
Net loss................ (117,784) (64,922) (111,567)
Adjustment for
immaterial pooled
businesses............. 1,014 45 --
Other................... -- -- (22)
Adjustment to conform
fiscal years of pooled
businesses............. -- (140) (1,224)
--------- --------- ---------
Balance at end of year.. $(325,558) $(208,788) $(143,771)
========= ========= =========
Unrealized appreciation
in marketable
securities:
Balance at beginning of
year................... $ 17,805 $ -- $ --
Change in unrealized
holding gains, net of
tax.................... (9,543) 17,805 --
--------- --------- ---------
Balance at end of year.. $ 8,262 $ 17,805 $ --
========= ========= =========
Foreign currency
translation adjustment:
Balance at beginning of
year................... $ (735) $ 588 $ 183
Translation adjustment.. (3,862) (1,323) 405
--------- --------- ---------
Balance at end of year.. $ (4,597) $ (735) $ 588
========= ========= =========
Total stockholders'
equity............... $ 243,560 $ 295,760 $ 290,213
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
PLATINUM TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................... $(117,784) $(64,922) $(111,567)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization.............. 57,191 38,824 24,140
Acquired in-process technology............. 67,904 48,456 88,493
Write-off of fixed assets, capitalized
software and other intangible assets in
conjunction with the restructuring plan... 19,687 -- --
Unrealized holding gains on marketable
equity securities......................... (12,581) (920) --
Realized net gain on sales of investment
securities................................ (7,566) (1,032) (332)
Write-off of capitalized software in
connection with product stabilization and
mergers................................... -- 654 942
Noncash compensation....................... -- -- 78
Sales of trading securities.................. 9,489 -- --
Changes in assets and liabilities, net of
acquisitions:
Trade and installment receivables............ (62,316) (67,219) (53,845)
Deferred income taxes........................ 14,580 (16,337) (13,000)
Accrued interest and other current assets ... (10,394) (1,170) (3,134)
Accounts payable and accrued liabilities..... 32,547 (7,080) 6,888
Deferred revenue............................. 53,969 59,196 20,325
Income taxes payable......................... 1,092 993 2,615
Other........................................ (13,232) 6,657 16,073
--------- -------- ---------
Net cash provided by (used in) operating
activities.............................. 32,586 (3,900) (22,324)
--------- -------- ---------
Cash flows from investing activities:
Purchases of investment securities........... (66,957) (18,797) (61,484)
Sales of investment securities............... 87 30,223 75,519
Maturities of investment securities.......... 24,383 5,846 10,753
Purchases of property and equipment.......... (26,940) (35,542) (39,435)
Purchased and developed software............. (63,781) (41,279) (20,742)
Payments for acquisitions.................... (19,338) (17,853) (103,085)
Other assets................................. (1,365) (3,749) (482)
--------- -------- ---------
Net cash used in investing activities.... (153,911) (81,151) (138,956)
--------- -------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock, net
of issuance costs........................... -- -- 194,420
Proceeds from issuance of convertible notes,
net of issuance costs....................... 144,967 110,783 --
Proceeds from exercise of stock options and
Stock Purchase Plan......................... 18,609 4,182 4,144
Short-term borrowings........................ -- 1,115 8,205
Payments on borrowings....................... (4,896) (5,915) (7,331)
Other........................................ -- -- (256)
--------- -------- ---------
Net cash provided by financing
activities.............................. 158,680 110,165 199,182
--------- -------- ---------
Adjustment to conform fiscal years of pooled
businesses.................................... -- (140) (2,203)
--------- -------- ---------
Net increase in cash and cash equivalents...... 37,355 24,974 35,699
Cash and cash equivalents at beginning of year. 140,783 115,809 80,110
--------- -------- ---------
Cash and cash equivalents at end of year....... $ 178,138 $140,783 $ 115,809
========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PLATINUM TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
PLATINUM technology, inc. and its subsidiaries (collectively, the "Company"
or "PLATINUM") develop, market and support software products, and provide
related professional services, that help organizations manage and improve
their information technology ("IT") infrastructures, which consist of data,
systems and applications. The Company's products and services help IT
departments, primarily in large and data-intensive organizations, minimize
risk, improve service levels and leverage information to make better business
decisions. The Company's products typically perform fundamental functions such
as automating operations, maintaining the operating efficiency of systems and
applications and ensuring data access and integrity. The Company currently
develops software products through its four business units: database
management, systems management, application infrastructure management and data
warehousing and decision support. The Company markets and supports its
products and services principally through its own sales organization,
including an international network of wholly-owned subsidiaries.
Use of Estimates
In preparing the consolidated financial statements in conformity with
generally accepted accounting principles, the Company's management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of PLATINUM
technology, inc. and its subsidiaries. All intercompany accounts and
transactions are eliminated in consolidation.
Revenue Recognition
Revenues from software product sales of perpetual and fixed-term license
agreements are recognized upon product delivery and customer acceptance, when
all significant contractual obligations are satisfied and the collection of
the resulting receivables is reasonably assured. Software product sales under
extended payment terms are discounted to present value. Revenues from
maintenance fees implicit in software product sales or separately priced
maintenance agreements are recognized on a straight-line basis over the
maintenance period.
Professional service revenues are derived from the Company's consulting
services business and educational programs. These revenues are comprised of
both time and material contracts and fixed-price contracts. Time and material
contract revenues are recognized as services are performed. Fixed-price
contract revenues are recognized based on the percentage-of-completion method.
Cash Equivalents and Investment Securities
Cash equivalents are comprised of highly liquid investments with original
maturities of three months or less. Investment securities consist primarily of
state and municipal bonds with original maturities generally ranging from four
to thirty years, corporate bonds with original maturities of less than one
year and marketable equity securities. The Company classifies its investment
securities as either available-for-sale or trading and reports them at fair
value.
Available-for-sale securities represent those securities that do not meet
the classification of held-to-maturity and are not actively traded. Trading
securities represent those securities which the Company intends to buy or
F-5
<PAGE>
sell in the near term for the purpose of generating profits on increases in
market values. For available-for-sale securities, unrealized holding gains and
losses, net of income taxes, are reported as a separate component of
stockholders' equity. For trading securities, unrealized holding gains and
losses are reflected in pre-tax earnings. For securities transferred from
available-for-sale to the trading classification, any unrealized holding gains
or losses at the date of transfer are recognized in pre-tax earnings
immediately.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method based on the estimated useful lives, generally three
to seven years, of the various classes of property and equipment. Amortization
of leasehold improvements is computed over the shorter of the lease term or
the estimated useful life of the asset.
Purchased and Developed Software
Software development costs are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of
Computer Software to Be Sold, Leased, or Otherwise Marketed." Costs associated
with the planning and designing phase of software development, including
coding and testing activities necessary to establish technological
feasibility, are classified as product development and expensed as incurred.
Once technological feasibility has been determined, additional costs incurred
in development, including coding, testing and documentation, are capitalized.
Amortization of purchased and developed software is provided on a product-
by-product basis over the estimated economic life of the software, generally
four years, using the straight-line method. This method generally results in
greater amortization expense per year than the method based on the ratio of
current year gross product revenue to current and anticipated future gross
product revenue. Amortization commences when a product is available for
general release to customers. Unamortized capitalized costs determined to be
in excess of the net realizable value of a product are expensed at the date of
such determination.
Excess of Cost Over Net Assets Acquired
Excess of cost over net assets acquired is amortized on a straight-line
basis over the expected period to be benefited, generally seven to 10 years.
Adjustments to the carrying value of excess of cost over net assets acquired
are made if the sum of expected future net cash flows from the business
acquired is less than book value.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in earnings in the period
of enactment.
Fair Value of Financial Instruments and Long-Lived Assets
The Company has reviewed the following financial instruments and determined
that their fair values approximated their carrying values as of December 31,
1997: cash and cash equivalents; trade and installment receivables; accrued
interest and other current assets; refundable income taxes; acquisition-
related payables; accounts payable and other accrued liabilities; and long-
term obligations, excluding convertible subordinated notes. Investment
securities are discussed in Note 3, and convertible subordinated notes are
discussed in Note 12.
On January 1, 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
under which the Company has reviewed long-lived assets
F-6
<PAGE>
and certain intangible assets and determined that their carrying values as of
December 31, 1997 are recoverable in future periods.
Earnings Per Share
In the fourth quarter of 1997, the Company adopted SFAS No. 128, "Earnings
Per Share," which established new methods for computing and presenting
earnings per share ("EPS") and replaced the presentation of primary and fully-
diluted EPS with basic ("Basic") and diluted EPS. Basic earnings per share is
based on the weighted average number of shares outstanding and excludes the
dilutive effect of unexercised common stock equivalents. Diluted earnings per
share is based on the weighted average number of shares outstanding and
includes the dilutive effect of unexercised common stock equivalents. Because
the Company reported a net loss for the years ended December 31, 1997, 1996
and 1995, per share amounts have been presented under the Basic method only.
Had the Company reported net earnings for the years ended December 31, 1997,
1996 and 1995, the weighted average number of shares outstanding would have
potentially been diluted by the following common equivalent securities (not
assuming the effects of applying the treasury stock method to outstanding
stock options or the if-converted method to convertible securities):
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Stock options............................ 11,861,865 10,143,622 8,404,911
Convertible subordinated notes (November
1996)................................... 8,243,010 8,243,727 --
Convertible subordinated notes (December
1997)................................... 4,160,600 -- --
---------- ---------- ---------
24,265,475 18,387,349 8,404,911
========== ========== =========
</TABLE>
Additionally, net earnings applicable to common stockholders for the years
ended December 31, 1997 and 1996 would have been increased by interest
expense, net of income taxes, related to the convertible subordinated notes of
$5,870,000 and $501,000, respectively.
Foreign Currency Translation and Transactions
The financial position and results of operations of the Company's foreign
subsidiaries are measured using the local currency as the functional currency.
Accordingly, assets and liabilities are translated into U.S. dollars using
current exchange rates as of the balance sheet date. Revenues and expenses are
translated at average exchange rates prevailing during the year. Translation
adjustments arising from differences in exchange rates are included as a
separate component of stockholders' equity. Gains and losses resulting from
foreign currency transactions are included in the consolidated statement of
operations.
Derivative Financial Instruments
In the ordinary course of business, the Company enters into forward exchange
contracts to minimize the short-term impact of foreign currency fluctuations
on assets and liabilities denominated in currencies other than the functional
currency of the reporting entity. All foreign exchange forward contracts
designated and effective as hedges of firm commitments are treated as hedges,
as required by generally accepted accounting principles.
Forward exchange contracts are reported at fair value within short-term
investment securities. Fair values of forward exchange contracts are
determined using published rates. Gains and losses on the forward exchange
contracts are included in other income and expense and offset foreign exchange
gains and losses from the revaluation of intercompany balances denominated in
currencies other than the functional currency of the reporting entity.
Realized and unrealized holding gains and losses on the forward exchange
contracts are reported within operating activities in the statement of cash
flows.
F-7
<PAGE>
Stock-Based Compensation
On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-
Based Compensation," which permits entities to recognize the compensation
expense associated with the fair value of all stock-based awards on the date
of grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and provide pro forma net income and earnings
per share disclosures as if the fair value method defined in SFAS No. 123 had
been applied. The Company has elected to apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosures of SFAS No. 123.
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
On January 1, 1997, the Company adopted SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," which distinguishes transfers of financial assets that are sales
from transfers that are secured borrowings. The Company sells installment
receivables to third party finance companies in the normal course of business.
During 1997, all such transactions were accounted for as sales in accordance
with SFAS No. 125.
Supplemental Cash Flow Disclosure
Income tax refunds received by the Company amounted to $524,000, $307,000
and $933,000 in 1997, 1996 and 1995, respectively. Cash paid for income taxes
in 1997, 1996 and 1995 was $1,173,000, $2,179,000 and $987,000, respectively.
Cash paid for interest in 1997, 1996 and 1995 was $8,419,000, $787,000 and
$824,000, respectively.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
2. ACQUISITIONS
Poolings of Interests
On June 15, 1995, the Company acquired all of the outstanding capital stock
of Software Interfaces, Inc. ("SII"), a leading provider of data access,
reporting and data conversion utilities for relational and non-relational
database management systems, in exchange for 1,085,450 shares of the Company's
Common Stock, $.001 par value (the "Common Stock"), which had a market value,
based upon the trading price of the Common Stock on the Nasdaq National Market
("Market Value"), of approximately $20,000,000 at the time of the acquisition.
In addition, the Company assumed stock options which converted into options to
purchase 14,377 shares of Common Stock.
On August 9, 1995, the Company acquired all of the outstanding capital stock
and warrants of Answer Systems, Inc. ("Answer"), a pioneer in client/server
help desk solutions, in exchange for 1,567,946 shares of Common Stock, which
had a Market Value of approximately $38,000,000 at the time of the
acquisition. In addition, the Company assumed stock options which converted
into options to purchase 42,176 shares of Common Stock.
On August 16, 1995, the Company acquired all of the outstanding capital
stock of Locus Computing Corporation ("Locus"), a leading provider of
consulting services for information technology users and suppliers, in
exchange for 1,452,445 shares of Common Stock, which had a Market Value of
approximately $33,000,000 at the time of the acquisition. In addition, the
Company assumed stock options which converted into options to purchase 231,905
shares of Common Stock.
On August 23, 1995, the Company acquired all of the outstanding capital
stock of Altai, Inc. ("Altai"), a vendor of integrated automated operations
software for open computing, in exchange for 1,098,295 shares of
F-8
<PAGE>
Common Stock, which had a Market Value of approximately $23,000,000 at the
time of the acquisition. In addition, the Company assumed stock options which
converted into options to purchase 52,696 shares of Common Stock.
On August 25, 1995, the Company acquired all of the outstanding capital
stock of Trinzic Corporation ("Trinzic"), a major provider of data warehousing
and open systems tools and services, in exchange for 6,654,484 shares of
Common Stock, which had a Market Value of approximately $150,000,000 at the
time of the acquisition. In addition, the Company assumed stock options which
converted into options to purchase 620,948 shares of Common Stock.
On November 17, 1995, the Company acquired all of the outstanding capital
stock of Softool Corporation ("Softool"), a leading provider of software
change and configuration management technology, in exchange for 1,452,708
shares of Common Stock, which had a Market Value of approximately $25,000,000
at the time of the acquisition.
On February 8, 1996, the Company acquired all of the outstanding capital
stock of Prodea Software Corporation ("Prodea"), a leading provider of data
warehousing and business intelligence tools, in exchange for 2,126,913 shares
of Common Stock, which had a Market Value of approximately $36,000,000 at the
time of the acquisition. In addition, the Company assumed stock options which
converted into options to purchase 212,427 shares of Common Stock.
On March 26, 1996, the Company acquired all of the outstanding capital stock
of Paradigm Systems Corporation ("Paradigm"), a leading provider of
information technology consulting services, in exchange for 762,503 shares of
Common Stock, which had a Market Value of approximately $12,800,000 at the
time of the acquisition. In addition, the Company assumed stock options which
converted into options to purchase 87,912 shares of Common Stock.
On March 29, 1996, the Company acquired all of the outstanding capital stock
of Axis Systems International, Inc. ("Axis"), a leading provider of
information technology consulting services, in exchange for 319,926 shares of
Common Stock, which had a Market Value of approximately $6,300,000 at the time
of the acquisition. In addition, the Company assumed stock options which
converted into options to purchase 59,986 shares of Common Stock.
On January 31, 1997, the Company acquired all of the outstanding capital
stock of Australian Technology Resources Pty Limited ("ATR"), a leading
provider of information technology consulting services, in exchange for
313,784 shares of Common Stock, which had a Market Value of approximately
$5,000,000 at the time of the acquisition.
On February 28, 1997, the Company acquired all of the outstanding capital
stock of I&S Informationstechnik and Services GmbH ("I&S"), a leading provider
of information technology consulting services, in exchange for 1,089,867
shares of Common Stock, which had a Market Value of approximately $17,200,000
at the time of the acquisition.
Each of the aforementioned transactions was accounted for as a pooling of
interests and, accordingly, the consolidated financial statements have been
restated as if the combining companies had been combined for all periods
presented. Merger costs relating to the acquisitions consummated in 1997, 1996
and 1995 amounted to $8,927,000, $5,782,000 and $30,819,000, respectively, of
which $3,155,000, $353,000 and $1,942,000, were included in other accrued
liabilities at December 31, 1997, 1996 and 1995, respectively. These costs
included investment banking and other professional fees, write-downs of
certain assets, employee severance payments, costs of closing excess office
facilities and various other expenses.
The following information reconciles total revenues and net loss of PLATINUM
technology, inc. as previously reported in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 with
F-9
<PAGE>
the amounts presented in the accompanying consolidated statements of
operations for the years ended December 31, 1996 and 1995, as well as separate
results of operations for 1997 of ATR and I&S during the periods preceding
their acquisition. The 1997 results presented for ATR represent the one-month
period ended January 31, 1997. The 1997 results for I&S represent the two-
month period ended February 28, 1997.
<TABLE>
<CAPTION>
1997 1996 1995
------------------- ------------------- ------------------
NET
NET INCOME NET INCOME INCOME
REVENUES (LOSS) REVENUES (LOSS) REVENUES (LOSS)
-------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
PLATINUM(1)..... $439,190 $(67,962) $304,676 $(111,933)
ATR............. $ 511 $ (56) 9,132 142 9,492 301
I&S............. 2,627 109 19,743 2,898 12,243 65
-------- -------- -------- ---------
Total....... $468,065 $(64,922) $326,411 $(111,567)
======== ======== ======== =========
</TABLE>
- --------
(1) Represents the historical results of PLATINUM technology, inc. without
considering the effect of the poolings of interests consummated during
1997. All merger costs and acquired in-process technology charges are
reflected in the historical results of PLATINUM.
The consolidated statement of operations for the year ended December 31,
1996 reflects the impact of ATR's operating results for the six months ended
June 30, 1996, which are also included in the year ended December 31, 1995
statement of operations due to differences in reporting periods relative to
PLATINUM. The revenues and net income of ATR included more than once were
$5,061,000 and $140,000, respectively.
The consolidated statement of operations for the year ended December 31,
1995 reflects the impact of Trinzic's operating results for the quarter ended
March 31, 1995, which are also included in the year ended December 31, 1994
statement of operations due to differences in reporting periods relative to
PLATINUM. The revenues and net income of Trinzic included more than once were
$12,553,000 and $215,000, respectively.
The consolidated statement of operations for the year ended December 31,
1995 reflects the impact of certain operating results included more than once,
due to the differences in reporting periods of Altai and Locus relative to
that of PLATINUM. The revenues and net income of Altai included more than once
were $2,514,000 and $441,100, respectively. The revenue and net income of
Locus included more than once were $3,197,000 and $568,000, respectively.
During 1996, the Company consummated an immaterial acquisition accounted for
as a pooling of interests. The Company did not restate the consolidated
financial statements to reflect the results of this entity for the periods
preceding the acquisition. As a result, the retained earnings of this entity
were recorded as of the acquisition date, causing a $45,000 adjustment to the
Company's accumulated deficit in 1996. This adjustment is reflected in the
consolidated statement of stockholders' equity.
On November 26, 1997, the Company consummated an immaterial acquisition
accounted for as a pooling of interests. The Company acquired all of the
outstanding capital stock of Vayda Consulting, Inc. ("Vayda"), a leading
provider of information technology consulting services, in exchange for
580,231 shares of Common Stock, which had a Market Value of approximately
$15,300,000 at the time of the acquisition. In addition, the Company assumed
stock options which converted into options to purchase 67,937 shares of Common
Stock. The Company did not restate the consolidated financial statements to
reflect the results of Vayda for the periods preceding the acquisition. As a
result, the retained earnings of Vayda were recorded as of the acquisition
date, causing an adjustment of $1,014,000 to the Company's accumulated deficit
in 1997. This adjustment is reflected in the consolidated statement of
stockholders' equity.
Purchase Transactions
The Company has also made a number of acquisitions that have been accounted
for under the purchase method. Accordingly, purchase prices have been
allocated to identifiable tangible and intangible assets acquired
F-10
<PAGE>
and liabilities assumed based on their estimated fair values. Amounts
allocated to acquired in-process technology have been expensed at the time of
acquisition. Excess of cost over net assets acquired is amortized on a
straight-line basis over the expected period to be benefited, generally seven
to ten years. The consolidated statements of operations reflect the results of
operations of the purchased companies since the effective dates of the
acquisitions.
To determine the fair market value of the acquired in-process technology,
the Company considered the three traditional approaches of value: the cost
approach, the market approach and the income approach. The Company relied
primarily on the income approach, whereupon fair market value is a function of
the future revenues expected to be generated by an asset, net of all allocable
expenses and charges for the use of contributory assets. The future net
revenue stream is discounted to present value based upon the specific level of
risk associated with achieving the forecasted asset earnings. The income
approach focuses on the income producing capability of the acquired assets and
best represents the present value of the future economic benefits expected to
be derived from these assets.
The Company determined that the acquired in-process technologies had not
reached technological feasibility based on the status of design and
development activities that required further refinement and testing. The
development activities required to complete the acquired in-process
technologies included additional coding, cross-platform porting and
validation, quality assurance procedures and customer beta testing.
The acquired technologies represent unique and emerging technologies, the
application of which is limited to the Company's IT infrastructure strategy.
Accordingly, these acquired technologies have no alternative future use.
Effective March 1995, the Company acquired all of the outstanding capital
stock of SQL Software Corporation ("SQL"), a provider of Windows-based
development tools for managing multiple relational databases, for
approximately $2,000,000; the assets of Viatech Development, Inc. ("Viatech"),
a provider of electronic distribution tools, for approximately $5,300,000; and
the assets of BrownStone Solutions, Inc. ("BrownStone"), a vendor of
repository technology, for approximately $6,300,000. Also effective March
1995, the Company acquired all of the outstanding capital stock of RELTECH
Group, Inc. ("Reltech"), a vendor of repository technology, for approximately
$9,800,000 in cash plus 318,453 shares of Common Stock, which had a Market
Value of approximately $7,500,000 at the time of the acquisition.
Effective July 1995, the Company acquired all of the outstanding capital
stock of Advanced Software Concepts, Inc. ("ASC"), a leading provider of
distributed storage network management solutions for heterogeneous
environments, for approximately $7,000,000.
Effective November 1995, the Company acquired substantially all of the
assets of ProtoSoft, Inc. ("ProtoSoft"), a pioneer in portable, object-
oriented analysis and design software for building enterprise-wide
applications and the developer of Paradigm Plus, for approximately $30,000,000
in cash plus 582,121 shares of Common Stock, which had a Market Value of
approximately $10,000,000 at the time of the acquisition.
Effective December 1995, the Company purchased all of the outstanding
capital stock of AIB Software Corporation ("AIB"), a leader in multi-platform
application development and testing tools, for approximately $2,200,000 in
cash plus 478,045 shares of Common Stock, which had a Market Value of
approximately $9,000,000 at the time of the acquisition; Protellicess
Software, Inc. ("Protellicess"), a leader in enterprise project and process
management software, in exchange for 822,077 shares of Common Stock, which had
a Market Value of approximately $15,000,000 at the time of the acquisition;
and BMS Computer, Inc. ("BMS"), a leader in integrated chargeback systems that
provide job accounting, chargeback, cost analysis and resource reporting for
heterogeneous environments, for approximately $6,900,000. In conjunction with
the acquisitions of AIB and Protellicess, the Company assumed stock options
which converted into options to purchase 116,144 and 128,320 shares of Common
Stock, respectively.
F-11
<PAGE>
During 1995, the Company also acquired certain software technologies with an
aggregate purchase price of approximately $10,227,000.
Internationally, during 1995, the Company acquired Echo-Soft Technologies
Sarl, a software sales and consulting firm located in France, Krystal Software
SA, an international affiliate of the Company in France, and Sequel UK Ltd.,
an international affiliate of the Company in the United Kingdom. The Company
also terminated its agreements with four other international affiliates and
established wholly-owned subsidiaries for these operations. The aggregate
price for these transactions was approximately $11,563,000.
Effective January 1996, the Company acquired all of the outstanding capital
stock of Advanced Systems Technologies, Inc. ("AST"), a leading developer of
performance management tools, in exchange for approximately $445,000 in cash
plus 344,640 shares of Common Stock, which had a Market Value of approximately
$5,800,000 at the time of the acquisition.
Effective July 1996, the Company acquired all of the outstanding capital
stock of Software Alternatives, Inc. (d/b/a System Software Alternatives)
("Software Alternatives"), a leading provider of production scheduling
software, for approximately $1,900,000. Also effective July 1996, the Company
acquired all of the outstanding capital stock of Grateful Data, Inc. (d/b/a
TransCentury Data Systems) ("Grateful Data"), a Year 2000 solution provider,
for $100,000 in cash plus 333,333 shares of Common Stock, which had a Market
Value of approximately $4,000,000 at the time of the acquisition.
Effective December 1996, the Company acquired all of the outstanding capital
stock of VREAM, Inc. ("VREAM"), a leading provider of virtual reality software
for the World Wide Web and other interactive environments, in exchange for
760,383 shares of Common Stock, which had a Market Value of approximately
$10,300,000 at the time of the acquisition. In addition, the Company assumed
stock options which converted into options to purchase 70,257 shares of Common
Stock.
During 1996, the Company also acquired certain software technologies for an
aggregate purchase price of approximately $3,513,000.
Internationally, effective December 1996, the Company acquired substantially
all of the assets of the Access Manager business unit of the High Performance
Systems division of International Computers Limited ("Access Manager"), a
leading provider of single-sign-on security computer software for enterprise
computing technology, in exchange for 2,286,222 shares of Common Stock, which
had a Market Value of approximately $30,000,000 at the time of the
acquisition.
Effective February 1997, the Company acquired all of the outstanding capital
stock of GEJAC, Inc. ("GEJAC"), a leading provider of UNIX and NT charge-back
software, in exchange for 412,801 shares of Common Stock, which had a Market
Value of approximately $6,800,000 at the time of the acquisition.
Internationally, effective October 1997, the Company acquired all of the
outstanding capital stock of ProMetrics Group Limited ("ProMetrics"), a
leading provider of productivity management software, in exchange for
approximately $8,000,000 in cash plus 364,396 shares of Common Stock, which
had a Market Value of approximately $9,500,000 at the time of the acquisition,
plus contingent consideration of approximately $11,000,000, as specified in
the acquisition agreement. The Company's issuance of Common Stock was
substantially used to retire approximately $7,000,000 of assumed debt under
the acquisition agreement.
On December 23, 1997, the Company and Intel Corporation ("Intel") entered
into certain agreements providing for the sale and license to the Company by
Intel of certain product technologies and the payment to the Company by Intel
of certain cash consideration. In exchange, the Company agreed to issue to
Intel 1,768,421 shares of the Company's Class II Series B Preferred Stock
("Preferred Stock"), which had a Market Value of
F-12
<PAGE>
approximately $42,000,000 on the date of the agreement, and to distribute
certain products manufactured by Intel. Additionally, the Company licensed
certain product technologies to Intel.
During 1997, the Company also acquired certain other software technologies
for an aggregate purchase price of approximately $6,800,000.
The following unaudited pro forma summary presents the Company's results of
operations as if the acquisitions accounted for as purchases had occurred at
the beginning of each period. This summary is provided for informational
purposes only. It does not necessarily reflect the actual results that would
have occurred had the acquisitions been made as of those dates or of results
that may occur in the future.
<TABLE>
<CAPTION>
1997 1996
--------- --------
(IN THOUSANDS,
EXCEPT
PER SHARE DATA)
<S> <C> <C>
Revenues............................................. $ 632,150 $485,456
Net loss............................................. (120,431) (73,853)
Net loss per share................................... (1.92) (1.27)
</TABLE>
The Company estimates aggregate payments for acquisition-related payables in
connection with the acquisitions described above to be $15,717,000,
$17,682,000 and $638,000 for the years ended December 31, 1998, 1999 and 2000,
respectively.
The Company may be required to make additional payments in future years to
various former owners of acquired businesses based upon the attainment of
certain operating results by such businesses. The amount of these payments was
not determinable at December 31, 1997. Additional payments will be charged to
compensation expense or recorded as an adjustment to the respective purchase
price in the periods in which such payments are determinable.
3. INVESTMENT SECURITIES
At December 31, 1997, the Company classified its marketable debt and equity
securities as either available-for-sale or trading. Available-for-sale
securities represent those securities that do not meet the classification of
held-to-maturity and are not actively traded. Trading securities represent
those securities which the Company intends to buy or sell in the near term for
the purpose of generating profits on increases in market values. At December
31, 1997, net unrealized holding gains from available-for-sale securities of
$13,770,000, reduced by income taxes of approximately $5,508,000, were
included as a separate component of stockholders' equity. For the year ended
December 31, 1997, available-for-sale securities amounting to $24,972,000 were
reclassified to trading securities. The Company reclassified its available-
for-sale securities to trading securities during 1997, because the Company
intended to sell the securities at various dates in the near future to benefit
from increases in the market price of those securities. Unrealized holding
gains from reclassified securities of approximately $19,829,000, previously
reported as a separate component of stockholders' equity in the amount of
$11,897,000 (net of income taxes), were recognized in pre-tax earnings for the
year ended December 31, 1997. The Company sold a portion of its trading
securities during 1997 and consequently reclassified the corresponding
unrealized gains to realized gains. For the year ended December 31, 1997, the
Company reported unrealized holding gains of approximately $12,581,000 in pre-
tax earnings.
During 1996, certain cost-basis equity investments became marketable equity
securities and were reclassified as either available-for-sale or trading. The
Company owns equity interests in certain technology companies that executed
initial public offerings during 1996. As a result, the Company reclassified
these investments based upon future trading intentions. The cost and
unrealized gain, net of income taxes, on the investment transferred to the
available-for-sale classification were approximately $8,383,000 and
$17,805,000, respectively. The cost and unrealized gain on the investment
transferred to the trading classification were approximately $1,125,000 and
$920,000, respectively.
F-13
<PAGE>
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and aggregate fair value of investment securities at December 31, 1997
were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST HOLDING GAINS HOLDING LOSSES FAIR VALUE
--------- ------------- -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current:
Available-for-sale--
U.S. Government
securities......... $ 7,571 $ 2 $ -- $ 7,573
State and municipal
bonds.............. 1,356 4 (36) 1,324
Corporate bonds..... 13,812 26 (2) 13,836
Marketable equity
securities......... 3,240 13,770 -- 17,010
------- ------- ----- -------
25,979 13,802 (38) 39,743
------- ------- ----- -------
Trading securities--
Marketable equity
securities......... 4,338 13,867 (351) 17,854
------- ------- ----- -------
$30,317 $27,669 $(389) $57,597
======= ======= ===== =======
Non-current:
Available-for-sale--
State and municipal
bonds.............. $25,498 $ 55 $ -- $25,553
======= ======= ===== =======
</TABLE>
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and aggregate fair value of investment securities at December 31, 1996
were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST HOLDING GAINS HOLDING LOSSES FAIR VALUE
--------- ------------- -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current:
Available-for-sale--
State and municipal
bonds.............. $ 402 $ 1 $-- $ 403
Corporate bonds..... 2,002 -- (1) 2,001
Marketable equity
securities......... 8,383 29,923 -- 38,306
------- ------- ---- -------
10,787 29,924 (1) 40,710
------- ------- ---- -------
Trading securities--
Marketable equity
securities......... 1,125 920 -- 2,045
------- ------- ---- -------
$11,912 $30,844 $ (1) $42,755
======= ======= ==== =======
Non-current:
Available-for-sale--
State and municipal
bonds.............. $ 2,122 $ 51 $(38) $ 2,135
======= ======= ==== =======
</TABLE>
F-14
<PAGE>
The contractual maturities of debt securities at December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
FAIR VALUE
--------------
(IN THOUSANDS)
<S> <C>
Due within one year........................................ $22,733
Due after one year through five years...................... 416
Due after five years....................................... 25,137
-------
$48,286
=======
</TABLE>
Using the specific identification method, the gross realized gains and gross
realized losses on the sale of available-for-sale securities were
approximately $44,000 and $0, respectively, for the year ended December 31,
1997, $1,032,000 and $0, respectively, for the year ended December 31, 1996
and $467,000 and $(135,000), respectively, for the year ended December 31,
1995. For the year ended December 31, 1997, the Company also sold investments
classified as trading securities. Gross realized gains and gross realized
losses related to these sales were $7,522,000 and $0, respectively.
4. PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Furniture and fixtures................................. $ 28,070 $ 26,568
Computers and software................................. 65,717 62,338
Transportation......................................... 11,445 8,117
Leasehold improvements................................. 26,498 20,780
-------- --------
131,730 117,803
Less accumulated depreciation and amortization......... 53,888 45,053
-------- --------
$ 77,842 $ 72,750
======== ========
</TABLE>
5. PURCHASED AND DEVELOPED SOFTWARE
Purchased and developed software consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Purchased software..................................... $ 47,238 $ 34,618
Software development costs............................. 141,690 89,400
-------- --------
188,928 124,018
Less accumulated amortization.......................... 72,211 41,580
-------- --------
$116,717 $ 82,438
======== ========
</TABLE>
During the years ended December 31, 1997, 1996 and 1995, $62,504,000,
$38,555,000 and $19,867,000, respectively, of software development costs were
capitalized. The Company recognized amortization expense applicable to
internally developed capitalized software of $21,361,000, $11,309,000 and
$6,276,000 during 1997, 1996 and 1995, respectively. The Company recognized
amortization expense applicable to purchased software of $9,270,000,
$6,237,000 and $3,084,000 during 1997, 1996 and 1995, respectively. During
1997, the Company wrote-off $10,214,000 of capitalized software development
costs and $1,450,000 of purchased software related to the restructuring plan
executed in May 1997. During 1996, the Company wrote off $654,000 of
capitalized software development costs related to certain AIB, SII and other
product technologies.
F-15
<PAGE>
6. INSTALLMENT ACCOUNTS RECEIVABLE
Installment accounts receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Current installment receivables....................... $ 42,753 $ 19,763
Allowance for uncollectible amounts................... (878) (395)
Deferred maintenance fees............................. (10,124) (5,058)
Unamortized discounts................................. (1,708) (707)
-------- --------
$ 30,043 $ 13,603
======== ========
Non-current installment receivables................... $ 58,889 $ 40,827
Allowance for uncollectible amounts................... (1,616) (816)
Deferred maintenance fees............................. (27,603) (16,347)
Unamortized discounts................................. (7,758) (1,999)
-------- --------
$ 21,912 $ 21,665
======== ========
</TABLE>
Installment accounts receivable represent amounts collectible on long-term
financing arrangements and include fees for product licenses, upgrades and
maintenance, sometimes also bundled with professional services contracts.
Installment receivables are generally financed over three to five years and
are recorded net of unamortized discounts, deferred maintenance fees and
allowances for uncollectible amounts.
The Company sells a significant portion of its installment receivables to
third parties. When these receivables are sold, the Company reduces the gross
installment receivable balance. Additionally, the Company reclassifies the
deferred maintenance to an obligation, which was previously reflected as a
reduction of the related installment receivable balance. The deferred
maintenance is recognized ratably into income over the term of the maintenance
agreement.
Proceeds from the sale of installment receivables for 1997 and 1996 were
approximately $206,916,000 and $129,328,000, respectively. There were no
accounts receivable sold with recourse for the year ended December 31, 1997.
Accounts receivable sold with recourse were $19,373,000 and $2,993,000 for the
years ended December 31, 1996 and 1995, respectively. As of December 31, 1997,
there were no potential recourse obligations for accounts receivable sold with
recourse. As of December 31, 1996 and 1995, potential obligations for accounts
receivable sold with recourse were $16,817,000 and $5,177,000, respectively.
In addition to accounts receivable sold with recourse, the Company has an
agreement with a third party that provides for potential recourse obligations
in the form of a loss pool based on the performance of the related accounts
receivable portfolio. Based on the terms of that agreement, potential recourse
obligations at December 31, 1997 and 1996 were $14,632,000 and $9,300,000,
respectively. Based on the credit ratings of the underlying obligors to the
accounts receivable and the performance history of the accounts receivable
portfolio, the Company has assessed the exposure related to these recourse
obligations and determined the potential liability to be minimal. The fair
market value of the recourse obligations at December 31, 1997 was not
determinable.
7. EMPLOYEE BENEFIT PLANS
The Company has various defined contribution retirement plans (401(k) and
profit sharing) for qualified employees. Employer contributions made under the
plans totaled $1,511,000, $1,071,000 and $406,000 in 1997, 1996 and 1995,
respectively.
F-16
<PAGE>
8. LINE OF CREDIT
At December 31, 1997, the Company had an unsecured bank line of credit for
$55,000,000, under which borrowings bear interest at rates ranging from
approximately LIBOR plus 1% to the bank's prime rate. This line of credit is
subject to limitations based upon certain financial covenants. At December 31,
1997, there were no borrowings outstanding under this line of credit.
At December 31, 1997, the Company had aggregate letters of credit
outstanding for approximately $2,623,000, with expiration dates ranging from
March 1998 to December 1998. These letters of credit reduce the available line
of credit balance.
9. STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN
As of December 31, 1997, the Company and its subsidiaries had seven stock
option plans, which are described below, as well as several plans that have
been assumed pursuant to acquisitions. The Company applies APB Opinion No. 25
in accounting for its plans. Accordingly, no compensation cost has been
recognized for its fixed stock option plans and its employee stock purchase
plan (the "Stock Purchase Plan").
Had compensation cost for the Company's stock option plans and the Stock
Purchase Plan been determined consistent with SFAS No. 123, the Company's net
loss and net loss per share would have been the pro forma amounts indicated
below for the years ended December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- ---------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
Net loss:
As reported............................. $(117,784) $(64,922) $(111,567)
Pro forma............................... (127,972) (70,866) (117,114)
Net loss per share:
As reported............................. $ (1.90) $ (1.14) $ (2.50)
Pro forma............................... (2.06) (1.24) (2.62)
</TABLE>
Under SFAS No. 123, the pro forma compensation expense related to the
Company's stock option plans and Stock Purchase Plan, before effects for
income taxes, was approximately $17,130,000, $9,940,000 and $9,326,000 in
1997, 1996 and 1995, respectively.
Excluding stock option plans assumed pursuant to acquisitions, the Company
has six stock option plans ("Company Plans"). The Employee Incentive
Compensation Plan, 1994 Stock Incentive Plan, 1991 Option Plan and 1989 Option
Plan provide for the granting of options to employees and non-employee
directors for up to an aggregate of 16,160,000 shares. Under the Chief
Executive Option Plan, the Company has authority to grant options for up to
1,600,000 shares to its Chief Executive Officer and President. Under the
Directors' Option Plan, the Company may grant options for up to 500,000 shares
to non-employee directors.
In general, the options granted under the Company Plans, excluding the
Directors' Option Plan, during 1997, 1996 and 1995 have similar provisions.
Under these plans, the Company has granted both non-qualified and incentive
stock options. These options have an exercise price equal to the closing
market price of the Company's stock on the date of grant, have a legal life of
ten years and typically vest in equal annual installments over a four-year
period beginning one year from the date of grant. Certain options granted
prior to 1995 have a legal life of fifteen years. The specific provisions of
any grant are determined by the Compensation Committee of the Board of
Directors or another designated committee.
Under the Directors' Option Plan, only non-qualified options have been
granted. These options have an exercise price equal to the closing market
price of the Company's stock on the date of grant and have a legal life of ten
years. The options granted in 1995 under this plan vested immediately, while
those granted in 1996 and 1997 vest annually over a three-year period
beginning one year from the date of grant.
F-17
<PAGE>
As discussed in Note 2, the Company has assumed various option grants
related to certain acquisitions. The assumption of these option grants
resulted in the deemed issuance by the Company of options for 67,937, 430,582
and 1,206,566 shares in 1997, 1996 and 1995, respectively. The options assumed
reflect outstanding options at the time of acquisition. The provisions of the
assumed options are generally the same as those provided for in the original
option agreements.
In 1996, the Company began offering the Stock Purchase Plan to its employees
who work more than 20 hours per week. Under this Plan, the Company is
authorized to issue up to 5,000,000 shares of Common Stock. Under terms of the
Stock Purchase Plan and current policies of the administrative committee,
employees may elect each year to withhold between one and 50 percent of their
cash compensation through regular payroll deductions to purchase Common Stock,
subject to Internal Revenue Service limitations. The purchase price of the
stock is 85 percent of the lower of the price at the grant date, which is the
beginning of the plan year (March 1 or September 1 for employees with a start
date between March 1 and August 31) or the exercise date, which is the end of
each plan quarter (February 28, May 31, August 31 and November 30). As of
December 31, 1997, approximately 50% of eligible employees were participating
in the Stock Purchase Plan. Under the Stock Purchase Plan, the Company sold
882,229 and 197,165 shares to employees in 1997 and 1996, respectively.
The fair value of stock option grants is estimated using the Black-Scholes
option-pricing model, with the following weighted-average assumptions used for
stock option grants in 1997, 1996 and 1995, respectively: weighted-average
option price, which equals the fair market value at date of grant, of $14.61,
$12.03 and $16.56; expected dividend yields of 0% for all years; expected
volatility of 61%, 55% and 55%; risk-free interest rates of 5.66%, 6.37% and
6.12%; and an expected life of five years for all years. The fair value of the
employees' purchase rights pursuant to the Stock Purchase Plan are estimated
using the Black-Scholes option-pricing model, with the following weighted-
average assumptions used for purchase rights granted in 1997 and 1996,
respectively: average fair market value of $13.75 and $10.75; average option
price of $11.69 and $9.14; expected dividend yield of 0% for both years;
expected volatility of 61% and 51%; average risk-free interest rate of 5.52%
and 5.42%; and expected life of three months for both years.
Stock option plan activity during the years ended December 31, 1997, 1996
and 1995 was as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------- -------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
FIXED OPTIONS SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------------- ---------- -------------- ---------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year................ 10,143,622 $12.18 8,404,911 $11.87 6,813,468 $ 9.66
Granted................. 3,590,727 14.61 2,781,172 12.03 2,683,058 16.56
Exercised............... (938,817) 8.91 (517,219) 4.60 (738,030) 6.27
Canceled................ (933,667) 13.49 (525,242) 13.80 (353,585) 14.02
---------- ---------- ---------
Outstanding at end of
year................... 11,861,865 13.08 10,143,622 12.18 8,404,911 11.87
========== ========== =========
Options exercisable at
end of year............ 5,797,724 5,488,725 5,211,103
========== ========== =========
Weighted-average grant-
date fair value of op-
tions granted during
the year............... $ 8.35 $ 6.96 $ 11.36
</TABLE>
The following table summarizes information about fixed stock options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------ ------------------------
RANGE OF WEIGHTED-AVG.
EXERCISE NUMBER OF REMAINING WEIGHTED-AVG. NUMBER OF WEIGHTED-AVG.
PRICES SHARES CONTRACTUAL LIFE EXERCISE PRICE SHARES EXERCISE PRICE
-------- ---------- ---------------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
$.0025-
9.75 1,419,229 3.87 years $ 3.52 1,330,587 $ 3.39
10.13-
12.00 2,062,375 7.00 10.74 1,092,745 10.41
12.38-
14.00 4,174,778 7.75 13.08 1,462,639 12.95
14.06-
18.13 2,165,479 7.56 15.14 1,030,550 14.99
$18.25-
33.73 2,040,004 7.91 19.92 881,203 19.18
---------- ---------
11,861,865 7.15 13.08 5,797,724 11.59
========== =========
</TABLE>
F-18
<PAGE>
During 1997, a wholly-owned subsidiary of the Company adopted a fixed stock
option plan (the "1997 Option Plan"). The 1997 Option Plan provides for the
granting of options to employees for up to an aggregate of 7,500,000 shares of
the subsidiary's common stock. Under this plan, the subsidiary has granted
non-qualified stock options. These options have an exercise price equal to the
fair market value of the subsidiary's stock on the date of grant, have a legal
life of ten years and vest on the sixth anniversary of the grant date. Options
granted under the 1997 Option Plan are exercisable in shares of the
subsidiary's common stock and are not convertible to the Company's Common
Stock. During 1997, the subsidiary granted 5,170,000 options at a fair market
value of $0.92. For the year ended December 31, 1997, 247,500 options were
canceled. The weighted-average grant-date fair value of these options was
$0.33 using the Minimum Value option-pricing method and a risk-free interest
rate of 5.80%.
10. PREFERRED STOCK
On December 23, 1997, the Company agreed, pursuant to a stock purchase
agreement, to issue to Intel 1,768,421 shares of its Preferred Stock, which
had a fair market value of approximately $42,000,000 on the date of
subscription, in exchange for certain product technologies and other
intangible assets. The shares of Preferred Stock were subscribed for as of
December 31, 1997 and subsequently issued on January 14, 1998.
The holders of the Preferred Stock have the option to convert, at any time,
each share of Preferred Stock into one share of Common Stock. Each share of
Preferred Stock will automatically convert into one share of Common Stock upon
the transfer by any holder of Preferred Stock in a non-permitted transfer. In
the event of a liquidation of the Company, the holders of the Preferred Stock
are entitled to receive $23.75 per share plus the amount of any declared but
unpaid dividends. The conversion and liquidation terms are subject to
adjustment based upon subsequent changes in equity interests.
As of December 31, 1997, the Company had reserved 1,768,421 shares of its
authorized Common Stock to be issued upon conversion of the Preferred Stock.
11. INCOME TAXES
Income (loss) before income taxes for the years ended December 31, 1997,
1996 and 1995 consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S....................................... $(113,313) $(68,911) $(137,724)
Non-U.S................................... 14,250 (5,256) 14,477
--------- -------- ---------
Total................................. $ (99,063) $(74,167) $(123,247)
========= ======== =========
</TABLE>
Income tax expense (benefit) for the years ended December 31, 1997, 1996 and
1995 consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal..................................... $ -- $ -- $ 315
State....................................... 241 175 133
Foreign..................................... 2,309 2,035 740
Deferred:
Federal..................................... 22,096 (7,838) (7,899)
State....................................... (3,295) (3,617) (4,969)
Foreign..................................... (2,630) -- --
------- ------- --------
$18,721 $(9,245) $(11,680)
======= ======= ========
</TABLE>
F-19
<PAGE>
The reconciliation of income taxes computed using the Federal statutory rate
of 35% to the income tax provision is as follows for the years ended December
31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax computed at statutory rate...... $(34,672) $(25,959) $(43,137)
State income tax, net of Federal tax
benefit................................... (3,053) (3,442) (4,836)
Research and experimentation credits....... (3,514) (1,491) (1,213)
Foreign tax credit......................... (117) (59) (239)
Foreign taxes.............................. 1,271 751 240
Foreign sales corporation.................. (557) (1,036) (294)
Municipal interest......................... (80) (289) (554)
Stock acquisitions......................... 9,953 6,281 11,450
Nondeductible merger costs................. 443 1,440 4,625
Change in valuation allowance.............. 45,064 12,608 22,856
Other...................................... 3,983 1,951 (578)
-------- -------- --------
Effective tax.............................. $ 18,721 $ (9,245) $(11,680)
======== ======== ========
</TABLE>
The tax effects of temporary differences and carryforwards that give rise to
deferred tax assets and liabilities at December 31, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
1997 1996
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Deferred revenue................................... $ 6,419 $ 1,152
Allowance for doubtful accounts.................... 561 749
Net operating loss carryforwards................... 118,475 95,190
Foreign net operating losses....................... 2,630 --
General business, AMT and state tax credits........ 12,907 9,544
Foreign tax credits................................ 952 1,138
Accrued expenses and reserves...................... 9,097 157
Rent abatement..................................... 2,471 1,957
Other.............................................. 5,856 5,128
--------- --------
Total gross deferred tax assets.................. 159,368 115,015
Less valuation allowance........................... (105,000) (59,936)
--------- --------
Net deferred tax assets.......................... 54,368 55,079
--------- --------
Deferred tax liabilities:
Capitalized software, net.......................... 36,420 23,908
Installment sales.................................. 819 826
Acquired technology................................ 1,000 3,124
Unrealized gain on marketable equity securities.... 11,161 12,499
--------- --------
Total gross deferred tax liabilities............. 49,400 40,357
--------- --------
Net deferred tax asset........................... $ 4,968 $ 14,722
========= ========
</TABLE>
The net change in the valuation allowance during 1997, 1996 and 1995 was an
increase of $45,064,000, $12,608,000 and $22,856,000, respectively.
The Company has reduced gross deferred tax assets by a valuation allowance
to reflect the estimated amount of deferred tax assets which will, more likely
than not, be realized. The net deferred tax asset at December 31, 1997
reflects management's estimate of the amount that will be realized as a result
of future profitability. The amount of the deferred tax asset considered
realizable could be reduced if estimates of future taxable income are reduced.
F-20
<PAGE>
At December 31, 1997, the Company had approximately $294,715,000 of net
operating loss carryforwards and $14,000,000 of tax credit carryforwards,
which are available to reduce future Federal income taxes, if any, through the
year 2012. The Company's ability to utilize the net operating loss
carryforwards and available tax credits may be limited due to changes in
ownership as a result of business combinations.
12. CONVERTIBLE SUBORDINATED NOTES
In November 1996, the Company issued $115,000,000 of convertible
subordinated notes (the "1996 Notes") due November 15, 2001, bearing interest
at 6.75% annually. Interest is payable semi-annually on May 15 and November
15. The holders of the Notes have the option to convert them into shares of
Common Stock, at any time prior to maturity, at a conversion price of $13.95
per share. The Notes are redeemable at the option of the Company, in whole or
in part, at any time during the twelve-month period commencing November 15,
1999 at 102.7% of their principal amount and during the twelve-month period
commencing November 15, 2000 at 101.35% of their principal amount. During
1997, $10,000 of the 1996 Notes were converted to Common Stock. As of December
31, 1997, $114,990,000 of the 1996 Notes were outstanding.
The Company estimated the fair value of the 1996 Notes as of December 31,
1997 at approximately $236,879,000, based upon their trading price on the
Nasdaq SmallCap Market on that date.
In December 1997, the Company issued $150,000,000 of convertible
subordinated notes (the "1997 Notes") due December 15, 2002, bearing interest
at 6.25% annually. Interest is payable semi-annually on June 15 and December
15, commencing June 15, 1998. The holders of the 1997 Notes have the option to
convert them into shares of Common Stock, at any time prior to maturity, at a
conversion price of $36.05 per share. The 1997 Notes are redeemable at the
option of the Company, in whole or in part, at any time during the twelve-
month period commencing December 15, 2000 at 102.5% of their principal amount
and during the twelve-month period commencing December 15, 2001 at 101.25% of
their principal amount. As of December 31, 1997, $150,000,000 of the 1997
Notes were outstanding.
The Company estimated the fair value of the 1997 Notes as of December 31,
1997 at approximately $159,375,000, based upon their bid price in the
convertible debentures market on that date.
For the years ended December 31, 1998, 1999, 2000, 2001 and 2002, aggregate
annual maturities of the 1996 Notes and the 1997 Notes are $0, $0, $0,
$114,990,000 and $150,000,000, respectively.
13. RESTRUCTURING
In May 1997, the Company executed a restructuring plan to consolidate its
sales, marketing, business development and product development operations to
achieve cost efficiencies through the elimination of redundant functions.
These redundancies resulted primarily from businesses acquired over the last
three years. The Company also realigned its business units and inside sales
force to redirect focus on its strongest product lines and better integrate
the efforts of certain product development teams. As part of the plan, the
Company reduced its worldwide work force by approximately 10%, eliminating
approximately 400 positions primarily in the areas of product development and
support, marketing and inside sales and, to a lesser extent, professional
services and administration.
The Company recorded a restructuring charge of $57,319,000 during the second
quarter of 1997 related to the restructuring plan. The restructuring charge
included the following expenses: facility-related costs, including a reserve
for estimated lease obligations associated with the closing of office
facilities; write-offs of excess equipment, furniture and fixtures; write-offs
of capitalized software costs and other intangible assets related to the
termination of development efforts for certain discontinued products, as well
as penalties for the cancellation of distributorship agreements for such
products; and severance and other employee-related costs of the terminated
staff.
F-21
<PAGE>
The following table summarizes the Company's restructuring activity for the
year ended December 31, 1997:
<TABLE>
<CAPTION>
INTANGIBLE ASSETS AND PROPERTY
EXCESS SEVERANCE AND PENALTIES FOR CANCELLED AND
FACILITIES BENEFITS AGREEMENTS EQUIPMENT TOTAL
---------- ------------- ----------------------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1997 restructuring
charges:
Cash-related charges.. $24,032 $10,364 $ 3,236 $ -- $ 37,632
Non-cash charges...... -- -- 16,177 3,510 19,687
------- ------- ------- ------ --------
$24,032 $10,364 $19,413 $3,510 57,319
======= ======= ======= ======
Payments made in 1997.............................................................. (15,322)
Write-offs taken in 1997........................................................... (19,687)
--------
Total accrued restructuring costs at December 31, 1997............................. 22,310
Less current portion............................................................... 6,308
--------
Long-term accrued restructuring costs ............................................. $ 16,002
========
</TABLE>
14. DERIVATIVE FINANCIAL INSTRUMENTS
The Company conducts business on a global basis in numerous major
international currencies and is, therefore, exposed to adverse movements in
foreign currency exchange rates. The Company has established a foreign
currency hedging program utilizing forward foreign exchange contracts to
reduce certain currency exposures. These contracts hedge exposures associated
with nonfunctional currency assets and liabilities denominated in Japanese,
Australian, numerous Asian and various European currencies. At the present
time, the Company hedges only those currency exposures associated with certain
nonfunctional currency assets and liabilities resulting from intercompany
balances and does not generally hedge anticipated foreign currency cash flows.
The Company does not enter into forward exchange contracts for trading
purposes.
Gains and losses on the foreign currency forward exchange contracts are
included in other income and offset foreign exchange gains and losses from the
revaluation of intercompany balances denominated in currencies other than the
functional currency of the reporting entity. The Company's forward contracts
generally have original maturities of one month.
The table below provides information as of December 31, 1997 about the
Company's foreign currency forward exchange contracts, including notional
values of outstanding forward contracts purchased and sold and the unrealized
gains or losses recorded for each contract.
<TABLE>
<CAPTION>
NOTIONAL NOTIONAL
VALUE VALUE UNREALIZED
PURCHASED SOLD GAINS (LOSSES)
--------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
European currencies................... $4,407 $(20,649) $(173)
Asian currencies...................... -- (412) 4
Japanese Yen.......................... -- (972) 4
Australian Dollar..................... -- (338) 11
--
------ -------- -----
Total............................. $4,407 $(22,371) $(154)
====== ======== =====
</TABLE>
While the notional or contract amounts of the Company's forward exchange
contracts provide one measure of the volume of these transactions, they do not
represent the Company's full exposure to credit risk. The Company faces
additional risks if the banking counterparties are unable to meet the terms of
the agreements. The Company has established policies to minimize such risks
and will only execute forward exchange contracts with major financial
institutions. The Company has assessed the potential exposure related to
default by such institutions to be minimal.
F-22
<PAGE>
15. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases office space and certain computer and telecommunications
equipment under long-term lease agreements expiring through the year 2016.
Total future minimum lease payments under noncancelable leases are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
1998...................... $ 40,980
1999...................... 33,133
2000...................... 24,727
2001...................... 20,067
2002 and thereafter....... 35,226
--------
Total................. $154,133
========
</TABLE>
Future minimum lease payments have not been reduced by minimum sublease
rentals of $603,000 due in the future under noncancelable subleases. Total
rent expense under all operating leases, net of insignificant sublease rental
income, amounted to $32,021,000, $22,510,000 and $15,659,000 in 1997, 1996 and
1995, respectively.
Litigation
The Company is subject to certain legal proceedings and claims that have
arisen in the ordinary course of business and have not been fully adjudicated.
Management currently believes the ultimate outcome of these matters will not
have a material adverse effect on the Company's results of operations or
financial position.
16. OTHER INCOME, NET
Other income (expense), net, for the years ended December 31, 1997, 1996 and
1995 is comprised of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income............................... $ 5,365 $ 5,163 $4,637
Interest expense.............................. (9,130) (1,825) (782)
Foreign exchange gains (losses)............... 469 (35) 64
Net realized gains on sales of investments.... 7,566 1,032 332
Unrealized gains on marketable equity
securities................................... 12,581 920 --
Other......................................... (122) (18) (121)
-------- ------- ------
$ 16,729 $ 5,237 $4,130
======== ======= ======
</TABLE>
F-23
<PAGE>
17. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in one industry segment. The Company markets and
services its products in the United States and in foreign countries through
its direct sales organization and affiliates (which are non-controlled product
representatives).
The following table presents information about the Company by geographic
area for the years ended December 31, 1997, 1996 and 1995. Export sales and
certain income and expense items are reported in the geographic area where the
final sale is made rather than where the transaction originates.
<TABLE>
<CAPTION>
DOMESTIC EUROPE OTHER TOTAL
--------- -------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1997
Revenues....................... $ 444,577 $119,919 $59,007 $ 623,503
Operating income (loss)........ (122,573) 4,135 2,646 (115,792)
Identifiable assets............ 690,127 89,958 54,092 834,177
1996
Revenues....................... $ 326,673 $ 97,708 $43,684 $ 468,065
Operating loss................. (74,742) (1,892) (2,770) (79,404)
Identifiable assets............ 498,500 84,201 35,871 618,572
1995
Revenues....................... $ 222,568 $ 67,906 $35,937 $ 326,411
Operating income (loss)........ (137,672) 9,885 410 (127,377)
Identifiable assets............ 365,799 59,465 27,003 452,267
</TABLE>
The revenues and operating income (loss) amounts above exclude the effect of
intercompany royalties. The domestic operating losses in 1997, 1996 and 1995
include all merger costs, restructuring costs and acquired in-process
technology charges.
No single customer accounted for 10% or more of total revenues in 1997, 1996
or 1995.
18. SUBSEQUENT EVENTS
On January 2, 1998, the Company entered into an agreement and plan of
merger, pursuant to which the Company has agreed to acquire Learmonth and
Burchett Management Systems PLC ("LBMS"), a leading provider of process
management solutions. Under the terms of this acquisition, LBMS will become a
wholly-owned subsidiary of the Company. The Company has agreed to exchange
approximately 2,745,000 shares of Common Stock for all of the outstanding
common shares of LBMS and has offered to exchange options to purchase
approximately 468,000 shares of Common Stock for the outstanding LBMS options.
This acquisition, which is expected to be consummated in the second quarter of
1998, is subject to the sanction of the English High Court, the approval of
the shareholders of LBMS and customary legal and regulatory conditions.
On February 18, 1998, the Company entered into an agreement and plan of
merger, pursuant to which the Company has agreed to acquire Mastering, Inc.
("Mastering"), a leading provider of information technology training. Under
the terms of this acquisition, Mastering will become a wholly-owned subsidiary
of the Company. The Company has agreed to exchange approximately 6,165,000
shares of Common Stock for all of the outstanding common shares of Mastering
and to assume stock options which will convert into options to purchase
approximately 2,143,000 shares of Common Stock. This acquisition, which is
expected to be consummated in the second quarter of 1998, is subject to the
filing of a registration statement with the Securities and Exchange
Commission, the approval of the stockholders of Mastering and customary legal
and regulatory conditions.
On March 14, 1998, the Company entered into an agreement and plan of merger,
pursuant to which the Company has agreed to acquire Logic Works, Inc.
("Logic"), a leading provider of data modeling tools. Under
F-24
<PAGE>
the terms of this acquisition, Logic will become a wholly-owned subsidiary of
the Company. The Company has agreed to exchange approximately 7,240,095 shares
of Common Stock for all of the outstanding common stock of Logic and to assume
stock options which will convert into options to purchase approximately
1,325,716 shares of Common Stock. This acquisition, which is expected to be
consummated in mid-1998, is subject to the filing of a registration statement
with the Securities and Exchange Commission, the approval of the stockholders
of Logic and customary legal and regulatory conditions.
The acquisitions of LBMS, Mastering and Logic are expected to be accounted
for as poolings of interests. Costs incurred in connection with these
transactions will be expensed in the periods in which the acquisitions are
consummated.
The following unaudited pro forma information shows total revenues and net
income (loss) of PLATINUM, LBMS, Mastering and Logic during the three years
ended December 31, 1997, 1996 and 1995, as if the transactions had been
consummated as of the earliest period presented. This summary is provided for
informational purposes only. It does not necessarily reflect the actual
results that would have occurred had the acquisitions been made as of those
dates or of results that may occur in the future.
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ----------------- ------------------
NET NET
INCOME INCOME
REVENUES (LOSS) REVENUES NET LOSS REVENUES (LOSS)
-------- --------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
PLATINUM................ $623,503 $(117,784) $468,065 $(64,922) $326,411 $(111,567)
LBMS.................... 23,897 4,469 21,861 (16,318) 41,158 (784)
Mastering............... 40,966 2,581 21,018 (2,892) 10,168 518
Logic................... 50,513 4,605 42,540 (3,062) 30,688 1,407
-------- --------- -------- -------- -------- ---------
Total............... $738,879 $(106,129) $553,484 $(87,194) $408,425 $(110,426)
======== ========= ======== ======== ======== =========
Net loss per share.. $ (1.36) $ (1.22) $ (2.04)
========= ======== =========
</TABLE>
F-25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
PLATINUM technology, inc.:
We have audited the accompanying consolidated balance sheets of PLATINUM
technology, inc. and subsidiaries as of December 31, 1997 and 1996 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of PLATINUM technology, inc. and subsidiaries as of December 31, 1997
and 1996, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
February 9, 1998, except for
Note 18, which is as of
March 14, 1998.
F-26
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors of
PLATINUM technology, inc.:
Under date of February 9, 1998 (except as to Note 18, which is as of March
14, 1998), we reported on the consolidated balance sheets of PLATINUM
technology, inc. and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997,
as contained in the 1997 annual report to stockholders. These consolidated
financial statements and our report thereon are included in the annual report
on Form 10-K for the year ended December 31, 1997. In connection with our
audits of the aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedule. The financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audits.
In our opinion, based on our audits, such consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
February 9, 1998, except for
Note 18, which is as of March
14, 1998
S-1
<PAGE>
SCHEDULE II
PLATINUM TECHNOLOGY, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS
FOR TRADE AND INSTALLMENT BEGINNING BAD DEBT ENDING
RECEIVABLES BALANCE EXPENSE WRITE-OFFS BALANCE
- ------------------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1997..... $3,714,000 $9,146,000 $(8,753,000) $4,107,000
Year ended December 31, 1996..... 2,809,000 905,000 -- 3,714,000
Year ended December 31, 1995..... 1,522,000 1,287,000 -- 2,809,000
</TABLE>
S-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON THE 16TH DAY
OF MARCH, 1998.
Platinum technology, inc.
/s/ Andrew J. Filipowski
By: _________________________________
Andrew J. Filipowski
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Andrew J. Filipowski President, Chief Executive March 16, 1998
____________________________________ Officer (principal
Andrew J. Filipowski executive officer) and
Chairman of the Board of
Directors
/s/ Paul L. Humenansky Executive Vice President, March 16, 1998
____________________________________ Chief Operations Officer
Paul L. Humenansky and Director
/s/ Michael P. Cullinane Executive Vice President, March 16, 1998
____________________________________ Chief Financial Officer
Michael P. Cullinane (principal financial and
accounting officer),
Treasurer and Director
/s/ James E. Cowie Director March 16, 1998
____________________________________
James E. Cowie
/s/ Steven D. Devick Director March 16, 1998
____________________________________
Steven D. Devick
Director
____________________________________
Gian M. Fulgoni
Director
____________________________________
Arthur P. Frigo
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
4.4 Indenture between the Company and American National Bank
and Trust Company, as Trustee, dated as of November 18,
1996.
4.5 Form of Note for the Company's convertible subordinated
notes due 2001 (included in Exhibit 4.4).
4.6 Indenture between the Company and American National Bank
and Trust Company, as Trustee, dated as of December 15,
1997.
4.7 Form of Note for the Company's convertible subordinated
notes due 2002 (included in Exhibit 4.6).
10.6 Amended and Restated Employment Agreement between Andrew
J. Filipowski and the Company, dated as of January 1,
1996.*
10.7 Amended and Restated Employment Agreement between Michael
P. Cullinane and the Company, dated as of January 1,
1996.*
10.8 Amended and Restated Employment Agreement between Paul L.
Humenansky and the Company, dated as of October 28,
1997.*
10.42 Credit Agreement, dated as of December 22, 1997, between
the Company and American National Bank and Trust Company
of Chicago, as Agent.
12 Computation of Ratios of Earnings to Fixed Charges.
21 Subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP with respect to the
Company's financial statements and financial statement
schedule.
27 Financial Data Schedule
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 4.4
PLATINUM technology, inc.
ISSUER,
AND
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
AS TRUSTEE,
INDENTURE
Dated as of November 18, 1996
$100,000,000
6 3/4% Convertible Subordinated Notes due 2001
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS AND INCORPORATION BY REFERENCE............................ 1
1.1. DEFINITIONS..................................................... 1
1.2. INCORPORATION BY REFERENCE OF TIA............................... 8
1.3. RULES OF CONSTRUCTION........................................... 8
2. THE SECURITIES........................................................ 9
2.1. FORM AND DATING................................................. 9
2.2. EXECUTION AND AUTHENTICATION.................................... 9
2.3. REGISTRAR, PAYING AGENT AND DEPOSITARY.......................... 11
2.4. PAYING AGENT TO HOLD ASSETS IN TRUST............................ 12
2.5. SECURITY HOLDER LISTS........................................... 12
2.6. TRANSFER AND EXCHANGE........................................... 12
2.7. REPLACEMENT SECURITIES.......................................... 15
2.8. OUTSTANDING SECURITIES.......................................... 15
2.9. TREASURY SECURITIES............................................. 16
2.10. TEMPORARY SECURITIES............................................ 16
2.11. CANCELLATION.................................................... 16
2.12. DEFAULTED INTEREST.............................................. 17
3. REDEMPTION............................................................ 18
3.1. RIGHT OF REDEMPTION............................................. 18
3.2. NOTICES TO TRUSTEE.............................................. 18
3.3. SELECTION OF SECURITIES TO BE REDEEMED.......................... 18
3.4. NOTICE OF REDEMPTION............................................ 19
3.5. EFFECT OF NOTICE OF REDEMPTION.................................. 20
3.6. DEPOSIT OF REDEMPTION PRICE..................................... 20
3.7. SECURITIES REDEEMED IN PART..................................... 21
4. COVENANTS............................................................. 21
4.1. PAYMENT OF SECURITIES........................................... 21
4.2. INTENTIONALLY OMITTED........................................... 21
4.3. CORPORATE EXISTENCE............................................. 21
4.4. PAYMENT OF TAXES AND OTHER CLAIMS............................... 21
4.5. MAINTENANCE OF PROPERTIES AND INSURANCE......................... 22
4.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT....................... 23
4.7. REPORTS......................................................... 23
4.8. LIMITATION ON STATUS AS INVESTMENT COMPANY...................... 23
4.9. WAIVER OF STAY, EXTENSION OR USURY LAWS......................... 24
5. SUCCESSOR CORPORATION................................................. 24
5.1. LIMITATION ON MERGER, SALE OR CONSOLIDATION..................... 24
5.2. SUCCESSOR CORPORATION SUBSTITUTED............................... 25
6. EVENTS OF DEFAULT AND REMEDIES........................................ 25
6.1. EVENTS OF DEFAULT............................................... 25
6.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT......... 27
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE...............28
6.4. TRUSTEE MAY FILE PROOFS OF CLAIM..............................................29
6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES...................29
6.6. PRIORITIES....................................................................30
6.7. LIMITATION ON SUITS...........................................................30
6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST......................................................................31
6.9. RIGHTS AND REMEDIES CUMULATIVE................................................31
6.10. DELAY OR OMISSION NOT WAIVER..................................................31
6.11. CONTROL BY HOLDERS............................................................32
6.12. WAIVER OF PAST DEFAULT........................................................32
6.13. UNDERTAKING FOR COSTS.........................................................32
6.14. RESTORATION OF RIGHTS AND REMEDIES............................................33
7. TRUSTEE.............................................................................33
7.1. RIGHTS OF TRUSTEE.............................................................34
7.2. INDIVIDUAL RIGHTS OF TRUSTEE..................................................35
7.3. TRUSTEE'S DISCLAIMER..........................................................35
7.4. DUTIES OF TRUSTEE.............................................................33
7.5. NOTICE OF DEFAULT.............................................................35
7.6. REPORTS BY TRUSTEE TO HOLDERS.................................................36
7.7. COMPENSATION AND INDEMNITY....................................................36
7.8. REPLACEMENT OF TRUSTEE........................................................37
7.9. SUCCESSOR TRUSTEE BY MERGER, ETC..............................................38
7.10. ELIGIBILITY; DISQUALIFICATION.................................................38
7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.............................38
8. SATISFACTION AND DISCHARGE..........................................................38
8.1. SATISFACTION AND DISCHARGE OF INDENTURE.......................................38
8.2. PAYMENT TO THE COMPANY........................................................39
9. AMENDMENTS, SUPPLEMENTS AND WAIVERS.................................................39
9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS............................39
9.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF HOLDERS.......40
9.3. COMPLIANCE WITH TIA...........................................................41
9.4. REVOCATION AND EFFECT OF CONSENTS.............................................41
9.5. NOTATION ON OR EXCHANGE OF SECURITIES.........................................42
9.6. TRUSTEE TO SIGN AMENDMENTS, ETC...............................................42
10. RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL................................42
10.1. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A CHANGE OF CONTROL.....42
11. SUBORDINATION.......................................................................45
11.1. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS................................45
11.2. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.............................45
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
<S> <C> <C>
11.3. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS
ON DISSOLUTION, LIQUIDATION OR REORGANIZATION................................46
11.4. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF
HOLDERS OF SENIOR INDEBTEDNESS...............................................47
11.5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.....................................48
11.6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF
NOTICE.......................................................................48
11.7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT...........................49
11.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS....................................49
11.9. SECURITY HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
SECURITIES...................................................................49
11.10. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.................................50
11.11. ARTICLE 11 NOT TO PREVENT EVENTS OF DEFAULT..................................50
11.12. NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR INDEBTEDNESS...............50
12. CONVERSION OF SECURITIES............................................................51
12.1. CONVERSION PRIVILEGE.........................................................51
12.2. EXERCISE OF CONVERSION PRIVILEGE.............................................51
12.3. FRACTIONAL INTERESTS.........................................................52
12.4. CONVERSION PRICE.............................................................53
12.5. ADJUSTMENT OF CONVERSION PRICE...............................................53
12.6. CONTINUATION OF CONVERSION PRIVILEGE IN CASE OF RECLASSIFICATION,
CHANGE, MERGER, CONSOLIDATION OR SALE OF ASSETS..............................57
12.7. NOTICE OF CERTAIN EVENTS.....................................................58
12.8. TAXES ON CONVERSION..........................................................59
12.9. COMPANY TO PROVIDE STOCK.....................................................59
12.10. DISCLAIMER OF RESPONSIBILITY FOR CERTAIN MATTERS.............................60
12.11. RETURN OF FUND DEPOSITED FOR REDEMPTION OF CONVERTED SECURITIES..............60
13. MISCELLANEOUS.......................................................................61
13.1. TIA CONTROLS.................................................................61
13.2. NOTICES......................................................................61
13.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.................................62
13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT...........................62
13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION................................62
13.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR....................................63
13.7. LEGAL HOLIDAYS...............................................................63
13.8. GOVERNING LAW................................................................63
13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS................................64
13.10. NO RECOURSE AGAINST OTHERS...................................................64
13.11. SUCCESSORS...................................................................64
13.12. DUPLICATE ORIGINALS..........................................................64
13.13 SEVERABILITY.................................................................64
13.14. TABLE OF CONTENTS, HEADINGS, ETC.............................................64
13.15. QUALIFICATION OF INDENTURE...................................................65
</TABLE>
iii
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
<S> <C>
310(a)(1).......................................................... 7.10
(a)(2)........................................................... 7.10
(a)(3)........................................................... N.A.
(a)(4)........................................................... N.A.
(a)(5)........................................................... 7.10
(b).............................................................. 7.8;
................................................................. 7.10;
................................................................. 13.2
(c).............................................................. N.A.
311(a)............................................................. 7.11
(b).............................................................. 7.11
(c).............................................................. N.A.
312(a)............................................................. 2.5
(b).............................................................. 13.3
(c).............................................................. 13.3
313(a)............................................................. 7.6
(b)(l)........................................................... N.A.
(b)(2)........................................................... 7.6
(c).............................................................. 7.6;
................................................................. 13.2
(d).............................................................. 7.6
314(a)............................................................. 4.7;
................................................................. 13.2
(b).............................................................. N.A.
(c)(l)........................................................... 2.2;
................................................................. 7.2;
................................................................. 13.4
(c)(2)........................................................... 7.2;
................................................................. 13.4
(c)(3)........................................................... N.A.
(d).............................................................. N.A.
(e).............................................................. 13.5
(f).............................................................. N.A.
315(a)............................................................. 7.1(b)
(b).............................................................. 7.5;
................................................................. 13.2
(c).............................................................. 7.1(a)
(d).............................................................. 6.11;
................................................................. 7.1(b)&(c);
................................................................. 7.2(c)
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(e)........................................................................... 6.13
316(a)(1ast sentence)........................................................... 2.9
(a)(l)(A)..................................................................... 6.11
(a)(l)(B)..................................................................... 6.12
(a)(2)........................................................................ N.A.
(b)........................................................................... 6.12;
.............................................................................. 6.7
317(a)(1)....................................................................... 6.3
(a)(2)........................................................................ 6.4
(b)........................................................................... 2.4
318(a).......................................................................... 13.1
</TABLE>
N.A. Means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
v
<PAGE>
INDENTURE, dated as of November 18, 1996, between PLATINUM technology,
inc., a Delaware corporation (the "Company"), and American National Bank and
Trust Company of Chicago, a national banking association, as trustee (The
"Trustee").
Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of the Company's 63/4%
Convertible Subordinated Notes due 2001:
ARTICLE
1.
DEFINITIONS AND INCORPORATION BY REFERENCE
1.1. DEFINITIONS.
"ACCELERATION NOTICE" shall have the meaning specified in Section 6.2.
"AFFILIATE" means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, (ii)
any spouse, immediate family member, or other relative who has the same
principal residence of any person described in clause (i) above, and (iii) any
trust in which any person described in clause (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means the power to
direct the management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract
or otherwise.
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"BANKRUPTCY LAW" means Title ll, U.S. Code, or any similar Federal, state
or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITALIZED LEASE OBLIGATIONS" means rental obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
1
<PAGE>
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interest, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CASH" means such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts.
"CHANGE OF CONTROL" occurs upon the occurrence of any of the following
events: (i) upon any merger or consolidation of the Company with or into any
Person or any sale, transfer or other conveyance, whether direct or indirect, of
all or substantially all of the assets of the Company, on a consolidated basis,
in one transaction or a series of related transactions, if, immediately after
giving effect to such transaction, any "person" or "group" other than the
Company is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the transferee
or surviving entity, (ii) when any "person" or "group" is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the voting power
in the aggregate normally entitled to vote in the election of directors of the
Company, (iii) when, during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office, or (iv) the pro rata distribution by the Company to its shareholders of
substantially all of its assets.
For purposes of this definition, (i) the terms "person" and "group" shall
have the meaning used for purposes of Rules 13d-3 and 13d-5 of the Exchange Act
as in effect on the Issue Date, whether or not applicable; and (ii) the term
"beneficial owner" shall have the meaning used in Rules 13d-3 and 13d-5 under
the Exchange Act as in effect on the Issue Date, whether or not applicable,
except that a "person" shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time or upon the occurrence
of certain events.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the Company's common stock, par value $.001 per share,
or as such stock may be reconstituted from time to time.
"COMPANY" means PLATINUM technology, inc. until a successor replaces it
pursuant to the Indenture, and thereafter means such successor.
"CONVERSION PRICE" shall have the meaning specified in Section 12.4.
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"CONVERSION SHARES" shall have the meaning specified in Section 12.1.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"DATE OF CONVERSION" shall have the meaning specified in Section 12.2.
"DEFAULT" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"DEFAULTED INTEREST" shall have the meaning specified in Section 2.12.
"DEFINITIVE SECURITIES" means Securities that are in the form of Security
attached hereto as Exhibit A that do not include the information called for by
footnotes 1 and 2 thereof.
"DEPOSITARY" means the sole holder of the Global Security, as specified in
Section 2.3 until a successor shall have been appointed and become such pursuant
to the applicable provision of this Indenture, and, thereafter, "Depositary"
shall mean or include such successor.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any Person, Capital Stock of such Person that, by its terms or by the
terms of any security into which it is convertible, exercisable or exchangeable,
is, or upon the happening of an event or the passage of time would be, required
to be redeemed or repurchased (including at the option of the holder thereof) by
such Person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Securities and (b) with respect to any Subsidiary of such
Person (including with respect to any Subsidiary of the Company), any Capital
Stock other than any common stock with no preference, privileges, or redemption
or repayment provisions.
"DISTRIBUTION DATE" shall have the meaning specified in Section 12.5(k).
"DTC" shall have the meaning specified in Section 2.3.
"EVENT OF DEFAULT" shall have the meaning specified in Section 6.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"EXPIRATION TIME" shall have the meaning specified in Section 12.5(e).
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board ("FASB") or in such
other statements by such other entity as approved by a significant segment of
the accounting profession which are in effect in the United States; PROVIDED,
HOWEVER, that for purposes of determining compliance with covenants in the
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Indenture, "GAAP" means such generally accepted accounting principles which are
in effect as of the Issue Date.
"GLOBAL SECURITY" means a Security held by the Depositary for the benefit
of beneficial owners, and which contains the paragraph referred to in footnote 1
and the schedule referred to in footnote 2 of the form of Security attached
hereto as Exhibit A.
"HOLDER" or "SECURITY HOLDER" means the Person in whose name a Security is
registered on the Registrar's books.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except such as would constitute trade payables to trade creditors in the
ordinary course of business that are not more than ninety (90) days past their
original due date, (iv) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks, (v) for the payment of money relating to a
Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(b) all net obligations of such Person under Interest Swap and Hedging
Obligations; (c) all liabilities of others of the kind described in the
preceding clause (a) or (b) that such Person has guaranteed or that is otherwise
its legal liability and all obligations to purchase, redeem or acquire any
Capital Stock; and (d) any and all deferrals, renewals, extensions, refinancings
and refundings (whether direct or indirect) of any liability of the kind
described in any of the preceding clauses (a), (b) or (c), or this clause (d),
whether or not between or among the same parties.
"INDENTURE" means this indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"INTEREST PAYMENT DATE" means the stated due date of an installment of
interest on the Securities.
"INTEREST SWAP AND HEDGING OBLIGATIONS" means any obligation of any Person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such Person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payment made by such Person calculated by applying a fixed
or floating rate of interest on the same notional amount.
"ISSUE DATE" means the date of first issuance of the Securities under this
Indenture.
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"JUNIOR SECURITY" of any Person means any Qualified Capital Stock and any
Indebtedness of such Person that is subordinated in right of payment to the
Securities and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Securities.
"LAST SALE PRICE" shall have the meaning specified in Section 12.3.
"LEGAL HOLIDAY" shall have the meaning specified in Section 13.7.
"LIEN" means any mortgage, lien, pledge, charge, security interest or other
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest).
"NON-ELECTING SHARE" shall have the meaning specified in Section 12.6.
"NOTICE OF DEFAULT" shall have the meaning specified in Section 6.1(3).
"OFFER" shall have the meaning specified in Section 12.5(e).
"OFFICER" means, with respect to the Company, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Treasurer,
the Controller or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means, with respect to the Company, a certificate
signed by two Officers or by an Officer and an Assistant Secretary of the
Company and otherwise complying with the requirements of Sections 13.4 and 13.5.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee and which complies with the requirements of
Sections 13.4 and 13.5.
"PAYING AGENT" shall have the meaning specified in Section 2.3.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning specified in Section
11.2(b).
"PAYMENT DEFAULT" shall have the meaning specified in Section 11.2(a).
"PAYMENT NOTICE" shall have the meaning specified in Section 11.2(b).
"PERSON" means any corporation, individual, limited liability company,
joint stock company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision thereof,
trust, municipality or other entity.
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"PRINCIPAL" of any Indebtedness means the principal of such Indebtedness
plus, without duplication, any applicable premium, if any, on such Indebtedness.
"PROPERTY" means any right or interest in or to property or assets of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PURCHASED SHARES" shall have the meaning specified in Section 12.5(e).
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that is
not Disqualified Capital Stock.
"RECORD DATE" means a Record Date specified in the Securities whether or
not such Record Date is a Business Day.
"REDEMPTION DATE," when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to Article 3 of this Indenture
and Paragraph 5 in the form of Security attached hereto as Exhibit A.
"REDEMPTION PRICE," when used with respect to any Security to be redeemed,
means the redemption price for such redemption pursuant to Paragraph 5 in the
form of Security attached hereto as Exhibit A, which shall include, without
duplication, in each case, accrued and unpaid interest, if any, to and including
the Redemption Date.
"REGISTRAR" shall have the meaning specified in Section 2.3.
"REPURCHASE DATE" shall have the meaning specified in Section 10.1(a).
"REPURCHASE OFFER" shall have the meaning specified in Section 10.1(b).
"REPURCHASE OFFER PERIOD" shall have the meaning specified in Section
10.1(b).
"REPURCHASE PRICE" shall have the meaning specified in Section 10.1(a).
"REPURCHASE PUT DATE" shall have the meaning specified in Section 10.1(b).
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means, collectively, the unsecured 6 3/4% convertible
subordinated notes due 2001 issued by the Company under this Indenture, as
supplemented from time to time in accordance with the terms hereof, limited in
aggregate principal amount to $100,000,000 ($115,000,000 if the Underwriters'
over-allotment option is exercised in full).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
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"SECURITIES CUSTODIAN" means the Trustee, as custodian with respect to the
Global Security, or any successor entity thereto.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior, in right of payment, to the Securities
or to other Indebtedness which is PARI PASSU with, or subordinated to, the
Securities; PROVIDED, that in no event shall Senior Indebtedness include (a)
Indebtedness of the Company owed or owing to any Subsidiary of the Company or
any officer, director or employee of the Company or any Subsidiary of the
Company, (b) Indebtedness to trade creditors, or (c) any liability for taxes
owed or owing by the Company.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the SEC as in effect on the date of this Indenture.
"SPECIAL RECORD DATE" for payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 2.12.
"STATED MATURITY," when used with respect to any Security, means November
15, 2001.
"SUBSIDIARY" with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation or
partnership) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-
77bbbb) as in effect on the date of the execution of this Indenture.
"TRADING DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the Nasdaq National
Market.
"TRUSTEE" means American National Bank and Trust Company of Chicago, as
trustee, until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"TRUST OFFICER" means any officer within the corporate trust division (or
any successor group) of the Trustee or any other officer of the Trustee
customarily performing
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functions similar to those performed by the Persons who at that time shall be
such officers, and also means, with respect to a particular corporate trust
matter, any other officer of the Trustee to whom such trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"UNDERWRITERS" means Donaldson, Lufkin & Jenrette Securities Corporation,
Hambrecht & Quist LLC and Robertson, Stephens & Company LLC.
"UNDERWRITING AGREEMENT" means that certain Underwriting Agreement, dated
November 18, 1996, by and between the Company and the Underwriters, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
1.2. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITY HOLDER" means a Holder or a Security Holder.
"INDENTURE TO BE QUALIFIED" means this Indenture
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the Securities means the Company and any other obligor on the
Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
1.3. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles means reference to such Sections or
Articles in this Indenture, unless stated otherwise.
ARTICLE
2.
THE SECURITIES
2.1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication, in respect
thereof, shall be substantially in the form of Exhibit A hereto, which Exhibit
is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
2.2. EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and one Officer shall
attest to, the Security for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
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A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security but such
signature shall be conclusive evidence that the Security has been authenticated
pursuant to the terms of this Indenture. Notwithstanding anything herein to the
contrary, if any Security shall have been authenticated and delivered hereunder
but never issued or sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
The Trustee shall authenticate the Securities for original issue in the
aggregate principal amount of up to $115,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Securities to be authenticated and the date the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $115,000,000, except as provided in
Section 2.7; PROVIDED, that Securities in excess of $100,000,000 shall not be
issued other than pursuant to the over-allotment option granted by the Company
to the Underwriters as provided in the Underwriting Agreement, or pursuant to
Section 2.7. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Affiliate of the Company, or any of their
respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
2.3. REGISTRAR, PAYING AGENT AND DEPOSITARY.
The Company shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where Securities may be presented for registration of
transfer or exchange and for conversion ("Registrar") and an office or agency
where Securities may be presented for payment ("Paying Agent") and where notices
and demands to or upon the Company in respect of the Securities may be served.
The Company may act as Registrar or Paying Agent, except that, for the purposes
of Articles 3, 8 and 10 and as otherwise specified in the Indenture, neither the
Company nor any Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Securities and of their transfer,
exchange and conversion. The Company hereby initially appoints the corporate
trust office of First Chicago Trust Company of New York ("First Chicago of New
York") as Registrar and Paying Agent, and First Chicago of New York hereby
agrees to so act.
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The Company shall give prompt written notice to the Trustee of any change
in the location of the Registrar or Paying Agent. If at any time the Company
shall fail to maintain a Registrar or Paying Agent, or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
13.2.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes described in this Section 2.3 and may from time to time rescind
such designations; PROVIDED, HOWEVER, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the Borough of Manhattan, The City of New York, for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency. The term "Paying Agent" includes any additional Paying Agent
and the term "Registrar" includes any additional Registrar.
The Company shall enter into an appropriate written agency agreement with
any Agent which is not an Affiliate, which agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints the Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Securities.
2.4. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that such Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all assets held by the Paying Agent for the payment of principal
of, premium, if any, and interest on the Securities (whether such assets have
been distributed to it by the Company or any other obligor on the Securities),
and shall notify the Trustee in writing of any Default in making any such
payment. If either of the Company or a Subsidiary of the Company acts as Paying
Agent, it shall segregate such assets and hold them as a separate trust for the
benefit of the Holders or the Trustee. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets distributed and the Trustee may at any time during the continuance of
any Payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent (if
other than the Company or an Affiliate of the Company) shall have no further
liability for such assets.
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2.5. SECURITY HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders.
2.6. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When Definitive
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations;
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in a form reasonably satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A BENEFICIAL
INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with written instructions
directing the Trustee to make, or to direct the Securities Custodian to make, an
endorsement on the Global Security to reflect an increase in the aggregate
principal amount of the Securities represented by the Global Security, the
Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer and exchange
of Global Securities or beneficial interests therein shall be effected through
the Depositary, in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
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(d) TRANSFER OF A BENEFICIAL INTEREST 1N A GLOBAL SECURITY FOR A DEFINITIVE
SECURITY.
(i) Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depositary from the Depositary
or its nominee on behalf of any Person having a beneficial interest in a
Global Security (all of which may be submitted by facsimile), and if such
beneficial interest is being transferred to the Person designated by the
Depositary as being the beneficial owner, a certification from such Person
to that effect (in substantially the form set forth on the reverse of the
Security), the Trustee or the Securities Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian,
the aggregate principal amount of the Global Security to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate, the Trustee
will authenticate and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the Persons in whose names such
Securities are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITY.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or another nominee
of the Depositary or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF DEPOSITARY. If at
any time:
(i) The Depositary for the Securities notifies the Company and the
Company notifies the Trustee in writing that the Depositary is no longer
willing or able to continue as Depositary for the Global Security and a
successor Depositary for the Global Security is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) The Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under
this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities to each person that the
Depositary identified as the beneficial owner of the
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Global Security, in an aggregate principal amount equal to the principal amount
of the Global Security, in exchange for such Global Security.
(g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
SECURITIES.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
the Global Security at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer taxes, assessments or similar governmental charge
payable in connection therewith (other than any such transfer taxes,
assessments or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.2 (fourth paragraph), 2.10, 3.7, 9.5, or
10.1 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to register
the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article 3, except the unredeemed
portion of any Definitive Security being redeemed in part, or (b) in the
event that the Trustee has been notified of an offer to repurchase
Securities pursuant to Article 10 hereof or of a redemption of Securities
pursuant to Article 3 hereof, any Security for a period beginning 15 days
before the mailing of a notice of an offer to repurchase or the mailing of
a notice of redemption and ending at the close of business on the day of
such mailing.
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2.7. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims and submits an affidavit or other evidence, satisfactory to the
Trustee, to the Trustee to the effect that the Security has been lost, destroyed
or wrongfully taken, the Company shall issue and the Trustee shall authenticate
a replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Security. In case any such
mutilated, destroyed, lost or stolen Security has become or is about to become
due, the Company, in its discretion, may instead of issuing a new Security, pay
such Security.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.7 are exclusive and, to the extent lawful,
preclude other rights and remedies with respect to replacement or payment of
mutilated, destroyed, lost or stolen Securities.
2.8. OUTSTANDING SECURITIES.
Securities outstanding at any time are all of the Securities that have been
authenticated by the Trustee (including any Security represented by a Global
Security) except those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Security effected by the Trustee
hereunder and those described in this Section 2.8 as not outstanding. A Security
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security, except as provided in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a BONA FIDE purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date the Paying Agent (other than the Company or an
Affiliate of the Company) holds Cash or U.S. Government Obligations sufficient
to pay all of the principal and interest due on the Securities payable on that
date in accordance with Section 3.6 hereof and payment of the Securities called
for redemption is not otherwise prohibited pursuant to Article 11 hereof or
otherwise, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue.
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2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or an Affiliate of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment, supplement,
waiver or consent, only Securities that the Trustee knows are so owned shall be
disregarded.
2.10. TEMPORARY SECURITIES.
Until the Securities are ready for delivery in their definitive form, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company reasonably and in good faith considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Securities in their definitive
form in exchange for temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Securities in their definitive form authenticated and delivered
hereunder.
2.1 1. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange, conversion, payment
or cancellation. The Trustee, or at the direction of the Trustee, the Registrar
or the Paying Agent (other than the Company or an Affiliate of the Company), and
no one else, shall cancel and dispose of all Securities surrendered for
transfer, exchange, conversion, payment or cancellation, and shall deliver a
cancellation certificate to the Company. Subject to Section 2.7, the Company may
not issue new Securities to replace Securities that have been paid or delivered
to the Trustee for cancellation. No Securities shall be authenticated in lieu of
or in exchange for any Securities canceled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by this
Indenture.
2.12. DEFAULTED INTEREST.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name the Security (or one or more predecessor Securities) is registered at the
close of business on the Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date plus, to the extent lawful,
any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company at
its election in each case, as provided in clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of Cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such Cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address shown upon the
registry books of the Registrar not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange or market on which the Securities may be listed, and
upon such notice as may be required by such exchange or market, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
ARTICLE
3.
REDEMPTION
3.1. RIGHT OF REDEMPTION.
Redemption of Securities, as permitted by any provision of this Indenture,
shall be made in accordance with Paragraph 5 of the form of Securities attached
hereto as Exhibit A and this Article 3. The Company will not have the right to
redeem any Securities prior to November 15, 1999. At any time on or after
November 15, 1999, upon not less than 30 nor more than 60 days notice to each
Holder of Securities, the Company will have the right to redeem all or any part
of
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the Securities at the Redemption Prices specified in Paragraph 5 therein under
the caption "Redemption," in each case including accrued and unpaid interest to
the Redemption Date.
3.2. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to Paragraph 5 of the
form of Securities attached hereto as Exhibit A, it shall notify the Trustee in
writing of the Redemption Date and the principal amount of Securities to be
redeemed and whether it wants the Trustee to give notice of redemption to the
Holders.
If the Company elects to reduce the principal amount of Securities to be
redeemed pursuant to Paragraph 5 of the form of Securities attached hereto as
Exhibit A by crediting against any such redemption Securities in its possession
which it has not previously delivered to the Trustee for cancellation, it shall
so notify the Trustee of the amount of the reduction and deliver such Securities
with such notice.
The Company shall give each notice provided for in this Section 3.2 to the
Trustee at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). Any such notice may be canceled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
3.3. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed pursuant to Paragraph
5 of the form of Securities attached hereto as Exhibit A, the Trustee shall
promptly redeem the Securities to be redeemed on a pro rata basis, in such
manner as the Trustee shall determine to be fair and appropriate and in such
manner as complies with any applicable Depositary, legal and stock exchange
requirements.
The Trustee shall make the selection from the Securities outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. If any
Security selected for partial redemption is thereafter converted in part before
termination of the conversion right as provided by Section 12.1 hereof, the
portion of the Security so converted shall be deemed to have been a part of the
portion selected for redemption such that only the excess, if any, of the amount
selected for partial redemption over the amount so converted, shall be redeemed.
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3.4. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage prepaid,
to the Trustee and each Holder whose Securities are to be redeemed. At the
Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date, and that the Securities called for redemption may
not be converted after the fifth Business Day prior to the Redemption Date;
(2) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the Paying
Agent at the address specified in such notice to collect the Redemption Price;
(5) that, unless (a) the Company defaults in its obligation to deposit Cash
with the Paying Agent in accordance with Section 3.6 hereof or (b) such
redemption is prohibited pursuant to Article 11 hereof or otherwise, interest on
the Securities called for redemption ceases to accrue on and after the
Redemption Date and the only remaining right of the Holders of such Securities
is to receive payment of the Redemption Price, including accrued and unpaid
interest, if any, to the Redemption Date, upon surrender to the Paying Agent of
the Securities called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion of the principal
amount, equal to $1,000 or any integral multiple thereof, of such Security to be
redeemed and that, after the Redemption Date, and upon surrender of such
Security, a new Security or Securities in aggregate principal amount equal to
the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the identification
of the particular Securities (or portion thereof) to be redeemed, as well as the
aggregate principal amount of such Securities to be redeemed and the aggregate
principal amount of Securities to be outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.4 and pursuant
to the redemption provisions of Paragraph 5 of the form of Securities attached
hereto as Exhibit A.
3.5. EFFECT OF NOTICE OF REDEMPTION.
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Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest, if any, to
the Redemption Date. Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including accrued and unpaid interest, if any, to the Redemption Date; PROVIDED
that if the Redemption Date is after a regular Record Date and on or prior to
the corresponding Interest Payment Date, the accrued interest, if any, shall be
payable to the Holder of the redeemed Securities registered on the relevant
Record Date; and PROVIDED, FURTHER, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
3.6. DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) Cash
sufficient to pay the Redemption Price of, including accrued and unpaid interest
on, all Securities to be redeemed on such Redemption Date (other than Securities
or portions thereof called for redemption on that date that have been delivered
by the Company to the Trustee for cancellation). The Paying Agent shall promptly
return to the Company any Cash so deposited which is not required for that
purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article 3 and payment of the Securities called for redemption
is not prohibited under Article 11 or otherwise, interest on the Securities to
be redeemed will cease to accrue on the applicable Redemption Date, whether or
not such Securities are presented for payment. Notwithstanding anything herein
to the contrary, if any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall continue to accrue and be paid from the Redemption Date until
such payment is made on the unpaid principal, and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate and in the
manner provided in Section 4.1 hereof and the Security.
3.7. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder,
without service charge to the Holder, a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
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ARTICLE
4.
COVENANTS
4.1. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities and this Indenture. An
installment of principal of or interest on the Securities shall be considered
paid on the date it is due if the Trustee or Paying Agent (other than the
Company or an Affiliate of the Company) holds for the benefit of the Holders, on
or before 10:00 a.m. New York City time on that date, Cash deposited and
designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
4.2. INTENTIONALLY OMITTED.
4.3. CORPORATE EXISTENCE.
Subject to Article 5, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate or other existence of each of its Subsidiaries in accordance
with the respective organizational documents of each of them and the rights
(charter and statutory) and corporate franchises of the Company and each of its
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to
preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if (a) the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of such entity and (b) the loss thereof is not
disadvantageous in any material respect to the Holders.
4.4. PAYMENT OF TAXES AND OTHER CLAIMS.
Except with respect to immaterial items, the Company shall, and shall cause
each of its Subsidiaries to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any of its
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become a
Lien upon the property and assets of the Company or any of its Subsidiaries;
PROVIDED, HOWEVER, that neither the Company nor any Subsidiary shall be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
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4.5. MAINTENANCE OF PROPERTIES AND INSURANCE.
The Company shall cause all material properties used or useful to the
conduct of its business and the business of each of its Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in their reasonable judgment may be necessary, so
that the business carried on in connection therewith may be properly conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section 4.5 shall prevent
the Company or any Subsidiary from discontinuing any operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is (a), in the judgment of the Company, desirable in the conduct of the
business of such entity and (b) not disadvantageous in any material respect to
the Holders.
The Company shall provide, or cause to be provided, for itself and each of
its Subsidiaries, insurance (including appropriate self-insurance) against loss
or damage of the kinds that, in the reasonable, good faith opinion of the
Company is adequate and appropriate for the conduct of the business of the
Company and such Subsidiaries in a prudent manner, with (except for self-
insurance) reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the reasonable, good
faith opinion of the Company and adequate and appropriate for the conduct of the
business of the Company and such Subsidiaries in a prudent manner for entities
similarly situated in the industry, unless failure to provide such insurance
(together with all other such failures) would not have a material adverse effect
on the financial condition or results of operations of the Company or such
Subsidiary.
4.6. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee within 120 days after the end
of its fiscal year an Officers' Certificate complying with Section 314(a)(4) of
the TIA and stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company or any Subsidiary
of the Company to comply with any conditions or covenants in this Indenture and,
if such signor does know of such a failure to comply, the certificate shall
describe such failure with particularity. The Officers' Certificate shall also
notify the Trustee should the relevant fiscal year end on any date other than
the current fiscal year end date.
(b) The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
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knowledge of any Default, any Event of Default or any such fact unless one of
its Trust Officers receives notice thereof from the Company or any of the
Holders.
4.7. REPORTS.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 30 days after it is or would have been
required to file such with the SEC, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the SEC if the Company was subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
SEC and, in each case, together with a management's discussion and analysis of
financial condition and results of operations which would be so required.
4.8. LIMITATION ON STATUS AS INVESTMENT COMPANY.
Neither the Company nor any of its Subsidiaries shall become an "investment
company" (as that term is defined in the Investment Company Act of 1940, as
amended).
4.9. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any stay or extension law or any usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of, or premium or interest on, the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE
5.
SUCCESSOR CORPORATION
5.1. LIMITATION ON MERGER, SALE OR CONSOLIDATION.
(a) The Company shall not, directly or indirectly, consolidate with or
merge with or into another Person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons, unless (i) either (a) in the case of a merger or
consolidation, the Company is the surviving entity or (b) the resulting,
surviving or transferee entity is a corporation organized under the laws of the
United States, any state thereof or the
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District of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities and the Indenture;
(ii) no Default or Event of Default shall exist or shall occur immediately
before or after giving effect on a pro forma basis to such transaction; and
(iii) the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
and, if a supplemental indenture is required, such supplemental indenture comply
with the Indenture and that all conditions precedent relating to such
transactions have been satisfied.
(b) For purposes of clause (a) of this Section 5.1, the sale, lease,
conveyance, assignment, transfer or other disposition of all or substantially
all of the properties and assets of one or more Subsidiaries of the Company,
which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any sale, lease, conveyance or transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, the successor corporation formed by such consolidation or into which
the Company is merged or to which such sale, lease, conveyance or transfer is
made (the "Successor Corporation"), shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under the Indenture with
the same effect as if such successor corporation had been named therein as the
Company, and when a successor corporation duly assumes all of the obligations of
the Company pursuant hereto and pursuant to the Securities, the predecessor
shall be released from such obligations (except with respect to any obligations
that arise from or as a result of such transaction), provided, however, that if
the Successor Corporation is a Subsidiary, the consolidated net worth of which
is less than that of the Company immediately prior to such merger,
consolidation, sale, lease, conveyance or transfer, the Company shall not be
released from such obligations but shall remain jointly and severally liable
therefor with the Successor Corporation.
ARTICLE
6.
EVENTS OF DEFAULT AND REMEDIES
6.1. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(1) failure to pay any installment of interest on the Securities as and
when the same becomes due and payable, or to perform any conversion of the
Securities required under this Indenture, and the continuance of such default
for a period of 30 days, whether or not such payment is prohibited by
Article 11;
(2) failure to pay all or any part of the principal of, or premium, if any
on the Securities when and as the same become due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation, default
in the payment of the Repurchase Price on the Repurchase Date in accordance with
Article 10, whether or not such payment is prohibited by Article 11;
(3) failure by the Company to observe or perform any covenant, agreement
or warranty contained in the Securities or this Indenture (other than a default
in the performance of any covenant, agreement or warranty which is specifically
dealt with elsewhere in this Section 6.1), and continuance of such failure for a
period of 60 days after there has been given, by registered or certified mail,
to the Company by the Trustee, or to the Company and the Trustee by Holders of
at least 25% in aggregate principal amount of the then outstanding Securities,
a written notice specifying such default or breach, requesting it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
(4) a default under Indebtedness of the Company or any of its Subsidiaries
with an aggregate principal amount in excess of $5,000,000 (a) resulting from
the failure to pay principal at maturity or (b) as a result of which the
maturity of such Indebtedness has been accelerated prior to its stated maturity;
(5) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization of the Company or any of its Significant Subsidiaries
under any bankruptcy or similar law, and such decree or order shall have
continued undischarged and unstayed for a period of 75 days; or a decree or
order of a court of competent jurisdiction over the appointment of a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency of the Company, any
of its Significant Subsidiaries, or of the property of any such Person, or for
the winding up or liquidation of the affairs of any such Person, shall have been
entered, and such decree, judgment, or order shall have remained in force
undischarged and unstayed for a period of 75 days;
(6) the Company or any of its Significant Subsidiaries shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or answer
or consent seeking reorganization under any bankruptcy or similar law or similar
statute, or shall consent to the filing of any such petition, or shall consent
to the appointment of a Custodian, receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of it or any of its assets or property, or shall make a
general assignment for the benefit of its creditors, or
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shall admit in writing its inability to pay its debts generally as they
become due, or shall, within the meaning of any Bankruptcy Law, become
insolvent, fail generally to pay its debts as they become due, or take any
corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing; or
(7) final unsatisfied judgments not covered by insurance aggregating
in excess of $5,000,000 at any one time shall have been rendered against
the Company or any of its Subsidiaries and have not been stayed, bonded or
discharged for a period (during which execution shall not be effectively
stayed) of 30 days (or, in the case of any such final judgment which
provides for payment over time, which shall so remain unstayed, unbonded or
undischarged 30 days beyond any applicable payment date provided therein).
Notwithstanding the 60-day period and notice requirement contained in
Section 6.1(3) above, with respect to a default under Article 10 the 60-day
period referred to in Section 6.1(3) shall be deemed to have begun as of the
date the Change of Control notice is required to be sent in the event that the
Company has not complied with the provisions of Section 10.1 and the Trustee or
Holders of at least 25% in principal amount of the outstanding Securities
thereafter give the Notice of Default referred to in Section 6.1(3) to the
Company and, if applicable, the Trustee; PROVIDED, HOWEVER, that if the breach
or default is a result of a default in the payment when due of the Repurchase
Price on the Repurchase Date, such Event of Default shall be deemed, for
purposes of this Section 6.1, to arise no later than on the Repurchase Date.
If a Default occurs and is continuing, the Trustee shall, within 90 days
after the occurrence of such default, give to the Holders notice of such
default.
6.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in Section
6.1(5) or (6) relating to the Company or any of its significant Subsidiaries)
occurs and is continuing, then, and in every such case, unless the principal of
all of the Securities shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of
then outstanding Securities, by a notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare all of the
principal of the Securities (or the Repurchase Price if the Event of Default
includes failure to pay the Repurchase Price, determined as set forth below),
including in each case accrued interest thereon, to be due and payable
immediately. If an Event of Default specified in Section 6.1(5) or (6) relating
to the Company or any Significant Subsidiary occurs, all principal and accrued
interest thereon will be immediately due and payable on all outstanding
Securities without any declaration or other act on the part of Trustee or the
Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article 6, the Holders of no less
than a majority in aggregate principal amount of then
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outstanding Securities, by written notice to the Company and the Trustee, may
rescind, on behalf of all Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(i) all overdue interest on all Securities,
(ii) the principal of (and premium, if any, applicable to) any
Securities which would then be due otherwise than by such declaration
of acceleration, and interest thereon at the rate borne by the
Securities,
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
(iv) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities that have become
due solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.12, including, if applicable, any Event of Default
relating to the covenants contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall
be effective against any Holder for any Event of Default or event which with
notice or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive any subsequent Default or Event or
Default or impair any right consequent thereon.
6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE
The Company covenants that if an Event of Default in payment of principal,
premium or interest specified in clause (1) or (2) of Section 6.1 occurs and is
continuing, the Company shall, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, premium (if any), interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
borne by the Securities, and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel.
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If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as Trustee of an express trust in favor of the
Holders, may institute a judicial proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
6.4. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such obligor or their creditors,
the Trustee (irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including:
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in such judicial
proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
7.7.
Nothing herein contain shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought it its own name as
trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of reasonable compensation to,
and reasonable expenses, disbursement and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.
6.6. PRIORITIES.
Any money collected by the Trustee pursuant to this Article 6 shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium (if
any) or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to Section
7.7;
SECOND: To the holders of the Senior Indebtedness of the Company to the
extent provided in Article 11;
THIRD: To the Holders in payment of the amounts then due and unpaid for
principal of, premium (if any), and interest on, the Securities in respect or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal, premium (if any) and interest, respectively; and
FOURTH: To whomsoever may be lawfully entitled thereto, the remainder, if
any.
6.7. LIMITATION ON SUITS.
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of then
outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
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(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of then outstanding Securities;
it being understood and intended that no one or more Holders may have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST
Notwithstanding any other provision of this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, and premium (if any) and interest on, such Security
when due (including, in the case of redemption, the Redemption Price on the
applicable Redemption Date, and in the case of the Repurchase Price, on the
applicable Repurchase Date) and to institute suit for the enforcement of any
such payment after such respective dates, and such rights shall not be impaired
without the consent of such Holder.
6.9. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
6.10. DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Security to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article 6, or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
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6.11. CONTROL BY HOLDERS.
The Holder or Holders of no less than a majority in aggregate principal
amount of then outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred upon the Trustee, PROVIDED,
that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction,
and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
6.12. WAIVER OF PAST DEFAULT.
Subject to Section 6.8, the Holder or Holders of not less than a majority
in aggregate principal amount of then outstanding Securities may, on behalf of
all Holders, prior to the declaration of acceleration of the maturity of the
Securities, waive any past Default hereunder and its consequences, except a
Default
(A) in the payment of the principal of, or premium, if any, or
interest on, any Security not yet cured as specified in clauses (1) and (2) of
Section 6.1, or
(B) in respect of a covenant or provision hereof, which, under
Article 9, cannot be modified or amended without the consent of the Holder of
each outstanding Security affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising from such a Default shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair the exercise of any right arresting therefrom.
6.13. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by
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such party litigant; but the provisions of this Section 6.13 shall not apply to
any suit instituted by the Company, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of then outstanding Securities, or
to any suit instituted by any Holder for enforcement of the payment of principal
of, premium (if any), or interest on, any Security on or after the respective
Stated Maturity of such Security (including, in the case of redemption, on or
after the Redemption Date).
6.14. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
ARTICLE
7.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed.
7.1. DUTIES OF TRUSTEE.
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.1.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any action under this
Indenture or at the request, order or direction of the Holders or in the
exercise of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any assets received by
it except as the Trustee may agree in writing with the Company. Assets held in
trust need not be segregated from other assets except to the extent required by
law.
7.2. RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel and may require an Officers' Certificate on or Opinion of Counsel, which
shall conform to Sections 13.4 and 13.5. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such certificate
or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance of the
Company's covenants in Article 4 hereof. In addition, the Trustee shall not be
deemed to have knowledge of any Default or Event of Default except (i) any Event
of Default occurring pursuant to Sections 6.1(1), 6.1(2) or 5.1, or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company, any of its
Subsidiaries, or their respective affiliates with the same rights it would have
it if were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Section 7.10 and 7.11.
7.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities and it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement in the Securities, other than the Trustee's certificate of
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
7.5. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Security Holder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of Default
in payment of principal (or premium, if any), or interest on, any
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Security (including the payment of the Repurchase Price on the Repurchase Date
and the payment of the Redemption Price on the Redemption Date), the Trustee may
withhold the notice if and so long as a Trust Officer in good faith determines
that withholding the notice is in the interest of the Security Holders.
7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each November 15 beginning with the November 15
following the date of this Indenture, the Trustee shall, if required by law,
mail to each Security Holder a brief report dated as of such November 15 that
complies with the TIA Section 313(a). The Trustee also shall comply with TIA
Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Securities
become listed on any stock exchange, market or automatic quotation system.
A copy of each report at the time of its mailing to Security Holders shall
be mailed to the Company and filed with the SEC and each stock exchange or
market, if any, on which the Securities are listed.
7.7. COMPENSATION AND INDEMNITY.
The Company agrees to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as Trustee)
and each of its officers, directors, attorneys-in-fact and agents for, and hold
it harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by it without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
administration of this trust and its rights or duties hereunder including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall provide reasonable cooperation at the Company's
expense in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel; PROVIDED, that the
Company will not be required to pay such fees and expenses if it assumes the
Trustee's defense and there is no conflict of interest between the Company and
the Trustee in connection with such defense. The Company need not pay for any
settlement made without its written consent. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
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To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of, and premium, if any, or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article 8 of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
7.8. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of then outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian or other public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of then outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 have been paid, the retiring Trustee shall transfer all property held by it
as trustee to the successor Trustee, subject to the lien provided in Section
7.7, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Security Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
7.10. ELIGIBILITY; DISQUALIFICATION
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of
at least $100,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b).
7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE
8.
SATISFACTION AND DISCHARGE
8.1. SATISFACTION AND DISCHARGE OF INDENTURE.
The Company may terminate its obligations under this Indenture (subject
to the provisions of this Article 8) when it shall have delivered to the Trustee
for cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Article 2 hereof) and the following
conditions shall be satisfied:
(1) The Company has paid all sums payable under the Indenture;
and
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(2) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent have been complied with as contemplated by this Section 8.1.
8.2. PAYMENT TO THE COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its request; and the Holder of such Security shall thereafter
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money shall thereupon cease.
ARTICLE
9.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by Board
Resolutions, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, PROVIDED, that such action pursuant to this clause (1) does
not adversely affect the interests of any Holder in any respect;
(2) to create additional covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company or to make any other change that does not adversely affect
the rights of any Holder, PROVIDED, that the Company has delivered to
the Trustee an Opinion of Counsel stating that such change pursuant to
this clause (2) does not adversely affect the rights of any Holder;
(3) to provide for collateral for, or guarantors of, the Securities;
(4) to evidence the succession of another Person to the Company and
the assumption by any such successor of the obligations of the Company
herein and in the Securities in accordance with Article 5: or
(5) to comply with the TIA.
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9.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF HOLDERS.
Subject to Section 6.8 and the last sentence of this paragraph, with the
consent of the Holders of not less than a majority in aggregate principal amount
of then outstanding Securities, by written act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by Board Resolutions, and
the Trustee may amend or supplement this Indenture or the Securities or enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or the Securities or of modifying in any manner the rights of
the Holders under this Indenture or the Securities. Subject to Section 6.8 and
the last sentence of this paragraph, the Holder or Holders of not less than a
majority in aggregate principal amount of then outstanding Securities may, in
writing, waive compliance by the Company with any provision of this Indenture or
the Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
(1) change the Stated Maturity of any Security or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, any
Security or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment or
the conversion of any Security on or after the due date thereof
(including, in the case of redemption, on or after the Redemption Date),
or reduce the Repurchase Price, or alter the Repurchase Offer or
redemption provisions in a manner adverse to the Holders;
(2) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the
Indenture;
(3) adversely affect the right of such Holder to convert Securities;
or
(4) modify any of the waiver provisions, except to increase any
required percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the Holder
of each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein,
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shall not, however, in any way impair or affect the validity of any such
supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this Article
9, the Company may, but shall not be obligated to, offer to any Holder who
consents to such amendment, supplement or waiver, or (at the option of the
Company) to all Holders, consideration for consent to such amendment, supplement
or waiver.
9.3. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of his Security by written notice to the Company
or the Person designated by the Company as the Person to whom consents should be
sent if such revocation is received by the Company or such Person before the
date on which the Trustee receives an Officers' Certificate certifying that the
Holders of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective pursuant to this
Section 9.4, it shall bind every Security Holder, unless it makes a change
described in any of clauses (1) through (4) of Section 9.2, in which case, the
amendment, supplement or waiver shall bind only each Holder of a Security who
has consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
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9.5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Security. The Trustee
may place an appropriate notation on the Security about the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Any failure
to make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article 9; PROVIDED, that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article 9 is authorized or permitted by this
Indenture.
ARTICLE
10.
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
10.1. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A CHANGE OF CONTROL.
(a) In the event that a Change of Control occurs, each Holder shall have
the right, at such Holder's option, subject to the terms and conditions of this
Indenture, to require the Company to repurchase all or any part of such Holder's
Securities (PROVIDED, that the principal amount of such Securities must be
$1,000 or an integral multiple thereof) on the date (the "Repurchase Date") that
is no later than 45 Business Days after the occurrence of such Change of
Control, at a cash price (the "Repurchase Price") equal to 100% of the principal
amount thereof, together with accrued and unpaid interest to the Repurchase
Date.
(b) In the event that, pursuant to this Section 10.1, the Company shall be
required to commence an irrevocable and unconditional offer to purchase
Securities (a "Repurchase Offer"), the Company shall follow the procedures set
forth in this Section 10.1 as follows:
(1) the Repurchase Offer shall commence within 30 Business Days following a
Change of Control;
(2) the Repurchase Offer shall remain open for 15 Business Days following
its commencement, except to the extent that a longer period is required by
applicable law,
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but in any case not more than 45 Business Days following the Change of
Control (the "Repurchase Offer Period");
(3) upon the expiration of a Repurchase Offer, the Company shall
purchase all Securities tendered in response to the Repurchase Offer;
(4) if the Repurchase Date is on or after an interest payment record
date and on or before the related Interest Payment Date, any accrued
interest will be paid to the Person in whose name a Security is registered
at the close of business on such record date, and no additional interest
will be payable to Security Holders who tender Securities pursuant to the
Repurchase Offer;
(5) the Company shall provide the Trustee with notice of the
Repurchase Offer, at least 5 Business Days before the commencement of any
Repurchase Offer; and
(6) on or before the commencement of any Repurchase Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice to each of the Security Holders,
which (to the extent consistent with this Indenture) shall govern the terms
of the Repurchase Offer and shall state:
(i) that the Repurchase Offer is being made pursuant to such
notice and this Section 10.1 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(ii) the Repurchase Price (including the amount of accrued and
unpaid interest, if any), the Repurchase Date and the Repurchase Put
Date (as defined below);
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest, if any;
(iv) that, unless the Company defaults in depositing Cash with
the Paying Agent in accordance with the last paragraph of this clause
(b) or such payment is prevented pursuant to Article 11, any Security,
or portion thereof, accepted for payment pursuant to the Repurchase
Offer shall cease to accrue interest after the Repurchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Repurchase Offer will be required to
surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the
Paying Agent (which may not for purposes of this Section 10.1,
notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) at the address specified in
the notice prior to the close of business on the earlier of (a) the
third Business Day prior to the Repurchase Date and (b) the third
Business Day
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following the expiration of the Repurchase Offer (such earlier date
being the "Repurchase Put Date");
(vi) that Holders will be entitled to withdraw their election,
in whole or in part, if the Paying Agent (which may not for purposes
of this Section 10.1, notwithstanding anything in this Indenture to
the contrary, be the Company or any Affiliate of the Company)
receives, up to the close of business on the Repurchase Put Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Securities the Holder
is withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased; and
(vii) a brief description of the events resulting in such Change
of Control.
Any such Repurchase Offer shall comply with all applicable provisions of
Federal and state laws, including those regulating tender offers, if applicable,
and any provisions of this Indenture which conflict with such laws shall be
deemed to be superseded by the provisions of such laws.
On or before the Repurchase Date, the Company shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the Repurchase
Offer on or before the Repurchase Put Date, (ii) deposit with the Paying Agent
Cash sufficient to pay the Repurchase Price (together with accrued and unpaid
interest, if any) of all Securities or portions thereof so tendered and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to Holders of Securities so
accepted payment in an amount equal to the Repurchase Price (together with
accrued and unpaid interest, if any), and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security or Securities
equal in principal amount to any unpurchased portion of the Securities
surrendered. Any Securities not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Repurchase Offer on or as soon as practicable after
the Repurchase Date.
ARTICLE
11.
SUBORDINATION
11.1. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company and each Holder, by its acceptance of Securities, agree that
(a) the payment of the principal of, premium, if any, and interest on the
Securities and (b) any other payment in respect of the Securities, including on
account of the acquisition or redemption of the Securities by the Company
(including, without limitation, pursuant to Article 10) is subordinated, to the
extent and in the manner provided in this Article 11, to the prior payment in
full of all Senior
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Indebtedness of the Company, whether outstanding at the date of this Indenture
or thereafter created, incurred, assumed or guaranteed, and that these
subordination provisions are for the benefit of the holders of Senior
Indebtedness.
This Article 11 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
11.2. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No payment may be made by the Company on account of the principal
of, premium, if any, or interest on, the Securities, or to acquire any of the
Securities (including repurchases of Securities at the option of the Holder) for
cash or property (other than Junior Securities), or on account of the redemption
provisions of the Securities, (i) upon the maturity of any Senior Indebtedness
of the Company by lapse of time, acceleration (unless waived) or otherwise,
unless and until all principal of, premium, if any, and interest on such Senior
Indebtedness are first paid in full (or such payment is duly provided for), or
(ii) in the event of default in the payment of any principal of, premium, if
any, or interest on any Senior Indebtedness of the Company when it becomes due
and payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise (a "Payment Default"), unless and until such Payment
Default has been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of Senior Indebtedness or their representative
immediately to accelerate its maturity and (ii) written notice of such event of
default given to the Company and the Trustee by the holders of an aggregate of
at least $5,000,000 principal amount outstanding of such Senior Indebtedness or
their representative (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of the Company on account
of the principal of, premium, if any, or interest on, the Securities, or to
acquire or repurchase any of the Securities for cash or property, or on account
of the redemption provisions of the Securities, in any such case other than
payments made with Junior Securities of the Company. Notwithstanding the
foregoing, unless (i) the Senior Indebtedness in respect of which such event of
default exists has been declared due and payable in its entirety within 179 days
after the Payment Notice is delivered as set forth above (the "Payment Blockage
Period"), and (ii) such declaration has not been rescinded or waived, at the end
of the Payment Blockage Period, the Company shall be required to pay all sums
not paid to the Holders of the Securities during the Payment Blockage Period due
to the foregoing prohibitions and to resume all other payments as and when due
on the Securities. Any number of Payment Notices may be given; PROVIDED,
HOWEVER, that (i) not more than one Payment Notice shall be given within a
period of any 360 consecutive days, and (ii) no default that existed upon the
date of such Payment Notice or the commencement of such Payment Blockage Period
(whether or not such event of default is on the same issue of Senior
Indebtedness) shall be made the basis for the commencement of any other Payment
Blockage Period.
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(c) In furtherance of the provisions of Section 11.1, in the event
that, notwithstanding the foregoing provisions of this Section 11.2, any payment
or distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the provisions of this Section 11.2, then such
payment or distribution (subject to the provisions of Section 11.7) shall be
received and held in trust by the Trustee or such Holder or Paying Agent for the
benefit of the holders of Senior Indebtedness of the Company, and shall be paid
or delivered by the Trustee or such Holders or such Paying Agent, as the case
may be, to the holders of Senior Indebtedness of the Company remaining unpaid or
unprovided for, or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness of the Company may have been issued, ratably according
to the aggregate amounts remaining unpaid on account of the Senior Indebtedness
of the Company held or represented by each, for application to the payment of
all Senior Indebtedness of the Company in full after giving effect to any
concurrent payment and distribution to the holders of such Senior Indebtedness.
11.3. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON
DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company shall first
be entitled to receive payments in full (or have such payment duly provided for)
before the Holders are entitled to receive any payment on account of the
principal of, premium, if any, and interest on, the Securities (other than
payment in Junior Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than payment in Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the provisions of this Article
11, shall be paid by the liquidating trustee or agent or other Person making
such a payment or distribution directly to the holders of Senior Indebtedness of
the Company or their representatives ratably according to the respective amounts
of such Senior Indebtedness held or represented by each, to the extent necessary
to make payment in full of all such Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Junior Securities), shall be received by the
Trustee or the Holders or any Paying Agent (or, if the Company or any Affiliate
of the Company is acting as its own Paying Agent, money for any such payment or
distribution shall be segregated or held in trust) on account of the principal
of or
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interest on the Securities before all Senior Indebtedness of the Company is paid
in full, such payment or distribution (subject to the provisions of Section
11.7) shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of such Senior Indebtedness, or
their respective representatives, ratably according to the respective amounts of
such Senior Indebtedness held or represented by each, to the extent necessary to
make payment as provided herein of all such Senior Indebtedness remaining unpaid
after giving effect to all concurrent payments and distributions and all
provisions therefor to or for the holders of such Senior Indebtedness, but only
to the extent that as to any holder of such Senior Indebtedness, as promptly as
practical following notice from the Trustee to the holders of such Senior
Indebtedness that such prohibited payment has been received by the Trustee,
Holder(s) or Paying Agent (or has been segregated as provided above), such
holder (or a representative therefor) notifies the Trustee of the amounts then
due and owing on such Senior Indebtedness, if any, held by such holder and only
the amounts specified in such notices to the Trustee shall be paid to the
holders of such Senior Indebtedness.
11.4. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness of the Company
as provided herein, the Holders of Securities shall be subrogated to the rights
of the holders of such Senior Indebtedness to receive payments or distributions
of assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of this
Article 11, which otherwise would have been made to the Holders shall, as
between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Article 11 are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 11 shall have been applied,
pursuant to the provisions of this Article 11, to the payment of payable under
Senior Indebtedness of the Company, then the Holders be entitled to receive from
the holders of such Senior Indebtedness any payments or distributions received
by such holders of Senior Indebtedness in excess of the amount sufficient to pay
all amounts payable under or in respect of such Senior Indebtedness in full.
11.5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article 11 or elsewhere in this Indenture or
in the Securities is intended to or shall impair as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on, the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything
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herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article 11, of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy. Notwithstanding anything to the contrary
in this Article 11 or elsewhere in this Indenture or in the Securities, upon any
distribution of assets of the Company referred to in this Article 11, the
Trustee, subject to the provisions of Sections 7.1 and 7.2, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 11 so long as such court has been apprised of the provisions of,
or the order, decree or certificate makes reference to, the provisions of this
Article 11. Nothing in this Section 11.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7.
11.6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.1
and 7.2, shall be entitled in all respects conclusively to assume that no such
fact exists.
11.7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
Amounts deposited in trust with the Trustee pursuant to and in accordance
with Section 8.2 shall be for the sole benefit of Security Holders and, to the
extent allocated for the payment of Securities, shall not be subject to the
subordination provisions of this Article 11. Otherwise, any deposit of assets
with the Trustee or the Agent (whether or not in trust) for the payment of
principal of or interest on any Securities shall be subject to the provisions of
Sections 11.1, 11.2, 11.3 and 11.4; PROVIDED THAT, if prior to one Business Day
preceding the date on which by the terms of this Indenture any such assets may
become distributable for any purpose (including, without limitation, the payment
of either principal of or interest on any Security) the Trustee or such Paying
Agent shall not have received with respect to such assets the written notice
provided for in Section 11.6, then the Trustee or such Paying Agent shall have
full power and authority to receive such assets and to apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date.
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11.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY OR
HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article 11 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
the Indenture or the Holders.
11.9. SECURITY HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
SECURITIES.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article 11 and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors of the Company),
the immediate filing of a claim for the unpaid balance of his Securities in the
form required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of the Senior Indebtedness or their
representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Security Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Security Holder in any
such proceeding.
11.10. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article 11 in respect of any Senior Indebtedness, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
11.11. ARTICLE 11 NOT TO PREVENT EVENTS OF DEFAULT.
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The failure to make a payment on account of principal of, premium, if
any, or interest on, the Securities by reason of any provision of this Article
11 shall not be construed as preventing the occurrence of a Default or an Event
of Default under Section 6.1 or in any way prevent the Holders from exercising
any right hereunder other than the right to receive payment on the Securities.
11.12. NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Securities or the Company or any other
Person, cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article 11 or otherwise. Nothing in this
Section 11.12 shall affect the obligation of any other such Person to hold such
payment for the benefit of, and to pay such payment over to, the holders of
Senior Indebtedness or their representatives.
ARTICLE
12.
CONVERSION OF SECURITIES
12.1. CONVERSION PRIVILEGE.
Subject to and upon compliance with the provisions of this Article 12, at
the option of the Holder thereof, any Security may at any time be converted, in
whole, or in part in multiples of $1,000 principal amount, into fully paid and
non-assessable shares of Common Stock issuable upon conversion of the Securities
(the "Conversion Shares"), at the conversion price in effect at the Date of
Conversion, until and including, but not after the close of business on the
Stated Maturity, or unless such Security or some portion thereof shall have been
called for redemption or delivered for repurchase prior to such date and no
Default is made in making due provision for the payment of the redemption price
in accordance with the terms of this Indenture, in which case, with respect to
such Security or portion thereof as has been so called for redemption or
delivered for repurchase, such Security or portion thereof may be so converted
until and including, but not after the close of business on the Business Day
prior to the Redemption Date or Repurchase Date, as applicable for such
Security, unless the Company subsequently fails to pay the applicable Redemption
Price or Repurchase Price, as the case may be.
12.2. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any Security
to be converted shall surrender such Security to the Company at any time during
usual business hours at the office of the Registrar, accompanied by a fully
executed written notice, in substantially the form set forth on the reverse of
the Security, that the Holder elects to convert such Security or a stated
portion thereof constituting a multiple of a $1,000 principal amount, and, if
such Security is surrendered for conversion during the period between the close
of business of any Record Date
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and the opening of business on the next following Interest Payment Date and has
not been called for redemption on a Redemption Date which occurs within such
period, accompanied also by payment of an amount equal to the interest payable
on such Interest Payment Date on the principal amount of the Security being
surrendered for conversion, notwithstanding such conversion. The Holder of any
Security at the close of business on a Record Date will be entitled to receive
the interest payable on such Security on the corresponding Interest Payment Date
notwithstanding the conversion thereof after such Record Date. Holders will
receive the interest payment due on November 15, 1999 whether or not they
surrender Securities for conversion as a result of the Company's exercise of its
right to redeem Securities on or after November 15, 1999. Such notice of
conversion shall also state the name or names (with address) in which the
certificate or certificates for shares of Common issued. Securities surrendered
for conversion shall (if reasonably required by the Company or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company, duly executed by the Holder or his
attorney duly authorized in writing. As promptly as practicable after the
receipt of such notice and the surrender of such Security as aforesaid, the
Company shall, subject to the provisions of Section 12.8 hereof, issue and
deliver to such Holder, or on his written order, a certificate or certificates
for the number of full shares of Common Stock issuable on such conversion of
Securities in accordance with the provisions of this Article 12 and Cash, as
provided in Section 12.3 hereof, in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion. Such conversion shall be deemed
to have been effected immediately prior to the close of business on the date
(herein called the "Date of Conversion") on which such Security shall have been
surrendered as aforesaid, the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become on the Date of Conversion the
holder or holders of record of the shares represented thereby; PROVIDED,
HOWEVER, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall cause the person or persons in whose name or
names the certificate or certificates for such shares are to be issued to be
deemed to have become the recordholder or holders thereof for all purposes at
the opening of business on the next succeeding day on which such stock transfer
books are open but such conversion shall nevertheless be at the conversion price
in effect at the close of business on the date when such Security shall have
been so surrendered with the conversion notice. In the case of conversion of a
portion, but less than all, of a Security, the Company shall as promptly as
practicable execute, and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Company, a Security or Securities in the
aggregate principal amount of the unconverted portion of the Security
surrendered. Except as otherwise expressly provided in this Indenture, no
payment or adjustment shall be made for interest accrued on any Security (or
portion thereof) converted or for dividends or distributions on any Common Stock
issued upon conversion of any Security.
12.3. FRACTIONAL INTERESTS.
No fractions of shares or scrip representing fractions of shares shall be
issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion thereof shall be basis of the
aggregate principal amount of the Securities so surrendered. If any
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fraction of a share of Common Stock would, except for the foregoing provisions
of this Section 12.3, be issuable on the conversion of any Security or
Securities, the Company shall make payment in lieu thereof in an amount of Cash
equal to the value of such fraction computed on the basis of the last sale price
of the Common Stock as reported on the Nasdaq National Market (or if not listed
for trading thereon, then on the principal national securities exchange on which
the Common Stock is listed or admitted to trading) at the close of business on
the Date of Conversion or if no such sale takes place on such day, the last sale
price for such day shall be the average of the closing bid and asked prices
regular way on the Nasdaq National Market (or if not listed for trading thereon,
on the principal national securities exchange or market on which the Common
Stock last sale price being hereinafter referred to as the "Last Sale Price").
If on such Trading Day the Common Stock is not quoted by any such organization,
the fair value of such Common Stock on such day, as reasonably determined in
good faith by the Board of Directors of the Company, shall be used.
12.4. CONVERSION PRICE.
The conversion price per share of Common Stock issuable upon conversion of
the Securities (the "Conversion Price") shall initially be $13.95 (or $13.95 in
principal amount of Securities for each such share of Common Stock).
12.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (i) make or pay a dividend (or other
distribution) in shares of Common Stock on any class of Capital Stock of the
Company, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares or (iii) combine or reclassify its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the Holder of any
Security thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock that he would have owned immediately following
such action had such Security been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately, except as provided in subsection (h) below, after the record date
in the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights, options or warrants to all
holders of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the then current market price per
share of the Common Stock (as determined pursuant to subsection (f) below) on
the record date mentioned below, the Conversion Price shall be adjusted to a
price, computed to the nearest cent, so that the same shall equal the price
determined by multiplying:
(i) the Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction, of which
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(ii) the numerator shall be (A) the number of shares of Common Stock
outstanding on the date of issuance of such rights, options or warrants,
immediately prior to such issuance, plus (B) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise
price of such rights, options or warrants and dividing the product so
obtained by such current market price), and of which
(iii) the denominator shall be (A) the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or
warrants, immediately prior to such issuance, plus (B) the number of
additional shares of Common Stock which are so offered for subscription or
purchase.
Such adjustment shall become effective immediately, except as provided in
subsection (h) below, after the record date for the determination of holders
entitled to receive such rights, options or warrants; PROVIDED, HOWEVER, that if
any such rights, options or warrants issued by the Company as described in this
subsection (b) are only exercisable upon the occurrence of certain triggering
events relating to control and provided for in shareholder rights plans, then
the Conversion Price will not be adjusted as provided in this subsection (b)
until such triggering events occur.
(c) In case the Company or any subsidiary of the Company shall distribute
to all holders of Common Stock, any of its assets, evidences of indebtedness,
cash or other assets or shares of Capital Stock other than Common Stock
(including securities, but other than (x) dividends or distributions exclusively
in cash or (y) any dividend or distribution for which an adjustment is required
to be made in accordance with subsection (a) or (b) above) then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the then current market price per share of the Common Stock (determined as
provided in subsection (f) below) on the record date mentioned below less the
then fair market value (as reasonably determined in good faith by the Board of
Directors of the Company) of the portion of the assets so distributed applicable
to one share of Common Stock, and of which the denominator shall be such current
market price per share of the Common Stock. Such adjustment shall become
effective immediately, except as provided in subsection (h) below, after the
record date for the determination of stockholders entitled to receive such
distribution.
(d) In case the Company or any subsidiary of the Company shall make any
distribution consisting exclusively of cash (excluding any cash portion of
distributions for which an adjustment is required to be made in accordance with
(c) above, or cash distributed upon a merger or consolidation to which Section
12.6 applies) to all holders of Common Stock in an aggregate amount that,
combined together with (i) all other such all-cash distributions made within the
then preceding 12 months in respect of which no adjustment has been made and
(ii) any cash and the fair market value of other consideration paid or payable
in respect of any tender
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offer by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 10% of the Company's market capitalization (defined as being the product
of the then current market price of the Common Stock (determined as provided in
subsection (f) below) times the number of shares of Common Stock then
outstanding) on the record date of such distribution, in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the date of such distribution by a fraction of which the numerator shall be the
then current market price per share of the Common Stock on such record date less
the amount of the cash so distributed applicable to one share of Common Stock,
and of which the denominator shall be such current market price per share of the
Common Stock. Such adjustment shall become effective immediately, except as
provided in subsection (h) below, after the record date for the determination of
stockholders entitled to receive such distribution.
(e) In case there shall be completed a tender or exchange offer made by
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock (any such tender or exchange offer being referred to as an "Offer")
that involves an aggregate consideration having a fair market value as of the
expiration of such Offer (the "Expiration Time") that, together with (i) any
cash and the fair market value of any other consideration payable in respect of
any other Offer, as of the expiration of such other Offer, expiring within the
12 months preceding the expiration of such Offer and in respect for which no
Conversion Price adjustment pursuant to this subsection (e) has been made and
(ii) the aggregate amount of any all-cash distributions referred to in
subsection (d) of this Section 12.5 to all holders of Common Stock within the 12
months preceding the expiration of such Offer for which no Conversion Price
adjustment, pursuant to such subsection (d), has been made, exceeds 10% of the
product of the then current market price per share (determined as provided in
subsection (f) below) of the Common Stock on the Expiration Time times the
number of shares of Common Stock outstanding (including any tendered shares) on
the Expiration Time, the Conversion Price shall be reduced by multiplying such
Conversion Price in effect immediately prior to the Expiration Time by a
fraction of which the numerator shall be (i) the product of the then current
market price per share (determined as provided in subsection (f) below) on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time minus (ii) the fair
market value of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the Offer) of all shares
validly tendered and not withdrawn as of the Expiration Time (the shares deemed
so accepted being referred to as the "Purchased Shares") and the denominator
shall be the product of (i) such current market price per share on the
Expiration Time times (ii) such number of outstanding shares on the Expiration
Time less the number of Purchased Shares, such reduction to become effective
immediately prior to the opening of business on the day following the Expiration
Time.
For purposes of this subsection (e), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.
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(f) For the purpose of any computation under subsections (b), (c), (d)
and (e) above, the current market price per share of Common Stock on any date
shall be deemed to be the average of the Last Sale Prices of a share of Common
Stock for the five consecutive Trading Days selected by the Company commencing
not more than 20 Trading Days before, and ending not later than, the earlier of
the date in question and the date before the "ex date," with respect to the
issuance, distribution or Offer requiring such computation. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 12.3 hereof, the fair value of the
Common Stock on such day, as reasonably determined in good faith by the Board of
Directors of the Company, shall be used. For purposes of this paragraph, the
term "ex date," when used with respect to any issuance, distribution or payments
with respect to an Offer, means the first date on which the Common Stock trades
regular way on the Nasdaq National Market (or if not listed or admitted to
trading thereof, then on the principal market or exchange on which the Common
Stock is listed or admitted to trading) without the right to receive such
issuance, distribution or Offer.
(g) In addition to the foregoing adjustments in subsections (a), (b),
(c), (d) and (e) above, the Company will be permitted to make such reductions in
the Conversion Price as it considers to be advisable. In the event the Company
elects to make such a reduction in the conversion price, the Company will comply
with the requirements of Rule 14e-1 of the Exchange Act and any other Federal
and state laws and regulations thereunder if and to the extent that such laws
and regulations are applicable in connection with the reduction of the price of
the Notes; PROVIDED that any provisions of this Indenture which conflict with
such laws shall be deemed superseded by the provisions of such laws.
(h) In any case in which this Section 12.5 shall require that an
adjustment (including by reason of the last sentence of subsection (a) or (c)
above) be made immediately following a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Security converted after such record
date and on and before such adjustment shall have become effective (i) defer
paying any Cash payment pursuant to Section 12.3 hereof or issuing to the Holder
of such Security the number of shares of Common Stock and other Capital Stock of
the Company (or other assets or securities) issuable upon such conversion in
excess of the number of shares of Common Stock and other Capital Stock of the
Company issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (ii) not later than five Business Days after such adjustment
shall become effective, pay to such Holder the appropriate Cash payment pursuant
to Section 12.3 hereof and issue to such Holder the additional shares of Common
Stock and other Capital Stock of the Company issuable on such Conversion.
(i) No adjustment in the Conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1.0% of the
Conversion Price; PROVIDED, that any adjustments which by reason of this
subsection (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
12 shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
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(j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly (i) file with the Trustee and the Registrar an Officers'
Certificate setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment, which
certificate shall be conclusive evidence of the correctness of such adjustment,
and (ii) mail or cause to be mailed a notice of such adjustment to each Security
Holder at his address as the same appears on the registry books of the
Registrar.
(k) In the event that the Company distributes rights or warrants (other
than those referred to in subsection (b) above) pro rata to holders of Common
Stock, so long as any such rights or warrants have not expired or been redeemed
by the Company, the Company shall make proper provision so that the Holder of
any Security surrendered for conversion will be entitled to receive upon such
conversion, in addition to the Conversion Shares, a number of rights and
warrants to be determined as follows: (i) if such conversion occurs on or prior
to the date for the distribution to the holders of rights or warrants of
separate certificates evidencing such rights or warrants (the "Distribution
Date"), the same number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion occurs after
such Distribution Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal amount of such
Security so converted was convertible immediately prior to such Distribution
Date would have been entitled on such Distribution Date in accordance with the
terms and provisions of and applicable to the rights or warrants.
12.6. CONTINUATION OF CONVERSION PRIVILEGE IN CASE OF RECLASSIFICATION,
CHANGE, MERGER, CONSOLIDATION OR SALE OF ASSETS.
If any of the following shall occur, namely: (a) any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of the
Securities (other than a change in par value, or from par value to no par value,
or from no par value, to par value, or as a result of a subdivision or
combination), (b) any consolidation or merger of the Company with or into any
other Person, or the merger of any other Person with or into the Company (other
than a merger which does not result in any reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (c) any sale,
transfer or conveyance of all or substantially all of the assets of the Company
(computed on a consolidated basis), then the Company, or such successor or
purchasing entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
only into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance by a holder of the number of
shares of Common Stock issuable upon conversion of such Security immediately
prior to such reclassification, change, consolidation, merger, sale, transfer or
conveyance assuming such holder of Common Stock of the Company failed to
exercise his rights of an election, if any,
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as to the kind or amount of cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
(PROVIDED that if the kind or amount of securities, cash and other property
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance is not the same for each share of Common Stock of the
Company held immediately prior to such reclassification, change, consolidation,
merger, sale, transfer or conveyance in respect of which such rights of election
shall not have been exercised ("Non-Electing Shares"), then for the purpose of
this Section 12.6, the kind and amount of securities, cash and other property
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance by each Non-Electing Share shall be deemed to be the kind
and amount so receivable per share by a plurality of the Non-Electing Shares).
Such supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 12. If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of shares of Common Stock includes shares of
stock or other securities and property (including cash) of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provisions of this Section 12.6 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be
mailed to each Holder of Securities at his address as the same appears on the
registry books of the Company.
Neither the Trustee nor the Registrar shall be under any responsibility
to determine the correctness of any provisions contained in any such
supplemental indenture relating either to the kind or amount of shares of stock
or securities or property (including cash) receivable by Holders of Securities
upon the conversion of their Securities after any such reclassification, change,
consolidation, merger, sale or conveyance or to any adjustment to be made with
respect thereto, but, subject to the provisions of Article 7.1 and 7.2 hereof,
may accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
12.7. NOTICE OF CERTAIN EVENTS.
In case:
(a) the Company shall declare a dividend (or any other distribution)
payable to the holders of Common Stock (other than cash dividends);
(b) the Company shall authorize the granting to all holders of Common
Stock of rights, warrants or options to subscribe for or purchase any shares of
stock of any class or of any other rights;
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(c) the Company shall authorize any reclassification or change of the
Common Stock (including a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or the
sale or conveyance of all or substantially all the property or business of the
Company;
(d) there shall be proposed any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) the Company or any of its Subsidiaries shall complete an Offer;
then, the Company shall cause to be filed at the office of the Registrar, and
shall cause to be mailed to each Holder of Securities, at its address as it
shall appear on the registry books of the Registrar, at least 20 days before the
date hereinafter specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice stating the date on
which (1) a record is expected to be taken for the purpose of such dividend,
distribution, rights, warrants or options or Offer, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights, warrants or options or to participate in
such Offer are to be determined, or (2) such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up
is expected to become effective and the date, if any is to be fixed, as of which
it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, change, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding-up. Neither the failure to give
notice nor any defect therein shall affect the legality or validity of the
events described in clauses (a) through (e) of this Section 12.7.
12.8. TAXES ON CONVERSION.
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant thereto; PROVIDED, HOWEVER,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of any such
tax or has established, to the satisfaction of the Company, that such tax has
been paid. The Company extends no protection with respect to any other taxes
imposed in connection with conversion of Securities.
12.9. COMPANY TO PROVIDE STOCK.
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Securities from time to
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time as such Securities are presented for conversion, PROVIDED, that nothing
contained herein shall be construed to preclude the Company from satisfying its
obligations in respect of the conversion of Securities by delivery of
repurchased shares of Common Stock which are held in the treasury of the
Company.
If any shares of Common Stock to be reserved for the purpose of conversion
of Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible use its best efforts to
secure such registration or approval, as the case may be, PROVIDED, HOWEVER,
that nothing in this Section 12.9 shall be deemed to limit in any way the
obligations of the Company provided in this Article 12.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Securities will upon issue be fully paid and non-assessable
by the Company and free of preemptive rights.
12.10. DISCLAIMER OF RESPONSIBILITY FOR CERTAIN MATTERS.
Neither the Trustee nor any agent of the Trustee shall at any time be under
any duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the Officers' Certificate referred to in Section 12.5(j) hereof, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. Neither the Trustee nor the
Registrar shall be accountable with respect to the validity or value (or the
kind or amount) of any shares of Common Stock, or of any securities or property
(including cash), which may at any time be issued or delivered upon the
conversion of any Security; and neither the Trustee nor any agent of the Trustee
makes any representation with respect thereto. Neither the Trustee nor any agent
of the Trustee shall be responsible for any failure of the Company to issue,
register the transfer of or deliver any shares of Common Stock or stock
certifcates or other securities or property (including cash) upon the surrender
of any Security for the purpose of conversion or, subject to Article 7 hereof,
to comply with any of the covenants of the Company contained in this Article 12.
12.11. RETURN OF FUNDS DEPOSITED FOR REDEMPTION OF CONVERTED SECURITIES.
Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other Paying Agent for the purpose of paying
the principal of and interest
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on any of the Securities and which shall not be required for such purposes
because of the conversion of such Securities, as provided in this Article 12,
shall after such conversion be repaid to the Company by the Trustee or such
other Paying Agent. All Securities delivered for conversion to the Trustee will
be canceled by or at the direction of the Trustee.
ARTICLE
13.
MISCELLANEOUS
13.1. TIA CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by operation of the TIA, the imposed duties, upon qualification
of this Indenture under the TIA, shall control.
13.2. NOTICES.
Any notices or other communications to the Company or the Trustee required
or permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by overnight courier, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company:
PLATINUM technology, inc.
South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Chief Financial Officer
Telecopy: (630) 691-0710
with a copy to General Counsel at (630) 691-0454
if to the Trustee:
American National Bank and Trust Company of Chicago
North LaSalle Street, 13th Floor
Chicago, IL 60690
Attention: Corporate Trust Division
Telecopy: (312) 661-6491
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; the next Business Day, if by
overnight courier; when receipt is acknowledged, if telecopied; and five
Business Days after mailing if sent by registered or certified mail, postage
prepaid return receipt
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requested (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee).
Any notice or communication mailed to a Security Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registry books of the Registrar and shall be sufficiently given to him if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Security Holder or any
defect in it shall not affect its sufficiency with respect to other Security
Holders. If a notice or communication is mailed in the manner provided above, it
is duly given, whether or not the addressee receives it.
13.3. COMMUNICATIONS BY HOLDERS WTIH OTHER HOLDERS.
Security Holders may communicate pursuant to TIA Section 312(b) with other
Security Holders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each Certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) A statement that, in opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such Person,
such condition or covenant has been complied with; PROVIDED, HOWEVER, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
13.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Security Holders. The Paying Agent or Registrar may make reasonable rules for
its own functions.
13.7. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
13.8. GOVERNING LAW.
THIS INDENTURE AND THE SECURITES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY ELECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
61
<PAGE>
13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
13.10. NO RECOURSE AGAINST OTHERS.
No direct or indirect partner, employee, stockholder, director or officer,
as such, past, present or future of the Company or any successor corporation,
shall have any personal liability in respect of the obligations of the Company
under the Securities or this Indenture by reason of his, her or its status as
such partner, stockholder, employee, director or officer. Each Securityholder by
a Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
13.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
13.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
13.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Securities shall be 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 shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
13.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the Articles
and the Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
62
<PAGE>
13.15. QUALIFICATION OF INDENTURE.
The Company shall qualify this Indenture under the TIA and shall pay all
costs and expenses (including attorneys' fees for the Company and the Trustee)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of the Indenture and the Securities and printing this
Indenture and the Securities. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
(Remainder of this page left blank intentionally.)
63
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the date first written above.
PLATINUM technology, inc.,
a Delaware Corporation
By: /s/ Michael P. Cullinane
----------------------------
Name: MICHAEL P. CULLINANE
--------------------------
Title: EXECUTIVE VICE PRESIDENT
-------------------------
Attest: Michael C. Wyatt CHIEF FINANCIAL OFFICER
--------------------------- -------------------------
Secretary
American National Bank and Trust Company of
Chicago, a national banking association
as Trustee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
The undersigned hereby acknowledges its appointment as Registrar and Paying
Agent as set forth in Section 2.3.
First Chicago Trust Company of New York
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the date first written above.
PLATINUM technology, inc.,
a Delaware Corporation
By: /s/ Andrew J. Filipowski
----------------------------
Name: Andrew J. Filipowski
--------------------------
Title: President, CEO & Chairman
-------------------------
Attest:
-------------------------
Secretary
American National Bank and Trust Company of
Chicago, a national banking association
as Trustee
By: /s/ Anjali Gottreich
----------------------------
Name: Anjali Gottreich
--------------------------
Title: Trust Officer
-------------------------
Attest:
-------------------------
Second Vice President
The undersigned hereby acknowledges its appointment as Registrar and Paying
Agent as set forth in Section 2.3.
First Chicago Trust Company of New York
By: /s/ Mary Kelly
----------------------------
Name: Mary Kelly
--------------------------
Title: Vice President
-------------------------
<PAGE>
EXHIBIT A
[FORM OF SECURITY]
PLATINUM technology, inc.
6 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2001
CUSIP No. 72764T AA9
$_____________
No.
PLATINUM technology, inc., a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to _____________, or
registered assigns, the principal sum of _____ Dollars, on November 15, 2001.
Interest Payment Dates: May 15 and November 15; commencing May 15, 1997.
Record Dates: May 1 and November 1.
Reference is made to the further provisions of this Security on the reverse
side, which will, for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated:_______ __, 1996
PLATINUM technology, inc.,
a Delaware Corporation
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Attest:
-----------------------
Secretary
A-l
<PAGE>
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the within-mentioned Indenture
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO as Trustee
By:
------------------------------
Authorized Signatory
Dated:____________
A-2
<PAGE>
PLATINUM technology, inc.
6 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2001
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein./1/
1. INTEREST.
PLATINUM technology, inc., a Delaware corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 6 3/4% per annum. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of 6 3/4% per annum compounded semi-annually.
The Company will pay interest semi-annually on May 15 and November 15
of each year (each, an "Interest Payment Date"), commencing May 15, 1997.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
November 22, 1996. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Any such
interest not so punctually paid, and defaulted interest relating thereto, may be
paid to the Persons who are registered Holders at the close of business on a
Special Record Date for the payment of such defaulted interest, as more fully
provided in the Indenture referred to below. Except as provided below, the
Company shall pay principal and interest in such coin or currency of the Untied
States of America as at the time of payment shall be legal tender for payment of
public and private debts ("U.S. Legal Tender"). The Securities will be payable
as to principal, premium and interest at the office or agency of the Company.
- ------------------
/1/ This paragraph should only be added if the Security is issued in global form
A-3
<PAGE>
maintained for such purpose within or without the City and State of New York, or
at the option of the Company, payment of principal, premium and interest may be
made by check mailed to the Holders at their addresses set forth in the registry
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of, premium and interest on
Global Securities and all other Securities the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent.
3. PAYING AGENT AND REGISTRAR.
Initially, First Chicago Trust Company of New York will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Co-Paying Agent,
Registrar or Co-Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent or
Co-Paying Agent, Registrar or Co-Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of
November 18, 1996 (the "Indenture"), between the Company and American National
Bank and Trust Company of Chicago, a national banking association (the
"Trustee"). Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are general
unsecured obligations of the Company limited in aggregate principal amount to
$10O,000,000 ($115,000,000 if the Underwriters exercise their overallotment
option in full).
5. REDEMPTION.
The Securities will not be subject to redemption prior to 1999. On or
after November 15, 1999 the Securities will be redeemable at the option of the
Company, in whole or in part, at the following Redemption Prices (expressed as a
percentage of principal amount) set forth below with respect to the indicated
Redemption Date, in each case, plus any accrued but unpaid interest to the
Redemption Date. The Securities may not be so redeemed prior to November 15,
1999.
IF REDEEMED DURING
THE 12-MONTH PERIOD
BEGINNING REDEMPTION PRICE
November 15, 1999 102.70 %
November 15, 2000 101.35 %
Any such redemption will comply with Article 3 of the Indenture.
A-4
<PAGE>
The Securities will not be subject to any sinking fund.
6. NOTICE OF REDEMPTION.
Notice of Redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Security to be redeemed at such Holder's last address as then shown upon
the registry books of the Registrar. Securities may be redeemed in part in
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date and payment of
the Securities called for redemption is not prohibited under Article 11 of the
Indenture, the Securities called for redemption will cease to bear interest and
the only right of the Holders of such Securities will be to receive payment of
the Redemption Price, plus any accrued and unpaid interest to the Redemption
Date.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiplies of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented, and any existing Default or Event of Default or
compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Securities to, among other things, cure
any
A-5
<PAGE>
ambiguity, defect or inconsistency, or make any other change that does not
adversely affect the rights of any Holder of a Security.
11. CONVERSION RIGHTS.
Subject to the provisions of the Indenture, the Holders have the right
to convert the principal amount of the Securities into fully paid and
nonassessable shares of Common Stock of the Company at the initial conversion
price per share of Common Stock of $13.95 (or $13.95 in principal amount of
Securities for each such share of Common Stock), or at the adjusted conversion
price then in effect, if adjustment has been made as provided in the Indenture,
upon surrender of the Securities to the Company at the office of the Registrar,
together with a fully executed notice in substantially the form attached hereto
and, if required by the Indenture, an amount equal to accrued interest payable
on such Security.
12. RANKING.
Payment of principal, premium, if any, and interest on the Securities
is subordinated, in the manner and to the e~xtent set forth in the Indenture, to
the prior payment in full of all Senior Indebtedness.
13. REPURCHASE AT OPTION OF HOLDER UPON A CHANGE OF CONTROL.
If there is a Change of Control, the Company shall be required to
offer to purchase on the Repurchase Date all outstanding Securities at a
purchase price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Repurchase Date. Holders of Securities will
receive a Repurchase Offer from the Company prior to any related Repurchase Date
and may elect to have such Securities purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
14. SUCCESSORS.
Except as provided in the Indenture, when a successor assumes all the
obligations of its predecessor under the Securities and the Indenture, the
predecessor will be released from those obligations.
15. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than an Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in
A-6
<PAGE>
aggregate principal amount of the Securities then outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest), if it determines that
withholding notice is in their interest.
16. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer or employee, as such, past, present
or future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the Securities or
the Indenture by reason of his, her or its status as such stockholder, director,
officer or employee. Each Holder of a Security by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
18. AUTHENTICATION.
The Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
19. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
20. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company will cause CUSIP numbers to be printed on
the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
A-7
<PAGE>
FORM OF ASSIGNMENT
I or we assign this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee __________
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date:__________ Signature: ___________________________________
(Sign exactly as name appears on
the other side of this Security)
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Article 10 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Article 10 of the Indenture, state the amount you want to be
purchased: $_________
Date:___________ Signature:___________________________________
(Sign exactly as name appears on
the other side of this Security)
A-9
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES/2/
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal
Amount of Amount of this
decrease in Amount of Global Security Signature of
Principal Amount Increase in following such authorized of Trustee
Date of of this Global Principal Amount decrease (or or Securities
Exchange Security of this Global increase) Custodian
Security
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
========================================================================================
</TABLE>
- -----------------------------
/2/ This schedule should only be added if the Security is issued in global form.
A-10
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF SECURITIES
RE: 6 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2001 OF PLATINUM technology, inc.
This Certificate relates to $______, principal amount of Securities held in
*______ book-entry or ______ definitive form by ______________________ (the
"Transferor").
The Transferor:*
[ ] (a) has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[ ] (b) has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
_____________________________________
[insert name of transferor]
By:__________________________________
Date:___________________________
*Check applicable box or blank.
Affiliation with the Company [check if applicable]
[ ] (a) The undersigned represents and warrants that it is, or at some time
during which it held this Security was, an Affiliate of the Company
(b) If 2(a) above is checked AND if the undersigned was not an Affiliate
of the Company at all times during which it held this Security,
indicate the periods during which the undersigned was an affiliate of
the Company:
(c) If 2(a) above is checked AND if the Transferee will not pay the full
purchase price for the transfer of this Security on or prior to the
date of transfer indicate when such purchase price will be paid:
- -----------------------------------------------------------------
A-11
<PAGE>
If any of the above representations required to be made by the Transferor is not
made, the Registrar shall not be obligated to register this Security in the name
of any person other than the Holder hereof.
DATED:______________________ _____________________________________
NOTICE: The signature of the Holder to this
assignment must correspond with the name as
written upon the face of this particular
Security without alteration or enlargement
or any change whatsoever.
A-12
<PAGE>
EXHIBIT B
FORM OF CONVERSION NOTICE
To: PLATINUM technology, inc.
The undersigned owner of this Security hereby: (i) irrevocably exercises
the option to convert this Security, or the portion hereof below designated, for
shares of Common Stock of PLATINUM technology, inc. in accordance with the terms
of this Indenture referred to in this Security and (ii) directs that such shares
of Common Stock deliverable upon the conversion, together with any check in
payment for fractional shares and any Security(ies) representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid by
the undersigned on account of interest accompanies this Security.
Dated:_______________________
__________________________________________
(Signature)
Provide information below for registration of shares of Common Stock if to be
issued, and of Securities if to be issued other than in the name of the
registered holder.
____________________________________
(Name)
____________________________________
(Street Address)
____________________________________
(City, State and Zip Code)
(Please print name and address)
____________________________________
(Social Security or other Taxpayer
Identifying Number)
Principal Amount to be converted: (in an
integral multiple of $1000, if less than all)
$___________________________
A-13
<PAGE>
EXHIBIT 4.6
PLATINUM technology, inc.,
ISSUER,
AND
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
AS TRUSTEE,
INDENTURE
Dated as of December 15, 1997
Up to $172,500,000
6.25% Convertible Subordinated Notes due 2002
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- ---------
<S> <C>
310 (a) (1)...................................... 7.10
(a) (2)...................................... 7.10
(a) (3)...................................... N.A.
(a) (4)...................................... N.A.
(a) (5)...................................... 7.10
(b).......................................... 7.8; 7.10; 13.2
(c).......................................... N.A.
311 (a).......................................... 7.11
(b).......................................... 7.11
(c).......................................... N.A.
312 (a).......................................... 2.5
(b).......................................... 13.3
(c).......................................... 13.3
313 (a).......................................... 7.6
(b) (1)...................................... N.A.
(b) (2)...................................... 7.6
(c).......................................... 7.6; 13.2
(d).......................................... 7.6
314 (a).......................................... 4.7; 13.2
(b).......................................... N.A.
(c) (1)...................................... 2.2; 7.2; 13.4
(c) (2)...................................... 7.2; 13.4
(c) (33)..................................... N.A.
(d).......................................... N.A.
(e).......................................... 13.5
(f).......................................... N.A.
315 (a).......................................... 7.1(b)
(b).......................................... 7.5; 13.2
(c).......................................... 7.1(a)
(d).......................................... 6.11; 7.1(b); 7.1(c); 7.2(c)
(e).......................................... 6.13
316 (a) (last sentence).......................... 2.9
(a) (1) (A).................................. 6.11
(a) (1) (B).................................. 6.12
(a) (2)...................................... N.A.
(b).......................................... 6.12; 6.7
317 (a) (1)...................................... 6.3
(a) (2)...................................... 6.4
(b).......................................... 2.4
318 (a).......................................... 13.1
</TABLE>
- ------------
N.A. Means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE................... 1
Section 1.1 Definitions........................................... 1
Section 1.2 Incorporation By Reference of TIA..................... 9
Section 1.3 Rules of Construction.................................10
ARTICLE 2 THE SECURITIES...............................................11
Section 2.1 Form and Dating.......................................11
Section 2.2 Execution and Authentication..........................11
Section 2.3 Registrar, Paying Agent And Depositary................12
Section 2.4 Paying Agent To Hold Assets In Trust..................12
Section 2.5 Security Holder Lists.................................13
Section 2.6 Transfer and Exchange; Restrictions on Transfer.......13
Section 2.7 Replacement Securities................................19
Section 2.8 Outstanding Securities................................20
Section 2.9 Treasury Securities...................................20
Section 2.10 Temporary Securities..................................21
Section 2.11 Cancellation..........................................21
Section 2.12 Defaulted Interest....................................21
ARTICLE 3 REDEMPTION...................................................22
Section 3.1 Right of Redemption...................................22
Section 3.2 Notices To Trustee....................................23
Section 3.3 Selection of Securities To Be Redeemed................23
Section 3.4 Notice of Redemption..................................23
Section 3.5 Effect of Notice of Redemption........................24
Section 3.6 Deposit of Redemption Price...........................25
Section 3.7 Securities Redeemed in Part...........................25
Section 3.8 Conversion Arrangement on Call for Redemption ........25
ARTICLE 4 COVENANTS....................................................26
Section 4.1 Payment Of Securities.................................26
Section 4.2 Maintenance Of Office Or Agency.......................27
Section 4.3 Corporate Existence...................................27
Section 4.4 Payment Of Taxes And Other Claims.....................27
Section 4.5 Maintenance Of Properties And Insurance...............28
Section 4.6 Compliance Certificate; Notice Of Default.............28
Section 4.7 Reports...............................................29
Section 4.8 Limitation On Status As Investment Company............29
Section 4.9 Waiver Of Stay, Extension Or Usury Laws...............29
Section 4.10 Additional Amounts....................................29
Section 4.11 Delivery of Certain Information.......................30
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 5 SUCCESSOR CORPORATION..............................................30
Section 5.1 Limitation On Merger, Sale Or Consolidation..................30
Section 5.2 Successor Corporation Substituted............................31
ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES.....................................31
Section 6.1 Events Of Default............................................31
Section 6.2 Acceleration Of Maturity Date; Rescission And Annulment......33
Section 6.3 Collection Of Indebtedness And Suits For Enforcement By
Trustee......................................................34
Section 6.4 Trustee May File Proofs Of Claim.............................35
Section 6.5 Trustee May Enforce Claims Without Possession Of Securities..36
Section 6.6 Priorities...................................................36
Section 6.7 Limitation On Suits..........................................36
Section 6.8 Unconditional Right Of Holders To Receive Principal,
Premium And Interest.........................................37
Section 6.9 Rights And Remedies Cumulative...............................37
Section 6.10 Delay Or Omission Not Waiver.................................37
Section 6.11 Control By Holders...........................................38
Section 6.12 Waiver Of Past Default.......................................38
Section 6.13 Undertaking For Costs........................................38
Section 6.14 Restoration Of Rights And Remedies...........................39
ARTICLE 7 TRUSTEE.............................................................39
Section 7.1 Duties Of Trustee............................................39
Section 7.2 Rights Of Trustee............................................40
Section 7.3 Individual Rights Of Trustee.................................41
Section 7.4 Trustee's Disclaimer.........................................41
Section 7.5 Notice Of Default............................................41
Section 7.6 Reports By Trustee To Holders................................42
Section 7.7 Compensation And Indemnity...................................42
Section 7.8 Replacement Of Trustee.......................................43
Section 7.9 Successor Trustee By Merger, Etc.............................44
Section 7.10 Eligibility; Disqualification................................44
Section 7.11 Preferential Collection Of Claims Against Company............44
ARTICLE 8 SATISFACTION AND DISCHARGE.........................................44
Section 8.1 Satisfaction And Discharge Of Indenture......................44
Section 8.2 Payment To The Company.......................................45
ARTICLE 9 AMENDMENTS, SUPPLEMENTS AND WAIVERS................................45
Section 9.1 Supplemental Indentures Without Consent of Holders...........45
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Section 9.2 Amendments, Supplemental Indentures And Waivers With
Consent Of Holders...........................................46
Section 9.3 Compliance With TIA..........................................47
Section 9.4 Revocation And Effect Of Consents............................47
Section 9.5 Notation On Or Exchange Of Securities........................48
Section 9.6 Trustee To Sign Amendments, Etc..............................48
ARTICLE 10 RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL..............48
Section 10.1 Repurchase Of Securities At Option Of The Holder Upon A
Change Of Control............................................48
ARTICLE 11 SUBORDINATION.....................................................51
Section 11.1 Securities Subordinated To Senior Indebtedness...............51
Section 11.2 No Payment On Securities In Certain Circumstances............51
Section 11.3 Securities Subordinated To Prior Payment Of All Senior
Indebtedness On Dissolution, Liquidation Or Reorganization...52
Section 11.4 Security Holders To Be Subrogated To Rights Of Holders
Of Senior Indebtedness.......................................53
Section 11.5 Obligations Of The Company Unconditional.....................54
Section 11.6 Trustee Entitled To Assume Payments Not Prohibited In
Absence of Notice............................................54
Section 11.7 Application By Trustee Of Assets Deposited With It...........55
Section 11.8 Subordination Rights Not Impaired By Acts Or Omissions
Of The Company Or Holders Of Senior Indebtedness.............55
Section 11.9 Security Holders Authorize Trustee To Effectuate
Subordination Of Securities..................................55
Section 11.10 Right Of Trustee To Hold Senior Indebtedness.................56
Section 11.11 Article 11 Not To Prevent Events Of Default..................56
Section 11.12 No Fiduciary Duty Of Trustee To Holders Of Senior
Indebtedness.................................................56
ARTICLE 12 CONVERSION OF SECURITIES..........................................56
Section 12.1 Conversion Privilege.........................................56
Section 12.2 Exercise Of Conversion Privilege.............................57
Section 12.3 Fractional Interests.........................................58
Section 12.4 Conversion Price.............................................58
Section 12.5 Adjustment Of Conversion Price...............................59
Section 12.6 Continuation Of Conversion Privilege In Case
Of Reclassification, Change,
Merger, Consolidation Or Sale Of Assets......................64
Section 12.7 Notice Of Certain Events.....................................65
Section 12.8 Taxes On Conversion..........................................66
Section 12.9 Company To Provide Stock.....................................66
Section 12.10 Disclaimer Of Responsibility For Certain Matters.............67
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Section 12.11 Return Of Funds Deposited For Redemption Of Converted Securities... 67
ARTICLE 13 MISCELLANEOUS............................................................. 67
Section 13.1 TIA Controls....................................................... 67
Section 13.2 Notices............................................................ 68
Section 13.3 Communications By Holders With Other Holders....................... 68
Section 13.4 Certificate And Opinion As To Conditions Precedent................. 69
Section 13.5 Statements Required In Certificate Or Opinion...................... 69
Section 13.6 Rules By Trustee, Paying Agent, Registrar.......................... 69
Section 13.7 Legal Holidays..................................................... 69
Section 13.8 Governing Law...................................................... 70
Section 13.9 No Adverse Interpretation Of Other Agreements...................... 70
Section 13.10 No Recourse Against Others......................................... 70
Section 13.11 Successors......................................................... 71
Section 13.12 Duplicate Originals................................................ 71
Section 13.13 Severability....................................................... 71
Section 13.14 Table Of Contents, Headings, Etc................................... 71
Section 13.15 Qualification Of Indenture......................................... 71
Exhibit A Form of Security
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INDENTURE, dated as of December 15, 1997 between PLATINUM technology, inc.,
a Delaware corporation (the "Company"), and American National Bank and Trust
Company of Chicago, a national banking association organized under the laws of
the United States of America, as trustee (The "Trustee").
Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of the Company's 6.25%
Convertible Subordinated Notes due 2002:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
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"Acceleration Notice" shall have the meaning specified in Section 6.2.
"Additional Amounts" shall have the meaning specified in Paragraph 6 in the
form of Security attached hereto as Exhibit A.
"Additional Interest" shall have the meaning specified in the Registration
Rights Agreement.
"Affiliate" means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, (ii)
any spouse, immediate family member, or other relative who has the same
principal residence of any person described in clause (i) above, and (iii) any
trust in which any person described in clause (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means the power to
direct the management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal, state
or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such Person.
<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capitalized Lease Obligations" means rental obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any corporation, any and all shares,
interest, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Cash" means such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" occurs upon the occurrence of any of the following
events: (i) upon any merger or consolidation of the Company with or into any
Person or any sale, transfer or other conveyance, whether direct or indirect, of
all or substantially all of the assets of the Company, on a consolidated basis,
in one transaction or a series of related transactions, if, immediately after
giving effect to such transaction, any "person" or "group" other than the
Company is or becomes the "beneficial owner," directly or indirectly, of more
than 50% of the voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of the transferee
or surviving entity, (ii) when any "person" or "group" is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the voting power
in the aggregate normally entitled to vote in the election of directors of the
Company, (iii) when, during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office, or (iv) the pro rata distribution by the Company to its stockholders of
substantially all of its assets.
For purposes of this definition, (i) the terms "person" and "group" shall
have the meaning used for purposes of Rules 13d-3 and 13d-5 of the Exchange Act
as in effect on the Issue Date, whether or not applicable; and (ii) the term
"beneficial owner" shall have the meaning used in Rules 13d-3 and 13d-5 under
the Exchange Act as in effect on the Issue Date, whether or not applicable,
except that a "person" shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time or upon the occurrence
of certain events.
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"Change of Control Notice" shall have the meaning specified in Section 10.1
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's common stock, par value $.001 per share,
or as such stock may be reconstituted from time to time.
"Company" means PLATINUM technology, inc. until a successor replaces it
pursuant to the Indenture, and thereafter means such successor.
"Conversion Price" shall have the meaning specified in Section 12.4.
"Conversion Shares" shall have the meaning specified in Section 12.1.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"Date of Conversion" shall have the meaning specified in Section 12.2.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
"Depositary" means the sole holder of the Global Security, as specified in
Section 2.3 until a successor shall have been appointed and become such pursuant
to the applicable provision of this Indenture, and, thereafter, "Depositary"
shall mean or include such successor.
"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 this 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).
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, Capital Stock of such Person that, by its terms or by the
terms of any security into which it is convertible, exercisable or exchangeable,
is, or upon the happening of an event or the passage of time would be, required
to be redeemed or repurchased (including at the option of the holder thereof) by
such Person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Securities and (b) with respect to any Subsidiary of such
Person (including with respect to any Subsidiary of the Company), any Capital
Stock other than any common stock with no preference, privileges, or redemption
or repayment provisions.
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"Distribution Date" shall have the meaning specified in Section 12.5.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means the Euroclear System.
"Event of Default" shall have the meaning specified in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Expiration Time" shall have the meaning specified in Section 12.5.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board ("FASB") or in such
other statements by such other entity as approved by a significant segment of
the accounting profession which are in effect in the United States; provided,
however, that for purposes of determining compliance with covenants in this
Indenture, "GAAP" means such generally accepted accounting principles which are
in effect as of the Issue Date.
"Global Security" means a Security held by the Depositary for the benefit
of beneficial owners, and which contains the paragraph referred to in footnote 1
and the schedule referred to in footnote 2 of the form of Security attached
hereto as Exhibit A.
"Holder" or "Security Holder" means the Person in whose name a Security is
registered on the Registrar's books.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except such as would constitute trade payables to trade creditors in the
ordinary course of business that are not more than ninety (90) days past their
original due date, (iv) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks, (v) for the payment of money relating to a
Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(b) all net obligations of such Person under Interest Swap and Hedging
Obligations; (c) all liabilities of others of the kind described in the
preceding clause (a) or (b) that such person has guaranteed or that is otherwise
its legal liability and all obligations to purchase, redeem or acquire any
Capital Stock; and (d) any and all deferrals, renewals, extensions,
refinancings, refundings (whether direct or indirect) of any liability of the
kind described in any of the preceding clauses (a), (b) or (c), or this clause
(d), whether or not between or among the same parties.
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"Indenture" means this indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Initial Purchasers" means Deutsche Morgan Grenfell Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities.
"Interest Swap And Hedging Obligations" means any obligation of any Person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such Person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payment made by such Person calculated by applying a fixed
or floating rate of interest on the same notional amount.
"Issue Date" means the date of first issuance of the Securities under this
Indenture.
"Junior Security" of any Person means any Qualified Capital Stock and any
Indebtedness of such Person that is subordinated in right of payment to the
Securities and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Securities.
"Last Sale Price" shall have the meaning specified in Section 12.3.
"Legal Holiday" shall have the meaning specified in Section 13.7.
"Lien" means any mortgage, lien, pledge, charge, security interest or other
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest).
"Non-Electing Share" shall have the meaning specified in Section 12.6.
"Non-U.S. Holder" means any Holder other than a U.S. Holder.
"Notice of Default" shall have the meaning specified in Section 6.1(3).
"Offer" shall have the meaning specified in Section 12.5(e).
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<PAGE>
"Officer" means, with respect to the Company, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Treasurer,
the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a certificate
signed by two Officers or by an Officer and an Assistant Secretary of the
Company and otherwise complying with the requirements of Sections 13.4 and 13.5.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee and which complies with the requirements of
Sections 13.4 and 13.5.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Payment Blockage Period" shall have the meaning specified in Section
11.2(b).
"Payment Default" shall have the meaning specified in Section 11.2(a).
"Payment Notice" shall have the meaning specified in Section 11.2(b).
"Person" means any corporation, individual, limited liability company,
joint stock company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision thereof,
trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such Indebtedness
plus, without duplication, any applicable premium, if any, on such Indebtedness.
"Principal Amount" shall have the meaning specified in Section 2.6(b).
"Property" means any right or interest in or to property or assets of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" means that certain Purchase Agreement, dated December
11, 1997, by and between the Company and the Initial Purchasers, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Purchased Shares" shall have the meaning specified in Section 12.5(e).
"QIB" shall mean a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities whether or
not such Record Date is a Business Day.
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<PAGE>
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to Paragraph 5 or Paragraph 7,
as the case may be, of the form of Security attached hereto as Exhibit A and
Article 3 of this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the redemption price for such redemption pursuant to Paragraph 5 or
Paragraph 7, as the case may be, in the form of Security attached hereto as
Exhibit A, which shall include, without duplication, in each case, accrued and
unpaid interest (including any Additional Amounts and Additional Interest), if
any, to the Redemption Date.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of December 15, 1997, between the Company and the Initial Purchasers,
as such agreement may be amended from time to time.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation S Global Security" shall have the meaning specified in Section
2.6(b).
"Repurchase Date" shall have the meaning specified in Section 10.1(a).
"Repurchase Offer" shall have the meaning specified in Section 10.1(a).
"Repurchase Price" shall have the meaning specified in Section 10.1(a).
"Repurchase Put Date" shall have the meaning specified in Section 10.1(b).
"Restricted Security" shall have the meaning specified in Section 2.6(d).
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Global Security" shall have the meaning specified in Section
2.6(b).
"Rule 144A Information" shall have the meaning specified in Section 4.11.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the unsecured 6.25% Convertible
Subordinated Notes due 2002 issued by the Company under this Indenture, as
supplemented from time to time in accordance with the terms hereof, limited in
aggregate principal amount to $150,000,000 ($172,500,000 if the Initial
Purchasers' over-allotment option is exercised in full).
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<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with respect to the
Global Security, or any successor entity thereto.
"Senior Indebtedness" means any Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior, in right of payment, to the Securities
or to other Indebtedness which is pari passu with, or subordinated to, the
Securities; provided, that in no event shall Senior Indebtedness include (a)
Indebtedness of the Company owed or owing to any Subsidiary of the Company or
any officer, director or employee of the Company or any Subsidiary of the
Company, (b) Indebtedness to trade creditors, (c) any liability for taxes owed
or owing by the Company or (d) any Indebtedness of the Company with respect to
the Company's 6 3/4% Convertible Subordinated Notes Due 2001 (the "6 3/4%
Notes").
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-X
promulgated by the SEC as in effect on the date of this Indenture.
"Special Record Date" for payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security, means December
15, 2002.
"Subsidiary" with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation or
partnership) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest.
"Tax Affected Security" means any Security in respect of which, as a result
of any Tax Law Change, the Company has or will become obligated to pay
Additional Amounts.
"Taxing Jurisdiction" shall have the meaning specified in Paragraph 6 of
the form of Security attached hereto as Exhibit A.
"Tax Law Change" means any change in, or amendment to, the laws,
regulations, treaties or rulings prevailing in the United States or any
political subdivision or taxing authority thereof or
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therein, which change or amendment becomes effective on or after the date hereof
or any application or judicial, legislative or administrative interpretation of
such laws, regulations, treaties or rulings.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-
77bbbb) as in effect on the date of the execution of this Indenture.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the Nasdaq National
Market.
"Trustee" means American National Bank and Trust Company of Chicago, as
trustee, until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust division (or
any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his or her knowledge of and familiarity with
the particular subject.
"United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
"U.S. Holder" means the beneficial holder of a Security or Common Stock
that for United States federal income tax purposes is (i) a citizen or resident
(as defined in Section 7701(b) of the Code) of the United States, (ii) a
corporation, partnership or other entity formed under the laws of the United
States or any political subdivision thereof, (iii) an estate the income of which
is subject to U.S. federal income taxation regardless of its source, and (iv) in
general, a trust subject to the primary supervision of a court within the United
States and the control of a United States fiduciary as described in Section
7701(a)(30) of the Code and (v) any other person whose income or gain with
respect to a Security or gain with respect to a Security or Common Stock is
effectively connected with the conduct of a United States trade or business.
"U.S. Government Obligations" means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
Section 1.2 Incorporation By Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
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"Commission" means the SEC.
"Indenture Securities" means the Securities.
"Indenture Security Holder" means a Holder or a Security Holder.
"Indenture To Be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Trustee.
"Obligor" on the Securities means the Company and any other obligor on the
Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3 Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(7) references to Sections or Articles means reference to such
Sections or Articles in this Indenture, unless stated otherwise.
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ARTICLE 2
THE SECURITIES
Section 2.1 Form and Dating.
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The Securities and the Trustee's certificate of authentication, in respect
thereof, shall be substantially in the form of Exhibit A hereto, which Exhibit
is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange or market rule or usage. The
Company shall approve the form of the Securities and any notation, legend or
endorsement on them. Any such notations, legends or endorsements not contained
in the form of Security attached as Exhibit A hereto shall be delivered in
writing to the Trustee. Each Security shall be dated the date of its
authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture, and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 Execution and Authentication.
----------------------------
Two Officers shall sign, or one Officer shall sign and one Officer shall
attest to, the Security for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security, but such
signature shall be conclusive evidence that the Security has been authenticated
pursuant to the terms of this Indenture. Notwithstanding anything herein to the
contrary, if any Security shall have been authenticated and delivered hereunder
but never issued or sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
The Trustee shall authenticate the Securities for original issue in the
aggregate principal amount of up to $172,500,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Securities to be authenticated and the date the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $172,500,000 except as provided in
Section 2.7; provided, that Securities in excess of $150,000,000 shall not be
issued other than upon exercise of the
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over-allotment option granted by the Company to the Initial Purchasers as
provided in the Purchase Agreement, or pursuant to Section 2.7. Upon the written
order of the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Affiliate of the Company, or any of their
respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
Section 2.3 Registrar, Paying Agent And Depositary.
--------------------------------------
The Company shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where Securities may be presented for registration of
transfer or for exchange ("Registrar") and an office or agency where Securities
may be presented for payment ("Paying Agent") and where notices and demands to
or upon the Company in respect of the Securities may be served. The Company may
act as Registrar or Paying Agent, except that, for the purposes of Articles 3, 8
and 10 and as otherwise specified in the Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Trustee, at its
office located at 14 Wall Street, New York, New York 10005 is initially
designated as Registrar and Paying Agent.
The Company shall enter into an appropriate written agency agreement with
any Agent, other than the Trustee, which is not an Affiliate, which agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints the DTC to act as Depositary with respect to
the Global Securities.
Section 2.4 Paying Agent To Hold Assets In Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to agree
in writing that such Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all assets held by the Paying Agent for the payment of principal
of, premium, if any, and interest on the Securities (whether such assets have
been distributed to it by the Company or any other obligor on the
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Securities), and shall notify the Trustee in writing of any Default in making
any such payment. If either of the Company or a Subsidiary of the Company acts
as Paying Agent, it shall segregate such assets and hold them as a separate
trust for the benefit of the Holders or the Trustee. The Company at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and
account for any assets distributed and the Trustee may at any time during the
continuance of any Payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to the Paying Agent, the
Paying Agent (if other than the Company or an Affiliate of the Company) shall
have no further liability for such assets.
Section 2.5 Security Holder Lists.
----------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders.
Section 2.6 Transfer and Exchange; Restrictions on Transfer.
-----------------------------------------------
(a) (i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate definitive Securities
and Global Securities at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer taxes, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments, or
similar governmental charge payable upon exchanges or transfers pursuant to
Section 2.2 (fourth paragraph), 2.10, 3.7, 9.5, or 10.1 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any definitive Security selected for
redemption in whole or in part pursuant to Article 3, except the unredeemed
portion of any definitive Security being redeemed in part, or (b) in the event
that the Trustee has been notified of an offer to repurchase Securities pursuant
to Article 10 hereof or of a redemption of Securities pursuant to Article 3
hereof, any Security for a period beginning 15 days before the mailing of a
notice of an offer to repurchase or the mailing of a notice of redemption and
ending at the close of business on the day of such mailing.
(b) So long as the Securities are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Securities that are so
eligible may be represented by one or more Global Securities registered in the
name of the Depositary or the nominee of the Depositary, except as otherwise
specified below. The transfer and exchange of beneficial interests in any such
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Global Security shall be effected through the Depositary in accordance with this
Indenture and the procedures of the Depositary therefor.
Securities that upon initial issuance are beneficially owned by QIBs will
be represented by a Global Security (the "Rule 144A Global Security") and
Securities that upon initial issuance are beneficially owned by Non-U.S. Persons
will be represented by another Global Security (the "Regulation S Global
Security"). Transfers of interests in the Securities between the Rule 144A
Global Security and the Regulation S Global Security will be made in accordance
with the standing instructions and procedures of the Depositary and its
participants. The Trustee shall make appropriate endorsements to reflect
increases or decreases in the principal amounts of such Global Securities as set
forth on the face of the Security ("Principal Amount") to reflect any such
transfers. Except as provided below, beneficial owners of a Global Security
shall 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 of such Global Securities.
(c) So long as the Securities are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Security to
a QIB in accordance with Rule 144A or to a Non-U.S. Person in accordance with
Regulation S, and upon receipt of the definitive Security or Securities being so
transferred, together with a certification, substantially in the form on the
reverse of the Security, from the transferor that the transfer is being made in
compliance with Rule 144A or Regulation S, as the case may be (or other evidence
satisfactory to the Trustee), the Trustee shall make an endorsement on the Rule
144A Global Security or the Regulation S Global Security, as the case may be, to
reflect an increase in the aggregate Principal Amount of the Securities
represented by such Global Security, the Trustee shall cancel such definitive
Security or Securities in accordance with the standing instructions and
procedures of the Depositary, the aggregate Principal Amount of Securities
represented by such Global Security to be increased accordingly; provided that
no definitive Security, or portion thereof, in respect of which the Company or
an Affiliate of the Company held any beneficial interest shall be included in
such Global Security until such definitive Security is freely tradable in
accordance with Rule 144(k); provided further that the Trustee shall issue
Securities in definitive form upon any transfer of a beneficial interest in the
Global Security to the Company or any Affiliate of the Company.
Any Global Security may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Securities Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Securities to be tradeable on The Portal Market or as may be required for the
Securities to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or Regulation S or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
Euroclear, Cedel or any securities exchange or automated quotation system upon
which the Securities may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Securities are subject.
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<PAGE>
(d) Every Security that bears or is required under this Section 2.6(d) to
bear the legend set forth in this Section 2.6(d) (together with any Common Stock
issued upon conversion of the Securities and required to bear the legend set
forth in Section 2.6(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set fort in this Section 2.6(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company; and
the Holder of each such Restricted Security, by such Holder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.6(d) and 2.6(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.6(e), if
applicable) shall bear a legend in substantially the following form, unless such
Security has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer), or unless otherwise agreed by the Company in
writing, with written notice thereof to the Trustee:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL
OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO PLATINUM
TECHNOLOGY, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
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<PAGE>
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
(E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER), OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; (3) PRIOR TO SUCH TRANSFER
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH
ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). THIS LEGEND WILL BE
REMOVED UPON THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO
CLAUSE 2(D) OR 2(E) ABOVE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Security (or Successor Security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to the conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of such
Security for exchange to the Registrar in accordance with the provisions of this
Section 2.6, be exchanged for a new Security or Securities of like tenor and
aggregate principal amount, which shall not bear the restrictive legend required
by this Section 2.6(d).
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<PAGE>
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.6(b) and in this
Section 2.6(d)), a Global Security may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints DTC to act as Depositary with respect to
the Global Securities. Initially, the Rule 144A Global Security and the
Regulation S Global Security shall be issued to the Depositary, registered in
the name of Cede & Co., as the nominee of the Depositary, and deposited with the
Securities Custodian for Cede & Co.
If at any time the Depositary for a Global Security notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security, the Company may appoint a successor Depositary with respect to such
Global Security. If a successor Depositary is not appointed by the Company
within ninety (90) days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of Securities, will authenticate and deliver,
Securities in certificated form, in aggregate principal amount equal to the
Principal Amount of such Global Security, in exchange for such Global Security.
If a Security in certificated form is issued in exchange for any portion of
a Global Security after the close of business at the office or agency where such
exchange occurs on any Record Date and before the opening of business at such
office or agency on the next succeeding Interest Payment Date, interest will not
be payable on such Interest Payment Date in respect of such certificated
Security, but will be payable on such Interest Payment Date, subject to the
provisions of Section 2.12, only to the Person to whom interest in respect of
such portion of such Global Security is payable in accordance with the
provisions of this Indenture.
Securities in certificated form issued in exchange for all or a part of a
Global Security pursuant to this Section 2.6 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such
Securities in certificated form to the Persons in whose names such Securities in
certificated form are so registered.
At such time as all interests in a Global Security have been redeemed,
repurchased, converted, canceled, exchanged for Securities in certificated form,
or transferred to a transferee who receives Securities in certificated form
thereof, such Global Security shall, upon receipt thereof, be canceled by the
Trustee in accordance with standing procedures and instructions existing between
the Depositary and the Securities Custodian. At any time prior to such
cancellation, if any interest in a Global Security is exchanged for Securities
in certificated form, redeemed, converted, repurchased or canceled, exchanged
for Securities in certificated form or transferred to a transferee who receives
Securities in certificated form therefor or any Security in certificated form is
exchanged or
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transferred for part of a Global Security, the principal amount of
such Security shall, in accordance with the standing procedures and instructions
existing between the Depositary and the Securities Custodian, be appropriately
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Security, by the Trustee or the Securities Custodian, at the
direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
stock certificate representing Common Stock issued upon conversion of such
Security shall bear a legend in substantially the following form, unless such
Common Stock has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer) or such Common Stock has been issued upon
conversion of Securities that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
Common Stock transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO PLATINUM TECHNOLOGY, INC. OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
COMPLIANCE WITH RULE 144A, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
(E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER) OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES; (2) PRIOR TO SUCH TRANSFER
(OTHER THAN A TRANSFER PURSUANT TO
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CLAUSE 1(E) ABOVE), IT WILL FURNISH TO HARRIS TRUST AND SAVINGS BANK, AS
TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES IT WILL DELIVER TO EACH
PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THE COMMON STOCK EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE COMMON STOCK EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST SUBMIT THIS CERTIFICATE TO HARRIS TRUST AND SAVINGS BANK, AS TRANSFER
AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE). THIS LEGEND WILL BE
REMOVED UPON THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO
CLAUSE 1(D) OR 1(E) ABOVE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.6.
(f) Any Security or Common Stock issued upon the conversion or exchange of
a Security that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such
Securities or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
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Section 2.7 Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims and submits an affidavit or other evidence, satisfactory to the
Trustee, to the Trustee to the effect that the Security has been lost, destroyed
or wrongfully taken, the Company shall issue and the Trustee shall authenticate
a replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Security. In case any such
mutilated, destroyed, lost or stolen Security has become or is about to become
due, the Company, in its discretion, may instead of issuing a new Security, pay
such Security.
Every replacement Security is an additional obligation of the Company.
The provisions of this Section 2.7 are exclusive and, to the extent lawful,
preclude other rights and remedies with respect to replacement or payment of
mutilated, destroyed, lost or stolen Securities.
Section 2.8 Outstanding Securities.
----------------------
Securities outstanding at any time are all of the Securities that have been
authenticated by the Trustee (including any Security represented by a Global
Security) except those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Security effected by the Trustee
hereunder and those described in this Section 2.8 as not outstanding. A Security
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Security, except as provided in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date the Paying Agent (other than the Company or an
Affiliate of the Company) holds Cash or U.S. Government Obligations sufficient
to pay all of the principal and interest due on the Securities payable on that
date in accordance with Section 3.6 hereof and payment of the Securities called
for redemption is not otherwise prohibited pursuant to Article 11 hereof or
otherwise, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue.
Section 2.9 Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the
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Company or an Affiliate of the Company shall be disregarded, except that, for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, amendment, supplement, waiver or consent, only Securities
that the Trustee knows are so owned shall be disregarded.
Section 2.10 Temporary Securities.
--------------------
Until the Securities are ready for delivery in their definitive form, the
Company may prepare and the Trustee shall authenticate, temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company reasonably and in good faith considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Securities in their definitive
form in exchange for temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Securities in their definitive form authenticated and delivered
hereunder.
Section 2.11 Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange, payment, conversion
or cancellation. The Trustee, or at the direction of the Trustee, the Registrar
or the Paying Agent (other than the Company or an Affiliate of the Company), and
no one else, shall cancel and, at the written direction of the Company, shall
dispose of all Securities surrendered for transfer, exchange, payment or
cancellation and shall deliver a cancellation certificate to the Company.
Subject to Section 2.7, the Company may not issue new Securities to replace
Securities that have been paid or delivered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 2.11, except as expressly permitted in the
form of Securities and as permitted by this Indenture.
Section 2.12 Defaulted Interest.
------------------
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name the Security (or one or more predecessor Securities) is registered at the
close of business on the Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date plus, to the extent lawful,
any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company at
its election as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
persons in whose names the Securities (or their respective predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such
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Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of Cash equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment, such
Cash when deposited to be held in trust for the benefit of the persons
entitled to such Defaulted Interest as provided in this clause (1).
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address shown upon the registry books of the Registrar not
less than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the persons in whose names the Securities (or their respective predecessor
Securities) are registered on such Special Record Date and shall no longer
be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange or market on which the Securities may be listed, and
upon such notice as may be required by such exchange or market, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
ARTICLE 3
REDEMPTION
Section 3.1 Right of Redemption.
-------------------
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with the provisions of Paragraphs 5 and 7
of the form of Securities attached as Exhibit A and this Article 3. Subject to
Paragraph 7 of the form of Securities attached as Exhibit A, the Company will
not have the right to redeem any Securities prior to December 15, 2000. At any
time on or after December 15, 2000, upon not less than 30 nor more than 60 days
notice to each Holder of Securities, the Company will have the right to redeem
all or any part of the Securities at the Redemption Prices specified in
Paragraph 5 therein under the caption "Redemption", in each case
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including accrued and unpaid interest (including any Additional Amounts or
Additional Interest) to the Redemption Date.
Section 3.2 Notices To Trustee.
------------------
If the Company elects to redeem Securities pursuant to the form of
Securities attached as Exhibit A, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Securities to be redeemed and
whether it wants the Trustee to give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to the form of Securities attached as Exhibit A by
crediting against any such redemption Securities in its possession, which it has
not previously delivered to the Trustee for cancellation, it shall so notify the
Trustee of the amount of the reduction and deliver such Securities with such
notice.
The Company shall give each notice provided for in this Section 3.2 to
the Trustee at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). Any such notice may be canceled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
Section 3.3 Selection of Securities To Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to the
form of Securities attached hereto as Exhibit A, the Trustee shall promptly
redeem the Securities to be redeemed on a pro rata basis, in such manner as the
Trustee shall determine to be fair and appropriate and in such manner as
complies with any applicable Depositary, legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. If any
Security selected for partial redemption is thereafter converted in part before
termination of the conversion right as provided by Section 12.1 hereof, the
portion of the Security so converted shall be deemed to have been a part of the
portion selected for redemption such that only the excess, if any, of the amount
selected for partial redemption over the amount so converted, shall be redeemed.
Section 3.4 Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed. At
the Company's request, the Trustee shall give the notice of
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redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date, and that the Securities called for
redemption may not be converted after the Business Day prior to the
Redemption Date;
(2) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Company defaults in its obligation to
deposit Cash with the Paying Agent in accordance with Section 3.6 hereof or
(b) such redemption is prohibited pursuant to Article 11 hereof or
otherwise, interest on the Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price,
including accrued and unpaid interest, if any, to the Redemption Date, upon
surrender to the Paying Agent of the Securities called for redemption and
to be redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and that upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed;
(9) that the notice is being sent pursuant to this Section 3.4 and
pursuant to the redemption provisions in the form of Securities attached as
Exhibit A; and
(10) in the case of a redemption pursuant to Paragraph 7 of the form
of Securities attached as Exhibit A, a form of written certification of
each beneficial owner of a Security as to such beneficial owner's
entitlement to Additional Amounts.
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Section 3.5 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest (including
any Additional Amounts or Additional Interest), if any, to the Redemption Date.
Upon surrender to the Trustee or Paying Agent, such Securities called for
redemption shall be paid at the Redemption Price, including accrued and unpaid
interest, if any, to the Redemption Date; provided that if the Redemption Date
is after a regular Record Date and on or prior to the corresponding Interest
Payment Date, the accrued interest, if any, shall be payable to the Holder of
the redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 3.6 Deposit of Redemption Price.
---------------------------
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) Cash
sufficient to pay the Redemption Price of, including accrued and unpaid interest
on, all Securities to be redeemed on such Redemption Date (other than Securities
or portions thereof called for redemption on that date that have been delivered
by the Company to the Trustee for cancellation). The Paying Agent shall promptly
return to the Company any Cash so deposited which is not required for that
purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article 3 and payment of the Securities called for redemption
is not prohibited under Article 11 or otherwise, interest on the Securities to
be redeemed will cease to accrue on the applicable Redemption Date, whether or
not such Securities are presented for payment. Notwithstanding anything herein
to the contrary, if any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall continue to accrue and be paid from the Redemption Date until
such payment is made on the unpaid principal, and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate and in the
manner provided in Section 4.1 hereof and the Security.
Section 3.7 Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder,
without service charge to the Holder, a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
Section 3.8 Conversion Arrangement on Call for Redemption.
---------------------------------------------
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In connection with any redemption of Securities, the Company may arrange
for the purchase and conversion of any Securities by an agreement with one or
more investment bankers or other purchasers (the "Purchasers") to purchase such
securities by paying to the Trustee in trust for the Holders, on or before the
Redemption Date, an amount not less than the applicable Redemption Price,
together with interest accrued to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price, together with interest
accrued to, but excluding, the Redemption Date, shall be deemed to be satisfied
and discharged to the extent such amount is so paid by such Purchasers. If such
an agreement is entered into (a copy of which shall be filed with the Trustee
prior to the close of business on the Business Day immediately prior to the
Redemption Date), any Securities called for redemption that are not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, and consistent with
any agreement or agreements with such Purchasers, to be acquired by such
Purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 12) surrendered by such Purchasers for conversion, all as
of immediately prior to the close of business on the Redemption Date (and the
right to convert any such Securities shall be extended though such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it to the
Holders in the same manner as it would monies deposited with it by the Company
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Company and such Purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such Purchasers, including the costs and
expenses, including reasonable legal fees, incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE 4
COVENANTS
Section 4.1 Payment Of Securities.
---------------------
The Company shall pay the principal of and interest (including Additional
Amounts, if any, or Additional Interest, if any) on the Securities on the dates
and in the manner provided in the Securities and this Indenture. An installment
of principal of or interest (including Additional Amounts, if any, or Additional
Interest, if any) on the Securities shall be considered paid on the date it is
due if the Trustee or Paying Agent (other than the Company or an Affiliate of
the Company) holds for the benefit of the Holders, on or before 10:00 a.m. New
York City time on that date, Cash deposited and designated for and sufficient to
pay the installment.
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The Company shall pay interest on overdue principal and on overdue
installments of interest (including Additional Amounts, if any, or Additional
Interest, if any) at the rate specified in the Securities, compounded semi-
annually, to the extent lawful.
Section 4.2 Maintenance Of Office Or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and for conversion and where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The office
of the Trustee located at 14 Wall Street, New York, New York 10005 is initially
designated as such office.
Section 4.3 Corporate Existence.
-------------------
Subject to Article 5, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
to preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if the Company
shall determine (a) that the preservation thereof is no longer desirable in the
conduct of the business of such entity and (b) the loss thereof is not
disadvantageous in any material respect to the Holders.
Section 4.4 Payment Of Taxes And Other Claims.
---------------------------------
Except with respect to immaterial items, the Company shall, and shall
cause each of its Subsidiaries to, pay or discharge or cause to be paid or
discharged, before the same shall become
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delinquent, (i) all taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to taxes) levied or
imposed upon the Company or any of its Subsidiaries or any of their respective
properties and assets and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and which
by law have or may become a Lien upon the property and assets of the Company or
any of its Subsidiaries; provided, however, that neither the Company nor any
Subsidiary shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves have been established in accordance
with GAAP.
Section 4.5 Maintenance Of Properties And Insurance.
---------------------------------------
The Company shall cause all material properties used or useful to the
conduct of its business and the business of each of its Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in their reasonable judgment may be necessary, so
that the business carried on in connection therewith may be properly conducted
at all times; provided, however, that nothing in this Section 4.5 shall prevent
the Company or any Subsidiary from discontinuing any operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is in the judgment of the Company, (a) desirable in the conduct of the
business of such entity and (b) not disadvantageous in any material respect to
the Holders.
The Company shall provide, or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company is adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries in a prudent manner, with (except for self-
insurance) reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall, in the reasonable, good faith opinion
of the Company, be customary, and adequate and appropriate for the conduct of
the business of the Company and such Subsidiaries in a prudent manner for
entities similarly situated in the industry, unless failure to provide such
insurance (together with all other such failures) would not have a material
adverse effect on the financial condition or results of operations of the
Company or such Subsidiary.
Section 4.6 Compliance Certificate; Notice Of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee within 120 days after the end
of its fiscal year an Officers' Certificate complying with Section 314(a)(4) of
the TIA and stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company or any Subsidiary
of the Company to comply with any conditions or covenants in this
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Indenture and, if such signor does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any
Default, Event of Default or fact which would prohibit the making of any payment
to or by the Trustee in respect of the Securities, an Officers' Certificate
specifying such Default, Event of Default or fact and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be deemed
to have knowledge of any Default, any Event of Default or any such fact unless
one of its Trust Officers receives notice thereof from the Company or any of the
Holders.
Section 4.7 Reports.
-------
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 30 days after it is or would have been
required to file such with the SEC, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the SEC if the Company was subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
SEC and, in each case, together with a management's discussion and analysis of
financial condition and results of operations which would be so required.
Section 4.8 Limitation On Status As Investment Company.
------------------------------------------
Neither the Company nor any of its Subsidiaries shall become an
"investment company" (as that term is defined in the Investment Company Act of
1940, as amended).
Section 4.9 Waiver Of Stay, Extension Or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of, premium of, or interest on, the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
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Section 4.10 Additional Amounts.
------------------
The Company will pay to the Holder of any Security Additional Amounts
as provided in the form of Security. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of or interest on, or in
respect of, any Security, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section to the extent that,
in such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section, and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not
be construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
At least 10 days prior to June 15, 1998, or an earlier Redemption Date
or Repurchase Date (and at least 10 days prior to each date of payment of
principal, premium, if any, or interest after June 15, 1998, or such earlier
Redemption Date or Repurchase Date), the Company shall furnish the Trustee, the
office or agency of the Trustee in the Borough of Manhattan and the office or
agency of the Paying Agent in the Borough of Manhattan, The City of New York, if
other than the Trustee or an agent thereof, with an Officers' Certificate
instructing the Trustee and such Paying Agent whether or not such payment of
principal of, premium, if any, or interest on the Securities shall be made to
the Holders of Securities subject to withholding or deduction. If any
withholding or deduction shall be required, such Officers' Certificate shall
specify the amount required to be withheld or deducted with respect to such
payments to such Holders of Securities and the Company will pay to the Trustee
or the applicable Paying Agent the Additional Amounts, if any, required to be
paid as set forth in the first sentence of this Section 4.10. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence, bad faith or willful misconduct arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers' Certificate
furnished pursuant to this Section. In the absence of any such Officers'
Certificates with respect to withholding, the Trustee can conclusively rely on
the fact that there is no such withholding.
Section 4.11 Delivery of Certain Information.
-------------------------------
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, upon the request of a holder of a Restricted Security, the
Company will promptly furnish or cause to be furnished Rule 144A Information (as
defined below) to such holder of Restricted Securities, or to a prospective
purchaser of any such security designated by any such holder, as the case may
be, to the extent required to permit compliance by such holder with Rule 144A
under the Securities Act (or any successor provision thereto) in connection with
the resale of any such security; provided, however, that the Company shall not
be required to furnish such information in connection with any request made on
or after the date which is two years from the later of (i) the date such a
Security (or any predecessor Security) was last acquired from the Company or
(ii) the date such a Security (or any predecessor Security) was last acquired
from an "affiliate" of the Company within the meaning of Rule 144 under the
Securities Act (or any successor provision thereto). "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
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ARTICLE 5
SUCCESSOR CORPORATION
Section 5.1 Limitation On Merger, Sale Or Consolidation.
-------------------------------------------
(a) The Company shall not, directly or indirectly, consolidate with or
merge with or into another Person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons, unless (i) either (a) in the case of a merger or
consolidation, the Company is the surviving entity or (b) the resulting,
surviving or transferee entity is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and expressly
assumes by supplemental indenture the due and punctual payment of the principal
of and interest (including Additional Amounts, if any, or Additional Interest,
if any) on all of the Securities and all of the obligations of the Company in
connection with the Securities and the Indenture; (ii) no Default or Event of
Default shall exist or shall occur immediately before or after giving effect on
a pro forma basis to such transaction; (iii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and, if a supplemental indenture is
required, such supplemental indenture comply with the Indenture and that all
conditions precedent relating to such transactions have been satisfied; and (iv)
the resulting, surviving or transferee entity, unless it is a Subsidiary,
immediately thereafter has a consolidated net worth not less than that of the
Company immediately prior thereto.
(b) For purposes of clause (a) of this Section 5.1, the sale, lease,
conveyance, assignment, transfer, or other disposition of all or substantially
all of the properties and assets of one or more Subsidiaries of the Company,
which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
Section 5.2 Successor Corporation Substituted.
---------------------------------
Upon any consolidation or merger or any sale, lease, conveyance or
transfer of all or substantially all of the assets of the Company in accordance
with the foregoing, the successor corporation formed by such consolidation or
into which the Company is merged or to which such sale, lease, conveyance or
transfer is made (the "Successor Corporation"), shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if such successor corporation had been
named herein as the Company, and when a successor corporation duly assumes all
of the obligations of the Company pursuant hereto and pursuant to the
Securities, the predecessor shall be released from such obligations (except with
respect to any obligations that arise from or as a result of such transaction);
provided, however, that if the Successor Corporation is a Subsidiary, the
consolidated net worth of which is less than that of
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the Company immediately prior to such merger, consolidation, sale, lease,
conveyance or transfer, the Company shall not be released from such obligations
but shall remain jointly and severally liable therefor with the Successor
Corporation.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events Of Default.
-----------------
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) failure to pay any installment of interest (including Additional
Amounts, if any, or Additional Interest, if any) on the Securities as and
when the same becomes due and payable, and the continuance of such default
for a period of 30 days, whether or not such payment is prohibited by
Article 11;
(2) failure to perform any conversion of the Securities required
under this Indenture and the continuance of such default for a period of 30
days;
(3) failure to pay all or any part of the principal of, or premium,
if any on the Securities when and as the same become due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, default in the payment of the Repurchase Price on the
Repurchase Date in accordance with Article 10, whether or not such payment
is prohibited by Article 11;
(4) failure by the Company to observe or perform any covenant,
agreement or warranty contained in the Securities or this Indenture (other
than a default in the performance of any covenant, agreement or warranty
which is specifically dealt with elsewhere in this Section 6.1), and
continuance of such failure for a period of 60 days after there has been
given, by registered or certified mail, to the Company by the Trustee, or
to the Company and the Trustee by Holders of at least 25% in aggregate
principal amount of the then outstanding Securities, a written notice
specifying such default or breach, requesting it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(5) a default under Indebtedness of the Company or any of its
Subsidiaries with an aggregate principal amount, individually or in the
aggregate, in excess of $25,000,000 (a) resulting from the failure to pay
principal at maturity or (b) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated maturity;
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(6) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Subsidiaries as bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order
shall have continued undischarged and unstayed for a period of 75 days; or
a decree or order of a court of competent jurisdiction over the appointment
of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency
of the Company, any of its Significant Subsidiaries, or of the property of
any such Person, or for the winding up or liquidation of the affairs of any
such Person, shall have been entered, and such decree, judgment, or order
shall have remained in force undischarged and unstayed for a period of 75
days;
(7) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file
a petition or answer or consent seeking reorganization under any bankruptcy
or similar law or similar statute, or shall consent to the filing of any
such petition, or shall consent to the appointment of a Custodian,
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of
it or any of its assets or property, or shall make a general assignment for
the benefit of its creditors, or shall admit in writing its inability to
pay its debts generally as they become due, or shall, within the meaning of
any Bankruptcy Law, become insolvent, fail generally to pay its debts as
they become due, or take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or
Notwithstanding the 60-day period and notice requirement contained in
Section 6.1(4) above, with respect to a default under Article 10 the 60-day
period referred to in Section 6.1(4) shall be deemed to have begun as of the
date the Change of Control Notice is required to be sent in the event that the
Company has not complied with the provisions of Section 10.1 and the Trustee or
Holders of at least 25% in principal amount of the outstanding Securities
thereafter give the Notice of Default referred to in Section 6.1(4) to the
Company and, if applicable, the Trustee; provided, however, that if the breach
or default is a result of a default in the payment when due of the Repurchase
Price on the Repurchase Date, such Event of Default shall be deemed, for
purposes of this Section 6.1, to arise no later than on the Repurchase Date.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall, within 90 days after the occurrence of such default,
give to the Holders notice of such default.
Section 6.2 Acceleration Of Maturity Date; Rescission And Annulment.
-------------------------------------------------------
If an Event of Default (other than an Event of Default specified in
Section 6.1(6) or (7) relating to the Company) occurs and is continuing, then,
and in every such case, unless the principal of all of the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of then outstanding Securities, by a
notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all of the principal of the Securities (or
the Repurchase Price if the Event of Default includes failure to pay the
Repurchase Price, determined as set forth below), including in each case accrued
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interest thereon, to be due and payable immediately. If an Event of Default
specified in Section 6.1(6) or (7) relating to the Company occurs, all principal
and accrued interest (including Additional Amounts, if any, or accrued
Additional Interest, if any) thereon will be immediately due and payable on all
outstanding Securities without any declaration or other act on the part of
Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article 6, the Holders of no less
than a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(i) all overdue interest (including Additional Amounts, if any,
or accrued Additional Interest, if any) on all Securities,
(ii) the principal of (and premium, if any, applicable to) any
Securities which would then be due otherwise than by such declaration
of acceleration, and interest thereon at the rate borne by the
Securities,
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
(iv) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest (including Additional Amounts,
if any, or accrued Additional Interest, if any) on Securities that have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.12, including, if applicable, any Event of
Default relating to the covenants contained in Section 10.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall
be effective against any Holder for any Event of Default or event which with
notice or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless such affected
Holder agrees, in writing, to waive any subsequent Default or Event or Default
or impair any right consequent thereon.
Section 6.3 Collection Of Indebtedness And Suits For Enforcement By Trustee.
---------------------------------------------------------------
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The Company covenants that if an Event of Default in payment of principal,
premium or interest (including any Additional Amounts and Additional Interest)
specified in clause (1) or (3) of Section 6.1 occurs and is continuing, the
Company shall, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal, premium (if any), interest (including any Additional
Amounts and Additional Interest) and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal (and
premium, if any) and on any overdue interest (including any Additional Amounts
and Additional Interest), at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including compensation to, and expenses, disbursements
and advances of, the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as Trustee of an express trust in favor of the
Holders, may institute a judicial proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.4 Trustee May File Proofs Of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such obligor or their creditors,
the Trustee (irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including:
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Amounts and
Additional Interest) owing and unpaid in respect of the Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in such judicial
proceeding, and
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(2) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due
it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts
due the Trustee under Section 7.7.
Nothing herein contain shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.5 Trustee May Enforce Claims Without Possession Of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of reasonable compensation to,
and reasonable expenses, disbursement and advances of, the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.
Section 6.6 Priorities.
----------
Any money collected by the Trustee pursuant to this Article 6 shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium (if
any) or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the holders of the Senior Indebtedness of the Company to
the extent provided in Article 11;
THIRD: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any), and interest (including any
Additional Amounts and Additional Interest) on, the Securities in
respect or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to
the amounts due and payable on such Securities for principal,
premium (if any) and interest (including any Additional Amounts and
Additional Interest), respectively; and
FOURTH: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
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Section 6.7 Limitation On Suits.
-------------------
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of then
outstanding Securities shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to
be incurred or reasonably probable to be incurred in compliance with
such request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of then outstanding Securities;
it being understood and intended that no one or more Holders may have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders or to
obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all the Holders.
Section 6.8 Unconditional Right Of Holders To Receive Principal, Premium And
----------------------------------------------------------------
Interest.
- --------
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest on, such
Security when due (including, in the case of redemption, the Redemption Price on
the applicable Redemption Date, and in the case of the Repurchase Price, on the
applicable Repurchase Date) and to institute suit for the enforcement of any
such payment after such respective dates, and such rights shall not be impaired
without the consent of such Holder.
Section 6.9 Rights And Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and
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every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay Or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article 6, or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 6.11 Control By Holders.
------------------
The Holder or Holders of no less than a majority in aggregate
principal amount of then outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred upon the Trustee,
provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction,
and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 6.12 Waiver Of Past Default.
----------------------
Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of then outstanding Securities may, on
behalf of all Holders, prior to the declaration of acceleration of the maturity
of the Securities, waive any past Default hereunder and its consequences, except
a Default
(A) in the payment of the principal of, premium, if any, or
interest (including any Additional Amounts) on, any Security not yet
cured as specified in clauses (1) and (3) of Section 6.1, or
(B) in respect of a covenant or provision hereof which, under
Article 9, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
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Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising from such a Default shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair the exercise of any right arresting
therefrom.
Section 6.13 Undertaking For Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of then outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of, premium
(if any) or interest on, any Security on or after the respective Stated Maturity
of such Security (including, in the case of redemption, on or after the
Redemption Date).
Section 6.14 Restoration Of Rights And Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
Section 7.1 Duties Of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in such exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
his own affairs.
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(b) Except during the continuance of a Default or an Event of Default:
(i) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations shall
be implied in or read into this Indenture which are adverse to the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any action under this
Indenture or at the request, order or direction of the Holders or in the
exercise of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any assets received by
it except as the Trustee may agree in writing with the Company. Assets held in
trust need not be segregated from other assets except to the extent required by
law.
Section 7.2 Rights Of Trustee.
-----------------
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
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(b) Before the Trustee acts or refrains from acting, it may consult with
counsel and may require an Officers' Certificate on or Opinion of Counsel, which
shall conform to Sections 13.4 and 13.5. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance of the
Company's covenants in Article 4 hereof. In addition, the Trustee shall not be
deemed to have knowledge of any Default or Event of Default except (i) any Event
of Default occurring pursuant to Sections 6.1(1), 6.1(2) or 6.1(3), or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
Section 7.3 Individual Rights Of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any of
its Subsidiaries, or their respective affiliates with the same rights it would
have it if were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Section 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate
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of authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
Section 7.5 Notice Of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Security Holder notice
of the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of Default
in payment of principal (or premium, if any), or interest (including any
Additional Amounts or Additional Interest) on, any Security (including the
payment of the Repurchase Price on the Repurchase Date and the payment of the
Redemption Price on the Redemption Date), the Trustee may withhold the notice if
and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Security Holders.
Section 7.6 Reports By Trustee To Holders.
-----------------------------
Within 60 days after each November 15 beginning with the November 15
following the date of this Indenture, the Trustee shall, if required by law,
mail to each Security Holder a brief report dated as of such November 15 that
complies with the TIA Section 313(a). The Trustee also shall comply with TIA
Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange, market or automatic quotation
system.
A copy of each report at the time of its mailing to Security Holders
shall be mailed to the Company and filed, if required, with the SEC and each
stock exchange or market, if any, on which the Securities are listed.
Section 7.7 Compensation And Indemnity.
--------------------------
The Company agrees to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company agrees to indemnify each of the Trustee (in its capacity
as Trustee) and its officers, directors, attorneys-in-fact and agents for, and
hold it harmless against, any claim, demand, expense (including but not limited
to reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel), loss or liability incurred by it without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
administration of this Indenture and its rights or duties hereunder including
the reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties
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hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity under this Section 7.7. The
Company shall defend the claim and the Trustee shall provide reasonable
cooperation at the Company's expense in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel; provided, that the Company will not be required to pay such fees
and expenses if it assumes the Trustee's defense and in the opinion of the
Trustee there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of, and premium, if any, or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article 8 of this Indenture and any
rejection or termination of this Indenture, including without limitation any
rejection or termination under any Bankruptcy Law.
Section 7.8 Replacement Of Trustee
----------------------
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of then outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian or other public
officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of then outstanding
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Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after such
delivery and provided that all sums owing to the retiring Trustee provided for
in Section 7.7 have been paid, the retiring Trustee shall transfer all property
held by it as trustee to the successor Trustee, subject to the lien provided in
Section 7.7, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Security Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
Section 7.9 Successor Trustee By Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus
of at least $100,000,000 as set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA Section 310(b).
Section 7.11 Preferential Collection Of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
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ARTICLE 8
SATISFACTION AND DISCHARGE
Section 8.1 Satisfaction And Discharge Of Indenture.
---------------------------------------
The Company may terminate its obligations under this Indenture
(subject to the provisions of this Article 8) when it shall have delivered to
the Trustee for cancellation all Securities theretofore authenticated (other
than any Securities which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Article 2 hereof) and the
following conditions shall be satisfied:
(1) The Company has paid all sums payable under the Indenture; and
(2) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent have been complied with as contemplated by this Section 8.1.
Section 8.2 Payment To The Company.
----------------------
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, for the payment of the principal of, premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its request; and the Holder of such Security shall thereafter
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money shall thereupon cease.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent Of Holders.
--------------------------------------------------
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
provided that such action pursuant to this clause (1) does not adversely affect
the interests of any Holder in any respect;
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<PAGE>
(2) to create additional covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company or
to make any other change that does not adversely affect the rights of any
Holder, provided, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such change pursuant to this clause (2) does not adversely
affect the rights of any Holder;
(3) to provide for collateral for, or guarantors of, the Securities;
(4) to evidence the succession of another Person to the Company and the
assumption by any such successor of the obligations of the Company herein and in
the Securities in accordance with Article 5;
(5) to comply with the TIA; or
(6) to qualify the Securities for listing for trading on the Luxembourg
Stock Exchange.
Section 9.2 Amendments, Supplemental Indentures And Waivers With Consent Of
---------------------------------------------------------------
Holders.
- -------
Subject to Section 6.8 and the last sentence of this paragraph, with
the consent of the Holders of not less than a majority in aggregate principal
amount of then outstanding Securities, by written act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by Board
Resolutions, and the Trustee may amend or supplement this Indenture or the
Securities or enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or the Securities or of modifying in any
manner the rights of the Holders under this Indenture or the Securities. Subject
to Section 6.8 and the last sentence of this paragraph, the Holder or Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities may, in writing, waive compliance by the Company with any provision
of this Indenture or the Securities. Notwithstanding any of the above, however,
no such amendment, supplemental indenture or waiver shall, without the consent
of the Holder of each outstanding Security affected thereby:
(1) change the Stated Maturity of any Security or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or
change the obligation of the Company to pay Additional Amounts in a manner
adverse to the Holders, or change the place of payment where, or the coin
or currency in which, any Security or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement of
any such payment or the conversion of any Security on or after the due date
thereof (including, in the case of redemption, on or after the Redemption
Date), or reduce the Repurchase Price, or alter the Repurchase Offer or
redemption provisions in a manner adverse to the Holders;
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(2) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose Holders is required for any such amendment,
supplemental indenture or waiver provided for in the Indenture;
(3) adversely affect the right of such Holder to convert Securities; or
(4) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the Indenture cannot
be modified or waived without the consent of the Holder of each outstanding
Security affected thereby.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article 9, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or (at the option of the
Company) to all Holders, consideration for consent to such amendment, supplement
or waiver.
Section 9.3 Compliance With TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect; provided that this
Section 9.3 shall not require such supplemental indenture or the Trustee to be
qualified under the TIA prior to the time such qualification is in fact required
under the terms of the TIA or the Indenture has been qualified under the TIA,
nor shall it constitute any admission or acknowledgment by any party to such
supplemental indenture that any such qualification is required prior to the time
such qualification is in fact required under the terms of the TIA or the
Indenture has been qualified under the TIA.
Section 9.4 Revocation And Effect Of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is
not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent
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as to his Security or portion of his Security by written notice to the Company
or the Person designated by the Company as the Person to whom consents should be
sent if such revocation is received by the Company or such Person before the
date on which the Trustee receives an Officers' Certificate certifying that the
Holders of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective pursuant to
this Section 9.4, it shall bind every Security Holder, unless it makes a change
described in any of clauses (1) through (4) of Section 9.2, in which case, the
amendment, supplement or waiver shall bind only each Holder of a Security who
has consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
Section 9.5 Notation On Or Exchange Of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms. Any
failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment, supplement or waiver.
Section 9.6 Trustee To Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article 9; provided, however, that the Trustee may,
but shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article 9 is
authorized or permitted by this Indenture.
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ARTICLE
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
Section 10.1 Repurchase Of Securities At Option Of The Holder Upon A Change Of
-----------------------------------------------------------------
Control.
-------
(a) In the event that a Change of Control occurs, each Holder shall have
the right, at such Holder's option, subject to the terms and conditions of this
Indenture, to require the Company to repurchase all or any part of such Holder's
Securities (provided, that the principal amount of such Securities must be
$1,000 or an integral multiple thereof) on the date (the "Repurchase Date") that
is no later than 45 Business Days after the occurrence of such Change of
Control, at a cash price (the "Repurchase Price") equal to 100% of the principal
amount thereof, together with accrued and unpaid interest (including any
Additional Amounts or Additional Interest) to the Repurchase Date.
(b) In the event of a Change of Control, the Company shall be required to
commence an irrevocable and unconditional offer to purchase Securities (a
"Repurchase Offer"), and the Company shall follow the procedures set forth in
this Section 10.1 as follows:
(1) the Repurchase Offer shall commence within 30 Business Days
following a Change of Control;
(2) the Repurchase Offer shall remain open for 15 Business Days
following its commencement, except to the extent that a longer period is
required by applicable law, but in any case not more than 45 Business Days
following the Change of Control (the "Repurchase Offer Period");
(3) upon the expiration of a Repurchase Offer, the Company shall
purchase all Securities tendered in response to the Repurchase Offer;
(4) if the Repurchase Date is on or after an interest payment record
date and on or before the related Interest Payment Date, any accrued
interest will be paid to the Person in whose name a Security is registered
at the close of business on such record date, and no additional interest
will be payable to Security Holders who tender Securities pursuant to the
Repurchase Offer;
(5) the Company shall provide the Trustee with notice of the
Repurchase Offer at least 5 Business Days before the commencement of any
Repurchase Offer; and
(6) on or before the commencement of any Repurchase Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice (a "Change of Control Notice") to
each of the
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Security Holders, which (to the extent consistent with this Indenture) shall
govern the terms of the Repurchase Offer and shall state:
(i) that the Repurchase Offer is being made pursuant to such
Change of Control Notice and this Section 10.1 and that all
Securities, or portions thereof, tendered will be accepted for
payment;
(ii) the Repurchase Price (including the amount of accrued and
unpaid interest, if any), the Repurchase Date and the Repurchase Put
Date;
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest, if any;
(vi) that, unless the Company defaults in depositing Cash with
the Paying Agent in accordance with the last paragraph of this clause
(b) or such payment is prevented pursuant to Article 11, any Security,
or portion thereof, accepted for payment pursuant to the Repurchase
Offer shall cease to accrue interest after the Repurchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Repurchase Offer will be required to
surrender the Security, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Security completed, to the
Paying Agent (which may not for purposes of this Section 10.1,
notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) at the address specified in
the Change of Control Notice prior to the close of business on the
earlier of (a) the third Business Day prior to the Repurchase Date and
(b) the third Business Day following the expiration of the Repurchase
Offer (such earlier date being the "Repurchase Put Date");
(vi) that Holders will be entitled to withdraw their election,
in whole or in part, if the Paying Agent (which may not for purposes of
this Section 10.1, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) receives, up
to the close of business on the Repurchase Put Date, a telegram,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
(vii) a brief description of the events resulting in such Change
of Control.
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<PAGE>
Any such Repurchase Offer shall comply with all applicable provisions
of Federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture which conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
On or before the Repurchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the
Repurchase Offer on or before the Repurchase Put Date, (ii) deposit with the
Paying Agent Cash sufficient to pay the Repurchase Price (together with accrued
and unpaid interest (including any Additional Amounts and Additional Interest),
if any) of all Securities or portions thereof so tendered and (iii) deliver to
the Trustee Securities so accepted together with an Officers' Certificate
listing the Securities or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to Holders of Securities so accepted payment in
an amount equal to the Repurchase Price (together with accrued and unpaid
interest (including any Additional Amounts and Additional Interest), if any),
and the Trustee shall promptly authenticate and mail or deliver to such Holders
a new Security or Securities equal in principal amount to any unpurchased
portion of the Securities surrendered. Any Securities not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date.
ARTICLE 11
SUBORDINATION
Section 11.1 Securities Subordinated To Senior Indebtedness.
----------------------------------------------
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of, premium, if any, and interest
(including any Additional Amounts or Additional Interest) on the Securities and
(b) any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company (including, without
limitation, pursuant to Article 10) is subordinated, to the extent and in the
manner provided in this Article 11, to the prior payment in full of all Senior
Indebtedness of the Company, whether outstanding at the date of this Indenture
or thereafter created, incurred, assumed or guaranteed, and that these
subordination provisions are for the benefit of the holders of Senior
Indebtedness.
Payments by the Company on the Securities are not senior or superior
in right of payments by the Company on the 6 3/4% Notes.
This Article 11 shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.
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Section 11.2 No Payment On Securities In Certain Circumstances.
-------------------------------------------------
(a) No payment may be made by the Company on account of the principal of,
premium, if any, or interest (including any Additional Amounts or Additional
Interest) on, the Securities, or to acquire any of the Securities (including
repurchases of Securities at the option of the Holder) for cash or property
(other than Junior Securities), or on account of the redemption provisions of
the Securities, (i) upon the maturity of any Senior Indebtedness of the Company
by lapse of time, acceleration (unless waived) or otherwise, unless and until
all principal of, premium, if any, and interest on such Senior Indebtedness are
first paid in full (or such payment is duly provided for), or (ii) in the event
of default in the payment of any principal of, premium, if any, or interest on
any Senior Indebtedness of the Company when it becomes due and payable, whether
at maturity or at a date fixed for prepayment or by acceleration or otherwise (a
"Payment Default"), unless and until such Payment Default has been cured or
waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of Designated Senior Indebtedness or their
representative immediately to accelerate its maturity and (ii) written notice of
such event of default given to the Company and the Trustee by the holders of an
aggregate of at least $5,000,000 principal amount outstanding of such Designated
Senior Indebtedness or their representative (a "Payment Notice"), then, unless
and until such event of default has been cured or waived or otherwise has ceased
to exist, no payment (by set-off or otherwise) may be made by or on behalf of
the Company on account of the principal of, premium, if any, or interest
(including any Additional Amounts or Additional Interest) on, the Securities, or
to acquire or repurchase any of the Securities for cash or property, or on
account of the redemption provisions of the Securities, in any such case other
than payments made with Junior Securities of the Company. Notwithstanding the
foregoing, unless (i) the Designated Senior Indebtedness in respect of which
such event of default exists has been declared due and payable in its entirety
within 179 days after the Payment Notice is delivered as set forth above (the
"Payment Blockage Period"), and (ii) such declaration has not been rescinded or
waived, at the end of the Payment Blockage Period, the Company shall be required
to pay all sums not paid to the Holders of the Securities during the Payment
Blockage Period due to the foregoing prohibitions and to resume all other
payments as and when due on the Securities. Any number of Payment Notices may be
given; provided, however, that (i) not more than one Payment Notice shall be
given within a period of any 360 consecutive days, and (ii) no default that
existed upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior Indebtedness) shall be made the basis for the commencement of any other
Payment Blockage Period.
(c) In furtherance of the provisions of Section 11.1, in the event that,
notwithstanding the foregoing provisions of this Section 11.2, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the provisions of this Section 11.2, then such
payment or distribution (subject to the provisions of Section 11.7) shall be
received and held in trust by the Trustee or such Holder or Paying Agent for the
benefit of the holders of Senior Indebtedness of the Company, and shall be paid
or delivered by the Trustee or such Holders or such Paying Agent, as the
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case may be, to the holders of Senior Indebtedness of the Company remaining
unpaid or unprovided for, or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness of the Company may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness of the Company held or represented by each, for application
to the payment of all Senior Indebtedness of the Company in full after giving
effect to any concurrent payment and distribution to the holders of such Senior
Indebtedness.
Section 11.3 Securities Subordinated To Prior Payment Of All Senior
------------------------------------------------------
Indebtedness On Dissolution, Liquidation Or Reorganization.
----------------------------------------------------------
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company shall first be
entitled to receive payments in full (or have such payment duly provided for)
before the Holders are entitled to receive any payment on account of the
principal of, premium, if any, and interest (including any Additional Amounts or
Additional Interest) on, the Securities (other than payment in Junior
Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than payment in Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the provisions of this Article
11, shall be paid by the liquidating trustee or agent or other Person making
such a payment or distribution directly to the holders of Senior Indebtedness of
the Company or their representatives ratably according to the respective amounts
of such Senior Indebtedness held or represented by each, to the extent necessary
to make payment in full of all such Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Junior Securities), shall be received by the
Trustee or the Holders or any Paying Agent (or, if the Company or any Affiliate
of the Company is acting as its own Paying Agent, money for any such payment or
distribution shall be segregated or held in trust) on account of the principal
of or interest (including any Additional Amounts or Additional Interest) on the
Securities before all Senior Indebtedness of the Company is paid in full, such
payment or distribution (subject to the provisions of Section 11.7) shall be
received and held in trust by the Trustee or such Holder or Paying Agent for the
benefit of the holders of such Senior Indebtedness, or their respective
representatives, ratably according to the respective amounts of such Senior
Indebtedness held or represented by each, to the extent necessary to make
payment as provided herein of all such Senior Indebtedness remaining unpaid
after giving effect to all concurrent payments and distributions and all
provisions therefor to or for the holders of such Senior Indebtedness, but only
to the extent that as to any holder of such Senior Indebtedness, as
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promptly as practical following notice from the Trustee to the holders of such
Senior Indebtedness that such prohibited payment has been received by the
Trustee, Holder(s) or Paying Agent (or has been segregated as provided above),
such holder (or a representative therefor) notifies the Trustee of the amounts
then due and owing on such Senior Indebtedness, if any, held by such holder, and
only the amounts specified in such notices to the Trustee shall be paid to the
holders of such Senior Indebtedness.
Section 11.4 Security Holders To Be Subrogated To Rights Of Holders Of Senior
----------------------------------------------------------------
Indebtedness.
------------
Subject to the payment in full of all Senior Indebtedness of the Company as
provided herein, the Holders of Securities shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of this
Article 11, which otherwise would have been made to the Holders shall, as
between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Article 11 are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 11 shall have been applied,
pursuant to the provisions of this Article 11, to the payment of amounts payable
under Senior Indebtedness of the Company, then the Holders shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under, or in respect of, such
Senior Indebtedness in full.
Section 11.5 Obligations Of The Company Unconditional.
----------------------------------------
Nothing contained in this Article 11 or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of each such Person, which obligation is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on, the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article 11, of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.
Notwithstanding anything to the contrary in this Article 11 or elsewhere in this
Indenture or in the Securities, upon any distribution of assets of the Company
referred to in this Article 11, the Trustee, subject to the provisions of
Sections 7.1 and 7.2, and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are
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pending, or a certificate of the liquidating trustee or agent or other Person
making any distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 11 so long as
such court has been apprised of the provisions of, or the order, decree or
certificate makes reference to, the provisions of this Article 11. Nothing in
this Section 11.5 shall apply to the claims of, or payments to, the Trustee
under or pursuant to Section 7.7.
Section 11.6 Trustee Entitled To Assume Payments Not Prohibited In Absence of
----------------------------------------------------------------
Notice.
------
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor, and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.1
and 7.2, shall be entitled in all respects conclusively to assume that no such
fact exists.
Section 11.7 Application By Trustee Of Assets Deposited With It.
--------------------------------------------------
Any deposit of assets with the Trustee or the Agent (whether or not in
trust) for the payment of principal of or interest on any Securities shall be
subject to the provisions of Sections 11.1, 11.2, 11.3 and 11.4; provided, that,
if prior to one Business Day preceding the date on which by the terms of this
Indenture any such assets may become distributable for any purpose (including,
without limitation, the payment of either principal of or interest on any
Security) the Trustee or such Paying Agent shall not have received with respect
to such assets the written notice provided for in Section 11.6, then the Trustee
or such Paying Agent shall have full power and authority to receive such assets
and to apply the same to the purpose for which they were received, and shall not
be affected by any notice to the contrary which may be received by it on or
after such date.
Section 11.8 Subordination Rights Not Impaired By Acts Or Omissions Of The
-------------------------------------------------------------
Company Or Holders Of Senior Indebtedness.
-----------------------------------------
No right of any present or future holders of any Senior Indebtedness
to enforce subordination provisions contained in this Article 11 shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
the Indenture or the Holders.
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Section 11.9 Security Holders Authorize Trustee To Effectuate Subordination Of
-----------------------------------------------------------------
Securities.
----------
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article 11 and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors of the Company),
the immediate filing of a claim for the unpaid balance of his Securities in the
form required in said proceedings and causing said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of the Senior Indebtedness or their
representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Security Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Security Holder in any
such proceeding.
Section 11.10 Right Of Trustee To Hold Senior Indebtedness.
--------------------------------------------
The Trustee shall be entitled to all of the rights set forth in this
Article 11 in respect of any Senior Indebtedness to the same extent as any other
holder of Senior Indebtedness, and nothing in this Indenture shall be construed
to deprive the Trustee of any of its rights as such holder.
Section 11.11 Article 11 Not To Prevent Events Of Default
-------------------------------------------
The failure to make a payment on account of principal of, premium, if
any, or interest on, the Securities by reason of any provision of this Article
11 shall not be construed as preventing the occurrence of a Default or an Event
of Default under Section 6.1 or in any way preventing the Holders from
exercising any right hereunder, other than the right to receive payment on the
Securities.
Section 11.12 No Fiduciary Duty Of Trustee To Holders Of Senior Indebtedness.
--------------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 11 or otherwise.
Nothing in this Section 11.12 shall affect the obligation of any other such
Person to hold such payment for the benefit of, and to pay such payment over to,
the holders of Senior Indebtedness or their representatives.
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ARTICLE 12
CONVERSION OF SECURITIES
Section 12.1 Conversion Privilege.
--------------------
Subject to and upon compliance with the provisions of this Article 12,
at the option of the Holder thereof, any Security may at any time be converted,
in whole, or in part in multiples of $1,000 principal amount, into fully paid
and non-assessable shares of Common Stock issuable upon conversion of the
Securities (the "Conversion Shares"), at the conversion price in effect at the
Date of Conversion, until and including, but not after the close of business on,
the Stated Maturity, or unless such Security or some portion thereof shall have
been called for redemption or delivered for repurchase prior to such date and no
Default is made in making due provision for the payment of the Redemption Price
or Repurchase Price in accordance with the terms of this Indenture, in which
case, with respect to such Security or portion thereof as has been so called for
redemption or delivered for repurchase, such Security or portion thereof may be
so converted until and including, but not after the close of business on, the
Business Day prior to the Redemption Date or Repurchase Date, as applicable for
such Security, unless the Company subsequently fails to pay the applicable
Redemption Price or Repurchase Price, as the case may be.
Section 12.2 Exercise Of Conversion Privilege.
--------------------------------
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security to the Company at any
time during usual business hours at its office or agency maintained for the
purpose as provided in this Indenture, accompanied by a fully executed written
notice, in substantially the form set forth on the reverse of the Security, that
the Holder elects to convert such Security or a stated portion thereof
constituting an integral multiple of a $1,000 principal amount, and, if such
Security is surrendered for conversion during the period between the close of
business of any Record Date and the opening of business on the next following
Interest Payment Date and has not been called for redemption on a Redemption
Date which occurs within such period, accompanied also by payment of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of the Security being surrendered for conversion, notwithstanding such
conversion. The Holder of any Security at the close of business on a Record Date
will be entitled to receive the interest payable on such Security on the
corresponding Interest Payment Date notwithstanding the conversion thereof after
such Record Date. Holders will receive the interest payment due on December 15,
2000 whether or not they surrender Securities for conversion as a result of the
Company's exercise of its right to redeem Securities on or after December 15,
2000. Such notice of conversion shall also state the name or names (with
address) in which the certificate or certificates for shares of Common shall be
issued. Securities surrendered for conversion shall (if reasonably required by
the Company or the Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, duly
executed by the Holder or his attorney duly authorized in writing. As promptly
as practicable after the receipt of such notice and the surrender of such
Security as aforesaid, the Company shall, subject to the provisions of Section
12.8 hereof, issue and deliver at such office or agency to such
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Holder, or on his written order, a certificate or certificates for the number of
full shares of Common Stock issuable on such conversion of Securities in
accordance with the provisions of this Article 12 and Cash, as provided in
Section 12.3 hereof, in respect of any fraction of a share of Common Stock
otherwise issuable upon such conversion. Such conversion shall be deemed to have
been effected immediately prior to the close of business on the date (herein
called the "Date of Conversion") on which such Security shall have been
surrendered as aforesaid, the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become on the Date of Conversion the
holder or holders of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall cause the person or persons in whose name or
names the certificate or certificates for such shares are to be issued to be
deemed to have become the record holder or holders thereof for all purposes at
the opening of business on the next succeeding day on which such stock transfer
books are open but such conversion shall nevertheless be at the conversion price
in effect at the close of business on the date when such Security shall have
been so surrendered with the conversion notice. In the case of conversion of a
portion, but less than all, of a Security, the Company shall as promptly as
practicable execute, and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Company, a Security or Securities in the
aggregate principal amount of the unconverted portion of the Security
surrendered. Except as otherwise expressly provided in this Indenture, no
payment or adjustment shall be made for interest accrued on any Security (or
portion thereof) converted or for dividends or distributions on any Common Stock
issued upon conversion of any Security.
All shares of Common Stock delivered upon such conversion of Securities
that are Restricted Securities shall, if required, bear restrictive legends set
forth in Section 2.6(e) and shall be subject to the restrictions on transfer
provided in such legends. Neither the Trustee nor any agent maintained for the
purpose of such conversion shall have any responsibility for the inclusion or
content of any such restrictive legends on such shares of Common Stock;
provided, however, that the Trustee shall have provided, to the Company or to
the transfer agent for such shares of Common Stock, prior to or concurrently
with a request to the Company to deliver such shares of Common Stock, written
notice that the Securities delivered for conversion are Restricted Securities.
Section 12.3 Fractional Interests.
--------------------
No fractions of shares or scrip representing fractions of shares shall be
issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion thereof shall be basis of the
aggregate principal amount of the Securities so surrendered. If any fraction of
a share of Common Stock would, except for the foregoing provisions of this
Section 12.3, be issuable on the conversion of any Security or Securities, the
Company shall make payment in lieu thereof in an amount of Cash equal to the
value of such fraction computed on the basis of the last sale price of the
Common Stock as reported on the Nasdaq National Market (or if not listed for
trading thereon, then on the principal national securities exchange or market on
which the Common Stock is listed or admitted to trading) at the close of
business on the Date of Conversion or if no such sale takes place
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on such day, the last sale price for such day shall be the average of the
closing bid and asked prices regular way on the Nasdaq National Market (or if
not listed for trading thereon, on the principal national securities exchange or
market on which the Common Stock is listed or admitted to trading) (such last
sale price being hereinafter referred to as the "Last Sale Price"). If on such
Trading Day the Common Stock is not quoted by any such organization, the fair
value of such Common Stock on such day, as reasonably determined in good faith
by the Board of Directors of the Company, shall be used.
Section 12.4 Conversion Price.
----------------
The conversion price per share of Common Stock issuable upon conversion of
the Securities (the "Conversion Price") shall initially be $36.0525, subject to
adjustment pursuant to Section 12.5.
Section 12.5 Adjustment Of Conversion Price.
------------------------------
The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (i) make or pay a dividend (or other
distribution) in shares of Common Stock on any class of Capital Stock of the
Company, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares or (iii) combine or reclassify its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the Holder of any
Security thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock that he would have owned immediately following
such action had such Security been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately, except as provided in subsection (h) below, after the record date
in the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights, options or warrants to all
holders of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the then current market price per
share of the Common Stock (as determined pursuant to subsection (f) below) on
the record date mentioned below, the Conversion Price shall be adjusted to a
price, computed to the nearest cent, so that the same shall equal the price
determined by multiplying:
(i) the Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction, of which
(ii) the numerator shall be (A) the number of shares of Common Stock
outstanding on the date of issuance of such rights, options or warrants,
immediately prior to such issuance, plus (B) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price
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(determined by multiplying such total number of shares by the exercise price of
such rights, options or warrants and dividing the product so obtained by such
current market price), and of which
(iii) the denominator shall be (A) the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants,
immediately prior to such issuance, plus (B) the number of additional shares of
Common Stock which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided in
subsection (h) below, after the record date for the determination of holders
entitled to receive such rights, options or warrants; provided, however, that if
any such rights, options or warrants issued by the Company as described in this
subsection (b) are only exercisable upon the occurrence of certain triggering
events relating to control and provided for in shareholder rights plans, then
the Conversion Price will be adjusted only as provided in the following
paragraphs.
Each share of Common Stock issued upon conversion of Securities pursuant to
this Article 12 shall be entitled to receive the appropriate number of Rights
(as defined in the Rights Agreement) and the certificates representing the
Common Stock issued upon such conversion shall bear such legends, if any, in
each case as may be provided by the terms of the Rights Agreement between the
Company and Harris Trust and Savings Bank (the "Rights Agreement"). Provided
that such Rights Agreement requires that each share of Common Stock issued upon
conversion of Securities shall be entitled to receive such Rights, then,
notwithstanding anything else to the contrary in this Section, there shall not
be any adjustment to the conversion privilege or Conversion Price as a result of
the issuance of such Rights, the distribution of separate certificates
representing such Rights, the exercise or redemption of such Rights in
accordance with any such Rights Agreement, or the termination or invalidation of
such Rights. In addition, in the event the Company amends the Rights Agreement
or implements a replacement or successor stockholders' rights plan, such
successor or amended rights plan must provide that upon conversion of the
Securities the Holders will receive, in addition to the Common Stock issuable
upon such conversion, such rights whether or not such rights have separated from
the Common Stock at the time of such conversion.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"):
(i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable, and
(iii) are also issued in respect of future issuances of Common Stock,
shall not be deemed distributed for purposes of this Section until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger
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Event with respect thereto, that shall have resulted in an adjustment to the
Conversion Price under this Section, (1) in the case of any such rights or
warrants which shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as thought it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of Common Stock with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of any such rights or warrants all
of which shall have expired without exercise by any holder thereof, the
Conversion Price shall be readjusted as if such issuance had not occurred.
(c) In case the Company or any subsidiary of the Company shall distribute
to all holders of Common Stock, any of its assets, evidences of indebtedness,
cash or other assets or shares of Capital Stock other than Common Stock
(including securities, but other than (x) dividends or distributions exclusively
in cash or (y) any dividend or distribution for which an adjustment is required
to be made in accordance with subsection (a) or (b) above) then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the then current market price per share of the Common Stock (determined as
provided in subsection (f) below) on the record date mentioned below less the
then fair market value (as reasonably determined in good faith by the Board of
Directors of the Company) of the portion of the assets so distributed applicable
to one share of Common Stock, and of which the denominator shall be such current
market price per share of the Common Stock. Such adjustment shall become
effective immediately, except as provided in subsection (h) below, after the
record date for the determination of stockholders entitled to receive such
distribution.
(d) In case the Company or any subsidiary of the Company shall make any
distribution consisting exclusively of cash (excluding any cash portion of
distributions for which an adjustment is required to be made in accordance with
(c) above, or cash distributed upon a merger or consolidation to which Section
12.6 applies) to all holders of Common Stock in an aggregate amount that,
combined together with (i) all other such all-cash distributions made within the
then preceding 12 months in respect of which no adjustment has been made and
(ii) any cash and the fair market value of other consideration paid or payable
in respect of any tender offer by the Company or any of its Subsidiaries for
Common Stock concluded within the preceding 12 months in respect of which no
adjustment has been made, exceeds 10% of the Company's market capitalization
(defined as being the product of the then current market price of the Common
Stock (determined as provided in subsection (f) below) times the number of
shares of Common Stock then outstanding) on the record date of such
distribution, in each such case the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution by a fraction of which
the numerator shall be the then current market price per share of the Common
Stock on such record date less the amount of the cash so distributed applicable
to one share of Common Stock, and of which the denominator shall be such current
market price per share of the Common Stock. Such adjustment shall become
effective immediately,
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except as provided in subsection (h) below, after the record date for the
determination of stockholders entitled to receive such distribution.
(e) In case there shall be completed a tender or exchange offer made by
the Company or any Subsidiary of the Company for all or any portion of the
Common Stock (any such tender or exchange offer being referred to as an "Offer")
that involves an aggregate consideration having a fair market value as of the
expiration of such Offer (the "Expiration Time") that, together with (i) any
cash and the fair market value of any other consideration payable in respect of
any other Offer, as of the expiration of such other Offer, expiring within the
12 months preceding the expiration of such Offer and in respect for which no
Conversion Price adjustment pursuant to this subsection (e) has been made and
(ii) the aggregate amount of any all-cash distributions referred to in
subsection (d) of this Section 12.5 to all holders of Common Stock within the 12
months preceding the expiration of such Offer for which no Conversion Price
adjustment, pursuant to such subsection (d), has been made, exceeds 10% of the
Company's market capitalization (defined as being the product of the then
current market price per share (determined as provided in subsection (f) below)
of the Common Stock on the Expiration Time times the number of shares of Common
Stock outstanding (including any tendered shares)) at the Expiration Time, the
Conversion Price shall be reduced by multiplying such Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the numerator
shall be (i) the product of the then current market price per share (determined
as provided in subsection (f) below) at the Expiration Time times the number of
shares of Common Stock outstanding (including any tendered shares) at the
Expiration Time minus (ii) the fair market value of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the Offer) of all shares validly tendered and not withdrawn as of
the Expiration Time (the shares deemed so accepted being referred to as the
"Purchased Shares") and the denominator shall be the product of (i) such current
market price per share at the Expiration Time times (ii) such number of
outstanding shares at the Expiration Time less the number of Purchased Shares,
such reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time.
For purposes of this subsection (e), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.
(f) For the purpose of any computation under subsections (b), (c), (d) and
(e) above, the current market price per share of Common Stock on any date shall
be deemed to be the average of the Last Sale Prices of a share of Common Stock
for the five consecutive Trading Days selected by the Company commencing not
more than 20 Trading Days before, and ending not later than, the earlier of the
date in question and the date before the "ex date," with respect to the
issuance, distribution or Offer requiring such computation. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 12.3 hereof, the fair value of the
Common Stock on such day, as reasonably determined in good faith by the Board of
Directors of the Company, shall be used. For purposes of this paragraph, the
term "ex date," when used with respect to any issuance, distribution or payments
with respect to an Offer, means the first date on which the Common Stock trades
regular way on the Nasdaq National Market (or if not
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listed or admitted to trading thereon, then on the principal market or exchange
on which the Common Stock is listed or admitted to trading) without the right to
receive such issuance, distribution or Offer.
(g) In addition to the foregoing adjustments in subsections (a), (b), (c),
(d) and (e) above, the Company will be permitted to make such reductions in the
Conversion Price as it considers to be advisable. In the event the Company
elects to make such a reduction in the Conversion Price, the Company will comply
with the requirements of Rule 14e-1 of the Exchange Act and any other Federal
and state laws and regulations thereunder if and to the extent that such laws
and regulations are applicable in connection with the reduction of the price of
the Notes; provided, that any provisions of this Indenture which conflict with
such laws shall be deemed superseded by the provisions of such laws.
(h) In any case in which this Section 12.5 shall require that an
adjustment (including by reason of the last sentence of subsection (a) or (c)
above) be made immediately following a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Security converted after such record
date and on and before such adjustment shall have become effective (i) defer
paying any Cash payment pursuant to Section 12.3 hereof or issuing to the Holder
of such Security the number of shares of Common Stock and other Capital Stock of
the Company (or other assets or securities) issuable upon such conversion in
excess of the number of shares of Common Stock and other Capital Stock of the
Company issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (ii) not later than five Business Days after such adjustment
shall become effective, pay to such Holder the appropriate Cash payment pursuant
to Section 12.3 hereof and issue to such Holder the additional shares of Common
Stock and other Capital Stock of the Company issuable on such Conversion.
(i) No adjustment in the Conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1.0% of the
Conversion Price; provided that any adjustments which by reason of this
subsection (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
12 shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
(j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly (i) file with the Trustee and the Registrar an Officers'
Certificate setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment, which
certificate shall be conclusive evidence of the correctness of such adjustment,
and (ii) mail or cause to be mailed a notice of such adjustment to each Security
Holder at his address as the same appears on the registry books of the
Registrar.
(k) In the event that the Company distributes rights or warrants (other
than those referred to in subsection (b) above) pro rata to holders of Common
Stock, so long as any such rights or warrants have not expired or been redeemed
by the Company, the Company shall make proper provision so that the Holder of
any Security surrendered for conversion will be entitled to receive
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upon such conversion, in addition to the Conversion Shares, a number of rights
and warrants to be determined as follows: (i) if such conversion occurs on or
prior to the date for the distribution to the holders of rights or warrants of
separate certificates evidencing such rights or warrants (the "Distribution
Date"), the same number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion occurs after
such Distribution Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal amount of such
Security so converted was convertible immediately prior to such Distribution
Date would have been entitled on such Distribution Date in accordance with the
terms and provisions of, and applicable to, the rights or warrants.
Section 12.6 Continuation Of Conversion Privilege In Case Of Reclassification,
-----------------------------------------------------------------
Change, Merger, Consolidation Or Sale Of Assets.
-----------------------------------------------
If any of the following shall occur, namely: (a) any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of the
Securities (other than a change in par value, or from par value to no par value,
or from no par value, to par value, or as a result of a subdivision or
combination), (b) any consolidation or merger of the Company with or into any
other Person, or the merger of any other Person with or into the Company (other
than a merger which does not result in any reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (c) any sale,
transfer or conveyance of all or substantially all of the assets of the Company
(computed on a consolidated basis), then the Company, or such successor or
purchasing entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
only into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance by a holder of the number of
shares of Common Stock issuable upon conversion of such Security immediately
prior to such reclassification, change, consolidation, merger, sale, transfer or
conveyance assuming such holder of Common Stock of the Company failed to
exercise his rights of an election, if any, as to the kind or amount of cash and
other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance (provided that if the kind or amount of
securities, cash and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance is not the same for
each share of Common Stock of the Company held immediately prior to such
reclassification, change, consolidation, merger, sale, transfer or conveyance in
respect of which such rights of election shall not have been exercised ("Non-
Electing Shares"), then for the purpose of this Section 12.6, the kind and
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance by
each Non-Electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-Electing Shares). Such supplemental
indenture shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 12. If, in
the case of any such consolidation, merger, sale or conveyance, the stock or
other securities and property (including cash) receivable thereupon by a holder
of shares
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of Common Stock includes shares of stock or other securities and property
(including cash) of a corporation other than the successor or purchasing
corporation, as the case may be, in such consolidation, merger, sale or
conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing. The
provisions of this Section 12.6 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be mailed
to each Holder of Securities at his address as the same appears on the registry
books of the Company.
Neither the Trustee nor any agent shall be under any responsibility to
determine the correctness of any provisions contained in any such supplemental
indenture relating either to the kind or amount of shares of stock or securities
or property (including cash) receivable by Holders of Securities upon the
conversion of their Securities after any such reclassification, change,
consolidation, merger, sale or conveyance or to any adjustment to be made with
respect thereto, but, subject to the provisions of Article 7.1 and 7.2 hereof,
may accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
Section 12.7 Notice Of Certain Events.
------------------------
In case:
(a) the Company shall declare a dividend (or any other distribution)
payable to the holders of Common Stock (other than cash dividends);
(b) the Company shall authorize the granting to all holders of Common
Stock of rights, warrants or options to subscribe for or purchase any shares of
stock of any class or of any other rights;
(c) the Company shall authorize any reclassification or change of the
Common Stock (including a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or the
sale or conveyance of all or substantially all the property or business of the
Company;
(d) there shall be proposed any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
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(e) the Company or any of its Subsidiaries shall complete an Offer;
then, the Company shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 4.2 hereof,
and shall cause to be mailed to each Holder of Securities, at its address as it
shall appear on the registry books of the Company, at least 20 days before the
date hereinafter specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice stating the date on
which (1) a record is expected to be taken for the purpose of such dividend,
distribution, rights, warrants or options or Offer, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights, warrants or options or to participate in
such Offer are to be determined, or (2) such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up
is expected to become effective and the date, if any is to be fixed, as of which
it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, change, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding-up. Neither the failure to give
notice nor any defect therein shall affect the legality or validity of the
events described in clauses (a) through (e) of this Section 12.7.
Section 12.8 Taxes On Conversion.
-------------------
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant thereto; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of any such
tax or has established, to the satisfaction of the Company, that such tax has
been paid. The Company extends no protection with respect to any other taxes
imposed in connection with conversion of Securities.
Section 12.9 Company To Provide Stock.
------------------------
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Securities from time to time as such Securities are presented for
conversion, provided, that nothing contained herein shall be construed to
preclude the Company from satisfying its obligations in respect of the
conversion of Securities by delivery of repurchased shares of Common Stock which
are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of conversion
of Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible use its best efforts to
secure such
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registration or approval, as the case may be, provided, however, that nothing in
this Section 12.9 shall be deemed to limit in any way the obligations of the
Company provided in this Article 12.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Securities will upon issue be fully paid and non-assessable
by the Company and free of preemptive rights.
Section 12.10 Disclaimer Of Responsibility For Certain Matters.
------------------------------------------------
Neither the Trustee nor any agent of the Trustee shall at any time be under
any duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the Officers' Certificate referred to in Section 12.5(j) hereof, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, herein or in any supplemental indenture provided
to be employed, in making the same. Neither the Trustee nor any conversion agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property
(including cash), which may at any time be issued or delivered upon the
conversion of any Security; and neither the Trustee nor any conversion agent
makes any representation with respect thereto. Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
register the transfer of or deliver any shares of Common Stock or stock
certificates or other securities or property (including cash) upon the surrender
of any Security for the purpose of conversion or, subject to Article 7 hereof,
to comply with any of the covenants of the Company contained in this Article 12.
Section 12.11 Return Of Funds Deposited For Redemption Of Converted Securities.
----------------------------------------------------------------
Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other Paying Agent for the purpose of paying
the principal of and interest on any of the Securities and which shall not be
required for such purposes because of the conversion of such Securities, as
provided in this Article 12, shall after such conversion be repaid to the
Company by the Trustee or such other Paying Agent. All Securities delivered for
conversion to the Trustee will be canceled by or at the direction of the
Trustee.
-67-
<PAGE>
ARTICLE 13
MISCELLANEOUS
Section 13.1 TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts with the
duties imposed by operation of the TIA, the imposed duties, upon qualification
of this Indenture under the TIA, shall control; provided that this Section 13.1
shall not require such supplemental indenture or the Trustee to be qualified
under the TIA prior to the time such qualification is in fact required under the
terms of the TIA or the Indenture has been qualified under the TIA, nor shall it
constitute any admission or acknowledgment by any party to such supplemental
indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the TIA or the Indenture
has been qualified under the TIA.
Section 13.2 Notices.
-------
Any notices or other communications to the Company or the Trustee required
or permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by overnight courier, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company:
PLATINUM technology, inc.
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181
Attention: Chief Financial Officer Telecopy:(630) 691-0710
with a copy to General Counsel at (630)691-0454
if to the Trustee:
American National Bank and Trust Company of Chicago
33 North LaSalle Street, 13th Floor Chicago, IL 60690
Attention: Corporate Trust Division
Telecopy: (312) 661-6491
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; the next Business Day, if by
overnight courier; when receipt is acknowledged, if telecopied; and five
Business
-68-
<PAGE>
Days after mailing if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Security Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registry books of the Registrar and shall be sufficiently given to him if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Security Holder or any
defect in it shall not affect its sufficiency with respect to other Security
Holders. If a notice or communication is mailed in the manner provided above, it
is duly given, whether or not the addressee receives it.
Section 13.3 Communications By Holders With Other Holders.
--------------------------------------------
Security Holders may communicate pursuant to TIA Section 312(b) with other
Security Holders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
Section 13.4 Certificate And Opinion As To Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 13.5 Statements Required In Certificate Or Opinion.
---------------------------------------------
Each Certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
-69-
<PAGE>
(3) A statement that, in opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
Section 13.6 Rules By Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Security Holders. The Paying Agent or Registrar may make reasonable rules for
its functions.
Section 13.7 Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 13.8 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
-70-
<PAGE>
Section 13.9 No Adverse Interpretation Of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 13.10 No Recourse Against Others.
--------------------------
No direct or indirect partner, employee, stockholder, director or officer,
as such, past, present or future of the Company or any successor corporation,
shall have any personal liability in respect of the obligations of the Company
under the Securities or this Indenture by reason of his, her or its status as
such partner, stockholder, employee, director or officer. Each Holder of a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Section 13.11 Successors.
----------
All agreements of the Company in this Indenture and the Securities shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 13.12 Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
Section 13.13 Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Securities shall be 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 shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 13.14 Table Of Contents, Headings, Etc.
---------------------------------
The Table of Contents, Cross-Reference Table and headings of the Articles
and the Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 13.15 Qualification Of Indenture.
--------------------------
If required by the TIA, the Company shall qualify this Indenture under the
TIA and shall pay all costs and expenses (including attorneys' fees for the
Company and the Trustee) incurred in connection therewith, including, but not
limited to, costs and expenses of qualification of the
-71-
<PAGE>
Indenture and the Securities and printing this Indenture and the Securities. The
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA. Notwithstanding anything to the contrary contained herein, the parties
hereto shall be required to comply with the provisions of the TIA only to the
extent required thereby.
-72-
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
PLATINUM technology, inc.,
a Delaware Corporation
By: /s/ Andrew J. Filipowski
----------------------------------
Name: Andrew J. Filipowski
--------------------------------
Title: President, CEO & CHAIRMAN
-------------------------------
Attest: /s/ Larry Freedman
--------------------
Secretary
American National Bank and Trust Company of
Chicago, a national banking association
as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
EXHIBIT A
[For Global Security only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (55 WATER STREET, NEW YORK, NEW
YORK) (THE "DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE
CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY
AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR
TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO PLATINUM
TECHNOLOGY, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E)
ABOVE), IT WILL FURNISH TO AMERICAN NATIONAL BANK AND TRUST COMPANY OF
<PAGE>
CHICAGO, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY
EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR
TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE). THIS LEGEND WILL BE REMOVED UPON THE TRANSFER OF THE
SECURITY EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) OR 2(E) ABOVE. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
-2-
<PAGE>
[FORM OF SECURITY]
PLATINUM technology, inc.
6.25% CONVERTIBLE SUBORDINATED NOTE DUE 2002
No. CUSIP No.______________
$___________
PLATINUM technology, inc., a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
__________________________, or registered assigns, the principal sum of
________________ Dollars, on December 15, 2002.
Interest Payment Dates: June 15 and December 15; commencing June 15, 1998.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security on the reverse
side, which will, for all purposes have the same effect as if set forth at this
place.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated:
PLATINUM technology, inc., a Delaware Corporation
[seal]
By:
------------------------------
Name:
Title:
Attest
By:
------------------------
Name:
Title:
This is one of the Securities described in the within-mentioned Indenture.
Dated:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
a national banking association, as Trustee
By:
------------------------
Authorized Signatory
-4-
<PAGE>
PLATINUM technology, inc.
6.25% CONVERTIBLE SUBORDINATED NOTE DUE 2001
[This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein./1/]
1. INTEREST.
PLATINUM technology, inc., a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Security
at the rate of 6.25% per annum. To the extent it is lawful, the Company promises
to pay interest on any interest payment due but unpaid on such principal amount
at a rate of 6.25% per annum compounded semi-annually.
The Company will pay interest semi-annually on June 15 and December 15 of
each year (each, an "Interest Payment Date"), commencing June 15, 1998, until
maturity, redemption, repurchase or conversion pursuant to the Indenture (as
hereinafter defined). Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid on
the Securities, from December 16, 1997. Interest will be computed on the basis
of a 360-day year consisting of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Any such
interest not so punctually paid, and defaulted interest relating thereto, may be
paid to the Persons who are registered Holders at the close of business on a
Special Record Date for the payment of such defaulted interest, as more fully
provided in the Indenture referred to below. Except as provided below, the
Company shall pay principal and interest in such
- --------------------
/1/This paragraph should only be added if the Security is issued in global form.
<PAGE>
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts ("U.S. Legal Tender").
The Securities will be payable as to principal, premium and interest at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or at the option of the Company, payment of
principal, premium and interest may be made by check mailed to the Holders at
their addresses set forth in the registry of Holders, and provided that payment
by wire transfer of immediately available funds will be required with respect to
principal of, premium and interest on Global Securities and all other Securities
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Holders must surrender Securities to a Paying Agent
to collect principal payments.
3. PAYING AGENT AND REGISTRAR.
Initially, American National Bank and Trust Company, a national banking
association (the "Trustee"), at its office located at 14 Wall Street, New York,
New York 10005, will act as Paying Agent and Registrar. The Company may change
any Paying Agent, Registrar or Co-Registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Paying Agent, Registrar or Co-Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture, dated as of December
15, 1997 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act, as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Indenture and said Act for
a statement of them. The Securities are general unsecured obligations of the
Company limited in aggregate principal amount to $150,000,000 ($172,500,000 if
the Initial Purchasers exercise their over-allotment option in full).
5. REDEMPTION.
Subject to the provisions of Paragraph 7 of this Security, the Securities
will not be subject to redemption prior to December 15, 2000. On or after
December 15, 2000 the Securities will be redeemable at the option of the
Company, in whole or in part, at the following Redemption Prices (expressed as a
percentage of principal amount) set forth below with respect to the indicated
Redemption Date.
If redeemed during the 12-month period beginning December 15:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000............................................. 102.50 %
2001 and thereafter.............................. 101.25
</TABLE>
-2-
<PAGE>
together, in each case, with accrued interest (including any Additional Amounts
(as defined below) or Additional Interest) to the Redemption Date; provided that
Securities that are Tax Affected Securities are also redeemable, in whole but
not in part, under the circumstances described in Paragraph 7 of this Security,
at a Redemption Price equal to 100% of the principal amount thereof plus
interest accrued to the Redemption Date. Any such redemption will comply with
Article 3 of the Indenture.
The Securities will not be subject to any sinking fund.
6. PAYMENT OF ADDITIONAL AMOUNTS.
The Company will pay to a Non-U.S. Holder of any Security such additional
amounts ("Additional Amounts") as may be necessary in order that every net
payment of the principal of, premium, if any, and interest on this Security
(including payment on redemption or repurchase), after deduction or withholding
for or on account of any present or future tax, assessment or governmental
charge imposed upon or as a result of such payment by the United States or any
political subdivision or taxing authority thereof or therein (each, a "Taxing
Jurisdiction"), will not be less than the amount provided for in this Security
to be then due and payable; provided, however, that the foregoing obligation to
pay Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such 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 an estate, a trust, a partnership
or a corporation) and the Taxing Jurisdiction, 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 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 federal 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
this Security for payment on a date more than 15 days after the date on
which such payment became due and payable or the date on which 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;
-3-
<PAGE>
(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 concerning the nationality, residence,
identity or connection with the United States of such Non-U.S. Holder (or
beneficial owner of such Security), if compliance is required or imposed by
a statute, treaty, regulation or administrative practice of the United
States or any political subdivision or taxing authority thereof or therein
as a 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 Security;
(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 this Security; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g).
Notwithstanding the foregoing, the Company shall not be obligated to pay
Additional Amounts in respect of payments becoming due on the Securities more
than 15 days after the Redemption Date with respect to any redemption of the
Securities described in Paragraph 7 of this Security 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 herein and in the Indenture, the Company
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein. Whenever in this Security there is a
reference, in any context, to the payment of the principal of, premium, if any,
or interest on, or in respect of, any Security such mention shall be deemed to
include mention of the payment of Additional Amounts payable as described in the
preceding paragraph to the extent that, in such context, Additional Amounts are,
were or would be payable in respect of such Security, and express mention of the
payment of Additional Amounts (if applicable) in any provisions of this Security
shall not be construed as excluding Additional Amounts in those provisions of
this Security where such express mention is not made.
-4-
<PAGE>
7. REDEMPTION FOR TAX REASONS.
If the Company determines that, principally as a result of a Tax Law
Change, the Company is or would become obligated on the next succeeding Interest
Payment Date to pay Additional Amounts to the Holder of any Security, as
described in Paragraph 6 of this Security, and such obligation cannot be avoided
by the Company taking reasonable measures available to it, then the Company may,
at its option, redeem the Tax Affected Securities in whole, but not in part, at
any time, on giving not less than 20 days' notice to the Holders prior to the
Redemption Date, at a Redemption Price equal to 100% of the principal amount
plus interest accrued to, 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 pay any such Additional Amounts were a payment in respect of the
Tax Affected Securities then made. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
(a) an Officers' Certificate stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Company so to redeem have occurred and (b) an
Opinion of Counsel of recognized standing selected by the Company and reasonably
acceptable to the Trustee to the effect that the circumstances referred to above
in this paragraph exist. The Trustee shall accept such opinion as sufficient
evidence of the satisfaction of the conditions precedent described above, in
which event it shall be conclusive and binding on the Holders. The Company's
right to redeem the Tax Affected Securities shall continue as long as the
Company is obligated to pay such Additional Amounts, notwithstanding that the
Company shall have made payments of Additional Amounts specified in Paragraph 6.
8. NOTICE OF REDEMPTION.
In the event of a redemption pursuant to Paragraph 7 of this Security,
notice of Redemption will be sent by first class mail, at least 30 days and not
more than 60 days prior to the Redemption Date to the Holder of each Security to
be redeemed at such Holder's last address as then shown upon the registry books
of the Registrar. Securities may be redeemed in part in integral multiples of
$1,000 only.
Except as set forth in the Indenture, from and after any Redemption Date,
if monies for the redemption of the Securities called for redemption shall have
been deposited with the Paying Agent on such Redemption Date and payment of the
Securities called for redemption is not prohibited under Article 11 of the
Indenture, the Securities called for redemption will cease to bear interest and
the only right of the Holders of such Securities will be to receive payment of
the Redemption Price, plus any accrued and unpaid interest (including any
Additional Amounts or Additional Interest) to the Redemption Date.
9. DENOMINATIONS; TRANSFER; EXCHANGE.
-5-
<PAGE>
The Securities are in registered form, without coupons, in denominations of
$1,000 and integral multiplies of $1,000. A Holder may register the transfer of,
or exchange Securities in accordance with, the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption.
10. PERSONS DEEMED OWNERS.
The registered Holder of a Security may be treated as the owner of it for
all purposes.
11. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
12. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented, and any existing Default or Event of Default or
compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Securities to, among other things, cure
any ambiguity, defect or inconsistency, or make any other change that does not
adversely affect the rights of any Holder of a Security.
13. CONVERSION RIGHTS.
Subject to the provisions of the Indenture, the Holders have the right to
convert the principal amount of the Securities into fully paid and nonassessable
shares of Common Stock of the Company at the initial Conversion Price per share
of Common Stock of $36.0525, or at the adjusted Conversion Price per share then
in effect, if adjustment has been made as provided in the Indenture, upon
surrender of the Securities to the Company, together with a fully executed
notice in substantially the form attached hereto and, if required by the
Indenture, an amount equal to accrued interest payable on such Securities.
14. RANKING.
Payment of principal, premium, if any, and interest (including any
Additional Amounts or Additional Interest) on the Securities is subordinated, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness.
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<PAGE>
15. REPURCHASE AT OPTION OF HOLDER UPON A CHANGE OF CONTROL.
If there is a Change of Control, the Company shall be required to offer to
purchase on the Repurchase Date all outstanding Securities at a purchase price
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
(including any Additional Amounts or Additional Interest), if any, to the
Repurchase Date. Holders of Securities will receive a Repurchase Offer from the
Company prior to any related Repurchase Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
16. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under the
Securities and the Indenture, the predecessor will be released from those
obligations.
17. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization),
then in every such case, unless the principal of all of the securities shall
have already become due and payable, either the Trustee or the Holders of 25% in
aggregate principal amount of Securities then outstanding may declare all the
Securities to be due and payable immediately in the manner and with the effect
provided in the Indenture. Holders of Securities may not enforce the Indenture
or the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest), if it determines that withholding notice is
in their interest.
18. REGISTRATION RIGHTS AGREEMENT.
The Holder of this Security and the Common Stock issuable upon conversion
thereof is entitled to the benefits of a Registration Rights Agreement (subject
to the provisions thereof), dated as of December 15, 1997, between the Company
and the Initial Purchasers.
19. RULE 144A INFORMATION.
Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security or the holder of Common Stock issued upon conversion thereof, the
Company will promptly furnish or cause to be furnished Rule 144A Information (as
defined in the Indenture) to such Holder of Restricted Securities or such holder
of Common Stock issued upon conversion of Restricted Securities, or to a
prospective purchaser of any such security designated by any such Holder or
holder, as the case may be, to the extent required to permit
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<PAGE>
compliance by such Holder or holder with Rule 144A under the Securities Act in
connection with the resale of any such security.
20. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or
its Affiliates, and may otherwise deal with the Company or its Affiliates as if
it were not the Trustee.
21. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer or employee, as such, past, present or
future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the Securities or
the Indenture by reason of his, her or its status as such stockholder, director,
officer or employee. Each Holder of a Security by accepting a Security waives
and releases all such liability. This waiver and release are part of the
consideration for the issuance of the Securities.
22. AUTHENTICATION.
The Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Security.
23. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TENENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
24. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities, and reliance may be placed only on the other identification numbers
printed hereon.
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<PAGE>
ASSIGNMENT FORM AND
CERTIFICATE OF TRANSFER
To assign this Security fill in the form below:
(I) or (we) assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
In connection with any transfer of any of the Securities within the period
prior to the expiration of the holding period applicable to the sales thereof
under Rule 144(k) under the Securities Act of 1933, as amended (the "Securities
Act") (or any successor provision), the undersigned confirms that such
Securities are being transferred:
CHECK ONE BOX BELOW
[_] to the Company or a subsidiary thereof; or
[_] pursuant to and in compliance with Rule 144A under the Securities Act;
or
[_] pursuant to and in compliance with Regulation S under the Securities
Act; or
[_] pursuant to Rule 144 of the Securities Act; or
[_] pursuant to an effective registration statement; or
[_] pursuant to another available exemption under the Securities Act;
and unless the box below is checked, the undersigned confirms that such
Securities are not being transferred to an "affiliate" of the Company as defined
in Rule 144 under the Securities Act (an "Affiliate").
[_] the Securities are being transferred to an Affiliate.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Article 10 of the Indenture, check the box: [_]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Article 10 of the Indenture, state the amount you want to be
purchased: $________
Date: Signature:
-------------------- ---------------------------------------
(Sign exactly as your name appears on
the other side of this Security)
-10-
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES/2/
The following exchanges of a part of this Global Security for definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal
Amount of Amount of Amount of this Signature of
decrease in Increase in Global Security authorized
Principal Amount Principal following such Trustee or
Date of of this Global Amount of this decrease (or Securities
Exchange Security Global Security increase) Custodian
- --------------- ---------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------
/2/This schedule should only be added if the Security is issued in global
form.
<PAGE>
EXHIBIT B
FORM OF CONVERSION NOTICE
To: PLATINUM technology, inc.
The undersigned owner of this Security hereby: (i) irrevocably exercises
the option to convert this Security, or the portion hereof below designated,
into shares of Common Stock of PLATINUM technology, inc. in accordance with the
terms of this Indenture referred to in this Security and (ii) directs that such
shares of Common Stock deliverable upon the conversion, together with any check
in payment for fractional shares and any Security(ies) representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares are to
be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.
Dated:
----------------------
-----------------------------------------
(Signature)
Provide information below for registration of shares of Common Stock if to
be issued, and of Securities if to be issued other than in the name of the
registered holder.
- ----------------------------------
(Name)
- ----------------------------------
(Street Address)
- ----------------------------------
City, State and Zip Code)
(Please print name and address)
- ----------------------------------
(Social Security or other Taxpayer
Identifying Number)
Principal Amount to be converted: (in an
integral multiple of $1000, if less than
all)
$
----------------------------------------
<PAGE>
Exhibit 10.6
PLATINUM technology, inc.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
This Amended and Restated Agreement ("Agreement"), is made and entered into
as of the 1st day of January, 1996 (the "Effective Date"), by and between
Platinum technology, inc., a Delaware corporation (the "Company"), and Andrew
Filipowski (the "Executive").
WHEREAS, the Company entered into an Employment Agreement with Executive as
an executive employee dated as of March 1, 1991 and the parties believe that the
Employment Agreement needs to be clarified and the parties deem it advisable to
amend and restate the Employment Agreement to clarify the language and include
certain provisions which should have been included;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment of Executive
As of the Effective Date, the Company hereby engages and employs Executive
in an executive capacity as the Company's Chairman, President and Chief
Executive Officer and Executive hereby accepts such employment and agrees to
act as an employee of the Company in accordance with the terms of employment
hereinafter specified ("Executive Employment").
2. Term of Executive Employment
The period of Executive Employment shall begin on the Effective Date and
continue until terminated as hereinafter provided (the "Employment Period").
3. Duties
(a) Executive shall be employed by Company as the Company's President and
Chief Executive Officer. In such capacity, Executive shall have supervision and
control over, and responsibility for, the general management and operation of
the Company, and shall have such other powers and duties as the Board of
Directors of the Company may from time to time prescribe; provided that, such
powers and duties are consistent with the Executive's then present duties and
with his position as the Company's senior executive officer in charge of the
general management of the Company.
(b) Nothing contained herein shall be construed so as to prohibit Executive
from performing such other or additional duties or responsibilities, and
exercising such other or additional authority in furtherance of the goals of the
Company, as the Executive and the Board of Directors of the Company shall from
time to time agree upon.
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<PAGE>
(c) Executive shall devote such portion of his business time and attention
as is necessary to appropriately and efficiently discharge his duties and
responsibilities as herein set forth. If Executive so discharges his duties he
may engage in other business and civic activities, in addition to those relating
to the Company's business, if such activities are not otherwise prohibited by
the terms of this Agreement.
(d) During Executive's employment hereunder, Executive shall not be
required to relocate his principal residence from his current location as a
result of the Company moving its principal executive offices or the Executive's
office to an address greater than twenty (20) miles away from the Company's
principal executive offices (or the Executive's office) at the Effective Date
and shall not be required to perform services which could make the continuance
of Executive's principal residence in such location unreasonably difficult or
inconvenient for Executive except to the extent that the performance of such
services (and travel) is commensurate with Executive's duties specified
hereunder.
4. Executive Salary and Compensation:
(a) Base Salary. During the Employment Period of the Company shall pay or
cause to be paid to Executive an initial base salary ("Base Salary") at an
annual rate of $702,000.00 per year, payable to Executive on a periodic basis in
accordance with the Company's then current executive salary payment practice;
provided, however, that the installments may not be made less frequently than on
a month basis. Such Base Salary shall be subject to review in accordance with
the Company's normal practice for executive salary review from time to time in
effect, and will not be reduced without the prior written consent of Executive.
(b) Incentive Compensation. Executive shall be entitled to receive an
annual bonus for the Employment Period as determined by the Compensation
Committee of the Company's Board of Directors (the "Committee") for each fiscal
year of the Company during the Employment Period ("Incentive Compensation"). The
Incentive Compensation for 1996 shall be the amounts set forth in Exhibit A
hereto, which may be amended from time to time by the Committee (computed before
deduction of the bonus payable to Executive hereunder and any bonus payable to
any executive officer which is also based upon the Company's pre-tax income);
provided, however, if the aggregate amount which is payable pursuant to this
Section 4(b) for any one calendar year shall exceed $1,000,000 then amounts
payable in excess of $1,000,000 shall be determined by a formula to be
established by the Committee. It is the intention of the parties hereto, that in
connection with establishing Incentive Compensation for periods following 1996
the Committee will not act arbitrarily and will modify the initial formula for
incentive compensation in good faith in light of the Company's and the
Executive's performance. The Company will pay the 1996 Incentive Compensation to
Executive based upon the audited financial statements of the Company prepared by
a nationally known independent accounting firm regularly retained by the Company
("Accounting Firm") (within 30 days following completion of the Company's annual
audit and in accordance with the final determination of Incentive Compensation
payable made by the aforementioned Accounting Firm). If Executive's employment
is terminated effective at any time other than the end of the Company's fiscal
year, the final adjustments will be made by the Accounting Firm based upon the
most recent unaudited financial statements of the Company for the month end
immediately prior to the effective date of termination.
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<PAGE>
(c) Withholding of Certain Taxes. All compensation referred to in Section
4(a) and 4(b) of this Agreement is stated in terms of gross amount, it being
understood that the Company will be required to withhold from such gross amount
deductions for federal, state and local income taxed (if any), F.I.C.A.,
unemployment compensation taxes and the like.
(d) Fringe Benefits. During the Employment Period, the Company shall
provide the following fringe benefits (hereinafter collectively "Fringe
Benefits") to Executive: (i) Medical and Dental Insurance. The Company shall
provide Executive and Executive's immediate family, including spouse and
children, if any, at the Company's expense, with comprehensive medical and
dental insurance coverage similar to that provided to other executive officers
of the Company; (ii) Life Insurance. The Company shall provide Executive, at the
Company's expense, a term or whole life policy or policies of insurance insuring
the life of Executive for the benefit of person(s) designated from time to time
by Executive in the amount of up to Five Million Dollars ($5,000,000) and shall
be a sole life policy if requested by Executive, which shall be assigned to
Executive, together with any cash value thereof at Executive's request and (b) a
split dollar life insurance policy or policies insuring the life of Executive
for the benefit of the person(s) designated from time to time by Executive in an
amount up to Fifteen Million Dollars ($15,000,000) and the premiums therefor are
reimbursed to the Company upon death or termination of employment and transfer
of the policy to Executive as more particularly described in such policy; (iii)
Disability Insurance. The Company shall provide Executive, at the Company's
expense, with comprehensive short and long term disability insurance in an
amount which the Company determines is reasonably commensurate with Executive's
compensation contemplated hereunder, including, without limitation, Executive's
base salary, incentive compensation, fringe benefits and the like; (iv) Clubs;
Professional Organizations. The Company shall pay the annual dues and
assessments for the Executive's membership in the Glen Oaks Country Club, the
Union League Club, Butler Country Club, Eagle Springs Country Club, Game Creek
Country Club, three health clubs and the Young President's Organization ("YPO")
("Clubs"). With respect to YPO, the Company shall also pay the costs and
expenses of YPO and other professional organizations sponsored events which the
Executive wishes to attend or participate in; (v) Automobile. The Company shall
provide Executive with the use of a company car and shall reimburse Executive
for all related expenses, including insurance coverage related thereto; (vi)
Administrative Assistance. The Company shall at the Company's expense maintain
his same office at the Corporate headquarters and provide Executive with an
Administrative Assistant and such other clerical assistance as required by
Executive.
5. Expenses. The Company shall pay or reimburse Executive in accordance with
the Company's policy for all expenses reasonably incurred by Executive during
the period of Executive's employment in connection with the performance of
Executive's duties under this Agreement, including, without limitation, travel,
entertainment and automobile expenses. As the Company may reasonably request,
Executive shall provide to the Company documentation or supporting information
relating to the expenses for which Executive seeks reimbursement.
6. For purposes of Sections 7, 8 and 9 the amount of annual Incentive
Compensation and Base Salary which is payable as severance shall be equal to the
greatest amount of Incentive Compensation and Base Salary, respectively, paid to
Executive during any trailing 12 month period during the 36 month period
preceding termination of Executive's employment with the Company (the "Severance
Pay"). In addition to the foregoing, at the end of the Severance
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<PAGE>
Period, Payout Period or such earlier date as provided by Section 9(b), at the
Executive's request, the Company shall (1) transfer its right, title and
interest in (a) any airline travel pass purchased for the benefit of the
Executive (including but not limited to the United Airlines Number A10194403002;
(b) all office equipment, computer, computer accessories, furniture, software,
modem, fax machine, printers and related equipment supplied by the Company for
the Executive's offices; and (c) the memberships to the Clubs; and (2) (a) sell
to Executive any automobile or other vehicle provided to Executive pursuant to
Section 4(d) at the net book value or (b) assign any automobile lease for the
vehicle(s) to the Executive, provided Executive assumes all remaining lease
payments thereunder. If during the Severance Period and Payout Period (as
hereinafter defined) the Executive's term as a director of the Company expires,
the Company shall nominate and recommend to the shareholders of the Company the
election of the Executive for the office of director of the Company.
7. Termination of Executive Employment by the Company: The Company shall have
the option to terminate Executive's employment with or without cause, for any
reason whatsoever, including without limitation, Disability (as hereinafter
defined) by providing written Notice of Termination (as defined below) to
Executive and such termination shall be effective 10 days after the giving of
said written notice; provided, however, but subject in all events to Section 9
hereof, (i) if Executive is terminated for any reason other than Good Cause then
the Company shall continue to pay to Executive, the Severance Pay, Fringe
Benefits and the like, for a period of 5 years from the effective date of
Executive's termination ("Payout Period"), and (ii) if Executive is terminated
for Good Cause, the Company shall pay to Executive all such compensation owing
through the date of termination.
For purposes of this Section 7, Notice of Termination shall mean delivery
to Executive of a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Company's Board of
Directors at a meeting of the Board of Directors (after reasonable notice has
been delivered to Executive and reasonable opportunity has been provided for
Executive, together with Executive's counsel, to be heard before the Board of
Directors prior to such vote). For purposes of this Agreement, the termination
of the Executive's employment hereunder shall be deemed to have been for Good
Cause only if the termination of the Executive's employment shall have been the
result of (a) an act or acts of dishonesty by Executive which the Board of
Directors reasonably believes constitute a felony which result directly or
indirectly in gain to or personal enrichment of the Executive at the Company's
expense, or (b) an act or acts by Executive which the Board of Directors
reasonably believes constitute a felony and as a result of which the continued
employment of executive by the Company will have an adverse effect on the
Company's business.
8. Termination of Executive Employment by Executive. The Executive may
terminate the Executive's employment by the Company at any time, and in such
event, unless prior to giving his notice, Executive shall have received a Notice
of Termination for Good Cause, the Company shall continue to pay to Executive,
as severance compensation, all compensation payable, including Severance Pay,
Fringe Benefits and the like for period of 6 months from the effective date of
Executive's termination (the "Severance Period") but subject in all events to
Section 9 hereof.
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<PAGE>
9. Change in Control.
(a) For purposes hereof a "Section 9 Termination" shall have occurred if
Executive's employment is terminated by Executive, or by the Company other than
for Good Cause, at any time during the period beginning on the 120th day
preceding the occurrence of a change in control (hereinafter defined) of the
Company and ending on the second anniversary following the occurrence of a
change in control of the Company. For purposes of this Agreement, a "change in
control" of the Company shall be deemed to have occurred on the first of any of
the following dates:
(1) any corporation, person or other entity (other than the Company,
majority-owned subsidiary of the Company or any of its subsidiaries, or an
employee benefit plan (or related trust) sponsored or maintained by the
Company), including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner
of stock representing more than the greater of (i) twenty-five percent
(25%) of the combined voting power of the Company's then outstanding
securities or (ii) the percentage of the combined voting power of the
Company's then outstanding securities which equals (A) ten percent (10%)
plus (B) the percentage of the combined voting power of the Company's
outstanding securities held by such corporation, person or entity on the
effective date of this Amended and Restated Employment Agreement; (b)(i)
the stockholders of the Company approve a definitive agreement to merge
or consolidate the Company with or into another corporation other than a
majority-owned subsidiary of the Company, or to sell or otherwise dispose
of all or substantially all of the Company's assets, and (ii) the persons
who were the members of the Board of Directors of the Company prior to such
approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; (c) the stockholder of
the Company approve a plan of liquidation of the Company; or (d) within any
period of 24 consecutive months, persons who were members of the Board of
Directors of the Company immediately prior to such 24-month period,
together with any persons who were first elected as directors (other than
as a result of any settlement of a proxy or consent solicitation contest or
any action taken to avoid such a contest) during such 24-month period by or
upon the recommendation of persons who were members of the Board of
Directors of the Company immediately prior to such 24-month period and who
constituted a majority of the Board of Directors of the Company at the time
of such election, cease to constitute a majority of the Board.
(b) If a Section 9 Termination occurs, then notwithstanding the provisions
of Section 7 and 8 hereof, the Company shall continue to pay to Executive, as
severance compensation, the Severance Pay and Fringe Benefits during the Payout
Period. In lieu of regular payments of Base Salary during the Payout Period,
Executive shall be entitled to receive, upon Executive's written election, a
lump sum payment equal to the present value of the stream of monthly payments
for the Payout Period, in which each monthly payment is 1/12 of the greatest
amount paid to Executive as Base Salary during any trailing 12 month period in
the 36 months prior to Executive's election hereunder. Executive may also
similarly elect to receive a lump sum payment equal to the present value of the
Incentive Compensation under Section 4(b) hereof for the balance of the Payout
Period and an amount equal to the present value of the
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<PAGE>
Fringe Benefits remaining to be paid for the balance of the Payout Period based
upon the Company's expenses for providing the Fringe Benefits pursuant to
Section 4(d) hereof during the Company's most recently completed fiscal year.
For purposes of this computation, present value shall be calculated on the basis
of the prime rate of interest announced by the Company's principal bank, or if
it has no such bank, published in the Wall Street Journal, on the date of
Executive's election to receive the lump sum payments provided for herein.
10. Death or Disability of the Executive: Executive's employment shall
automatically terminate upon the death of the Executive and, at the option of
the Company as determined by the Board of Directors, upon the Disability (as
hereinafter defined) of Executive. "Disability," as used herein, shall be
deemed to have occurred whenever the Board determines, that in its judgment
Executive has suffered physical or mental illness, injury or infirmity of such a
nature, degree or effect as to render Executive, for a significant period of
time, substantially unable to perform his duties as delineated in paragraph 3
hereof.
11. Gross Up for Excise Tax Liability: If it shall be determined that any
payment or benefit received or to be received by Executive under this Agreement
or any other plan, arrangement or agreement of the Company or any person whose
actions result in a Change in Control of the Company or any affiliate thereof
(all such payments and benefits a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") (the "Excise Tax"), then the Company shall pay to Executive an
additional payment (a "Gross-Up Payment") in an amount necessary to reimburse
Executive, on an after-tax basis, for the Excise Tax and for any federal, state
and local income tax and excise tax (including any interest and penalties
imposed with respect to such taxes) that may be imposed by reason of the
Payment. For purposes of determining the amount of any Gross-Up Payment,
Executive shall be deemed to pay federal, state and local income taxes at the
highest applicable marginal rate of taxation in the calendar year in which the
Gross-Up Payment is to be made. All determinations required to be made under
this Section 11, including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment shall be made by the Accounting Firm which shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the request for such determination. Such request may
be made by either party. The Company shall pay the fees and expenses of the
Accounting Firm in connection with any determinations hereunder. The Gross-Up
Payment shall be paid by the Company within 10 days of the Accounting Firm's
determination of the amount thereof.
12. Mitigation of Amounts Payable Under Sections 7, 8 and 9: The Executive
shall not be required to mitigate the amount of any payment provided for
pursuant to Sections 7, 8 and 9 of this Agreement by seeking other employment
or otherwise, and, further, any payment or benefit to be provided to Executive
pursuant to this Agreement shall not be reduced by any compensation or other
amount earned or collected by Executive at any time before or after the
termination of Executive Employment hereunder.
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<PAGE>
13. Miscellaneous: Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when delivered in person
to the following addresses:
(i) if to the Company, to:
Platinum technology, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Attn: Chief Financial Officer
with a copy to:
Platinum technology, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Attn: General Counsel
(ii) If to Executive to:
Andrew J. Filipowski
624 Robinwood Lane
Wheaton, IL 60187
Any party may change its address for notice hereunder by notice to the
other party hereto.
(b) Governing Law. The parties agree that this Agreement shall be
construed and governed in accordance with the laws of the State of Illinois
applicable to agreements made and to be performed entirely within such state.
(c) Binding Effect. This Agreement shall be binding upon and incur to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns. Any Successor will
automatically succeed to the obligations of the Company under this Agreement,
including the obligations set forth in Sections 7 and 8 of this Agreement (as
adjusted pursuant to the terms of Section 9 of this Agreement); provided that,
the Company shall remain liable under this Agreement in such event.
(d) Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Entire Agreement. This Agreement represents the entire agreement and
understanding of the parties hereto with respect to the matters set forth
herein. This Agreement supersedes all prior negotiations, discussions
correspondence, communications, understandings and agreements between the
parties, written or oral, relating to the subject matter of this Agreement.
This Agreement may be amended, superseded, canceled, renewed, or extended and
the terms hereof may be waived, only by a written instrument signed by the
parties hereto or, in the case of a waiver, by the party waiving compliance.
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(f) Waivers. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
(g) Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered in the interpretation or construction of the
provisions hereof.
(h) Arbitration. Except for any claim or dispute which gives rise or
could give rise to equitable relief under this Agreement, at the request of the
Executive any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled exclusively and
finally by arbitration. The arbitration shall be conducted in accordance with
such rules and before such arbitrator as the parties shall agree and if they
fail to so agree within 15 days after demand for arbitration, such arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (hereinafter referred to as "AAA Rules"). Such
arbitration shall be conducted in Chicago, Illinois, or in such other city as
the parties to the dispute may designate by mutual consent. The arbitral
tribunal shall consist of three arbitrators (or such lesser number as may be
agreed upon by the parties) selected according to the procedure set forth in the
AAA Rules in effect on the date hereof and the arbitrators shall be empowered to
order any remedy which is appropriate to the proceedings and issues presented to
them. The chairman of the arbitral tribunal shall be appointed by the American
Arbitration Association from among the three arbitrators so selected. Any party
to a decision rendered in such arbitration proceedings may seek an order
enforcing the same by any court having jurisdiction.
(i) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied against
the Executive or Company.
(j) Legal Expenses. The Executive shall be entitled to recover any
expenses for attorney's fees and disbursements incurred by him in connection
with enforcing his rights under this Agreement.
IN WITNESS WHEREOF, the Company and Executive have signed this Agreement as
of the day and year written above.
PLATINUM technology, inc.
By: /s/ Michael P. Cullinane
---------------------------
Its: Exec. V.P. & CFO
--------------------------
/s/ Andrew J. Filipowski
------------------------------
Andrew J. Filipowski
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Exhibit 10.7
PLATINUM technology, inc.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
This Amended and Restated Agreement ("Agreement"), is made and entered
into as of the 1st day of January, 1996 (the "Effective Date"), by and between
Platinum technology, inc., a Delaware corporation (the "Company"), and Michael
P. Cullinane (the "Executive").
WHEREAS, the Company entered into an Employment Agreement with Executive as
an executive employee dated as of March 1, 1991 and the parties believe that the
Employment Agreement needs to be clarified and the parties deem it advisable to
amend and restate the Employment Agreement to clarify the language and include
certain provisions which should have been included;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment of Executive
As of the Effective Date, the Company hereby engages and employs Executive
in an executive capacity as the Company's Chief Financial Officer and Executive
hereby accepts such employment and agrees to act as an employee of the Company
in accordance with the terms of employment hereinafter specified ("Executive
Employment").
2. Term of Executive Employment
The period of Executive Employment shall begin on the Effective Date and
continue until terminated as hereinafter provided (the "Employment Period").
3. Duties
(a) Executive shall be employed by Company as the Company's Chief
Financial Officer. In such capacity, Executive shall have supervision and
control over, and responsibility for, the general management of the financial
affairs of the Company, and shall have such other powers and duties as the Chief
Executive Officer and/or the Board of Directors of the Company may from time to
time prescribe; provided that, such powers and duties are consistent with the
Executive's then present duties and with his position as the Company's senior
executive officer in charge of the general management of the financial affairs
of the Company.
(b) Nothing contained herein shall be construed so as to prohibit
Executive from performing such other or additional duties or responsibilities,
and exercising such other or additional authority in furtherance of the goals of
the Company, as the Executive and Chief
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Executive Officer and/or the Board of Directors of the Company shall from time
to time agree upon.
(c) Executive shall devote such portion of his business time and attention
as is necessary to appropriately and efficiently discharge his duties and
responsibilities as herein set forth. If Executive so discharges his duties he
may engage in other business and civic activities, in addition to those relating
to the Company's business, if such activities are not otherwise prohibited by
the terms of this Agreement.
(d) During Executive's employment hereunder, Executive shall not be
required to relocate his principal residence from his current location as a
result of the Company moving its principal executive offices or the Executive's
office to an address greater than twenty (20) miles away from the Company's
principal executive offices (or the Executive's office) at the Effective Date
and shall not be required to perform services which could make the continuance
of Executive's principal residence in such location unreasonably difficult or
inconvenient for Executive except to the extent that the performance of such
services (and travel) is commensurate with Executive's duties specified
hereunder.
4. Executive Salary and Compensation:
(a) Base Salary. During the Employment Period of the Company shall pay or
cause to be paid to Executive an initial base salary ("Base Salary") at an
annual rate of $445,500.00 per year, payable to Executive on a periodic basis in
accordance with the Company's then current executive salary payment practice;
provided, however, that the installments may not be made less frequently than on
a month basis. Such Base Salary shall be subject to review in accordance with
the Company's normal practice for executive salary review from time to time in
effect, and will not be reduced without the prior written consent of Executive.
(b) Incentive Compensation. Executive shall be entitled to receive an
annual bonus for the Employment Period as determined by the Compensation
Committee of the Company's Board of Directors (the "Committee") for each fiscal
year of the Company during the Employment Period ("Incentive Compensation"). The
Incentive Compensation for 1996 shall be the amounts set forth in Exhibit A
hereto, which may be amended from time to time by the Committee (computed before
deduction of the bonus payable to Executive hereunder and any bonus payable to
any executive officer which is also based upon the Company's pre-tax income);
provided, however, if the aggregate amount which is payable pursuant to this
Section 4(b) for any one calendar year shall exceed $1,000,000 then amounts
payable in excess of $1,000,000 shall be determined by a formula to be
established by the Committee. It is the intention of the parties hereto, that in
connection with establishing Incentive Compensation for periods following 1996
the Committee will not act arbitrarily and will modify the initial formula for
incentive compensation in good faith in light of the Company's and the
Executive's performance. The Company will pay the 1996 Incentive Compensation to
Executive based upon the audited financial statements of the Company prepared by
a nationally known independent accounting firm regularly retained by the Company
("Accounting Firm") (within 30 days following completion of the Company's annual
audit and in accordance with the final determination of Incentive Compensation
payable made by the aforementioned Accounting Firm). If Executive's employment
is terminated effective at any time other than the end of the Company's fiscal
year, the final adjustments will be made by the Accounting Firm based upon the
most recent unaudited
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<PAGE>
financial statements of the Company for the month end immediately prior to the
effective date of termination.
(c) Withholding of Certain Taxes. All compensation referred to in Section
4(a) and 4(b) of this Agreement is stated in terms of gross amount, it being
understood that the Company will be required to withhold from such gross amount
deductions for federal, state and local income taxes (if any), F.I.C.A.,
unemployment compensation taxes and the like.
(d) Fringe Benefits. During the Employment Period, the Company shall
provide the following fringe benefits (hereinafter collectively "Fringe
Benefits") to Executive: (i) Medical and Dental Insurance. The Company shall
provide Executive and Executives' immediate family, including spouse and
children, if any, at the Company's expense, with comprehensive medical and
dental insurance coverage similar to that provided to other executive officers
of the Company; (ii) Life Insurance. The Company shall provide Executive, at the
Company's expense, a policy or policies of life insurance insuring the life of
Executive for the benefit of person(s) designated from time to time by
Executive. Such life insurance policy or policies shall be in the amount of up
to Five Million Dollars ($5,000,000) and shall be a sole life policy if
requested by Executive, which shall be assigned to Executive, together with any
cash value thereof at Executive's request; (iii) Disability Insurance. The
Company shall provide Executive, at the Company's expense, with comprehensive
short and long term disability insurance in an amount which the Company
determines is reasonably commensurate with Executive's compensation contemplated
hereunder, including, without limitation, Executive's base salary, incentive
compensation, fringe benefits and the like; (iv) Clubs; Professional
Organizations. The Company shall pay the annual dues and assessments for the
Executive's membership in the DuPage Club, Glen Oak Country Club, Central Park
Athletic Club and the East Bank Club ("Clubs"); (v) Automobile. The Company
shall provide Executive with the use of a company car and shall reimburse
Executive for all related expenses, including insurance coverage related
thereto; (vi) Administrative Assistance. The Company shall at the Company's
expense maintain his same office at the Corporate headquarters and provide
Executive with an Administrative Assistant and such other clerical assistance as
required by Executive.
5. Expenses. The Company shall pay or reimburse Executive in accordance with
the Company's policy for all expenses reasonably incurred by Executive during
the period of Executive's employment in connection with the performance of
Executive's duties under this Agreement, including, without limitation, travel,
entertainment and automobile expenses. As the Company may reasonably request,
Executive shall provide to the Company documentation or supporting information
relating to the expenses for which Executive seeks reimbursement.
6. For purposes of Sections 7, 8 and 9 the amount of annual Incentive
Compensation and Base Salary which is payable as severance shall be equal to the
greatest amount of Incentive Compensation and Base Salary, respectively, paid to
Executive during any trailing 12 month period during the 36 month period
preceding termination of Executive's employment with the Company (the "Severance
Pay"). In addition to the foregoing, at the end of the Severance Period, Payout
Period or such earlier date as provided by Section 9(b), at the Executive's
request, the Company shall (1) transfer its right, title and interest in (a) any
airline travel pass purchased for the benefit of the Executive (including but
not limited to the United Airlines Lifetime Limited Pass Plus Number
M10194681002; (b) all office equipment, computer, computer accessories,
furniture, software, modem, fax machine, printers and related equipment supplied
by the Company for the Executive's offices; and (c) the memberships to the
Clubs; and (2) (a) sell
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to Executive any automobile or other vehicle provided to Executive pursuant to
Section 4(d) at the net book value or (b) assign any automobile lease for the
vehicle(s) to the Executive, provided Executive assumes all remaining lease
payments thereunder. If during the Severance Period and Payout Period (as
hereinafter defined) the Executive's term as a director of the Company expires,
the Company shall nominate and recommend to the shareholders of the Company the
election of the Executive for the office of director of the Company.
7. Termination of Executive Employment by the Company: The Company shall have
the option to terminate Executive's employment with or without cause, for any
reason whatsoever, including without limitation, Disability (as hereinafter
defined) by providing written Notice of Termination (as defined below) to
Executive and such termination shall be effective 10 days after the giving of
said written notice; provided, however, but subject in all events to Section 9
hereof, (i) if Executive is terminated for any reason other than Good Cause then
the Company shall continue to pay to Executive, the Severance Pay, Fringe
Benefits and the like, for a period of 5 years from the effective date of
Executive's termination ("Payout Period"), and (ii) if Executive is terminated
for Good Cause, the Company shall pay to Executive all such compensation owing
through the date of termination.
For purposes of this Section 7, Notice of Termination shall mean delivery
to Executive of a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Company's Board of
Directors at a meeting of the Board of Directors (after reasonable notice has
been delivered to Executive and reasonable opportunity has been provided for
Executive, together with Executive's counsel, to be heard before the Board of
Directors prior to such vote.) For purposes of this Agreement, the termination
of the Executive's employment hereunder shall be deemed to have been for Good
Cause only if the termination of the Executive's employment shall have been the
result of (a) an act or acts of dishonesty by Executive which the Board of
Directors reasonably believes constitute a felony which result directly or
indirectly in gain to or personal enrichment of the Executive at the Company's
expense, or (b) an act or acts by Executive which the Board of Directors
reasonably believes constitute a felony and as a result of which the continued
employment of executive by the Company will have an adverse effect on the
Company's business.
8. Termination of Executive Employment by Executive. The Executive may
terminate the Executive's employment by the Company at any time, and in such
event, unless prior to giving his notice, Executive shall have received a Notice
of Termination for Good Cause, the Company shall continue to pay to Executive,
as severance compensation, all compensation payable, including Severance Pay,
Fringe Benefits and the like for period of 24 months from the effective date of
Executive's termination (the "Severance Period") but subject in all events to
Section 9 hereof.
9. Change in Control.
(a) For purposes hereof a "Section 9 Termination" shall have occurred if
Executive's employment is terminated by Executive, or by the Company other than
for Good Cause, at any time during the period beginning on the 120th day
preceding the occurrence of a change in control (hereinafter defined) of the
Company and ending on the second anniversary following the occurrence of a
change in control of the Company. For purposes of this Agreement, a "change in
control" of the Company shall be deemed to have occurred on the first of any of
the following dates:
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<PAGE>
(1) any corporation, person or other entity (other than the Company, a
majority-owned subsidiary of the Company or any of its subsidiaries, or an
employee benefit plan (or related trust) sponsored or maintained by the
Company), including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner
of stock representing more than the greater of (i) twenty-five percent
(25%) of the combined voting power of the Company's then outstanding
securities or (ii) the percentage of the combined voting power of the
Company's then outstanding securities which equals (A) ten percent (10%)
plus (B) the percentage of the combined voting power of the Company's
outstanding securities held by such corporation, person or entity on the
effective date of this Amended and Restated Employment Agreement; (b)(i)
the stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation other than a
majority-owned subsidiary of the Company, or to sell or otherwise dispose
of all or substantially all of the Company's assets, and (ii) the persons
who were the members of the Board of Directors of the Company prior to such
approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; (c) the stockholders
of the Company approve a plan of liquidation of the Company; or (d)
within any period of 24 consecutive months, persons who were members of the
Board of Directors of the Company immediately prior to such 24-month
period, together with any persons who were first elected as directors
(other than as a result of any settlement of a proxy or consent
solicitation contest or any action taken to avoid such a contest) during
such 24-month period by or upon the recommendation of persons who were
members of the Board of Directors of the Company immediately prior to such
24-month period and who constituted a majority of the Board of Directors of
the Company at the time of such election, cease to constitute a majority of
the Board.
(b) If a Section 9 Termination occurs, then notwithstanding the provisions
of Section 7 and 8 hereof, the Company shall continue to pay to Executive, as
severance compensation, the Severance Pay and Fringe Benefits during the Payout
Period. In lieu of regular payments of Base Salary during the Payment Period,
Executive shall be entitled to receive, upon Executive's written election, a
lump sum payment equal to the present value of the stream of monthly payments
for the Payout Period, in which each monthly payment is 1/12 of the greatest
amount paid to Executive as Base Salary during any trailing 12 month period in
the 36 months prior to Executive's election hereunder. Executive may also
similarly elect to receive a lump sum payment equal to the present value of the
Incentive Compensation under Section 4(b) hereof for the balance of the Payout
Period and an amount equal to the present value of the Fringe Benefits remaining
to be paid for the balance of the Payout Period based upon the Company's
expenses for providing the Fringe Benefits pursuant to Section 4(d) hereof
during the Company's most recently completed fiscal year. For purposes of this
computation, present value shall be calculated on the basis of the prime rate of
interest announced by the Company's principal bank, or if it has no such bank,
published in the Wall Street Journal, on the date of Executive's election to
receive the lump sum payments provided for herein.
10. Death or Disability of the Executive: Executive's employment shall
automatically terminate upon the death of the Executive and, at the option of
the Company as determined by
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the Board of Directors, upon the Disability (as hereinafter defined) of
Executive. "Disability," as used herein, shall be deemed to have occurred
whenever the Board determines, that in its judgment Executive has suffered
physical or mental illness, injury or infirmity of such a nature, degree or
effect as to render Executive, for a significant period of time, substantially
unable to perform his duties as delineated in paragraph 3 hereof.
11. Gross Up for Excise Tax Liability: If it shall be determined that any
payment or benefit received or to be received by Executive under this Agreement
or any other plan, arrangement or agreement of the Company or any person whose
actions result in a Change in Control of the Company or any affiliate thereof
(all such payments and benefits a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") (the "Excise Tax"), then the Company shall pay to Executive an
additional payment (a "Gross-Up Payment") in an amount necessary to reimburse
Executive, on an after-tax basis, for the Excise Tax and for any federal, state
and local income tax and excise tax (including any interest and penalties
imposed with respect to such taxes) that may be imposed by reason of the
Payment. For purposes of determining the amount of any Gross-Up Payment,
Executive shall be deemed to pay federal, state and local income taxes at the
highest applicable marginal rate of taxation in the calendar year in which the
Gross-Up Payment is to be made. All determinations required to be made under
this Section 11, including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment shall be made by the Accounting Firm which shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the request for such determination. Such request may
be made by either party. The Company shall pay the fees and expenses of the
Accounting Firm in connection with any determinations hereunder. The Gross-Up
Payment shall be paid by the Company within 10 days of the Accounting Firm's
determination of the amount thereof.
12. Mitigation of Amounts Payable Under Sections 7, 8 and 9: The Executive
shall not be required to mitigate the amount of any payment provided for
pursuant to Sections 7, 8 and 9 of this Agreement by seeking other employment or
otherwise, and, further, any payment or benefit to be provided to Executive
pursuant to this Agreement shall not be reduced by any compensation or other
amount earned or collected by Executive at any time before or after the
termination of Executive Employment hereunder.
13. Miscellaneous: Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when delivered in person
to the following addresses:
(i) if to the Company, to:
Platinum technology, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Attn: Chief Executive Officer
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with a copy to:
Platinum technology, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Attn: General Counsel
(ii) If to Executive to:
Michael P. Cullinane
2233 Edgebrook Drive
Lisle, IL 60532
Any party may change its address for notice hereunder by notice to the
other party hereto.
(b) Governing Law. The parties agree that this Agreement shall be
construed and governed in accordance with the laws of the State of Illinois
applicable to agreements made and to be performed entirely within such state.
(c) Binding Effect. This Agreement shall be binding upon and incur to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns. Any Successor will
automatically succeed to the obligations of the Company under this Agreement,
including the obligations set forth in Sections 7 and 8 of this Agreement (as
adjusted pursuant to the terms of Section 9 of this Agreement); provided that,
the Company shall remain liable under this Agreement in such event.
(d) Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Entire Agreement. This Agreement represents the entire agreement and
understanding of the parties hereto with respect to the matters set forth
herein. This Agreement supersedes all prior negotiations, discussions
correspondence, communications, understandings and agreements between the
parties, written or oral, relating to the subject matter of this Agreement.
This Agreement may be amended, superseded, canceled, renewed, or extended and
the terms hereof may be waived, only by a written instrument signed by the
parties hereto or, in the case of a waiver, by the party waiving compliance.
(f) Waivers. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
(g) Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered in the interpretation or construction of the
provisions hereof.
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(h) Arbitration. Except for any claim or dispute which gives rise or could
give rise to equitable relief under this Agreement, at the request of the
Executive any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled exclusively and
finally by arbitration. The arbitration shall be conducted in accordance with
such rules and before such arbitrator as the parties shall agree and if they
fail to so agree within 15 days after demand for arbitration, such arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (hereinafter referred to as "AAA Rules"). Such
arbitration shall be conducted in Chicago, Illinois, or in such other city as
the parties to the dispute may designate by mutual consent. The arbitral
tribunal shall consist of three arbitrators (or such lesser number as may be
agreed upon by the parties) selected according to the procedure set forth in the
AAA Rules in effect on the date hereof and the arbitrators shall be empowered to
order any remedy which is appropriate to the proceedings and issues presented to
them. The chairman of the arbitral tribunal shall be appointed by the American
Arbitration Association from among the three arbitrators so selected. Any party
to a decision rendered in such arbitration proceedings may seek an order
enforcing the same by any court having jurisdiction.
(i) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied against
the Executive or Company.
(j) Legal Expenses. The Executive shall be entitled to recover any
expenses for attorney's fees and disbursements incurred by him in connection
with enforcing his rights under this Agreement.
IN WITNESS WHEREOF, the Company and Executive have signed this Agreement as
of the day and year written above.
PLATINUM technology, inc.
By: /s/ Andrew J. Filipowski
---------------------------
Its:
--------------------------
/s/ Michael P. Cullinane
------------------------------
Michael P. Cullinane
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Exhibit 10.8
PLATINUM technology, inc.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
This Amended and Restated Agreement ("Agreement"), is made and entered into
as of the 28th day of October, 1997 (the "Effective Date"), by and between
Platinum technology, inc., a Delaware corporation (the "Company"), and Paul L.
Humenansky (the "Executive").
WHEREAS, the Company entered into an Employment Agreement with Executive as
an executive employee dated as of March 1, 1991 and the parties believe that the
Employment Agreement needs to be clarified and the parties deem it advisable to
amend and restate the Employment Agreement to clarify the language and include
certain provisions which should have been included;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment of Executive
-----------------------
As of the Effective Date, the Company hereby engages and employs Executive
in an executive capacity as the Company's Chief Operating Officer and Executive
hereby accepts such employment and agrees to act as an employee of the Company
in accordance with the terms of employment hereinafter specified ("Executive
Employment").
2. Term of Executive Employment
----------------------------
The period of Executive Employment shall begin on the Effective Date and
continue until terminated as hereinafter provided (the "Employment Period").
3. Duties
------
(a) Executive shall be employed by Company as the Company's Chief Operating
Officer. In such capacity, Executive shall have supervision and control over,
and responsibility for, the general management of the development laboratories
and of the research, development and production of new products of the Company,
and shall have such other powers and duties as the Chief Executive Officer
and/or the Board of Directors of the Company may from time to time prescribe;
provided that, such powers and duties are consistent with the Executive's then
present duties and with his position as the Company's senior executive officer
in charge of the new product development and management of the development
laboratories of the Company.
(b) Nothing contained herein shall be construed so as to prohibit Executive
from performing such other or additional duties or responsibilities, and
exercising such other or
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additional authority in furtherance of the goals of the Company, as the
Executive and Chief Executive Officer and/or the Board of Directors of the
Company shall from time to time agree upon.
(c) Executive shall devote such portion of his business time and attention
as is necessary to appropriately and efficiently discharge his duties and
responsibilities as herein set forth. If Executive so discharges his duties he
may engage in other business and civic activities, in addition to those relating
to the Company's business, if such activities are not otherwise prohibited by
the terms of this Agreement.
(d) During Executive's employment hereunder, Executive shall not be
required to relocate his principal residence from his current location as a
result of the Company moving its principal executive offices or the Executive's
office to an address greater than twenty (20) miles away from the Company's
principal executive offices (or the Executive's office) at the Effective Date
and shall not be required to perform services which could make the continuance
of Executive's principal residence in such location unreasonably difficult or
inconvenient for Executive except to the extent that the performance of such
services (and travel) is commensurate with Executive's duties specified
hereunder.
4. Executive Salary and Compensation:
---------------------------------
(a) Base Salary. During the Employment Period the Company shall pay or
cause to be paid to Executive an initial base salary ("Base Salary") at an
annual rate of $508,000.00 per year, payable to Executive on a periodic basis in
accordance with the Company's then current executive salary payment practice;
provided, however, that the installments may not be made less frequently than on
a month basis. Such Base Salary shall be subject to review in accordance with
the Company's normal practice for executive salary review from time to time in
effect, and will not be reduced without the prior written consent of Executive.
(b) Incentive Compensation. Executive shall be entitled to receive an
annual bonus for the Employment Period as determined by the Compensation
Committee of the Company's Board of Directors (the "Committee") for each fiscal
year of the Company during the Employment Period ("Incentive Compensation"). The
Incentive Compensation for 1996 shall be the amounts set forth in Exhibit A
hereto, which may be amended from time to time by the Committee (computed before
deduction of the bonus payable to Executive hereunder and any bonus payable to
any executive officer which is also based upon the Company's pre-tax income);
provided, however, if the aggregate amount which is payable pursuant to this
Section 4(b) for any one calendar year shall exceed $1,000,000 then amounts
payable in excess of $1,000,000 shall be determined by a formula to be
established by the Committee. It is the intention of the parties hereto, that in
connection with establishing Incentive Compensation for periods following 1997
the Committee will not act arbitrarily and will modify the initial formula for
incentive compensation in good faith in light of the Company's and the
Executive's performance. The Company will pay the 1997 Incentive Compensation to
Executive based upon the audited financial statements of the Company prepared by
a nationally known independent accounting firm regularly retained by the Company
("Accounting Firm") (within 30 days following completion of the Company's annual
audit and in accordance with the final determination of Incentive Compensation
payable made by the aforementioned Accounting Firm). If Executive's employment
is terminated effective at any time other than the end of the Company's fiscal
year,
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the final adjustments will be made by the Accounting Firm based upon the most
recent unaudited financial statements of the Company for the month end
immediately prior to the effective date of termination.
(c) Withholding of Certain Taxes. All compensation referred to in Section
4(a) and 4(b) of this Agreement is stated in terms of gross amount, it being
understood that the Company will be required to withhold from such gross amount
deductions for federal, state and local income taxed (if any), F.I.C.A.,
unemployment compensation taxes and the like.
(d) Fringe Benefits. During the Employment Period, the Company shall
provide the following fringe benefits (hereinafter collectively "Fringe
Benefits") to Executive: (i) Medical and Dental Insurance. The Company shall
provide Executive and Executives's immediate family, including spouse and
children, if any, at the Company's expense, with comprehensive medical and
dental insurance coverage similar to that provided to other executive officers
of the Company; (ii) Life Insurance. The Company shall provide Executive, at the
Company's expense, (a) a term and/or whole life policy or policies of insurance
insuring the life of Executive for the benefit of person(s) designated from time
to time by Executive in the amount of up to Five Million Dollars ($5,000,000)
and shall be a sole life policy if requested by Executive, which shall be
assigned to Executive, together with any cash value thereof at Executive's
request and (b) a split dollar life insurance policy or policies insuring the
life of Executive for the benefit of the person(s) designated from time to time
by Executive in a base amount of not less than Six Million Dollars ($6,000,000)
and the premiums therefor are reimbursed to the Company upon death or
termination of employment and transfer of policy to Executive as more
particularly described in such policy; (iii) Disability Insurance. The Company
shall provide Executive, at the Company's expense, with comprehensive short and
long term disability insurance in an amount which the Company determines is
reasonably commensurate with Executive's compensation contemplated hereunder,
including, without limitation, Executive's base salary, incentive compensation,
fringe benefits and the like; (iv) Clubs; Professional Organizations. The
Company shall pay the annual dues and assessments for the Executive's membership
in the DuPage Club, Glen Oak Country Club, Central Park Athletic Club and YEO
("Clubs"); (v) Automobile. The Company shall provide Executive with the use of
Company car(s) (such car(s) to be comparable to the car(s) the Company provides
on the date hereof) and shall reimburse Executive for all related expenses,
including insurance coverage related thereto; (vi) Administrative Assistance.
The Company shall at the Company's expense maintain his same office at the
Corporate headquarters and provide Executive with an Administrative Assistant
and such other clerical assistance as required by Executive.
5. Expenses. The Company shall pay or reimburse Executive in accordance with
the Company's policy for all expenses reasonably incurred by Executive during
the period of Executive's employment in connection with the performance of
Executive's duties under this Agreement, including, without limitation, travel,
entertainment and automobile expenses. As the Company may reasonably request,
Executive shall provide to the Company documentation or supporting information
relating to the expenses for which Executive seeks reimbursement.
6. For purposes of Sections 7, 8 and 9 the amount of annual Incentive
Compensation and Base Salary which is payable as severance shall be equal to the
greatest amount of Incentive Compensation and Base Salary, respectively, paid to
Executive during any trailing 12 month period during the 36 month period
preceding termination of Executive's employment with the Company (the "Severance
Pay"). In addition to the foregoing, at the end of the Severance
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Period, Payout Period, CIC Period or such earlier date as provided by Section
9(b), at the Executive's request, the Company shall (1), at no cost to
Executive, transfer its right, title and interest in (a) any airline travel pass
purchased for the benefit of the Executive (including but not limited to the
United Airlines Lifetime Limited Pass Plus Number P10194680002; (b) all office
equipment, computer, computer accessories, furniture, software, modem, fax
machine, printers and related equipment supplied by the Company for the
Executive's offices including his home office; and (c) the memberships to the
Clubs; and (2) (a) sell to Executive any automobile or other vehicle provided to
Executive pursuant to Section 4(d) at the net book value or (b) assign any
automobile lease for the vehicle(s) to the Executive, provided Executive assumes
all remaining lease payments thereunder. If during the Severance Period and
Payout Period (as hereinafter defined) the Executive's term as a director of the
Company expires, the Company shall nominate and recommend to the shareholders of
the Company the election of the Executive for the office of director of the
Company.
7. Termination of Executive Employment by the Company: The Company shall have
the option to terminate Executive's employment with or without cause, for any
reason whatsoever, including without limitation, Disability (as hereinafter
defined) by providing written Notice of Termination (as defined below) to
Executive and such termination shall be effective 10 days after the giving of
said written notice; provided, however, but subject in all events to Section 9
hereof, (i) if Executive is terminated for any reason other than Good Cause then
the Company shall continue to pay to Executive, the Severance Pay, Fringe
Benefits and the like, for a period of 3 years from the effective date of
Executive's termination ("Payout Period"), and (ii) if Executive is terminated
for Good Cause, the Company shall pay to Executive all such compensation owing
through the date of termination.
For purposes of this Section 7, Notice of Termination shall mean delivery
to Executive of a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Company's Board of
Directors at a meeting of the Board of Directors (after reasonable notice has
been delivered to Executive and reasonable opportunity has been provided for
Executive, together with Executive's counsel, to be heard before the Board of
Directors prior to such vote.) For purposes of this Agreement, the termination
of the Executive's employment hereunder shall be deemed to have been for Good
Cause only if the termination of the Executive's employment shall have been the
result of (a) an act or acts of dishonesty by Executive which the Board of
Directors reasonably believes constitute a felony which result directly or
indirectly in gain to or personal enrichment of the Executive at the Company's
expense, or (b) an act or acts by Executive which the Board of Directors
reasonably believes constitute a felony and as a result of which the continued
employment of executive by the Company will have an adverse effect on the
Company's business.
8. Termination of Executive Employment by Executive. The Executive may
terminate the Executive's employment by the Company at any time, and in such
event, unless prior to giving his notice, Executive shall have received a Notice
of Termination for Good Cause, the Company shall continue to pay to Executive,
as severance compensation, all compensation payable, including Severance Pay,
Fringe Benefits and the like for period of 18 months from the effective date of
Executive's termination (the "Severance Period") but subject in all events to
Section 9 hereof.
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9. Change in Control.
(a) For purposes hereof a "Section 9 Termination" shall have occurred if
Executive's employment is terminated by Executive, or by the Company other than
for Good Cause, at any time during the period beginning on the 120th day
preceding the occurrence of a change in control (hereinafter defined) of the
Company and ending on the second anniversary following the occurrence of a
change in control of the Company. For purposes of this Agreement, a "change in
control" of the Company shall be deemed to have occurred on the first of any of
the following dates:
(1) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty
percent (20%) or more of either (A) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly from the
Company other than in connection with the acquisition by the Company or its
affiliates of a business, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, (D)
any acquisition by a lender to the Company pursuant to a debt restructuring
of the Company, or (E) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 2(d);
(2) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board;
(3) Consummation of a reorganization, merger or consolidation of the
Company or any direct or indirect subsidiary of the Company or sale or
other disposition of all or substantially all of the assets of the Company
(a "Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such Business
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Combination beneficially own, directly or indirectly, more than sixty
percent (60%) of, respectively, the then-outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination (which
shall include for these purposes, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination and any Person
beneficially owning, immediately prior to such Business Combination,
directly or indirectly, 20% or more of the Outstanding Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty percent (20%) or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from
such Business Combination, or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company other than to a corporation which would
satisfy the requirements of clauses (A), (B) and (C) of Subsection (iii) of
this Section 2(d), assuming for this purpose that such liquidation or
dissolution was a Business Combination.
(b) If a Section 9 Termination occurs, then notwithstanding the provisions
of Section 7 and 8 hereof, the Company shall continue to pay to Executive, as
severance compensation, the Severance Pay and Fringe Benefits for a period of
five years from the effective date of Executive's termination (the "CIC
Period"). In lieu of regular payments of Base Salary during the CIC Period,
Executive shall be entitled to receive, upon Executive's written election, a
lump sum payment equal to the present value of the stream of monthly payments
for the CIC Period, in which each monthly payment is 1/12 of the greatest amount
paid to Executive as Base Salary during any trailing 12 month period in the 36
months prior to Executive's election hereunder. Executive may also similarly
elect to receive a lump sum payment equal to the present value of the Incentive
Compensation under Section 4(b) hereof for the balance of the CIC Period and an
amount equal to the present value of the Fringe Benefits remaining to be paid
for the balance of the CIC Period based upon the Company's expenses for
providing the Fringe Benefits pursuant to Section 4(d) hereof during the
Company's most recently completed fiscal year. For purposes of this computation,
present value shall be calculated on the basis of the prime rate of interest
announced by the Company's principal bank, or if it has no such bank, published
in the Wall Street Journal, on the date of Executive's election to receive the
lump sum payments provided for herein.
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10. Death or Disability of the Executive: Executive's employment shall
automatically terminate upon the death of the Executive and, at the option of
the Company as determined by the Board of Directors, upon the Disability (as
hereinafter defined) of Executive. "Disability," as used herein, shall be deemed
to have occurred whenever the Board determines, that in its judgment Executive
has suffered physical or mental illness, injury or infirmity of such a nature,
degree or effect as to render Executive, for a significant period of time,
substantially unable to perform his duties as delineated in paragraph 3 hereof.
11. Gross Up for Excise Tax Liability: If it shall be determined that any
payment or benefit received or to be received by Executive under this Agreement
or any other plan, arrangement or agreement of the Company or any person whose
actions result in a Change in Control of the Company or any affiliate thereof
(all such payments and benefits a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal revenue Code of 1986, as amended (the
"Code") (the "Excise Tax"), then the Company shall pay to Executive an
additional payment (a "Gross-Up Payment") in an amount necessary to reimburse
Executive, on an after-tax basis, for the Excise Tax and for any federal, state
and local income tax and excise tax (including any interest and penalties
imposed with respect to such taxes) that may be imposed by reason of the
Payment. For purposes of determining the amount of any Gross-Up Payment,
Executive shall be deemed to pay federal, state and local income taxes at the
highest applicable marginal rate of taxation in the calendar year in which the
Gross-Up Payment is to be made. All determinations required to be made under
this Section 11, including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment shall be made by the Accounting Firm which shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the request for such determination. Such request may
be made by either party. The Company shall pay the fees and expenses of the
Accounting Firm in connection with any determinations hereunder. The Gross-Up
Payment shall be paid by the Company within 10 days of the Accounting Firm's
determination of the amount thereof.
12. Non-Compete: In the event Executive terminates his employment pursuant to
Section 8 hereof, Executive hereby agrees that, during the Severance Period he
shall not, directly or indirectly, as employee, agent, consultant, stockholder,
director, co-partner or in any other individual or representative capacity, own,
operate, manage, control, invest in or participate in any manner in, act as a
consultant or advisor to, render services for (alone or in association with any
person, firm, corporation or entity), or otherwise assist Computer Associates
International, Inc., BMC Software Inc., and/or Rational Software ("Competitor");
provided, however, that nothing contained herein shall be construed to prevent
Executive from investing in the stock of a Competitor, but only if Executive is
not involved in the business of said Competitor and if Executive and his
associates (as such term is defined in Regulation 14(A) promulgated under the
Securities Exchange Act of 1934, as in effect on the date hereof), collectively,
do not own more than an aggregate of two (2%) percent of the stock of such
Competitor."
13. Mitigation of Amounts Payable Under Sections 7, 8 and 9: The Executive
shall not be required to mitigate the amount of any payment provided for
pursuant to Sections 7, 8 and 9 of this Agreement by seeking other employment or
otherwise, and, further, any payment or benefit to be provided to Executive
pursuant to this Agreement shall not be reduced by any compensation or other
amount earned or collected by Executive at any time before or after the
termination of Executive Employment hereunder.
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14. Miscellaneous: Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when delivered in person
to the following addresses:
(i) if to the Company, to:
Platinum technology, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Attn: Chief Executive Officer
with a copy to:
Platinum technology, inc.
1815 South Meyers Road
Oakbrook Terrace, IL 60181
Attn: General Counsel
(ii) If to Executive to:
Paul L. Humenansky
630 Forest Avenue
Glen Ellyn, IL 60137
Any party may change its address for notice hereunder by notice to the
other party hereto.
(b) Governing Law. The parties agree that this Agreement shall be construed
and governed in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed entirely within such state.
(c) Binding Effect. This Agreement shall be binding upon and incur to the
benefit of the parties hereto and their respective heirs, legal representatives,
executors, administrators, successors and assigns. Any Successor will
automatically succeed to the obligations of the Company under this Agreement,
including the obligations set forth in Sections 7 and 8 of this Agreement (as
adjusted pursuant to the terms of Section 9 of this Agreement); provided that,
the Company shall remain liable under this Agreement in such event.
(d) Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Entire Agreement. This Agreement represents the entire agreement and
understanding of the parties hereto with respect to the matters set forth
herein. This Agreement supersedes all prior negotiations, discussions
correspondence, communications, understandings and agreements between the
parties, written or oral, relating to the subject matter of this Agreement. This
Agreement may be amended, superseded, canceled, renewed, or extended and the
terms hereof may be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving compliance.
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(f) Waivers. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
(g) Headings. The headings in this Agreement are inserted for convenience
only and are not to be considered in the interpretation or construction of the
provisions hereof.
(h) Arbitration. Except for any claim or dispute which gives rise or could
give rise to equitable relief under this Agreement, at the request of the
Executive any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled exclusively and
finally by arbitration. The arbitration shall be conducted in accordance with
such rules and before such arbitrator as the parties shall agree and if they
fail to so agree within 15 days after demand for arbitration, such arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (hereinafter referred to as "AAA Rules"). Such
arbitration shall be conducted in Chicago, Illinois, or in such other city as
the parties to the dispute may designate by mutual consent. The arbitral
tribunal shall consist of three arbitrators (or such lesser number as may be
agreed upon by the parties) selected according to the procedure set forth in the
AAA Rules in effect on the date hereof and the arbitrators shall be empowered to
order any remedy which is appropriate to the proceedings and issues presented to
them. The chairman of the arbitral tribunal shall be appointed by the American
Arbitration Association from among the three arbitrators so selected. Any party
to a decision rendered in such arbitration proceedings may seek an order
enforcing the same by any court having jurisdiction.
(i) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied against
the Executive or Company.
(j) Legal Expenses. The Executive shall be entitled to recover any expenses
for attorney's fees and disbursements incurred by him in connection with
enforcing his rights under this Agreement.
IN WITNESS WHEREOF, the Company and Executive have signed this Agreement as
of the day and year written above.
PLATINUM technology, inc.
By: /s/ Andrew J. Filipowski
------------------------------
Its: Chief Executive Officer
-----------------------------
/s/ Paul L. Humenansky
----------------------------------
Paul L. Humenansky
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EXHIBIT 10.42
CHICAGO 80002-63 48337
================================================================================
CREDIT AGREEMENT
This Agreement, dated as of December 22, 1997, is among PLATINUM
technology, inc., the Lenders signatory hereto and American National Bank and
Trust Company of Chicago, as Agent. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement:
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any partnership, association, entity, firm, corporation or
limited liability company, or division thereof, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding ownership interests
of a partnership or limited liability company.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans made on the
same Borrowing Date (or date of conversion or continuation) by the Lenders to
the Borrower of the same Type and, in the case of Eurodollar Advances, for the
same Eurodollar Interest Period.
"Affiliate" means each of the following: (i) any other "Person" (as defined
below in this Article) that directly or indirectly controls, is controlled by,
or is under direct or indirect common control with, such Person; and (ii) any
other Person that is or becomes a general partner or joint venturer in such
Person. For purposes of this Agreement, a Person shall "control" another Person
if the controlling Person either owns fifty percent (50%) or more of any class
of voting securities (or other ownership interests) of the controlled Person, or
possesses, directly or indirectly, the power to direct or cause the direction of
management and policies of the applicable Person, whether through ownership of
securities or other interests, by contract, trust or otherwise. Each general
partner of a Person which is a partnership shall be deemed to have control of
such Person.
<PAGE>
"Agent" means American National Bank and Trust Company of Chicago in its
capacity as agent for the Lenders pursuant to Article XI, and not in its
individual capacity as a Lender, and any successor Agent appointed pursuant to
Article XI.
"Aggregate Commitment" means an amount in U.S. Dollars equal to the
aggregate of the Commitments of all the Lenders, as reduced from time to time
pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be amended, restated, or
modified and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Base Rate for such day and (ii) the sum of
Federal Funds Effective Rate for such day plus 1% per annum, changing when and
as the Alternate Base Rate changes.
"Alternate Base Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.
"Alternate Base Rate Loan" means a Loan which bears interest at the
Alternate Base Rate.
"ANB" means American National Bank and Trust Company of Chicago in its
individual capacity, and its successors.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any one of the Senior Vice President, Tax and
Treasury (William Gecsey), Executive Vice President and Chief Financial Officer
(Michael P. Cullinane), and Senior Vice President and Corporate Controller
(Kenneth Mueller) of the Borrower, acting singly.
"Available Commitment" means, at any time of determination, the Aggregate
Commitment minus the Facility Letter of Credit Obligations.
"Base Rate" means a rate per annum announced publicly by ANB from time to
time as its "base rate" or "prime rate" which "base rate" or "prime rate" may
not necessarily be the lowest rate charged by ANB to any of its customers; such
Base Rate to change simultaneously with any change in such "base rate" or "prime
rate".
"Borrower" means PLATINUM technology, inc., a Delaware corporation, and its
successors and assigns.
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"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Capitalized Software" means at any date, the amount of the asset shown as
Purchased and Developed Software on a consolidated balance sheet of the Borrower
and its Subsidiaries prepared in accordance with GAAP.
"Cash and Cash Equivalents" means the amount of the Borrower's and its
Subsidiaries' (i) cash, (ii) investments in direct obligations of the United
States government or any agency thereof, or obligations guaranteed by the United
States government or any agency thereof, (iii) investments in commercial paper
rated in the highest grade by a nationally recognized credit rating agency and
(iv) time deposits with, including certificates of deposit issued by, any office
located in the United States of any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $100,000,000, provided in
each case that such investment matures within one year from the date of
acquisition thereof by the Borrower or a Subsidiary. The amount of all such
investments shall be calculated at the market value of such investment on the
date of calculation.
"Change in Control" is defined in Section 2.18.
"Change in Control Notice" is defined in Section 2.18.
"Charges" shall mean all national, federal, state, county, parish, city,
municipal or other Governmental Authority (as defined below in this Article)
taxes, levies, assessments, charges, liens, claims, fees or encumbrances
(including but not limited to those imposed by the PBGC (as defined below in
this Article), upon or related to: (i) the
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ownership or use of any of Borrower's or a Subsidiary's assets, whether fixed,
personal or intangible; (ii) any of Borrower's or a Subsidiary's payroll, income
or gross receipts, (iii) the Obligations (as defined below in this Article); or
(iv) any other aspect of Borrower's or a Subsidiary's business.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Shortfall Amount" is defined in Section 9.1.
"Commercial Letter of Credit" means any Facility Letter of Credit issued
for the purpose of providing the principal payment mechanism in connection with
the purchase of goods by the Borrower in the ordinary course of business.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below or as set
forth in any Notice of Assignment relating to any assignment that has become
effective pursuant to Section 13.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.
"Condemnation" is defined in Section 8.8.
"Contingent Obligation" means any obligation of such Person which
guarantees or is intended to guarantee any Indebtedness (as defined below in
this Article), leases, dividends, distributions or other payment or performance
obligations (collectively "Primary Obligations") of any other Person (the
"Primary Obligor") in any manner, whether directly or indirectly. The
Contingent Obligations of a Person shall include, without limitation, any
obligation of such Person, whether or not contingent: (i) to purchase any such
Primary Obligation or any property constituting direct or indirect security
therefor; (ii) to advance or supply funds to such Primary Obligor or the Person
to whom the Primary Obligor owes such Primary Obligation either (A) to purchase
or to pay any such Primary Obligation or (B) to maintain working capital or
equity capital of the Primary Obligor or otherwise to maintain the net worth or
solvency of the Primary Obligor; (iii) to purchase property, securities or
services primarily for the purpose of assuring the Person to whom any such
Primary Obligation is owed of the ability of the Primary Obligor to make payment
of such Primary Obligation; or (iv) otherwise to assure or hold harmless the
Person to whom such Primary Obligation is owed against loss in respect of such
Primary Obligation. However, the term "Contingent Obligation" shall not include
(a) endorsements of instruments for deposit or collection in the ordinary course
of business; (b) Rate Hedging Obligations incurred in the ordinary course of
business for interest rate hedging purpose and not for speculation; (c)
repurchase obligations with respect to obligations of, or guaranteed by, the
United States government or any agency thereof; (d) ACH and wire transfer
obligations incurred in the ordinary course of business and on terms customary
in the industry; and (e) performance guarantees or other similar obligations
(but not involving any guaranty
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of collection of the Receivables) entered into by the Borrower or a Material
Subsidiary in connection with, and on terms customary under, Qualified
Receivables Transactions. For purposes of this Agreement, the amount of any
Contingent Obligation shall be that amount which is equal to the stated or
determinable amount of the Primary Obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
anticipated liability in respect of such Primary Obligation (assuming such
Person is required to perform thereunder), as reasonably determined by Lender.
The Person with such Contingent Obligation shall provide Agent and the Lenders
with such information, documents and instruments as they reasonably may request
in connection with the determination of the amount of such Contingent
Obligation.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Current Liabilities" means the current liabilities of the Borrower and its
Subsidiaries as calculated for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Default" means an event described in Article VIII.
"Defaulting Lender" means any Lender that (i) on any Borrowing Date fails
to make available to the Agent such Lender's Loans required to be made to the
Borrower on such Borrowing Date or (ii) shall not have made a payment to the
Issuer pursuant to Section 2.2.5(b). Once a Lender becomes a Defaulting Lender,
such Lender shall continue as a Defaulting Lender until such time as such
Defaulting Lender makes available to the Agent, the amount of such Defaulting
Lender's Loans and/or to the Issuer, such payments due to the Issuer pursuant to
2.2.5(b) together with all other amounts required to be paid to the Agent and/or
the Issuer pursuant to this Agreement.
"Deferred Revenues" means the amount shown as Deferred Maintenance -
Current and Long-Term on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP.
"Environmental Affiliate" of a Person means any other Person whose
liability for any Environmental Claim (as defined below in this Article) such
Person has or may have retained, assumed or otherwise become liable for
(contingently or otherwise), whether contractually, by operation of law or
equity, or otherwise.
"Environmental Approvals" means any permit, license, approval, ruling,
variance, exemption or other authorization required under applicable
Environmental Laws (as defined below in this Article).
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"Environmental Claim" means, with respect to any Person, any notice, claim,
demand or similar communication (written or oral) delivered to such Person by
any other Person, alleging potential liability which reasonably could involve,
in the aggregate, $10,000,000 or more, for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting
from: (i) the presence or release into the environment of any Material of
Environmental Concern (as defined below in this Article), at any location,
whether or not owned by the Person subject to such claim or (ii) circumstances,
facts or events, which individually, collectively, or with notice, lapse of time
or both, currently or in the future will form the basis of any violation or
alleged violation of any Environmental Law.
"Environmental Laws" means all federal, state, provincial, local and
foreign laws, rules, decisions, regulations, ordinances, judgements, orders,
decrees, plans, permits, injunctions, grants, concessions, franchises, licenses,
agreements and other restrictions of any Governmental Authority, which relate to
pollution, protection of human health or protection of the environment (such as
but not limited to ambient air, surface water, ground water, land surface or
subsurface strata), including without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, handling, clean-up
or other remediation of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at a Eurodollar
Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S.
Dollars are being offered to prime banks in the London interbank market at 11:00
a.m., London time, two (2) Business Days prior to the first day of such
Eurodollar Interest Period for delivery on the first day of such Eurodollar
Interest Period for the number of months comprised therein and in an amount
approximately equal to the principal amount of the Eurodollar Loans requested
for such Eurodollar Interest Period, as determined by the Agent by reference to
the Bloomberg Financial Market's terminal screen entitled "Official BBA LIBOR
Fixings" or such other information vendor selected by the Agent for determining
British Bankers' Association Interest Settlement Rates for Dollar deposits.
Each determination of Eurodollar Base Rate made by the Agent shall be conclusive
and binding on the Borrower and the Lenders absent manifest error.
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"Eurodollar Interest Period" means, with respect to a Eurodollar Advance, a
period of one, two, three or six months commencing on a Business Day selected
by the Borrower pursuant to this Agreement. Such Eurodollar Interest Period
shall end on the day which corresponds numerically to such date one, two, three
or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, such Eurodollar Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day, such Eurodollar
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement if any (expressed as a decimal) applicable
to such Eurodollar Interest Period, plus (ii) 1% per annum. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.
"Exchange Rate" means with respect to any non-U.S. Dollar currency on any
date, the rate at which such currency may be exchanged into U.S. Dollars, as set
forth on such date on the relevant Reuters currency page at or about 11:00 A.M.,
London time, on such date. In the event that such rate does not appear on any
Reuters currency page, the "Exchange Rate" with respect to such non-U.S. Dollar
currency shall be determined by reference to such other publicly available
service for displaying exchange rates as may be agreed upon by the Agent and the
Borrower or, in the absence of such agreement, such "Exchange Rates" shall
instead be the Agent's (or an Affiliate of the Agent's) spot rate of exchange in
the interbank market where its foreign currency exchange operations in respect
of such non-U.S. Dollar currency are then being conducted, at or about 10:00
A.M., local time, on such date for the purchase of U.S. Dollars with such non-
U.S. Dollar currency, for delivery two Business Days later; provided, that if at
the time of any such determination, no such spot rate can reasonably be quoted,
the Agent may use any reasonable method as it deems applicable to determine such
rate, and such determination shall be conclusive absent manifest error.
"Facility Letter of Credit" means a Letter of Credit issued by the Issuer
pursuant to Section 2.2.
"Facility Letter of Credit Obligations" means, as at the time of
determination thereof, an amount in U.S. Dollars equal to all liabilities,
whether actual or contingent, of the Borrower with respect to the Facility
Letters of Credit, including the sum of (a)
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Reimbursement Obligations and (b) the aggregate undrawn face amount of the
outstanding Facility Letters of Credit.
"Facility Termination Date" means December 21, 1998 or such earlier date as
the Commitments may be terminated pursuant to Sections 2.5, 2.18 or 9.1.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"GAAP" means generally accepted accounting principles as in effect from
time to time.
Governmental Authority Definitions. The following terms shall have the
following meanings: (i) the term "United States" shall mean the United States
of America, and all geographical territories and subdivisions of the United
States of America; (ii) the term "Other Nations" shall mean each country,
principality or other independent territory, and each subdivision thereof, which
is not a part of the United States; (iii) the term "Supra-National Authority"
shall mean the European Union, the United Nations, the World Court, the
Commonwealth, the North Atlantic Treaty Organization, the General Agreement on
Tariffs and Trade and all other multinational authorities or treaties, and all
subdivisions and branches thereof, which have or may have from time to time
jurisdiction over any of the parties to or any performance under this Agreement
or any Loan Document (as defined below in this Article); and (iv) the term
"Governmental Authority" shall mean any subdivision, agency, branch, court,
administrative body, legislative body, judicial body, alternative dispute
resolution authority or other governmental institution of (A) the United States,
(B) any state, municipality, county, parish, subdivision or territory of the
United States, (C) all Other Nations, (D) any state, territory, county,
province, municipality, parish or other subdivision of any Other Nations, and
(E) all Supra-National Authorities.
"Guarantor" means each of Platinum Technology UK Limited and Platinum
Technology GmbH and their successors and assigns and any other Person who
executes a Guaranty after the date of this Agreement pursuant to Section 6.11,
and "Guarantors" means more than one Guarantor.
"Guaranties" means those certain Guaranties dated as of December 22, 1997
executed by the Guarantors in favor of the Agent, for the ratable benefit of the
Lenders, as they may be amended or modified and in effect from time to time and
any
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Guaranties executed hereafter in accordance with Section 6.11, and
"Guaranty" means any one of the Guaranties.
"Hazardous Substances" means any chemical, solid, liquid, gas or other
substance having the characteristics identified in, listed under or designated
pursuant to any of the following: (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.A. (S)9601(14), as
a "hazardous substance"; (ii) the Clean Water Act, 33 U.S.C.A. (S)1321(B)(2)(A),
as a "hazardous substance"; (iii) the Clean Water Act, 33 U.S.C.A. (S)(S)1317(a)
and 1362(13), as a "toxic pollutant"; (iv) Table 1 of Committee Print Numbered
95-30 of the Committee on Public Works and Transportation of the United States
House of Representatives as a "toxic pollutant"; (v) the Clean Air Act, 42
U.S.C.A. (S)7412(a)(1), as a "hazardous air pollutant"; (vi) the Toxic
Substances Control Act, 15 U.S.C.A. (S)2606(f), as an "imminently hazardous
chemical substance or mixture"; (vii) the Resource, Conservation and Recovery
Act, 42 U.S.C.A. (S)(S)6903(5) and 6921, as a "hazardous waste"; or (viii) any
other or successor laws as presenting a danger to the public health or welfare,
to the environment, or otherwise requiring special handling, collection,
storage, treatment, disposal or transportation. The term "Hazardous Substance"
also shall include, without limitation: (i) petroleum, crude oil, gasoline,
natural gas, liquefied natural gas, synthetic fuel, or other petroleum, oil or
gas based products and by-products; (ii) nuclear, radioactive or atomic
substances, mixtures, wastes, compounds, materials, elements, products or
matters; or (iii) any other substance, mixture, waste, compound, material,
element, product or matter that presents an imminent danger to the public health
or welfare, or the environment, upon its release, use, disposal, processing,
storage or transportation.
"Indebtedness" means, without duplication, each of the following, whether
primary, secondary, direct, indirect, absolute, contingent, fixed or otherwise,
currently or subsequently owing, due or payable, however evidenced, created,
incurred, acquired or owing, and however arising, whether by agreement (written
or oral), at law, in equity or otherwise: (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(other than trade payables on terms of ninety (90) days or less incurred in the
ordinary course of business of such Person); (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument; (iii) the
principal component of all Capitalized Lease Obligations of such Person; (iv)
the face amount of all Letters of Credit issued for the account of such Person
and, without duplication, all unreimbursed amounts drawn under such Letters of
Credit; (v) all indebtedness of any other Person secured by any "Lien" (as
defined below in this Article) on any Property (as defined below in this
Article) such Person owns, whether or not such indebtedness has been assumed;
(vi) all Contingent Obligations of such Person; (vii) all payment obligations of
such Person under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars and similar
agreements) and currency swaps, exchanges, and forward contracts and similar
agreements; and (viii) liabilities in respect of unfunded vested benefits under
Plans and Multiemployer Plans covered by Title IV of ERISA.
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<PAGE>
"Initial Control Group" is defined in Section 2.18.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit or contribution of capital by such
Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or
other securities owned by such Person; any deposit accounts and certificate of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person.
"Investment Securities" means, at any date, the amount of the assets shown
as Investment Securities on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP. The amount of all such
investments shall be calculated at the market value of such investment on the
date of calculation.
"Issuer" means ANB and any successor issuer agreed to by the Borrower, the
Agent and the Required Lenders.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Lender's Office" shall mean the office of a Lender located at its address
set forth in Section 8.3 below, or such other office as a Lender subsequently
may designate in writing as such to the Borrower.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Letter of Credit Collateral Account" is defined in Section 2.2.7.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement, preferential arrangement or interest of
any kind or nature whatsoever (including, without limitation, any conditional
sale, Capitalized Lease or other title retention agreement and the filing of any
financing statement or similar instrument under the Uniform Commercial Code or
comparable law of any Governmental Authority).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant to
Article II (or any conversion or continuation thereof).
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"Loan Documents" means this Agreement, the Notes and the other documents
and agreements contemplated hereby and executed by the Borrower in favor of the
Agent, the Issuer or any Lender.
"Material Adverse Effect" means either an adverse claim, result or effect
impacting Borrower or a Material Subsidiary which involves a liability, cost, or
loss of $10,000,000 or more, individually or in the aggregate, or any other
material adverse effect upon any of the following: (i) the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Borrower
and its consolidated Subsidiaries taken as a whole; or (ii) the ability of
Borrower to perform, or of the Agent or the Lenders to enforce, any of the
Obligations.
"Material Subsidiary" means any Subsidiary which (i) represents more than
5% of the consolidated assets of the Borrower and Subsidiaries as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 5% of the
consolidated gross revenues (from operations) of the Borrower and its
Subsidiaries as reflected in the consolidated financial statement of the
Borrower and its Subsidiaries referred to in clause (i) above, all calculated
in accordance with GAAP.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, cleaning agents, toxic substances and all other Hazardous
Substances.
"Maximum Funding Amount" means the sum of (a) with respect to outstanding
Receivables Investor Instruments that have fixed principal amounts, such
principal amounts, and (b) with respect to Receivables Investor Instruments that
have variable principal amounts, the Receivable Stated Amount thereof.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Note" means a promissory note, in substantially the form of Exhibit "A"
hereto, duly executed by the Borrower and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Notice of Assignment" is defined in Section 13.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans, all Facility Letter of Credit Obligations, all accrued and unpaid
fees and all
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<PAGE>
expenses, reimbursements, indemnities and other obligations of the Borrower to
the Lenders or to any Lender, the Agent or any indemnified party arising under
the Loan Documents.
"Participants" is defined in Section 13.2.1.
"Payment Date" means the last day of each month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any individual, sole proprietorship, partnership, joint
venture, union, unincorporated organization, firm, corporation, limited
liability company, cooperative, association, trust or other enterprise or
legally recognized entity, any Governmental Authority, and any agency,
subdivision, department or instrumentality of any Governmental Authority.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Pro Rata Share" means, for each Lender, the ratio such Lender's Commitment
bears to the Aggregate Commitment.
"Purchaser Money Note" means a promissory note evidencing the obligation of
a Receivables Subsidiary to pay the purchase price for Receivables to Borrower
or any other Seller in connection with a Qualified Receivables Transaction,
which note shall be repaid from cash available to the maker of such note, other
than cash required to be held as reserves pursuant to Receivables Documents,
amounts paid in respect of interest, principal and other amounts owing under
Receivables Documents and amounts paid in connection with the purchase of newly
generated Receivables.
"Purchasers" is defined in Section 13.3.1.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by Borrower or any other Seller pursuant
to which Borrower or such other Seller may sell, convey or otherwise transfer to
a Receivables Subsidiary (in the case of a transfer by Borrower or any other
Seller) and any other Person (in the case of a transfer by a Receivables
Subsidiary), or may grant a security interest in, any Receivables Program Assets
(whether now existing or arising in the future); provided that:
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(a) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of a Receivables Subsidiary or Special Purpose Vehicle
(i) is guaranteed by the Borrower or any other Seller (excluding guarantees of
obligations pursuant to Standard Securitization Undertakings), (ii) is recourse
to or obligates Borrower or any other Seller in any way other than pursuant to
Standard Securitization Undertakings or (iii) subjects any Property or asset of
the Borrower or any other Seller, directly or indirectly, contingently or
otherwise, to the satisfaction of obligations incurred in such transactions,
other than pursuant to Standard Securitization Undertakings,
(b) neither the Borrower nor any other Seller has any material
contract, agreement, arrangement or understanding with a Receivables Subsidiary
or a Special Purpose Vehicle other than on terms no less favorable to the
Borrower or such Seller than those that might be obtained at the time from
Persons that are not Affiliates of the Borrower, other than fees payable in the
ordinary course of business in connection with servicing accounts receivable,
and
(c) the Borrower and the other Sellers do not have any obligation to
maintain or preserve the financial condition of a Receivables Subsidiary or a
Special Purpose Vehicle or cause such entity to achieve certain levels of
operating results.
"Quick Ratio" means the ratio of (i) the sum of Cash and Cash Equivalent,
plus Current and Non-Current Investment Securities, plus net trade accounts
receivable arising in the ordinary course of the Borrower's and its
Subsidiaries' businesses, to (ii) Current Liabilities minus the current portion
of Deferred Revenues, calculated on a consolidated basis for the Borrower and
its Subsidiaries in accordance with GAAP.
"Receivable Stated Amount" means, with respect to a Receivables Investor
Instrument, the maximum amount of the funding commitment with respect thereto.
"Receivables" means all rights of the Borrower or any other Seller to
payments (whether constituting accounts, chattel paper, instruments, general
intangibles or otherwise, and including the right to payment of any interest or
finance charges), which rights are identified in the accounting records of the
Borrower or such Seller as accounts receivable.
"Receivables Documents" means (a) a receivables purchase agreement, pooling
and servicing agreement, credit agreement, agreements to acquire undivided
interests or other agreement to transfer, or create a security interest in,
Receivables Program Assets, in each case as amended, modified, supplemented or
restated and in effect from time to time entered into by the Borrower, another
Seller and/or a Receivables Subsidiary, and (b) each other instrument, agreement
and other document entered into by the Borrower, any other Seller or a
Receivables Subsidiary relating to the transactions contemplated by the items
referred to in clause (a) above, in each case as amended, modified, supplemented
or restated and in effect from time to time.
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"Receivables Investor Instruments" means trust certificates, purchased
interests or any other securities, instruments or agreements evidencing an
interest in the Receivables Program Assets held by a person other than the
Borrower or its Subsidiaries.
"Receivables Program Assets" means (a) all Receivables which are described
as being transferred by the Borrower, another Seller or a Receivables Subsidiary
pursuant to the Receivables Documents, (b) all Receivables Related Assets, and
(c) all collections (including recoveries) and other proceeds of the assets
described in the foregoing clauses.
"Receivables Program Obligations" means (a) notes, trust certificates,
undivided interests, partnership interests or other interests representing the
right to be paid a specified principal amount from the Receivables Program
Assets, and (b) related obligations of the Borrower, another Seller or a Special
Purpose Vehicle (including, without limitation, rights in respect of interest or
yield, breach of warranty claims and expense reimbursement and indemnity
provisions) and other Standard Securitization Undertakings.
"Receivables Related Assets" means (a) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of Liens securing such Receivables and other credit support in respect of such
Receivables), (b) any proceeds of such Receivables and any lockboxes or accounts
in which such proceeds are deposited, (c) spread amounts and other similar
accounts (and any amounts on deposit therein) established in connection with a
Qualified Receivables Transaction, (d) any warranty, indemnity, dilution and
other intercompany claim arising out of Receivables Documents and (e) other
assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable.
"Receivables Subsidiary" means a special purpose wholly-owned Subsidiary of
the Borrower or any Subsidiary of the Borrower created in connection with the
transactions contemplated by a Qualified Receivables Transaction, which
Subsidiary engages in no activities other than those incidental to such
Qualified Receivables Transaction and which is designated as a Receivables
Subsidiary by the Borrower's or such Subsidiary's, as the case may be, Board of
Directors. Any such designation by such Board of Directors shall be evidenced
by providing to the Agent a certified copy of the resolutions of such Board of
Directors giving effect to such designation and an officer's certificate
certifying, to the best of such officer's knowledge and belief after consulting
with counsel, that such designation, and the transactions in which the
Receivables Subsidiary will engage, comply with the requirements of the
definition of Qualified Receivables Transaction.
"Reimbursement Obligations" means, at any time, the aggregate of the
obligations of the Borrower to the Lenders and the Issuer in respect of all
unreimbursed
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payments or disbursements made by the Issuer and the Lenders under or in respect
of the Facility Letters of Credit.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 66 2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66 2/3% of the aggregate unpaid
principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Seller" means the Borrower and any Subsidiary (other than a Receivables
Subsidiary) which is a party to a Receivables Documents.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
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"Special Purpose Vehicle" means a trust, partnership or other special
purpose Person established by the Borrower and/or a Subsidiary to implement a
Qualified Receivables Transaction.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Borrower or any other Seller which
are reasonably customary in accounts receivable securitization transactions, as
determined in good faith by the Agent.
"Standby Letter of Credit" means any Facility Letter of Credit which is not
a Commercial Letter of Credit.
"Stock" means all shares, options, interests, participations or other
equivalents (however designated) of or in a corporation, whether voting or non-
voting, including without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and/or documents
convertible, in whole or in part, into any one or more or all of the preceding.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Required Lenders and shall include, without
limitation, the Borrower's existing $115,000,000 6 3/4% Convertible Subordinated
Notes Due November 15, 2001 and $150,000,000 6.25% Convertible Subordinated
Notes due December 15, 2002 and any future subordinated Indebtedness issued by
the Borrower provided such subordinated Indebtedness has terms, including
without limitation, representations and warranties, covenants, defaults,
subordination provisions and remedies substantially the same as those in the
existing Subordinated Indebtedness.
"Subsidiary" of a Person shall mean and include each of the following: (i)
any corporation 50% or more of whose stock of any class or classes is at the
time owned by such Person, directly and/or indirectly through one or more
Subsidiaries, trusts, nominees or otherwise; and (ii) any partnership,
association, joint venture or other entity in which such Person, directly and/or
indirectly through one or more Subsidiaries or otherwise as aforesaid, is either
a general partner, or has 50% or more of the equity or voting interest at the
time, including but not limited to 50% or more of the membership interests of a
limited liability company.
"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 5% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 5% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.
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"Tangible Net Worth" means at any date, the stockholder's equity of the
Borrower on a consolidated basis plus the outstanding principal amount of
Subordinated Indebtedness excluding any value for goodwill, trademarks, patents,
copyrights, Capitalized Software, organization expense, and other similar
intangible items, prepaid expenses and accounts due to Borrower from Affiliates,
all determined and computed as of such date in accordance with GAAP.
"Total Liabilities" means all liabilities shown on a consolidated balance
sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP less
Deferred Revenues and less Subordinated Debt.
"Transaction Documents" means, collectively, the Loan Documents and the
Guaranties.
"Transferee" is defined in Section 13.4.
"Type" means, with respect to any Advance, its nature as an Alternate Base
Rate Advance or Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"U.S. Dollar Equivalent" means with respect to an amount denominated in any
currency other than U.S. Dollars, the equivalent in U.S. Dollars of such amount
determined at the Exchange Rate on the date of determination of such equivalent.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
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ARTICLE II
THE CREDITS
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2.1 Commitment From and including the date of this Agreement and prior to
the Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans to the Borrower from time
to time in amounts not to exceed in the aggregate at any one time outstanding
the amount of its Available Commitment. Subject to the terms of this Agreement,
the Borrower may borrow, repay and reborrow at any time prior to the Facility
Termination Date. The Commitments to lend hereunder shall expire on the Facility
Termination Date. Any outstanding Advances and all other unpaid Obligations
shall be paid in full by the Borrower on the Facility Termination Date.
2.2 Facility Letters of Credit.
2.2.1 Obligation to Issue. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, the Issuer hereby agrees to issue for the account of
the Borrower through such of the Issuer's Lending Installations or Affiliates as
the Issuer and the Borrower may jointly agree, one or more Facility Letters of
Credit in accordance with this Section 2.2, from time to time during the period,
commencing on the date of this Agreement and ending on the Business Day prior to
the Facility Termination Date. Facility Letters of Credit may be issued up to
the full amount of the Aggregate Commitment, provided that at no time may the
sum of (a) the Facility Letter of Credit Obligations plus (b) the total
aggregate unpaid balance of the Advances exceed the Aggregate Commitment.
2.2.2 Conditions for Issuance. In addition to being subject to the
satisfaction of the conditions contained in Section 4.1 and 4.2, the obligation
of the Issuer to issue any Facility Letter of Credit is subject to the
satisfaction in full of the following conditions:
(i) the aggregate maximum amount then available for drawing under
Facility Letters of Credit issued by the Issuer, after giving
effect to the Facility Letter of Credit requested hereunder,
shall not exceed any limit imposed by law or regulation upon
the Issuer;
(ii) after giving effect to the requested issuance of any Facility
Letter of Credit, the sum of (a) the Facility Letter of Credit
Obligations plus (b) the total aggregate unpaid principal
balance of the Advances does not exceed the Aggregate
Commitment.
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(iii) If the requested Facility Letter of Credit is in a currency
other than U. S. Dollars, the Issuer agrees, in its sole
discretion, to issue the Facility Letter of Credit in such
currency and the Agent determines the U.S. Dollar Equivalent of
the maximum amount available for drawing under such Facility
Letter of Credit in order to determine the Available
Commitment, which determination is subject to revision from
time to time pursuant to Section 2.18.2.
(iv) the requested Facility Letter of Credit has an expiration not
longer than twelve (12) months from the date of issuance.
(v) the Borrower shall have delivered to the Issuer at such times
and in such manner as the Issuer may reasonably prescribe such
documents and materials as may be required pursuant to the
terms of the proposed Facility Letter of Credit and the
proposed Facility Letter of Credit shall be reasonably
satisfactory to the Issuer as to form and content; and
(vi) as of the date of issuance, no order, judgment or decree of any
court, arbitrator or governmental authority shall purport by
its terms to enjoin or restrain the Issuer from issuing the
Facility Letter of Credit and no law, rule or regulation
applicable to the Issuer and no request or directive (whether
or not having the force of law) from any governmental authority
with jurisdiction over the Issuer shall prohibit or request
that the Issuer refrain from the issuance of Facility Letters
of Credit generally or the issuance of that Facility Letter of
Credit.
2.2.3 Procedure for Issuance of Facility Letters of Credit. (a) The
Borrower shall give the Issuer one Business Day's prior written notice of any
requested issuance of a Facility Letter of Credit under this Agreement (except
that, in lieu of such written notice, the Borrower may give the Issuer
telephonic notice of such request if confirmed in writing by delivery to the
Issuer (i) immediately of a telecopy of the written notice required hereunder
which has been signed by an Authorized Officer containing all information
required to be contained in such written notice and (ii) promptly (but in no
event later than the requested time of issuance) of a copy of the written notice
required hereunder containing the original signature of an Authorized Officer);
such notice shall be irrevocable and shall specify the stated amount of the
Facility Letter of Credit requested, the effective date (which day shall be a
Business Day) of issuance of such requested Facility Letter of Credit, the date
on which such requested Facility Letter of Credit is to expire (which date shall
be a Business Day and shall in no event be later than twelve (12) months from
the issuance date), the purpose for which such Facility Letter of Credit is to
be issued, and the Person for whose benefit the requested Facility Letter of
Credit is to be issued and the currency in which it is to be issued, if not U.S.
Dollars. At the time such request is made, the Borrower shall also provide the
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Issuer with a copy of the form of the Facility Letter of Credit it is requesting
be issued. Such notice, to be effective, must be received by the Issuer not
later than 2:00 P.M. (Chicago time) or the time agreed upon by the Issuer and
the Borrower on the last Business Day on which notice can be given under this
Section 2.2.3(a). The Issuer shall within one Business Day of any requested
issuance of a Facility Letter of Credit forward to the Lenders a copy of the
Borrower's request for the issuance of a Facility Letter of Credit hereunder.
(b) Subject to the terms and conditions of this Section 2.2.3 and provided
that the applicable conditions set forth in Sections 4.2 and 2.2.2 hereof have
been satisfied, the Issuer shall, on the requested date, issue a Facility Letter
of Credit on behalf of the Borrower in accordance with the Issuer's usual and
customary business practices.
(c) The Issuer shall not extend or amend any Facility Letter of Credit
unless the requirements of this Section 2.2.3 are met as though a new Facility
Letter of Credit was being requested and issued.
2.2.4 Reimbursement Obligations.
(a) The Borrower agrees to pay to the Issuer, for the account of the
Lenders, as applicable, the amount of all Reimbursement Obligations, interest
and other amounts payable to the Issuer under or in connection with any Facility
Letter of Credit immediately when due, irrespective of any claim, set-off,
defense or other right which the Borrower or any Subsidiary may have at any time
against the Issuer or any other Person, under all circumstances, including
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any Subsidiary may have at any time
against a beneficiary named in a Facility Letter of Credit or
any transferee of any Facility Letter of Credit (or any Person
for whom any such transferee may be acting), the Issuer, any
Lender, or any other Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including
any underlying transactions between the Borrower or any
Subsidiary and the beneficiary named in any Facility Letter of
Credit);
(iii) any draft, certificate or any other document presented under
the Facility Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
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(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents;
or
(v) the occurrence of any Default or Unmatured Default.
(b) The Issuer shall promptly notify the Borrower of any draw under a
Facility Letter of Credit. The Borrower shall reimburse the Issuer, for the
account of the Lenders, as applicable, for drawings under a Facility Letter of
Credit issued by it no later than the Business Day after the payment by the
Issuer. Unless the Borrower shall have made such payment to the Issuer on such
date, the Borrower shall be deemed to have elected to fulfill its Reimbursement
Obligation by requesting a Loan in an amount equal to the amount paid by the
Issuer in respect of such drawing under the Letter of Credit. No Borrowing
Notice from the Borrower shall be required and such Loan shall be disbursed by
the Lenders notwithstanding any failure to satisfy any conditions for
disbursement of a Loan set forth in Article IV hereof (including restatement of
all representations and warranties) and, to the extent of the Loans so
disbursed, the Reimbursement Obligation of the Borrower hereunder shall be
deemed satisfied. If any Reimbursement Obligation with respect to any Facility
Letter of Credit is not paid by the Borrower and there is no availability to
make a Loan under Section 2.1, then the Reimbursement Obligation shall bear
interest from the date of the relevant drawing under the pertinent Facility
Letter of Credit until the fifth Business Day following such drawing at the
Alternate Base Rate in effect for each such day and thereafter until paid at the
interest rate for past due Alternate Base Rate Loans calculated in accordance
with Section 2.11.
2.2.5 Participation. (a) Immediately upon issuance by the Issuer of
any Facility Letter of Credit in accordance with the procedures set forth in
Section 2.2.3, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuer (without recourse or
warranty to the Issuer) an undivided interest and participation equal to its Pro
Rata Share in such Facility Letter of Credit (including, without limitation, all
obligations of the Borrower with respect thereto) and any security therefor or
guaranty pertaining thereto; provided, that a Facility Letter of Credit issued
by the Issuer shall not be deemed to be a Facility Letter of Credit for purposes
of this Section 2.2.5 if the Issuer shall have received written notice from any
Lender on or before one Business Day prior to the date of its issuance of such
Facility Letter of Credit that one or more of the conditions contained in
Section 4.2 is not then satisfied, and, in the event the Issuer receives such a
notice, it shall have no further obligation to issue any Facility Letter of
Credit until such notice is withdrawn by that Lender or such condition has been
effectively waived in accordance with the provisions of this Agreement.
(b) In the event that the Issuer makes any payment under any Facility
Letter of Credit and the Borrower shall not have repaid such amount to the
Issuer pursuant to Section 2.2.4, the Issuer shall promptly notify each Lender
of such failure, and each
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Lender shall promptly and unconditionally pay to the Agent for the account of
the Issuer the amount of such Lender's Pro Rata Share of the unreimbursed amount
of any such payment. If any Lender fails to make available to the Issuer, any
amounts due to the Issuer pursuant to this Section 2.2.5(b), the Issuer shall be
entitled to recover such amount, together with interest thereon at the Federal
Funds Effective Rate, for the first three Business Days after such Lender
receives such notice and thereafter, at the Alternate Base Rate, payable (i) on
demand, (ii) by setoff against any payments made to the Issuer for the account
of such Lender or (iii) by payment to the Issuer by the Agent of amounts
otherwise payable to such Lender under this Agreement. The failure of any Lender
to make available to the Agent its Pro Rata Share of the unreimbursed amount of
any such payment shall not relieve any other Lender of its obligation hereunder
to make available to the Agent its Pro Rata Share of the unreimbursed amount of
any payment on the date such payment is to be made, but no Lender shall be
responsible for the failure of any other Lender to make available to the Agent
its Pro Rata Share of the unreimbursed amount of any payment on the date such
payment is to be made.
(c) Whenever the Issuer receives a payment on account of a Reimbursement
Obligation, including any interest thereon, it shall pay, on the same Business
Day the payment is received if received before noon (Chicago time) and on the
next Business Day if received after noon (Chicago time), to each Lender which
has funded its participating interest therein, in immediately available funds,
an amount equal to such Lender's Pro Rata Share thereof.
(d) The obligations of a Lender to make payments to the Issuer with respect
to a Facility Letter of Credit shall be absolute, unconditional and irrevocable,
not subject to any counterclaim, set-off, qualification or exception whatsoever
and shall be made in accordance with the terms and conditions of this Agreement
under all circumstances.
(e) In the event any payment by the Borrower or any Subsidiary received by
the Issuer with respect to a Facility Letter of Credit and distributed to the
Lenders on account of their participations is thereafter set aside, avoided or
recovered from the Issuer or the Agent in connection with any receivership,
liquidation, reorganization or bankruptcy proceeding, each Lender which received
such distribution shall, upon demand by the Agent or the Issuer, contribute such
Lender's Pro Rata Share of the amount set aside, avoided or recovered together
with interest at the rate required to be paid by the Agent or the Issuer upon
the amount required to be repaid by it.
2.2.6 Compensation for Facility Letters of Credit. The Borrower agrees
to pay to the Issuer a letter of credit fee equal to (i) 1% per annum on the
average daily undrawn amount (calculated at the U.S. Dollar Equivalent) of each
outstanding Standby Letter of Credit for the period from and including the date
of issuance of such Standby Letter of Credit to and including the expiration of
such Standby Letter of Credit, payable annually in advance and (ii) a fee to be
negotiated between the Borrower and the Issuer at the time of issuance of a
Commercial Letter of Credit, such fee to be payable
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annually in advance. The letter of credit fees shall be distributed to the
Lenders on a monthly basis in accordance with their respective Pro Rata Shares.
Such fees are nonrefundable and the Borrower shall not be entitled to any rebate
of any portion thereof if a Facility Letter of Credit does not remain
outstanding through its stated expiry date or for any other reason. The Borrower
further agrees to pay to the Issuer, on demand, such other customary and
reasonable administrative fees, charges and expenses of the Issuer in respect of
the issuance, negotiation, acceptance, amendment, transfer and payment of a
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which such Facility Letter of Credit is issued in accordance
with a schedule of fees provided by the Issuer to the Borrower.
2.2.7 Letter of Credit Collateral Account. The Borrower hereby agrees
that it will, until the final expiration date of any Facility Letter of Credit
and thereafter as long as any amount is payable to the Issuer or the Lenders in
respect of any Facility Letter of Credit and whether or not this Agreement is
then in effect, maintain a special collateral account (the "Letter of Credit
Collateral Account") at the Agent's office at the address specified pursuant to
Article XIV, in the name of the Borrower but under the sole dominion and control
of the Agent, for the benefit of the Lenders and in which the Borrower shall
have no interest other than as set forth in Section 9.1. If this Agreement
terminates and any Letters of Credit remain outstanding beyond the Facility
Termination Date, the Borrower shall, prior to the Facility Termination Date,
(i) deposit in the Letter of Credit Collateral Account for the benefit of the
Agent and the Lenders, an amount equal to 100% of the sum of the aggregate
maximum amount remaining available to be drawn under the remaining outstanding
Facility Letters of Credit (assuming compliance with all conditions for drawing
thereunder), (herein the "Collateral Amount"), or (ii) deliver to the Agent for
the benefit of the Lenders, assets of the type described in the definition of
"Cash and Cash Equivalents" having a face amount, which when discounted at the
Agent's customary advance rate for collateral of that type, is at least equal to
the Collateral Amount, plus such pledge agreements, financing statements,
control agreements and other documents requested by the Agent in order to
perfect a first and prior perfected security interest in such assets in favor of
the Agent and the Lenders or (iii) provide the Agent for the benefit of the
Lenders with a letter(s) of credit in an aggregate amount at least equal to the
Collateral Amount, such letter(s) of credit to be in form and substance, and
issued by banks, satisfactory to the Agent. Such Letter of Credit Collateral
Account shall be maintained by the Agent in accordance with the provisions of
Section 9.1. The Agent will invest any funds on deposit from time to time in the
Letter of Credit Collateral Account in assets of the type described in said
"Cash and Cash Equivalent" definition, as directed by the Borrower from time to
time.
2.2.8 Nature of Obligations. (a) As among the Borrower, the Issuer and
the Lenders, the Borrower assumes all risks of the acts and omissions of, or
misuse of the Facility Letters of Credit by, the respective beneficiaries of the
Facility Letters of Credit. In furtherance and not in limitation of the
foregoing, the Issuer and the Lenders shall not be responsible for (i) the
forms, validity, sufficiency, accuracy, genuineness or
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legal effect of any document submitted by any party in connection with the
application for and issuance of any Facility Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer of assign a Facility Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reason; (iii)
failure of the beneficiary of a Facility Letter of Credit to comply fully with
conditions required in order to draw upon such Facility Letter of Credit; (iv)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise; (v) errors in
interpretation of technical terms; (vi) misapplication by the beneficiary of a
Facility Letter of Credit of the proceeds of any drawing under such Facility
Letter of Credit; and (viii) any consequences arising from causes beyond the
control of the Issuer or the Lenders and to the extent not avoidable by the
Issuer or the Lender by the observance of reasonable commercial standards
prevailing in the geographic area where the Agent is located. Notwithstanding
the foregoing, nothing contained herein shall be deemed to relieve the Issuer or
any Lender from responsibility for any of the foregoing consequences to the
extent arising from the Issuer or such Lender's willful or intentional breach of
the terms hereof or its gross negligence.
(b) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuer or
any Lender under or in connection with the Facility Letters of Credit or any
related certificates, if taken or omitted in good faith, shall not put the
Issuer or such Lender under any resulting liability to the Borrower or relieve
the Borrower of any of its obligations hereunder to the Issuer, the Agent or any
Lender.
2.3 Ratable Loans. Each Advance hereunder shall consist of Loans made from
the several Lenders ratably in proportion to the ratio that their respective
Commitments bear to the Aggregate Commitment.
2.4 Types of Advances. The Advances may be Alternate Base Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.
2.5 Commitment Fee; Reductions in Aggregate Commitment. The Borrower agrees
to pay to the Agent for the account of each Lender a commitment fee of 12.5
basis points per annum on the daily unborrowed portion of such Lender's
Commitment from the date hereof to and including the Facility Termination Date,
payable on each Payment Date hereafter and on the Facility Termination Date. In
calculating the unborrowed portion of a Lender's Commitment, the undrawn amount
of any outstanding Commercial Letters of Credit will not be considered usage,
but the undrawn amount of any outstanding Standby Letters of Credit will be
considered usage.
The Borrower may permanently reduce the Aggregate Commitment in whole, or
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in part ratably among the Lenders in integral multiples of $5,000,000 upon at
least ten Business Days' written notice to the Agent, which notice shall specify
the amount of any such reduction, provided, however, that the amount of the
Aggregate Commitment may not be reduced below the aggregate principal amount of
the outstanding Advances and Facility Letter of Credit Obligations. All accrued
commitment fees shall be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
2.6 Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the
minimum amount of $1,000,000 (and in multiples of $100,000 in excess thereof),
and each Alternate Base Rate Advance shall be in the minimum amount of $100,000
(and in multiples of $10,000 in excess thereof), provided, however, that any
Alternate Base Rate Advance may be in the amount of the unused Aggregate
Commitment.
2.7 Optional Principal Payments. The Borrower may from time to time pay,
without penalty or premium, all outstanding Alternate Base Rate Advances, or, in
a minimum aggregate amount of $100,000 and in integral multiples of $10,000 in
excess thereof, any portion of the outstanding Alternate Base Rate Advances upon
two Business Days' prior notice to the Agent. A Eurodollar Advance may be paid
prior to the last day of the applicable Eurodollar Interest Period only upon
payment of any amounts due under Section 3.4 in connection with such prepayment.
2.8 Method of Selecting Types and Eurodollar Interest Periods for New
Advances. The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance, the Eurodollar Interest Period applicable to each Advance
from time to time. The Borrower shall give the Agent irrevocable notice (a
"Borrowing Notice") not later than 10:00 a.m. (Chicago time) at least one
Business Day before the Borrowing Date of each Alternate Base Rate Advance, and
two Business Days before the Borrowing Date for each Eurodollar Advance,
specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Eurodollar Interest
Period applicable thereto.
The Agent shall give each Lender notice of the Borrowing Notice on the Business
Day on which such Borrowing Notice was received by Agent. Not later than noon
(Chicago time) on each Borrowing Date, each Lender shall make available its Loan
or Loans, in funds immediately available in Chicago to the Agent at its address
specified pursuant to
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Article XIV. The Agent will make the funds so received from the Lenders
available to the Borrower at the Agent's aforesaid address.
2.9 Conversion and Continuation of Outstanding Advances. Alternate Base
Rate Advances shall continue as Alternate Base Rate Advances unless and until
such Alternate Base Rate Advances are converted into Eurodollar Advances. Each
Eurodollar Advance shall continue as a Eurodollar Advance until the end of the
then applicable Eurodollar Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a Alternate Base Rate
Advance unless the Borrower shall have given the Agent a Conversion/Continuation
Notice requesting that, at the end of such Eurodollar Interest Period, such
Eurodollar Advance either continue as a Eurodollar Advance for the same or
another Interest Period. Subject to the terms of Section 2.6, the Borrower may
elect from time to time to convert all or any part of an Advance of any Type
into any other Type or Types of Advances; provided that any conversion of any
Eurodollar Advance shall be made on, and only on, the last day of the Eurodollar
Interest Period applicable thereto. The Borrower shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an
Advance or continuation of a Eurodollar Advance not later than 10:00 a.m.
(Chicago time) at least one Business Day, in the case of a conversion into a
Alternate Base Rate Advance, or two Business Days, in the case of a conversion
into or continuation of a Eurodollar Advance, prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued, and
(iii) the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion
into or continuation of an Alternate Base Rate Advance, the
duration of the Eurodollar Interest Period applicable thereto.
2.10 Changes in Interest Rate, etc. Each Alternate Base Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a Eurodollar
Advance into an Alternate Base Rate Advance pursuant to Section 2.9 to but
excluding the date it becomes due or is converted into a Eurodollar Advance
pursuant to Section 2.9 hereof, at a rate per annum equal to the Alternate Base
Rate for such day. Changes in the rate of interest on that portion of any
Advance maintained as an Alternate Base Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each Eurodollar
Advance shall bear interest on the outstanding principal amount thereof from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Eurodollar Interest Period at the interest rate
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determined as applicable to such Eurodollar Advance. No Eurodollar Interest
Period may end after the Facility Termination Date.
2.11 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8 or 2.9, during the continuance of a Default or
Unmatured Default the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 9.2 requiring unanimous consent of the
Lenders to changes in interest rates), declare that no Advance may be made as,
converted into or continued as a Eurodollar Advance. During the continuance of a
Default, the Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 9.2 requiring unanimous consent of the
Lenders to changes in interest rates), declare that (i) each Eurodollar Advance
shall bear interest for the remainder of the applicable Eurodollar Interest
Period at the rate otherwise applicable to such Eurodollar Interest Period plus
2% per annum and (ii) each Alternate Base Rate Advance shall bear interest at a
rate per annum equal to the Alternate Base Rate plus 2% per annum.
2.12 Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to the Agent at the Agent's address specified pursuant to Article XIV, or at any
other Lending Installation of the Agent specified in writing by the Agent to the
Borrower, by noon (local time) on the date when due and shall be applied ratably
by the Agent among the Lenders. Each payment delivered to the Agent for the
account of any Lender shall be delivered by the Agent to such Lender on the same
Business Day such payment is received if received prior to noon (Chicago time)
and on the next Business Day if received after noon (Chicago time), shall be in
the same type of funds that the Agent received and shall be delivered to its
address specified pursuant to Article XIV or at any Lending Installation
specified in a notice received by the Agent from such Lender. When directed by
telephonic, facsimile or written notice, from an Authorized Officer, the Agent
is hereby authorized to charge the account of the Borrower maintained with ANB
for each payment of principal, interest and fees as it becomes due hereunder.
2.13 Notes; Telephonic Notices. Each Lender is hereby authorized to record
the principal amount of each of its Loans and each repayment on the schedule
attached to its Note, provided, however, that neither the failure to so record
nor any error in such recordation shall affect the Borrower's obligations under
such Note. The Borrower hereby authorizes the Lenders and the Agent to extend,
convert or continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any Person or Persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation signed by an Authorized Officer, if such confirmation is requested
by the Agent or any Lender, of each telephonic notice. If the written
confirmation differs in any material respect from the action taken by the Agent
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and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.
2.14 Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Alternate Base Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which the Alternate Base Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Alternate Base Rate Advance converted into a
Eurodollar Advance on a day other than a Payment Date shall be payable on the
date of conversion. Interest accrued on each Eurodollar Advance shall be payable
on the last day of its applicable Interest Period, on any date on which the
Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Advance having a Eurodollar
Interest Period longer than three months shall also be payable on the last day
of each three-month interval during such Eurodollar Interest Period. Interest
and commitment fees shall be calculated for actual days elapsed on the basis of
a 360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (local time) at the place of payment. If any payment of principal of or
interest on an Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.15 Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof (and on the same Business Day as
received by the Agent with respect to Borrowing and Conversion/Continuation
Notices), the Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. The Agent will notify each Lender
of the interest rate applicable to each Eurodollar Advance within two Business
Days of determination of such interest rate and will give each Lender prompt
notice of each change in the Alternate Base Rate.
2.16 Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or telex notice to the
Agent and the Borrower, designate a Lending Installation through which Loans
will be made by it and for whose account Loan payments are to be made.
2.17 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make
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payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or
(ii) in the case of the Borrower, a payment of principal, interest or fees to
the Agent for the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The Agent may,
but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or the
Borrower, as the case may be, has not in fact made such payment to the Agent,
the recipient of such payment shall, on demand by the Agent, repay to the Agent
the amount so made available together with interest thereon in respect of each
day during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to (i) in the case of payment by a Lender, the Federal Funds Effective
Rate for such day or (ii) in the case of payment by the Borrower, the interest
rate applicable to the relevant Loan.
2.18 Mandatory Prepayments.
2.18.1 Change in Control. Within 30 Business Days prior to the
consummation of any transaction which would cause a Change in Control and which
is scheduled to close prior to the Facility Termination Date, the Borrower shall
notify (a "Change in Control Notice") the Agent of such expected transaction,
including within such Change in Control Notice the expected closing date of such
transaction, if known by the Borrower. The Agent shall promptly deliver a copy
of such notice to each Lender. Within 10 Business Days of receipt of such Change
in Control Notice by the Agent and the Lenders, the Required Lenders may, at
their option, give notice to the Agent and the Borrower that the Lenders elect
to terminate their Commitment hereunder. Unless an earlier date is otherwise
agreed upon between the Borrower, the Agent and the Required Lenders, the
Aggregate Commitment shall terminate simultaneously with the closing of such
transaction and the Borrower shall repay at such time all outstanding Advances,
together with accrued interest thereon, any accrued fees with respect to the
Aggregate Commitment, any costs, losses or expenses incurred by the Lenders in
connection with such prepayment payable by the Borrower pursuant to Section 3.4,
provide cash collateral for all outstanding Facility Letters of Credit in
accordance with Section 2.18.4 and pay any other obligations of the Borrower to
the Lenders hereunder.
For purposes of this Agreement, the term "Change in Control" shall mean
each of the following: (i) any Person or "group" (as such term is defined in
Section 13(d) of the Securities Act of 1934, as said Act is amended from time to
time), other than a Subsidiary or employee benefit plan of Borrower, which is
not as of the Effective Date the legal or beneficial owner of fifty percent
(50%) or more of the common Stock of the Borrower or voting securities of the
Borrower representing fifty percent (50%) or more of the combined voting power
of all voting securities of the Borrower, becomes the owner of fifty percent
(50%) or more of such common Stock or voting securities after the Effective
Date; (ii) approval by the stockholders of the Borrower of any merger,
reorganization or consolidation with respect to which the Persons who were the
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respective legal and beneficial owners of the Borrower's Stock immediately
before such merger, reorganization or consolidation do not thereafter
beneficially and legally own, directly or indirectly, more than 75% of both the
common Stock and/or combined voting power of the securities of the corporation
or other entity which results from such merger, reorganization or consolidation;
(iii) the "Initial Control Group" (as defined below in this Section 2.18) holds
less than 5 percent (5%) of the fully diluted common Stock of the Borrower,
including as common Stock, the amount of common Stock which may be purchased by
such Person under options exercisable within 60 days of the date of
determination; or (iv) any Person or group of Persons (within in the meaning of
Section 13 or 14 of the Securities Act of 1934, as said Act is amended from time
to time) other than the Initial Control Group acquires at anytime beneficial
ownership of common Stock of the Borrower which on a fully diluted basis
constitutes a greater percentage of the common Stock of the Borrower then is
beneficially owned at such time by the Initial Control Group. For purposes of
this Agreement, the term "Initial Control Group" shall mean those individuals
and/or entities listed on Schedule 3 attached to and made a part of this
Agreement, who as of the Effective Date effectively control the operations of
Borrower by serving as directors of Borrower and/or owning common Stock of
Borrower, as the case may be.
2.18.2 Outstandings Exceed Aggregate Commitment. If at any time for
any reason, the total of the then outstanding Advances plus the amount of the
U.S. Dollar Equivalent of all Facility Letter of Credit Obligations exceeds the
Aggregate Commitment, as then in effect, the Borrower shall immediately prepay
Advances and/or provide cash collateral in accordance with Section 2.18.4 in an
amount sufficient so that after giving effect thereto, the total of the
outstanding Advances plus the amount of the U.S. Dollar Equivalent of the
Facility Letter of Credit Obligations does not exceed the Aggregate Commitment.
2.18.3 U.S. Dollar Equivalent. Mandatory prepayments that would
otherwise be required pursuant to Section 2.18.2 solely as a result of
fluctuations in Exchange Rates from time to time shall only be required to be
made on the last Business Day of each month on the basis of the Exchange Rate in
effect on such Business Day.
2.18.4 Letter of Credit Collateral Account. Upon a mandatory
prepayment pursuant to this Section 2.18, the Borrower shall, upon request of
the Agent, deliver to the Agent security for the Facility Letters of Credit in
accordance with, and on the same terms and conditions as those set forth in,
Section 2.2.7, in an amount equal to, in the case of Section 2.18.1, 100% of the
sum of the aggregate maximum amount remaining available to be drawn under the
outstanding Facility Letters of Credit (assuming compliance with all conditions
for drawing thereunder) which will remain outstanding after the Facility
Termination Date and in the case of 2.18.2, an amount sufficient to cause the
sum of the outstanding Advances plus the U. S. Dollar Equivalent of the Facility
Letters of Credit not collateralized to not exceed the
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Aggregate Commitment. Such Letter of Credit Collateral Account shall be
maintained by the Agent in accordance with the provisions of Section 9.1.
2.19 Application of Payments with Respect to Defaulting Lenders. No
payments of principal, interest or fees delivered to the Agent for the account
of any Defaulting Lender shall be delivered by the Agent to such Defaulting
Lender. Instead, such payments shall, for so long as such Defaulting Lender
shall be a Defaulting Lender, be held by the Agent, and the Agent is hereby
authorized and directed by all parties hereto to hold such funds in escrow and
apply such funds as follows:
(i) First, if applicable, to any payments due to the Issuer pursuant
to Section 2.2.5(b); and
(ii) Second, to Loans required to be made by such Defaulting Lender on
any Borrowing Date to the extent such Defaulting Lender fails to
make such Loans.
Notwithstanding the foregoing, upon the termination of the Aggregate
Commitment and the payment and performance of all of the Obligations (other than
those owing to a Defaulting Lender), any funds then held in escrow by the Agent
pursuant to the preceding sentence shall be distributed to each Defaulting
Lender, pro rata in proportion to amounts that would be due to each Defaulting
Lender but for the fact that it is a Defaulting Lender.
ARTICLE III
CHANGE IN CIRCUMSTANCES
-----------------------
3.1 Yield Protection. If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
amendment to any existing law, rule, regulation, policy, guideline or directive
or any change in the interpretation thereof, by any governmental or quasi-
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency;
(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of
any Lender or applicable Lending Installation), or changes the
basis of taxation of payments to any Lender in respect of its
Loans or any Facility Letters of Credit or other amounts due it
hereunder, or
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(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any applicable Lending
Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to
Eurodollar Advances), or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining loans or reduces any amount
receivable by any Lender or any applicable Lending Installation
in connection with loans, or requires any Lender or any
applicable Lending Installation to make any payment calculated
by reference to the amount of loans held or interest received
by it, by an amount deemed material by such Lender,
and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation of making or maintaining its Loans, Facility
Letters of Credit or Commitment or to reduce the return received by such Lender
or applicable Lending Installation in connection with its Loans, Facility
Letters of Credit or Commitment, then, within 15 days of demand by such Lender,
the Borrower shall pay such Lender that portion of such increased expense
incurred or reduction in an amount received which such Lender determines is
attributable to making, funding and maintaining its Loans, any Facility Letters
of Credit and its Commitment. Notwithstanding the foregoing, no Lender shall be
permitted to request payment hereunder for any increased cost or reduction in
amount received which was incurred more than 180 days prior to the date payment
is requested.
3.2 Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
issuance of or participation in Facility Letters of Credit or its obligation to
make Loans or issue or participate in Facility Letters of Credit hereunder
(after taking into account such Lender's policies as to capital adequacy).
"Change" means (i) any change after the date of this Agreement in the Risk-Based
Capital Guidelines or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital
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Guidelines" means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International Convergence
of Capital Measurements and Capital Standards," including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Agent shall suspend the availability of the affected Type of Advance and if
maintenance of such Eurodollar Loans would violate any applicable law, rule,
regulation or directive, whether or not having the force of law, require any
Eurodollar Advances of the affected Type to be repaid, subject to the payment of
any funding indemnification amounts required by Section 3.4.
3.4 Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made, converted, or continued on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Advance.
3.5 Lender Statements; Limitations on Liability, Survival of Indemnity. To
the extent reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. The Borrower shall not be
liable to a Lender under Sections 3.1 or 3.2 above for any such increased costs
whose imposition was caused solely by the willful or intentional breach by such
Lender of the terms of this Agreement or by such Lender's gross negligence or
willful misconduct. Each Lender shall deliver a written statement of such Lender
to the Borrower (with a copy to the Agent) as to the amount due, if any, under
Section 3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable
detail the calculations upon which such Lender determined such amount and shall
be presumptively correct in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Eurodollar Loan shall
be calculated as though each Lender funded its Eurodollar Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the Eurodollar applicable to such Loan, whether in
fact that is the case or
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not. Unless otherwise provided herein, the amount specified in the written
statement of any Lender shall be payable on demand after receipt by the Borrower
of such written statement. The obligations of the Borrower under Sections 3.1,
3.2 and 3.4 shall survive payment of the Obligations and termination of this
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION
-----------------------------------------------
4.1 Initial Advance. The Lenders shall not be required to make the initial
Advance (or the Issuer issue the initial Facility Letter of Credit) hereunder
unless the Borrower has paid to the Agent all fees due to the Agent for its own
account and the account of the Lenders under this Agreement and pursuant to the
letter dated February 4, 1997 between ANB and the Borrower, as amended August
28, 1997, and the Borrower has furnished to the Agent with sufficient copies for
the Lenders:
(i) Copies of the articles of incorporation (or other applicable
charter document) of the Borrower and each Guarantor, together
with all amendments, and a certificate of good standing for the
Borrower and each Guarantor, all certified by the appropriate
governmental officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of
the Borrower and each Guarantor, of its by-laws and of its
Board of Directors' resolutions (and resolutions of other
bodies, if any are deemed necessary by counsel for any Lender)
authorizing the execution of the Loan Documents or the
Guaranties, as applicable.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower and each Guarantor, which
shall identify by name and title and bear the signature of the
officers of the Borrower or such Guarantor authorized to sign
the Loan Documents or the Guaranties, whichever is applicable,
and to make borrowings hereunder, upon which certificate the
Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Borrower or the applicable
Guarantor.
(iv) A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Borrowing Date and after
giving effect to the execution of this Agreement no Default or
Unmatured Default has occurred and is continuing and the
representations and warranties contained in Article V are true
and correct as of such date.
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(v) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "B" hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the form
of Exhibit "E" hereto, addressed to the Agent and signed by an
Authorized Officer, together with such other related money
transfer authorizations as the Agent may have reasonably
requested.
(viii) Guaranties executed by Platinum Technology UK Limited and
Platinum Technology GmbH.
(ix) A written opinion(s) of each Guarantor's counsel, addressed to
the Lenders, in form satisfactory to the Required Lenders.
(x) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2 Each Advance. The Lenders shall not be required to make any Advance nor
shall the Issuer be required to issue any Facility Letter of Credit (other than
an Advance that, after giving effect thereto and to the application of the
proceeds thereof, does not increase the aggregate amount of outstanding
Advances), unless on the applicable Borrowing Date or issuance date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date (or issuance date)
except to the extent any such representation or warranty is
stated to relate solely to an earlier date, in which case such
representation or warranty shall be true and correct on and as
of such earlier date.
(iii) All legal matters incident to the making of such Advance or the
issuance of a Facility Letter of Credit shall be satisfactory
to the Lenders and their counsel, or the Issuer or its counsel,
whichever is applicable.
Each Borrowing Notice with respect to each such Advance and each request to
issue a Facility Letter of Credit shall constitute a representation and warranty
by the Borrower that the conditions contained in Sections 4.2(i) and (ii) have
been satisfied. Any Lender or the Issuer may require a duly completed compliance
certificate in substantially the form of Exhibit "C" hereto as a condition to
making an Advance or issuing a Facility Letter of Credit.
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4.3 Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Borrower and the Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 Inducement. To induce Lenders to enter into this Agreement and to make
the Loans and to induce the Issuer to issue Facility Letters of Credit, Borrower
makes the representations and warranties set forth in Sections 5.2 through 5.21
of this Agreement, which representations and warranties shall survive the
execution and delivery of this Agreement and the Loan Documents and the making
of the Loans and the issuance of the Facility Letters of Credit, until such time
as Borrower has indefeasibly paid and performed all the Obligations owed to
Lenders, Issuer and the Agent. For purposes of this Agreement, the "best
knowledge" of Borrower shall mean the knowledge which a reasonable, prudent,
experienced individual in similar business circumstances would have after a
diligent inquiry into the subject matter at issue.
5.2 Status. Borrower: (i) is a duly organized and validly existing
corporation in good standing under the laws of the State of Delaware; (ii) has
the power and authority to own its property and assets and to transact the
business in which it is engaged or presently proposes to engage; and (iii) has
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in every jurisdiction of every Governmental Authority in
which it owns or leases real property or in which the nature
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of its business requires it to be so qualified, including but not limited to the
State of Illinois unless the failure to be so qualified could not have a
Material Adverse Effect. Each Material Subsidiary: (i) is a corporation or
similar limited liability entity duly organized or created and validly existing
under the laws of its jurisdiction of incorporation or creation; (ii) has the
power and authority to own its property and assets and to transact the business
in which it is engaged or presently purposes to engage and (iii) has duly
qualified and/or is authorized to do business and, to the extent applicable, is
in good standing, as a foreign corporation or otherwise, in every jurisdiction
of every Governmental Authority in which it owns or leases real property or in
which the nature of its business requires it to be so qualified or authorized
unless the failure to be so qualified or authorized would not have a Material
Adverse Effect. Borrower and each Material Subsidiary have paid and will
continue to pay all taxes, Charges, levies and other fees associated with such
qualifications or authorizations to the extent failure to pay would have a
Material Adverse Effect, and shall maintain the same in full force and effect.
5.3 Power and Authority. Borrower has full power and authority to execute,
deliver and perform the terms and provisions of each of the Loan Documents and
the Notes. Borrower has taken all necessary and proper corporate or other action
to authorize its execution, delivery and performance of and under such Loan
Documents. Borrower duly has executed and delivered each such Loan Document, and
each such Loan Document constitutes Borrower's legal, valid and binding
obligations, enforceable against it in accordance with said Loan Documents'
terms, except as bankruptcy, insolvency, similar laws which affect creditors'
rights generally or general equity principles may limit such enforceability.
5.4 Securities Matters. Borrower did not issue any of its Stock or other
securities of any type or nature in violation of any securities or similar laws
of any Governmental Authority, nor, to Borrower's best knowledge, did any of its
Subsidiaries issue any of its Stock or securities of any type or nature in
violation of any securities or similar laws of any Governmental Authority.
5.5 No Violation. Neither Borrower's execution, delivery or performance of,
nor compliance with the terms and provisions of the Loan Documents nor the
consummation by the Borrower of the transactions contemplated by the Loan
Documents, either currently or with the passage of time or granting of notice,
will: (i) contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or Governmental
Authority; (ii) conflict or be inconsistent with or result in any breach of, any
terms, covenants, conditions or provisions of, constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any property or assets of Borrower or any Material Subsidiary,
pursuant to the terms of any indenture, mortgage, deed of trust, agreement,
bond, note, insurance policy, license or other instrument to which Borrower or
any Material Subsidiary is a party or by which Borrower or any Material
Subsidiary or any property or assets of Borrower or any Material Subsidiary are
bound or to which
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Borrower or any Material Subsidiary may be subject; or (iii) will contravene,
constitute a violation of constitute a default under or in any manner conflict
with the Articles of Incorporation, bylaws or other organizational documents of
Borrower or any Material Subsidiary.
5.6 Litigation. Except as provided on Schedule 5.6, there are no actions,
claims, demand letters, investigations, suits or proceedings pending or, to
Borrower's best knowledge, threatened against or affecting Borrower or any of
its Subsidiaries: (i) with respect to any of the transactions contemplated by
the Agreement or any of the Loan Documents or (ii) which could, individually or
in the aggregate, have a Material Adverse Effect. There are no actions, suits or
proceedings pending or to Borrower's best knowledge threatened against or
affecting Borrower or any Subsidiary or any of their assets or properties
regarding any Environmental Claims, Environmental Laws or Materials of
Environmental Concern.
5.7 Margin Regulations. Borrower has not used all or any portion of any
proceeds of the Loans to purchase or carry any Margin Stock (as defined in
Regulation U) or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. Neither the making of the Loans, nor the issuance of
the Facility Letters of Credit nor the use of the proceeds from the Loans will
violate or be inconsistent with the provisions of Regulations G, T, U or X of
the Federal Reserve Board.
5.8 Approvals. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
Person (whether or not such Person is a Governmental Authority) is required to
authorize, or is otherwise required in connection with: (i) Borrower's
execution, delivery and performance of any Loan Documents or the consummation by
the Borrower of any of the transactions contemplated by the Loan Documents; or
(ii) the legality, validity, binding effect or enforceability of any Loan
Document except those which Borrower duly made or obtained, and which remain in
full force and effect, as identified on Schedule 5.8 to this Agreement. All
consents and approvals of, and filings and registrations with, and all other
actions by, any Person (whether or not such Person is a Governmental Authority)
required in order for the Borrower to make or consummate all transactions
contemplated by the Loan Documents have been obtained, given, filed or taken and
are or will be in full force and effect.
5.9 Investment Company Act. Borrower is not: (i) an "investment company" or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended; or (ii) subject to any other federal
or state law or regulation which purports to restrict or regulate its ability to
borrow money.
5.10 True and Complete Disclosure. All factual information furnished by or
on behalf of Borrower or any Material Subsidiary to Agent and the Lenders on or
prior to the Effective Date, for purposes of or in connection with this
Agreement, the Loans, the Loan Documents and/or the transactions contemplated by
the Loan Documents is, and
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all other such factual information subsequently furnished by or on behalf of
Borrower or any of its Material Subsidiaries to Agent and the Lenders will be,
true, complete and accurate in all material respects on the date as of which
such information is dated and/or furnished, and not incomplete by omitting to
state any material fact necessary to make such information not misleading at
such time. The preceding includes any information, representations or warranties
of or provided by or on behalf of Borrower or any of its Material Subsidiaries
in any schedule or exhibit to any Loan Documents, as well as contained in the
corpus of such Loan Documents, or provided separately in conjunction with such
Loan Documents. The copies of all documents or instruments Borrower and its
Material Subsidiaries have provided to Agent and the Lenders in conjunction with
the Loan Documents and the transactions contemplated by the Agreement are
complete, accurate copies of the items they purport to be.
5.11 No Default. Neither Borrower nor any Material Subsidiary is in default
under or with respect to any Loan Document or with respect to a material term of
any other material agreement, instrument or undertaking to which Borrower or any
Material Subsidiary is a party or by which Borrower, any Material Subsidiary or
any property of Borrower and its Material Subsidiaries is bound. No Default or
Unmatured Default exists before or after giving effect to any or all of the
transactions contemplated by the Loan Documents.
5.12 Licenses and Permits. Borrower and its Material Subsidiaries have
obtained and hold in full force and effect, all franchises, licenses, permits,
certificates, registrations, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals (collectively
the "Permits") which are necessary for the operation of their business as
conducted prior to and will be conducted following the Effective Date, the
absence of which could have a Material Adverse Effect. Borrower and its Material
Subsidiaries have fulfilled and performed all of their material obligations
under each such Permit. No event has occurred or condition or state of facts
exists which constitutes, or after notice or lapse of time or both, would
constitute, a material breach or default under any such Permit, or would cause
the revocation or termination of any such Permit and such default and/or
revocation would have a Material Adverse Effect. Neither Borrower or any
Material Subsidiary has received notice of cancellation, of default or of any
material dispute concerning any such Permit. Each such Permit is valid,
subsisting and in full force and effect and to Borrower's best knowledge will
continue in full force and effect until after the Facility Termination Date.
Borrower and its Material Subsidiaries shall renew all such Permits which expire
while the Loans or any of the Obligations are outstanding, to the extent failure
to do so could have a Material Adverse Effect.
5.13 Compliance with Laws.
5.13.1 General. To Borrower's best knowledge, Borrower and each of its
Material Subsidiaries, are in compliance with all laws, rules, member
association rules, injunctions, ordinances, franchises and regulations
(including, without limitation,
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all Environmental Laws), and all orders, judgments, writs and decrees of any
Governmental Authority applicable to any of them or any of their assets both
prior to closing and giving effect to the closing of the Loan Documents where
failure to so comply would have a Material Adverse Effect. To Borrower's best
knowledge, there have been no legislative or regulatory proposals adopted or
pending which could have a Material Adverse Effect on Borrower's or its Material
Subsidiaries or businesses.
5.13.2 Export Assurance. Irrespective of any disclosure Borrower or any
Subsidiary may make to Agent or the Lenders of any ultimate destination for any
software products licensed, sold or distributed by Borrower or any Subsidiary,
Borrower and its Subsidiaries shall not export or re-export, directly or
indirectly, any software products or any technical data derived therefrom,
without first obtaining all necessary approvals or required export licenses to
do so from the United States Department of Commerce or any agency of the United
States Government or of any Other Nation or Governmental Authority having
jurisdiction over such transaction, if required by an applicable statute,
regulation, order, judgment or decree. Borrower represents, warrants and
covenants to Agent and the Lenders that Borrower and its Subsidiaries do not
intend to and shall not, without the prior written consent (if required) of the
"Office of Export Administration of the U.S. Department of Commerce",
Washington, D.C. 20230, transmit or ship any software products or modifications
thereto or products thereof, directly or indirectly to the Peoples Republic of
China or to any group Q, S, V, Y or Z country specified in Section 770 of the
Export Administration Regulations or any Supplements thereto issued by the U.S.
Department of Commerce, as amended, supplemented or replaced from time to time.
5.14 No Threatened Insolvency. Any Advance or Facility Letter of Credit
requested by Borrower or extended by Lenders or Issuer to or on behalf of
Borrower under this Agreement does not currently and to Borrower's best
knowledge will not in the future render Borrower insolvent. Neither Borrower nor
any of Borrower's Material Subsidiaries are contemplating either the filing of a
petition under the Bankruptcy Code, or any other or similar law of any
Governmental Authority involving insolvency, or liquidation of all or a major
portion of their property. No Person has filed or to Borrower's best knowledge
is contemplating filing any petition under any such law against Borrower or its
Material Subsidiaries. Borrower and, to Borrower's best knowledge each of its
Material Subsidiaries, are now and at all times hereafter until and including
the date upon which all Obligations are indefeasibly repaid in full to Agent,
Issuer and the Lenders, solvent and generally paying their debts as they mature.
Borrower has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage. Borrower now owns
and shall at all times during the term of this Agreement own property which, at
a fair valuation, is greater than the sum of its debts.
5.15 Tax Returns. To the best of its knowledge, Borrower itself has filed
and, each of its Material Subsidiaries has filed, on a timely basis all federal,
state, county and local income, excise, withholding, value added, property,
sales, use, franchise or
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other tax returns, declarations or reports which any state, local, municipal, or
federal authority of any Governmental Authority required Borrower or its
Material Subsidiaries to file on or before the Effective Date. All such tax
returns, declarations and reports of Borrower, and to Borrower's best knowledge
its Material Subsidiaries, were true and correct, and accurately reflected all
taxable income and tax liabilities of Borrower and, to Borrower's best knowledge
its Material Subsidiaries, for all periods such reports covered. Borrower and to
Borrower's best knowledge its Material Subsidiaries have paid all taxes,
interest and penalties, (if any), which became due pursuant to such returns or
pursuant to any assessment which has become payable, except where payment is
being contested in good faith and adequate reserves have been provided on the
Borrower's or such Material Subsidiary's books and records.
5.16 Financial Statements. Borrower has provided Agent and the Lenders
with unaudited financial statements prepared by Borrower's management, which
cover the six (6) month period ended June 30, 1997 (the "Unaudited Financials").
The Unaudited Financials and all other financial information, statements,
warranties, projections, balance sheets, cash flow statements and reports which
Borrower provides to Agent and the Lenders shall be referred to collectively in
this Agreement as the "Financial Statements". The Financial Statements which
Borrower has delivered or will deliver to Agent and the Lenders in the future
will fully and fairly present the financial condition of Borrower and its
Subsidiaries, and the results of their business operations for the respective
periods indicated in such Financial Statements. The Financial Statements were
prepared in conformity with GAAP and are on a consolidated basis with all of
Borrower's Subsidiaries.
5.17 Undisclosed Liabilities. The most recent ending date of the
Unaudited Financials shall be referred to in this Agreement as the "Balance
Sheet Date". Borrower and its Material Subsidiaries have no debts or liabilities
of any type or nature, whether accrued, absolute or contingent, determined or
undetermined, whether due or to become due (including without limitation
unasserted claims whether known or unknown, liabilities for taxes of any type,
penalties, fees or interest) other than those reflected in the Unaudited
Financials dated as of the Balance Sheet Date and those liabilities incurred in
the ordinary course of business since the Balance Sheet Date. Neither Borrower
nor any Material Subsidiary have incurred any liability or debt which has or to
Borrower's best knowledge will have a Material Adverse Effect. Except as
identified on attached and incorporated Schedule 5.17, since the Balance Sheet
Date, neither Borrower nor its Material Subsidiaries have experienced any
Material Adverse Effect, and have not incurred any material or unusual forward
or long-term commitments. No fact or condition exists, is contemplated or is to
Borrower's best knowledge threatened which might reasonably be expected to cause
any such material adverse change in the future.
5.18 COBRA. Except as would not be material: (i) Borrower and each
Material Subsidiary to which COBRA (as hereinafter defined) is applicable, has
provided each of their former employees with the right to continue his or her
respective insurance
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program with Borrower or applicable Material Subsidiary, in compliance with all
relevant provisions of the Code, as modified by the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), including all amendments to COBRA as
contained in the Tax Reform Act of 1986, or any subsequent legislation, (ii)
there are no commitments, whether contractual in nature or based upon any
representation, warranty or other undertaking of Borrower or such Material
Subsidiary, which would preclude Borrower or such Material Subsidiary from
increasing the cost charged to individuals for participating in any continuing
medical benefit coverage, or (iii) except for COBRA or as may be required under
any state continuation coverage laws, Borrower and such Material Subsidiaries
have not established any employee benefit plan which constitutes a "welfare
benefit plan" within the meaning of Section 3(l) of ERISA, providing for
continuing benefits or coverage for any participant or beneficiary of a
participant after such participant's termination of employment with Borrower or
such Material Subsidiary.
5.19 Intellectual Property. Borrower directly or indirectly owns, is
licensed or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefore, computer software products, and tangible or intangible property
information or material (excluding packaged commercially available software
programs generally available to the public which have been licensed to Borrower
or a Subsidiary pursuant to end-user licenses) ("Intellectual Property") that
are material to the business of Borrower and its Subsidiaries as currently
conducted by them. Except as provided on Schedule 5.19, there is no claim
pending or, to Borrower's best knowledge, threatened, against Borrower or a
Subsidiary with respect to any alleged infringement of any trademark, service
mark, trade name, copyright, patent or trade secret owned by another person that
could reasonably be expected to have a Material Adverse Effect. Except as
provided on Schedule 5.19, there is no claim or action pending or to Borrower's
best knowledge threatened concerning any Intellectual Property.
5.20 ERISA. As of the Effective Date, all Plans satisfy all minimum
funding standards of Section 302 of ERISA and Section 412 of the Code and no
material Reportable Event or material Termination Event exists concerning any
such Plan of Borrower or any member of Borrower's ERISA Controlled Group.
Neither Borrower nor any member of Borrower's ERISA Controlled Group has
incurred, or expects to incur, any withdrawal liability under Section 4201 of
ERISA to any Multiemployer Plan.
5.21 Subsidiaries. Schedule 5.21 hereto contains an accurate list of all
Subsidiaries of the Borrower as of the Effective Date, setting forth their
respective jurisdictions of incorporation and the percentage of their respective
capital stock owned by the Borrower or the other Subsidiaries. All of the
issued and outstanding shares of capital stock of such Subsidiaries have been
duly authorized and issued and are fully paid and non-assessable, to the extent
these terms have local meanings substantially the same as their meanings under
the law chosen by the parties as governing this Agreement.
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ARTICLE VI
AFFIRMATIVE COVENANTS
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6.1 Duration of Affirmative Covenants. Borrower covenants and agrees that
on and after the Effective Date, and until Borrower indefeasibly has paid and/or
performed in full all the Obligations owed to the Agent, the Issuer and Lenders,
and Lenders and the Issuer no longer have any obligation to make Advances or
issue Facility Letters of Credit under this Agreement, and there are no
outstanding Advances or Facility Letters of Credit issued under this Agreement,
Borrower shall comply with the affirmative covenants set forth in Sections 6.2
through 6.11 below.
6.2 Financial Covenants.
6.2.1 Quick Ratio. The Borrower will at all times maintain a Quick
Ratio of at least 1.0 to 1.0.
6.2.2 Tangible Net Worth. The Borrower will at all times maintain a
Tangible Net Worth of not less than $100,000,000.
6.2.3 Total Liabilities to Tangible Net Worth. The Borrower will not
permit the ratio of (a) Total Liabilities to (b) Tangible Net Worth to at any
time exceed 1.0 to 1.0.
6.3 Information Covenants.
6.3.1 General Obligation to Provide Notice. Borrower will furnish to
the Agent and the Lenders written notice of each of the events and within the
time periods, referenced in Sections 6.3.2 through 6.3.7 below.
6.3.2 Notice of Default, Liens or Litigation. Promptly, and in any
event within five (5) Business Days after Borrower obtains knowledge of each of
the following, Borrower shall provide written notice of the same to the Agent
and the Lenders: (i) the occurrence of any Default or Unmatured Default, (ii)
any material Lien on, or any claim or charge asserted against any assets of
Borrower or a Material Subsidiary which, if reduced to judgment with respect to
such assets, would have a Material Adverse Effect on the business of Borrower or
such Material Subsidiary; (iii) any litigation or governmental proceeding
pending or threatened against Borrower or any Material Subsidiary which could,
if adversely determined, have a Material Adverse Effect on Borrower or such
Material Subsidiary; or (iv) any other event, act or condition which could have
a Material Adverse Effect on Borrower or a Material Subsidiary.
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6.3.3 ERISA Notices. Borrower shall provide written notice of each
of the following ERISA matters to Agent and the Lenders within the time periods
provided:
(i) as soon as possible, and in any event within ten (10) days after
Borrower or any member of its Controlled Group knows that:
(A) any material Termination Event with respect to a Plan has
occurred or will occur,
(B) any condition exists with respect to a Plan which presents a
material risk of termination of the Plan or imposition of a
material excise tax or other material liability on Borrower
or any member of its Controlled Group,
(C) Borrower or any member of its Controlled Group applies for a
waiver of the minimum funding standard under Section 412 of
the Code or Section 302 of ERISA,
(D) Borrower or any member of its Controlled Group has engaged
in a "prohibited transaction," as defined in Section 4975 of
the Code or as described in Section 406 of ERISA, that is
not exempt under Section 4975 of the Code and Section 408 of
ERISA, which will result in a material liability to Borrower
or any member of its ERISA Controlled Group,
(E) the aggregate present value of the Unfunded Liabilities
under all Borrower's Plans is in excess of ten million
dollars ($10,000,000),
(F) any condition exists with respect to a Multiemployer Plan
which presents a material risk of a partial or complete
withdrawal (as described in Section 4203 or 4205 of ERISA)
by Borrower or any member of its Controlled Group from a
Multiemployer Plan and which will result in a material
liability to Borrower or any member of its controlled Group,
(G) Borrower or any member of its Controlled Group is in
"default" (as defined in Section 4219(c) (5) of ERISA) with
respect to payments to a Multiemployer Plan, and such
default will result in liability to Borrower or a Subsidiary
in excess of $10,000,000,
(H) a Multiemployer Plan is in "reorganization" (as defined in
Section 418 of the Code or Section 4241 of ERISA) or is
"insolvent" (as defined in Section 4245 of ERISA),
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(I) to the best knowledge of Borrower, the potential withdrawal
liability (as determined in accordance with Title IV of
ERISA) of Borrower and the members of its Controlled Group
with respect to all Multiemployer Plans is in excess of ten
million dollars ($10,000,000)
(J) there is an action brought against Borrower or any member of
its ERISA Controlled Group under Section 502 of ERISA with
respect to a failure to comply with Section 515 of ERISA;
and as soon as possible, and in any event within five (5)
Business Days after the receipt by Borrower or any member of
its Controlled Group of a demand letter from the PBGC
notifying Borrower or such member of its Controlled Group of
the PBGC's final decision finding liability and the date by
which such liability must be paid, Borrower shall provide
Lender with a copy of such letter, together with a
certificate of the chief financial officer of Borrower
setting forth the action which Borrower or such member of
its ERISA Controlled Group proposes to take with respect to
such matter.
(ii) In the case of a notice required under Sections 6.3.3(i)(A)
through 6.3.3(i)(J) of this Agreement, Borrower shall deliver to
the Agent and the Lenders, a certificate of an Authorized
Officer, setting forth the details of each of the events
described in clauses 6.3.3(i)(A) through 6.3.3(i)(J) above, as
applicable, and the action which Borrower or the applicable
member of its Controlled Group proposes to take with respect to
such matter, together with a copy of any notice or filing from
the PBGC or which may be required by the PBGC or other agency of
the United States government with respect to each of the events
described in clauses 6.3.3(i)(A) through 6.3.3(i)(J) above, as
applicable.
6.3.4 Environmental Notices. Promptly, and in any event within five
(5) Business Days after the existence of any of the following conditions,
Borrower shall provide Agent and the Lenders with a certificate of an Authorized
Officer specifying in detail the nature of such condition and Borrower's or its
Environmental Affiliate's proposed response to any of the following: (i) the
receipt by Borrower or any of its Environmental Affiliates of any communication
(written or oral), whether from a Governmental Authority, citizens group,
employee or otherwise, that alleges that Borrower or such Environmental
Affiliate is not in compliance with any Environmental Laws if such allegation
could potentially, in the aggregate, involve Borrower or a Material Subsidiary
incurring liability of $10,000,000 or more; (ii) Borrower or any of its
Environmental Affiliates obtains actual knowledge that there exists any
Environmental
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Claim pending or threatened against Borrower or such Environmental Affiliate if
such Claim could potentially, in the aggregate, involve Borrower or a Material
Subsidiary incurring liability of $10,000,000 or more; (iii) any release,
emission, discharge or disposal of any Material of Environmental Concern that
could form the basis of any Environmental Claim against Borrower or any of its
Environmental Affiliates if such release, emission, discharge or disposal could
potentially, in the aggregate, involve Borrower or a Material Subsidiary
incurring liability of $10,000,000 or more. Borrower and each Material
Subsidiary shall comply fully with and assist any associated environmental
investigation and/or clean-up, and promptly complete any required remedial
actions.
6.3.5 Financial Reporting. The Borrower shall:
(A) As soon as available, but not later than 105 days after the
end of each fiscal year (commencing with the fiscal year
ending December 31, 1997), provide to Agent, with sufficient
copies for each Lender, a copy of the audited consolidated
balance sheet as of the end of such year and the
consolidated statements of income (from) operations,
shareholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by an unqualified
opinion of a nationally recognized independent accounting
firm ("Independent Auditor") which report shall state that
such consolidated financial statements present fairly the
financial position for the periods indicated in conformity
with GAAP and by any management letter prepared by said
Independent Auditor. Such opinion shall not be qualified or
limited because of a restricted or limited examination by
the Independent Auditor of any material portion of the
Borrower's or any Subsidiary's records;
(B) As soon as available, but not later than 60 days after the
end of each of the first three fiscal quarters of each
fiscal year (commencing with the fiscal quarter ended
September 30, 1997), provide to the Agent with sufficient
copies for each Lender, a copy of the Borrower's 10-Q
financial statements filed with the Securities and Exchange
Commission, and certified by its chief financial officer as
fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the
financial position and the results of operations of the
Borrower and its Subsidiaries.
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(C) Together with the financial statements required under
Sections 6.3.5(A) and (B), a compliance certificate in
substantially the form of "Exhibit "C" hereto signed by an
Authorized Officer showing the calculations necessary to
determine compliance with this Agreement, listing all
Material Subsidiaries as of such date and stating that no
Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status
thereof.
(D) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled
under ERISA, to the extent such is required by ERISA or the
regulations promulgated thereunder.
(E) Such information (financial or otherwise) regarding each
Guarantor as the Agent may from time to time reasonably
request.
(F) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports
and proxy statements so furnished.
(G) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files
with the Securities and Exchange Commission.
(H) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably
request.
6.3.6 Other Defaults. Immediately upon the occurrence of any of the
following events, Borrower shall provide Agent and the Lenders with written
notice, in reasonable detail and with such supporting documentation as is
necessary for Agent and the Lenders to evaluate accurately the same: any default
by Borrower or a Material Subsidiary under any evidence of Indebtedness,
indenture, mortgage, note, security interest or other material obligation of
Borrower or a Material Subsidiary, or any other matter which has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect.
6.3.7 Other Information. From time to time, Borrower shall provide
Lenders with such other information or documents (financial or otherwise) as
Agent reasonably may request, within five (5) Business Days of Agent's request
for the same.
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6.4 Books, Records and Inspections. Borrower shall keep, for itself and
its Subsidiaries, proper books of record and account, in which Borrower shall,
and shall cause each Subsidiary to, make full, true and correct entries, in
conformity with GAAP and all requirements of law, of all dealings and
transactions in relation to its business, and its activities including but not
limited to dealings or transactions between or among Borrower and its
Subsidiaries. Borrower shall, and shall cause each Subsidiary to, permit
officers and designated representatives of the Agent and the Lenders (including,
without limitation, internal or external auditors of the Agent or any Lender) to
visit and inspect any of the properties of Borrower or its Subsidiaries and to
examine the books of record and account of Borrower or its Subsidiaries, to
review and/or audit the books and records of Borrower or its Subsidiaries, to
review the work papers of Borrower's independent certified public accountants,
make copies or abstracts of any of the preceding, and to discuss the affairs,
finances and accounts of Borrower or its Subsidiaries with, and be advised as to
the same by, the officers and independent accountants of Borrower and its
Subsidiaries, all upon reasonable notice and at such reasonable times as the
Agent or the Lenders may desire, provided that, so long as no Default or
Unmatured Default has occurred, each Lender and the Agent may conduct such
inspections no more than once in any calendar year at such Agent's or Lender's
own cost. However, following the occurrence of a Default or Unmatured Default,
the Agent and the Lenders may take any actions authorized under this Section as
often as they desire, at Borrower's sole cost. By this provision, Borrower
irrevocably authorizes all its and its Subsidiaries' officers and accountants to
discuss said finances and affairs with the Agent and the Lenders.
6.5 Maintenance of Insurance. Borrower, shall, and shall cause each
Material Subsidiary to, at their own cost and expense, maintain with financially
sound and reputable insurance companies, insurance in at least such amounts and
against at least such risks as are customarily insured against by companies
engaged in the same or a similar businesses (including but not limited to
product liability insurance), which insurance shall in any event not provide for
less coverage or fewer risks than the insurance in effect on the Effective Date.
All such insurance shall be in such form, for such period, and written by an
insurance company with a Best's Rating of "A" or better. Upon any Lender's
request, Borrower shall deliver promptly to Agent and the Lenders evidence of
Borrower's or a Subsidiary's payment of all premiums for any insurance
identified in this Section, as well as copies of the applicable policies and
certificates. Lenders' acceptance of a policy in lesser amounts or risks does
not constitute and shall not constitute a waiver of the foregoing obligations.
Borrower shall notify the Agent and the Lenders immediately of any event or
occurrence causing a material loss or decline in value of Borrower's or a
Material Subsidiary's assets and the estimated (or actual if available) amount
of such loss or decline, and whether or not the same will be covered by
insurance.
6.6 Taxes. Borrower shall, and shall cause each Material Subsidiary to,
pay or cause to be paid when due, all taxes, Charges and assessments and all
other lawful
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claims which Borrower or its Material Subsidiaries are required to pay by any
Governmental Authority, except Borrower or a Material Subsidiary may contest in
good faith and by appropriate proceedings diligently conducted, so long as
Borrower or the applicable Material Subsidiary has established adequate reserves
with respect to such contest, in accordance with GAAP.
6.7 Franchises and Intellectual Property. Borrower shall, and shall cause
each Subsidiary to, do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and to the extent
applicable, its status in good standing as a foreign corporation, and all
respective patents, trademarks, service marks, trade names, copyrights,
franchises, licenses, other Intellectual Property, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights,
consents and approvals necessary in the conduct of its business except where
failure to so maintain or preserve would not have a Material Adverse Effect.
6.8 Compliance with Law. Borrower shall comply and shall cause all its
Material Subsidiaries to comply in all material respects with all applicable
laws, rules, statutes, regulations, decrees and orders of, and all applicable
restrictions imposed by, all Governmental Authorities, in respect of the conduct
of their businesses and the ownership of their properties, including, without
limitation, all Environmental Laws, ERISA laws, COBRA and the Fair Labor
Standards Act, as amended, except where failure to so comply would not have a
Material Adverse Effect.
6.9 Performance of Obligations. Borrower shall perform and shall cause
each of its Material Subsidiaries to perform all of their obligations under the
terms of each, mortgage, indenture, security agreement, debt instrument, lease,
undertaking and contract by which it or any of its properties or any of its
Material Subsidiaries are bound or to which it is a party, including but not
limited to each of the Loan Documents, except with respect to immaterial
obligations under documents other than the Loan Documents.
6.10 Maintenance of Properties. The Borrower will, and will cause each
Material Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its Property in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times except
where failure to so maintain would not have a Material Adverse Effect.
6.11 Additional Guarantors. From time to time after the date of this
Agreement, the Borrower shall cause each Material Subsidiary which is not then a
Guarantor which is, or becomes, a Material Subsidiary, to execute and deliver to
the Agent for the ratable benefit of the Lenders, a guaranty in substantially
the form of Exhibit "F" hereto, along with appropriate resolutions and opinions
of counsel, if requested by the Agent.
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ARTICLE 7
NEGATIVE COVENANTS
------------------
7.1 Duration of Negative Covenants. Borrower covenants and agrees that on
and after the Effective Date and until Borrower indefeasibly has paid and/or
performed in full all the Obligations owed to the Agent, the Issuer and the
Lenders and the Agent, the Issuer and the Lenders no longer have any obligation
to make Advances or issue Facility Letter of Credit under this Agreement, and no
Advances or Facility Letter of Credit issued under this Agreement are still
outstanding, Borrower shall comply with the negative covenants set forth in
Sections 7.2 through 7.14 below.
7.2 Indebtedness and Contingent Obligations. Without the prior written
consent of the Required Lenders, Borrower shall not, nor shall it permit any
Material Subsidiary to, create, incur, assume, suffer to exist or otherwise
become or remain directly or indirectly liable (including without limitation,
liability incurred as a general partner or joint venturer) with respect to any
Indebtedness or Contingent Obligations, other than: (i) Indebtedness under this
Agreement and under the other Loan Documents; (ii) Indebtedness outstanding on
the Effective Date and specifically disclosed on Schedule 7.2; (iii) Capitalized
Lease Obligations which, in the aggregate, have a net present value (as
determined in accordance with GAAP) of all future lease payment obligations that
is less than $10,000,000; (iv) other Contingent Obligations with respect to
obligations (other than Indebtedness) of Borrower's Material Subsidiaries,
provided that the amount of such Contingent Obligations, individually or in the
aggregate, does not exceed $10,000,000; (v) other Indebtedness and Contingent
Obligations the principal amount of which, individually or in the aggregate,
does not exceed $10,000,000; (vi) Subordinated Indebtedness which is unsecured
and other Indebtedness which is unsecured and which Borrower owes to Persons who
execute and deliver to Agent (in form and substance acceptable to the Agent and
the Required Lenders) subordination agreements subordinating their claims
against Borrower to the payment of the Obligations, (vii) indebtedness of any
Receivables Subsidiary to the Borrower or any other Seller under any Purchase
Money Notes in connection with Qualified Receivables transactions permitted
under clause (iv) of Section 7.5; and (viii) Receivables Program Obligations
described under clause (a) of the definition of such term of Special Purpose
Vehicles, and Receivables Program Obligations described under clause (b) of the
definition of such term of the Borrower and the Consolidated Entities, provided
in each case such Receivables Program Obligations relate solely to Qualified
Receivables Transactions permitted under clause (iv) of Section 7.5.
7.3 Liens. Without the prior, written consent of the Required Lenders,
Borrower shall not, nor shall it permit any Material Subsidiary to, create,
incur, assume or suffer to exist, directly or indirectly, any Lien on any of its
property now owned or subsequently acquired, other than: (i) Liens existing on
the Effective Date and specifically disclosed in Schedule 7.2 hereto; (ii) Liens
for taxes not yet due or which
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are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are being maintained in
accordance with GAAP; (iii) Liens (other than any Lien imposed by ERISA or
pursuant to any Environmental Law) incurred or deposits made in the ordinary
course of business in connection with workers compensation, unemployment
insurance and other types of social security; (iv) Liens imposed by law, such as
carriers', warehousemen's and mechanics' liens and other similar liens arising
in the ordinary course of business which secure payment of obligations not more
than 60 days past due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on its
books; (v) Utility easements, building restrictions and such other encumbrances
or charges against real property as are of a nature generally existing with
respect to properties of a similar character and which do not in any material
way affect the marketability of the same or interfere with the use thereof in
the business of the Borrower or the Material Subsidiaries, (vi) Liens incurred
in connection with the sale of receivables pursuant to Section 7.5(iii) provided
such Lien applies only to the receivables being sold; and (v) the customary
interests of any Receivables Subsidiaries, Special Purpose Vehicles and related
collateral agents and trustees in Receivables Program Assets under Qualified
Receivables Transactions permitted under clause (iv) of Section 7.5.
7.4 Restrictions on Fundamental Changes. Without the prior written consent
of the Required Lenders, Borrower shall not, nor shall it permit any Material
Subsidiary to, directly, indirectly, voluntarily or involuntarily: (i) enter
into any merger, consolidation, reorganization or other combination unless
Borrower (in the case of a merger, consolidation, reorganization, or other
combination involving the Borrower) is the survivor thereof or, in the case of a
merger, consolidation, reorganization, or other combination involving a Material
Subsidiary, the surviving entity is wholly-owned by the Borrower and any
guaranty required by Section 6.11 has been executed and delivered to the Agent,
(ii) liquidate, wind-up or dissolve (or suffer any termination, liquidation or
dissolution); (iii) discontinue or materially change its business; (iv) convey,
lease, sell, transfer, assign or otherwise dispose of all or any part of its
business or property, whether now existing or subsequently acquired, except as
otherwise permitted under Section 7.5 or Section 7.15 below; or (iv) create or
divest of any Material Subsidiary or any significant interest in any Material
Subsidiary, if the same could have a Material Adverse Effect. Neither Borrower
nor any Material Subsidiary shall amend its articles of incorporation,
organizational documents, by-laws or operating agreements (as the case may be),
nor make any name change, from that existing on the Effective Date, to the
extent that it has a Material Adverse Effect. Nothing in this Section 7.4 shall
prohibit the creation by the Borrower and its Material Subsidiaries of
Receivables Subsidiaries or the creation by Receivables Subsidiaries of Special
Purpose Vehicles, in each case solely in connection with Qualified Receivables
Transactions permitted under clause (iv) of Section 7.5.
7.5 Sale of Assets. Without the prior written consent of the Required
Lenders, Borrower shall not, nor shall it permit any Material Subsidiary to,
directly or indirectly
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assign, pledge, hypothecate, encumber, grant a security interest in, convey,
lease, sell, transfer or otherwise dispose of (or agree to do so at any future
time), by sale, merger, consolidation, liquidation, dissolution or otherwise,
all or any Substantial Portion of its Property assets, except: (i) sales and/or
licenses of inventory in the ordinary course of business; (ii) sales of
equipment which are uneconomic, obsolete or no longer useful in its business;
(iii) sales of receivables for cash provided such sales are either (a) non-
recourse to the Borrower or any Subsidiary or (b) with recourse to the Borrower
or a Subsidiary provided the outstanding principal amount of such Receivables in
aggregate at any one time does not exceed $10,000,000; (iv) sales pursuant to a
Qualified Receivables Transaction and (v) transfers permitted pursuant to
Section 7.15.
7.6 Redemptions. Without the prior written consent of the Required
Lenders, Borrower shall not redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of its own shares of any class of Stock (or any
options or warrants issued with respect to its shares), or make any material
change in Borrower's capital structure or set aside any funds for any of the
foregoing purposes to the extent any of the foregoing could have a Material
Adverse Effect.
7.7 Advances, Investments and Loans. Without the prior written consent of
the Required Lenders, Borrower shall not, nor shall it permit any Material
Subsidiary to, make or suffer to exist any Investments, except that Borrower or
a Material Subsidiary shall be permitted: (i) to make advances to Wholly-Owned
Subsidiaries of Borrower so long as the same do not materially diminish, affect
or reduce the Agent and the Lenders' rights or ability to collect under this
Agreement; (ii) to establish and maintain accounts receivable and payable, if
created in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; (iii) to acquire and hold Cash and Cash
Equivalents; (iv) to make Acquisitions [or Investments in unrelated Persons],
whether by acquisition of Stock, other equity interests, acquisition of assets
or investments in partnerships and joint ventures unless such Acquisition or
Investment results in a violation of Section 7.4; (v) to provide temporary
working capital financing to acquisition targets of Borrower and advances to
third party software developers (against reasonably anticipated future royalties
or time and materials costs) provided that such financing and/or advances shall
not exceed individually or in the aggregate Five Million Dollars ($5,000,000)
outstanding at any time and shall not materially diminish, affect or reduce the
Agent's or the Lender's rights or ability to collect under this Agreement, (vi)
to create Receivables Subsidiaries and Receivables Subsidiaries shall be
permitted to create Special Purpose Vehicles, (vii) to incur Standard
Securitization Undertakings, in each case solely in connection with Qualified
Receivables Transactions, (viii) to make loans or advances to Receivables
Subsidiaries evidenced by Purchase Money Notes in connection with Qualified
Receivables Transactions permitted under clause (iv) of Section 7.5 and (iv)
Investments permitted pursuant to Section 7.15.
7.8 Transactions with Affiliates. Borrower shall not, nor shall it permit
any Subsidiary to, enter into any transaction with any Affiliate, officer,
director, stockholder,
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Subsidiary or employee of Borrower or a Material Subsidiary except in the
ordinary course of business and pursuant the reasonable requirements of
Borrower's or such Material Subsidiary's business, upon terms and conditions
which are fair and reasonable to Borrower or such Material Subsidiary and which
are not less favorable than obtainable at the time in a comparable arm's-length
transaction with a Person other than an Affiliate.
7.9 Plans. Borrower shall not, nor shall it permit any member of its
Controlled Group to, take any action which would cause the Plans to fail to
satisfy all minimum funding obligations under Section 412 of the Code.
7.10 Sales and Leasebacks. Borrower shall not, nor shall it permit any
Material Subsidiary to, become liable, directly or indirectly, with respect to
any lease, whether an operating lease or a Capitalized Lease, of any property
(whether real or personal or mixed) whether now owned or subsequently acquired:
(i) which Borrower or a Material Subsidiary directly or indirectly has sold or
transferred or is to sell or transfer to any other Person; or (ii) which
Borrower or a Material Subsidiary intends to use for substantially the same
purposes as any other property which has been or is to be sold or transferred by
Borrower or Material Subsidiary directly or indirectly to any other Person in
connection with such lease.
7.11 Material of Environmental Concern. Borrower and its Subsidiaries
shall not use in their businesses or operations, any products or by-products
which constitute, nor store or hold at any site or location at which they
conduct business or otherwise operate, any Hazardous Substances or Materials of
Environmental Concern unless Borrower or such Subsidiary strictly and fully
complies with all requirements of applicable Environmental Laws which require
the special handling, collection, storage, treatment, disposal or transportation
of such items. Borrower and its Subsidiaries shall not release and shall not
permit the release of any Materials of Environmental Concern on, from or near
any location at which Borrower or its Subsidiaries conduct their businesses or
operations, nor in any way violate any Environmental Laws.
7.12 Margin Stock. Borrower shall not use, directly or indirectly, all or
any portion of the proceeds from the Advances, to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock.
7.13 Subordinated Indebtedness. The Borrower will not make any amendment
or modification to the indenture, note or other agreement evidencing or
governing any Subordinated Indebtedness, or directly or indirectly voluntarily
prepay, defease or in substance defease, purchase, redeem, retire or otherwise
acquire, any Subordinated Indebtedness.
7.14 Dividends. The Borrower will not, nor will it permit any Material
Subsidiary to, declare or pay any dividends on its capital stock (other than
dividends payable in its
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own capital stock), except that any Material Subsidiary may declare and pay
dividends to any Wholly-Owned Subsidiary or the Borrower.
7.15 Corporate Reorganization. The Borrower may desire, during the term
of this Agreement, to transfer some or all of its operations (including the
related tangible assets) into another corporation ("New Company") which would
either be wholly owned by the Borrower or be commonly controlled by a Person who
wholly owns both the Borrower and the New Company. Prior to, or simultaneously
with, the transfer of the assets, the New Company would be added as a joint and
several co-Borrower under this Agreement or as a Guarantor. (All of the
foregoing herein called the "Reorganization"). While the final structure of the
New Company, the assets to be transferred to the New Company, whether the New
Company will be a Guarantor or co-Borrower and whether any additional changes to
this Agreement will be required by the Lenders in connection with the
consummation of the Reorganization are subject to the final written approval of
the Lenders at the time the Reorganization is effected, and nothing herein shall
be deemed a waiver or amendment by the Lenders of any provision of this
Agreement until such final approval is given, the Lenders and the Borrowers
agree to negotiate in good faith the terms and conditions under which the
Lenders will permit the Reorganization and the changes to this Agreement on
substantially the terms set forth above.
ARTICLE VIII
DEFAULTS
--------
The occurrence of any one or more of the following events shall constitute
a Default:
8.1 Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders, the Issuer or the Agent
under or in connection with this Agreement, any Loan or Facility Letter of
Credit, or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the date as of
which made.
8.2 Nonpayment of principal of any Note or any Facility Letter of Credit
when due, or nonpayment of interest upon any Note or of any commitment fee or
other fees and obligations under any of the Loan Documents within five (5) days
after the same becomes due.
8.3 The breach by the Borrower or any Subsidiary of any of the terms or
provisions of Articles 6 or 7 which is not remedied within fifteen (15) days
after written notice from the Agent or any Lender.
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8.4 The breach by the Borrower or any Subsidiary (other than a breach
which constitutes a Default under Section 8.1, 8.2 or 8.3) of any of the terms
or provisions of this Agreement which is not remedied within thirty (30) days
after written notice from the Agent or any Lender.
8.5 Failure of the Borrower or any of its Material Subsidiaries to pay
when due any Indebtedness aggregating in excess of $10,000,000 ("Material
Indebtedness"); or the default by the Borrower or any of its Material
Subsidiaries in the performance of any term, provision or condition contained in
any agreement under which any such Material Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect of which
is to cause, or to permit the holder or holders of such Material Indebtedness to
cause, such Material Indebtedness to become due prior to its stated maturity; or
any Material Indebtedness of the Borrower or any of its Material Subsidiaries
shall be declared to be due and payable or required to be prepaid or repurchased
(other than by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Material Subsidiaries shall not pay, or
admit in writing their inability to pay, their debts generally as they become
due provided, however, that it shall not constitute a default hereunder if the
Borrower or Material Subsidiary is contesting such default by appropriate
proceedings diligently conducted and the holder or holders have not commenced
suit or taken an action to foreclose on, or otherwise attach, any property of
the Borrower or such Material Subsidiary.
8.6 The Borrower or any of its Material Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws or
other similar law of any Governmental Authority as now or hereafter in effect,
(ii) make an assignment for the benefit of creditors, (iii) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any Substantial Portion of
its Property, (iv) institute any proceeding seeking an order for relief under
the Federal bankruptcy laws or other similar law of any Governmental Authority
as now or hereafter in effect or seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 8.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section 8.7.
8.7 Without the application, approval or consent of the Borrower or any of
its Material Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Material Subsidiaries
or any Substantial Portion of its or their Property, or a proceeding described
in Section 8.6(iv) shall be instituted against the Borrower or any of its
Material Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 consecutive
days.
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8.8 Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of (each a "Condemnation"),
all or any portion of the Property of the Borrower and its Subsidiaries which,
when taken together with all other Property of the Borrower and its Subsidiaries
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
constitutes a Substantial Portion.
8.9 The Borrower or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $10,000,000 which is not stayed on appeal or otherwise being
appropriately contested in good faith.
8.10 The Unfunded Liabilities of all Single Employer Plans shall exceed in
the aggregate $10,000,000 or any Reportable Event shall occur in connection with
any Plan.
8.11 The Borrower or any of its Subsidiaries shall be the subject of any
proceeding or investigation pertaining to the release by the Borrower or any of
its Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
8.12 Any Guaranty shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty, or any Guarantor shall fail to comply with any
of the terms or provisions of any Guaranty to which it is a party, or any
Guarantor denies that it has any further liability under any Guaranty to which
it is a party, or gives notice to such effect.
8.13 Any event or condition shall occur or exist with respect to the
Borrower or any Subsidiary which the Required Lenders determine in good faith
will have a Material Adverse Effect.
8.14 Any Governmental Authority revokes or fails to renew any material
license, permit or franchise of the Borrower or any Material Subsidiary or the
Borrower or any Material Subsidiary for any reason loses any material license,
permit or franchise, or the Borrower suffers the imposition of any restraining
order, escrow, suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any material license, permit or
franchise and such revocation, failure or imposition has, or might reasonably be
expected to have, a Material Adverse Effect.
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ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
9.1 Acceleration.
(a) If any Default described in Section 8.6 or 8.7 occurs, (i) the
obligations of the Lenders to make Loans hereunder and the obligation of the
Issuer to issue Facility Letters of Credit shall automatically terminate and the
Obligations shall immediately become due and payable without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives and without any election or action on the part of the Agent or
any Lender and (ii) the Borrower will be and become thereby unconditionally
obligated, without the need for demand or the necessity of any act or evidence,
to deliver to the Agent, at its address specified pursuant to Article XIV, for
deposit into the Letter of Credit Collateral Account, an amount (the "Collateral
Shortfall Amount") equal to the excess, if any, of
(A) 100% of the sum of the aggregate maximum amount remaining available to
be drawn under the Facility Letters of Credit (assuming compliance with all
conditions for drawing thereunder) issued by the Issuer and outstanding as of
such time, minus
(B) the amount on deposit in the Letter of Credit Collateral Account at
such time that is free and clear of all rights and claims of third parties and
that has not been applied by the Lenders against the Obligations.
(b) If any Default occurs and is continuing (other than a Default described
in Section 8.6 or 8.7), (i) the Required Lenders may terminate or suspend the
obligations of the Lenders to make Loans and the obligation of the Issuer to
issue Facility Letters of Credit hereunder, or declare the Obligations to be due
and payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives and (ii) the Required Lenders may,
upon notice delivered to the Borrower and in addition to the continuing right to
demand payment of all amounts payable under this Agreement, make demand on the
Borrower to deliver (and the Borrower will, forthwith upon demand by the
Required Lenders and without necessity of further act or evidence, be and become
thereby unconditionally obligated to deliver), to the Agent, at its address
specified pursuant to Article XIV, for deposit into the Letter of Credit
Collateral Account an amount equal to the Collateral Shortfall Amount.
(c) If at any time while any Default is continuing or after the Commitments
of the Lenders have been terminated, the Agent determines that the Collateral
Shortfall Amount at such time is greater than zero, the Agent may make demand on
the Borrower to deliver (and the Borrower will, forthwith upon demand by the
Agent and without necessity of further act or evidence, be and become thereby
unconditionally
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obligated to deliver), to the Agent as additional funds to be deposited and held
in the Letter of Credit Collateral Account an amount equal to such Collateral
Shortfall Amount at such time.
(d) The Agent may at any time or from time to time after funds are
deposited in the Letter of Credit Collateral Account, apply such funds to the
payment of the Obligations and any other amounts as shall from time to time have
become due and payable by the Borrower to the Lenders under the Loan Documents.
(e) Neither the Borrower nor any Person claiming on behalf of or through
the Borrower shall have any right to withdraw any of the funds held in the
Letter of Credit Collateral Account. After all of the Obligations have been
indefeasibly paid in full, any funds remaining in the Letter of Credit
Collateral Account shall be returned by the Agent to the Borrower or paid to
whoever may be legally entitled thereto at such time.
(f) The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords its own property, it
being understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any Persons with respect to any such
funds.
If, within 15 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans hereunder and the
obligation of the Issuer to issue Facility Letters of Credit hereunder as a
result of any Default (other than any Default as described in Section 8.6 or 8.7
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
9.2 Amendments. Subject to the provisions of this Article IX, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that notwithstanding anything to the
contrary contained herein, no amendment, modification, change or waiver shall be
effective without consent of all the Lenders to:
(i) extend the maturity of the principal of, or interest on, any Note
or of any of the other Obligations;
(ii) increase or forgive the principal amount of any Note or of any of
the other Obligations or decrease the rate of interest thereon;
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(iii) change the date of payment of principal of, or interest on, any
Note or of any of the other Obligations;
(iv) change the amount of the Commitment of any Lender (except for a
ratable decrease in the Commitments of all Lenders);
(v) change the method of calculation utilized in connection with
the computation of interest and fees;
(vi) change the manner of pro rata application by the Agent of
payments made by the Borrower, or any other payments required
hereunder or under the other Loan Documents;
(vii) release any Guarantor;
(viii) modify this Section or the definition of "Required Lenders";
and
(ix) permit the Borrower to assign its rights under this Agreement.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 13.3.2 without obtaining the consent of any
other party to this Agreement.
9.3 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan or the issuance of a Facility Letter of Credit notwithstanding
the existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to making such Loan or issuing such Facility Letter of
Credit shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Lenders required pursuant to Section 9.2,
and then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Agent, the Issuer, and the Lenders until the
Obligations have been paid in full.
ARTICLE X
GENERAL PROVISIONS
------------------
10.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Notes and
the making of the Loans and the issuance of the Facility Letters of Credit
herein contemplated.
10.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower
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in violation of any limitation or prohibition provided by any applicable statute
or regulation.
10.3 Taxes. Any taxes (excluding federal income taxes on the overall net
income of any Lender) or other similar assessments or charges made by any
governmental or revenue authority in respect of the Loan Documents shall be paid
by the Borrower, together with interest and penalties, if any.
10.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
10.5 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent, the Issuer and the Lenders and
supersede all prior agreements and understandings among the Borrower, the Agent,
the Issuer and the Lenders relating to the subject matter thereof other than the
fee letter described in Section 11.14.
10.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
10.7 Expenses; Indemnification. The Borrower shall reimburse the Agent
for any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents, provided that Borrower shall not be
obligated to reimburse the Agent for legal fees in connection with the
preparation and execution of the Loan Documents for any amounts in excess of
$15,000. The Borrower also agrees to reimburse the Agent and the Lenders for
any costs and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent and the Lenders, which attorneys may be
employees of the Agent or the Lenders) paid or incurred by the Agent or any
Lender in connection with the collection and enforcement of the Loan Documents.
The Borrower further agrees to indemnify the Agent and each Lender, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Agent or
any Lender is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan or Facility Letter of Credit hereunder
except to the extent that they are determined by a court of
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competent jurisdiction in a final and non-appealable order to have directly
resulted from the negligence, gross negligence, or willful misconduct of the
party seeking indemnification. The obligations of the Borrower under this
Section shall survive the termination of this Agreement.
10.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
10.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, except that any
calculation or determination which is to be made on a consolidated basis shall
be made for the Borrower and all its Subsidiaries, including those Subsidiaries,
if any, which are unconsolidated on the Borrower's audited financial statements.
10.10 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
10.11 Nonliability of Lenders. The relationship between the Borrower, the
Lenders, the Issuer, and the Agent shall be solely that of borrower, lender and
letter of credit issuer. Neither the Agent, the Issuer, nor any Lender shall
have any fiduciary responsibilities to the Borrower. Neither the Agent, the
Issuer, nor any Lender undertakes any responsibility to the Borrower to review
or inform the Borrower of any matter in connection with any phase of the
Borrower's business or operations. The Borrower agrees that neither the Agent,
the Issuer, nor any Lender shall have liability to the Borrower (whether
sounding in tort, contract or otherwise) for losses suffered by the Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless it is determined by
a court of competent jurisdiction in a final and non-appealable order that such
losses resulted from the gross negligence or willful misconduct of the party
from which recovery is sought. Neither the Agent, the Issuer, nor any Lender
shall have any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out of, or in any
way related to the Loan Documents or the transactions contemplated thereby.
10.12 Confidentiality. The Agent, the Issuer, and each Lender agree to
hold any confidential information which it may receive from the Borrower or any
Subsidiary pursuant to this Agreement in confidence, except for disclosure (i)
to its Affiliates and to
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other Lenders and their respective Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to that Lender or to a Transferee,
(iii) to regulatory officials, (iv) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (v) to any Person in connection
with any legal proceeding to which that Lender is a party, and (vi) permitted by
Section 13.4.
ARTICLE XI
THE AGENT
---------
11.1 Appointment; Nature of Relationship. American National Bank and
Trust Company of Chicago is hereby appointed by the Lenders as the Agent
hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the contractual representative of
such Lender with the rights and duties expressly set forth herein and in the
other Loan Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this Article XI.
Notwithstanding the use of the defined term "Agent," it is expressly understood
and agreed that the Agent shall not have any fiduciary responsibilities to any
Lender by reason of this Agreement or any other Loan Document and that the Agent
is merely acting as the representative of the Lenders with only those duties as
are expressly set forth in this Agreement and the other Loan Documents. In its
capacity as the Lenders' contractual representative, the Agent (i) does not
hereby assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders hereby agrees to
assert no claim against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each Lender hereby
waives.
11.2 Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
11.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.
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11.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; (iv) the validity,
enforceability, effectiveness, sufficiency or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith; or (v) the
value, sufficiency, creation, perfection or priority of any interest in any
collateral security.
11.5 Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders (or all the Lenders, if required hereunder), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders and on all holders of Notes. The Lenders hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
11.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
11.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be an employee of the Agent.
11.8 Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Agent is entitled to reimbursement by
the Borrower under
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the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf
of the Lenders and not reimbursed by the Borrower under the Loan Documents, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders under this
Section 11.8 shall survive payment of the Obligations and termination of this
Agreement.
11.9 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default hereunder unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.
11.10 Rights as a Lender. In the event the Agent is a Lender or the
Issuer, the Agent shall have the same rights and powers hereunder and under any
other Loan Document as any Lender or Issuer and may exercise the same as though
it were not the Agent, and the term "Lender", "Lenders" or "Issuer" shall, at
any time when the Agent is a Lender or Issuer, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Loan Document, with the Borrower or any of its Subsidiaries in
which the Borrower or such Subsidiary is not restricted hereby from engaging
with any other Person. The Agent, in its individual capacity, is not obligated
to remain a Lender or the Issuer.
11.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
11.12 Information. The Agent shall promptly deliver to the Lenders
copies of all financial statements, written reports and other written
information delivered by the Borrower to the Agent in compliance with the terms
of this Agreement and any written
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requests by the Borrower for amendments or waivers to the Agreement. The Agent
agrees that upon receipt by it of a written request from a Lender that such
Lender wants information from the Borrower pursuant to Section 6.3.5(E) and
Section 6.3.7 and specifying the information it wants, the Agent shall promptly
request such information from the Borrower and will cooperate with the Lender to
obtain the information desired by such Lender. The Agent shall have no
responsibility for the timeliness, sufficiency, accuracy or completeness of any
information supplied by the Borrower or for any interpretation or use thereof by
the Lender. Agent's sole responsibility hereunder shall be to request the
Borrower to provide the information.
11.13 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
upon the appointment of a successor Agent or, if no successor Agent has been
appointed, forty-five days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrower and the Lenders and with the consent of the Borrower, a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and consented to by the Borrower within thirty days after the
resigning Agent's giving notice of its intention to resign, then the resigning
Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent.
If the Agent has resigned or been removed and no successor Agent has been
appointed, the Lenders may perform all the duties of the Agent hereunder and the
Borrower shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such successor
Agent has accepted the appointment. Any such successor Agent shall be a
commercial bank having capital and retained earnings of at least $750,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal
of an Agent, the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents.
11.14 Agent's Fee. The Borrower agrees to pay to the Agent, for its own
account, the fees agreed to by the Borrower and the Agent pursuant to that
certain letter agreement dated April 4, 1997, as amended August 28, 1997 or as
otherwise agreed from time to time.
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ARTICLE XII
SETOFF; RATABLE PAYMENTS
------------------------
12.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender to
or for the credit or account of the Borrower may be offset and applied toward
the payment of the Obligations owing to such Lender, whether or not the
Obligations, or any part hereof, shall then be due.
12.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Section 3.1, 3.2 or 3.4) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.
If an amount to be setoff is to be applied to Indebtedness of the Borrower
to a Lender, other than Indebtedness evidenced by any of the Notes held by such
Lender or a Facility Letter of Credit Obligation, such amount shall be applied
first to the Obligations and only after the Obligations are paid in full and
discharged shall it be applied to Indebtedness not evidenced by the Notes or
Facility Letter of Credit.
ARTICLE XIII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
13.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 13.3. Notwithstanding clause (ii) of this Section, any Lender may
at any time, without the consent of the Borrower or the Agent, assign all or any
portion of its rights under this
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Agreement and its Notes to a Federal Reserve Bank; provided, however, that no
such assignment to a Federal Reserve Bank shall release the transferor Lender
from its obligations hereunder. The Agent may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 13.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Agent. Any assignee
or transferee of a Note agrees by acceptance thereof to be bound by all the
terms and provisions of the Loan Documents. Any request, authority or consent of
any Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
13.2 Participations.
13.2.1 Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents. No
Participant shall be permitted to make any claims itself under Article III, but
may make claims through its applicable Lender, but only to the extent that the
facts and circumstances giving rise to such claims also apply to the applicable
Lender.
13.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan, Facility Letter of Credit or
Commitment in which such Participant has an interest which forgives principal,
interest or fees or reduces the interest rate or fees payable with respect to
any such Loan, Facility Letter of Credit or Commitment, postpones any date fixed
for any regularly-scheduled payment of principal of, or interest or fees on, any
such Loan, Facility Letter of Credit or Commitment, releases any Guarantor of
any such Loan, Facility Letter of Credit or releases any substantial portion of
collateral, if any, securing any such Loan or Facility Letter of Credit.
13.2.3 Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 12.1 in respect
of its
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participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 12.1 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 12.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 12.2 as if each Participant were a Lender.
13.3 Assignments.
13.3.1 Permitted Assignments. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be substantially in
the form of Exhibit "D" hereto or in such other form as may be agreed to by the
parties thereto. The consent of the Borrower and the Agent shall be required
prior to an assignment becoming effective with respect to a Purchaser which is
not a Lender or with respect to a Purchaser who is an Affiliate where said
assignment immediately results in the imposition of increased costs pursuant to
Article III hereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required to any assignment.
Such consent shall not be unreasonably withheld or delayed.
13.3.2 Effect; Effective Date. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit "I" to
Exhibit "D" hereto (a "Notice of Assignment"), together with any consents
required by Section 13.3.1, and (ii) payment of a $4,000 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of Assignment
shall contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans under the
applicable assignment agreement are "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan Documents
will not be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate Commitment and
Loans assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3.2, the transferor Lender, the Agent and
the Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such
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Purchaser, in each case in principal amounts reflecting their Commitment, as
adjusted pursuant to such assignment.
13.4 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound by Section
10.12 of this Agreement.
13.5 Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 4.3.
ARTICLE XIV
NOTICES
-------
14.1 Notices. Except as otherwise permitted by Section 2.13 with respect
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, facsimile transmission
or similar writing) and shall be given to such party: (x) in the case of the
Borrower, the Issuer or the Agent, at its address or facsimile number set forth
on the signature pages hereof, (y) in the case of any Lender or the Issuer, at
its address or facsimile number set forth below its signature hereto or (z) in
the case of any party, such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and the Borrower. Each
such notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent under Article II shall not be effective until received.
14.2 Change of Address. The Borrower, the Agent, the Issuer and any Lender
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XV
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COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex or telephone, that it has taken
such action.
ARTICLE XVI
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
------------------------------------------------------------
16.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
16.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT, THE ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE ISSUER, OR
ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.
16.3 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, THE ISSUER, AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
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IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
PLATINUM technology, inc.
By: /s/ Michael P. Cullinane
-----------------------------------
Print Name: Michael P. Cullinane
---------------------------
Title:
--------------------------------
1815 South Meyers Road
Oakbrook Terrace, Illinois 60181-5235
Attention:
----------------------------
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Commitments
-----------
$ 25,000,000 AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
Individually and as Agent
By: /s/ Paul C. Carlisle
--------------------------------
Print Name: Paul C. Carlisle
------------------------
Title: FVP
-----------------------------
33 North LaSalle Street
Chicago, Illinois 60690
Attention: Paul C. Carlisle
$25,000,000 LASALLE NATIONAL BANK
By: /s/ John McGuire
--------------------------------
Print Name: John McGuire
------------------------
135 S. LaSalle, Suite 217
Chicago, IL 60603
Attention: John McGuire
$5,000,000 SILICON VALLEY BANK
By: /s/ Brent H. Dennell
---------------------------------
Print Name: Brent H. Dennell
-------------------------
One Central Plaza
11300 Rockville Plaza
Suite 1205
Rockville, Maryland 20852
Attention:
$55,000,000
===========
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EXHIBIT "A"
NOTE
$_________ December 22, 1997
PLATINUM technology, inc., a Delaware corporation (the "Borrower"),
promises to pay to the order of __________________________________________ (the
"Lender") the lesser of the principal sum of ____________________ Dollars or the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Article II of the Agreement (as hereinafter defined), in
immediately available funds at the main office of American National Bank and
Trust Company of Chicago in Chicago, Illinois, as Agent, together with interest
on the unpaid principal amount hereof at the rates and on the dates set forth in
the Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Loans in full on the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder. Subject to the terms of the Agreement, the Borrower may repay
and reborrow at any time prior to the Facility Termination Date.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Credit Agreement dated as of December 22, 1997, (which, as it
may be amended or modified and in effect from time to time, is herein called the
"Agreement"), among the Borrower, the lenders party thereto, including the
Lender, and American National Bank and Trust Company of Chicago, as Agent, to
which Agreement reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may be prepaid or its maturity date accelerated. This Note is
guaranteed pursuant to the Guaranties, all as more specifically described in the
Agreement, and reference is made thereto for a statement of the terms and
provisions thereof. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement.
PLATINUM technology, inc.
-----------------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
A-1
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF PLATINUM technology, inc.,
DATED December 22, 1997
<TABLE>
<CAPTION>
Maturity
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
- ---- ---- ------ ---- -------
<S> <C> <C> <C> <C>
</TABLE>
A-2
<PAGE>
EXHIBIT "B"
FORM OF OPINION
____________, 19__
The Agent and the Lenders who are parties to the
Credit Agreement described below.
Gentlemen/Ladies:
We are counsel for PLATINUM technology, inc. (the "Borrower"), and have
represented the Borrower in connection with its execution and delivery of a
Credit Agreement dated as of December 22, 1997 (the "Agreement") among the
Borrower, the Lenders named therein, and American National Bank and Trust
Company of Chicago, as Agent, and providing for Advances and Facility Letters of
Credit in an aggregate principal amount not exceeding $55,000,000 at any one
time outstanding. All capitalized terms used in this opinion and not otherwise
defined herein shall have the meanings attributed to them in the Agreement.
We have examined the Borrower's articles of incorporation, by-laws,
resolutions, the Loan Documents and such other matters of fact and law which we
deem necessary in order to render this opinion. Based upon the foregoing, it is
our opinion that:
1. The Borrower and each Material Subsidiary are corporations duly
incorporated, validly existing and in good standing under the laws of their
states of incorporation and have all requisite authority to conduct their
business in each jurisdiction in which their business is conducted.
2. The execution and delivery of the Loan Documents by the Borrower and
the performance by the Borrower of the Obligations have been duly authorized by
all necessary corporate action and proceedings on the part of the Borrower and
will not:
(a) require any consent of the Borrower's shareholders;
(b) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its Material
Subsidiaries or the Borrower's or any Material Subsidiary's articles of
incorporation or by-laws or any indenture, instrument or agreement binding
upon the Borrower or any of its Subsidiaries; or
(c) result in, or require, the creation or imposition of any Lien
pursuant to the provisions of any indenture, instrument or agreement
binding upon the Borrower or any of its Subsidiaries.
B-1
<PAGE>
3. The Loan Documents have been duly executed and delivered by the
Borrower and constitute legal, valid and binding obligations of the Borrower
enforceable in accordance with their terms except to the extent the enforcement
thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and subject also to the availability
of equitable remedies if equitable remedies are sought.
4. There is no litigation or proceeding against the Borrower or any of
its Subsidiaries which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
5. No approval, authorization, consent, adjudication or order of any
governmental authority, which has not been obtained by the Borrower or any of
its Subsidiaries, is required to be obtained by the Borrower or any of its
Material Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement, the issuance of any Facility
Letters of Credit or in connection with the payment by the Borrower of the
Obligations.
6. The Obligations constitute senior indebtedness which is entitled to
the benefits of the subordination provisions of all outstanding Subordinated
Indebtedness.
This opinion may be relied upon by the Agent, the Lenders and their
participants, assignees and other transferees.
Very truly yours,
-----------------------------
B-2
<PAGE>
EXHIBIT "C"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of December 22, 1997 (as amended, modified, renewed or
extended from time to time, the "Agreement") among the PLATINUM technology, inc.
(the "Borrower"), the lenders party thereto and American National Bank and Trust
Company of Chicago, as Agent for the Lenders. Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings ascribed
thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
C-1
<PAGE>
---------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I [and Schedule II] hereto and the financial statements delivered with
this Certificate in support hereof, are made and delivered this ____ day of
______________, 19___.
---------------------------
C-2
<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of _________, 199_ with
Provisions of Section 6.2.1, 6.2.2, 6.2.3, 7.2, 7.5, and 7.7
<TABLE>
<CAPTION>
<S> <C>
A. Quick Ratio ((S)6.2.1)
1. Cash and Cash Equivalents
----------------
2. Current and Non-Current Securities
----------------
3. Net Trade Accounts Receivable
----------------
4. Sum of Lines 1, 2 and 3
----------------
5. Current Liabilities
----------------
6. Current Portion of Deferred Revenues
----------------
7. Line 5 minus Line 6
----------------
8. Ratio of Line 4 to Line 7
----------------
9. Line 8 must be equal to or exceed 1.00
----------------
10. Borrower in Compliance Yes/No
----------------
B. Tangible Net Worth ((S)6.2.2)
1. Stockholders Common Equity
----------------
2. Outstanding Subordinated Debt
----------------
3. Sum of Lines 1 and 2
----------------
4. Capitalized Software
----------------
5. Goodwill
----------------
6. Other Intangible Assets
----------------
7. Sum of Lines 4, 5 and 6
----------------
8. Line 3 minus Line 7
----------------
9. Line 8 must be equal to or exceed $100,000,000
----------------
10. Borrower in Compliance Yes/No
----------------
C. Total Liabilities to Tangible Net Worth (6.2.3)
1. Total Liabilities
----------------
2. Outstanding Subordinated Debt
----------------
3. Deferred Revenues
----------------
4. Sum of Lines 2 and 3
----------------
5. Line 1 minus Line 4
----------------
6. Tangible Net Worth (Line B.8)
----------------
7. Ratio of Line 5 to Line 6
----------------
8. Ratio must not exceed 1.00
----------------
9. Borrower in Compliance Yes/No
----------------
D. Indebtedness and Other Obligations (7.2)
----------------
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1. Capitalized Lease Obligations
----------------
2. Other Contingent Obligations of
Material Subsidiaries
----------------
3. Other Indebtedness and Contingent
Obligations
----------------
4. No individual line to exceed $10,000,000
----------------
5. Borrower in Compliance Yes/No
----------------
E. Sale of Assets
1. Receivables Sold and Outstanding with
Recourse to Borrower or any Subsidiary
----------------
2. Line 1 not to exceed $10,000,000
----------------
3. Borrower in Compliance Yes/No
----------------
F. Advances, Investments, and Loans
1. Temporary Working Capital financing
and/or Advances to Third Parties
----------------
2. Line 1 not to exceed $5,000,000
----------------
3. Borrower in Compliance Yes/No
----------------
</TABLE>
C-4
<PAGE>
EXHIBIT "D"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
__________________________ (the "Assignor") and __________________ (the
"Assignee") is dated as of _________________, 19__. The parties hereto agree as
follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as it may be amended, modified, renewed or extended from time to time is
herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached
hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans and
participations in the Facility Letters of Credit, if the applicable Commitment
has been terminated) purchased by the Assignee hereunder is set forth in Item 4
of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Agent) after a
Notice of Assignment substantially in the form of Exhibit "I" attached hereto
has been delivered to the Agent. Such Notice of Assignment must include any
consents required to be delivered to the Agent by Section 13.3.1 of the Credit
Agreement. In no event will the Effective Date occur if the payments required
to be made by the Assignee to the Assignor on the Effective Date under Sections
4 and 5 hereof are not made on the proposed Effective Date. The Assignor will
notify the Assignee of the proposed Effective Date no later than the Business
Day prior to the proposed Effective Date. As of the Effective Date, (i) the
Assignee shall have the rights and obligations of a Lender under the Loan
Documents with respect to the rights and obligations assigned to the Assignee
hereunder and (ii) the Assignor shall relinquish its rights and be released from
its corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal,
reimbursement payments under Facility Letters of Credit, interest and fees with
respect
D-1
<PAGE>
to the interest assigned hereby. The Assignee shall advance funds directly to
the Agent with respect to all Loans and reimbursement payments made on or after
the Effective Date with respect to the interest assigned hereby. In
consideration for the sale and assignment of Loans and participations in the
Letters of Credit hereunder, (i) the Assignee shall pay the Assignor, on the
Effective Date, an amount equal to the principal amount of the portion of all
Floating Rate Loans assigned to the Assignee hereunder and (ii) with respect to
each Fixed Rate Loan made by the Assignor and assigned to the Assignee hereunder
which is outstanding on the Effective Date, (a) on the last day of the
Eurodollar Interest Period therefor or (b) on such earlier date agreed to by the
Assignor and the Assignee or (c) on the date on which any such Fixed Rate Loan
either becomes due (by acceleration or otherwise) or is prepaid (the date as
described in the foregoing clauses (a), (b) or (c) being hereinafter referred to
as the "Payment Date"), the Assignee shall pay the Assignor an amount equal to
the principal amount of the portion of such Fixed Rate Loan assigned to the
Assignee which is outstanding on the Payment Date. If the Assignor and the
Assignee agree that the Payment Date for such Fixed Rate Loan shall be the
Effective Date, they shall agree to the interest rate applicable to the portion
of such Loan assigned hereunder for the period from the Effective Date to the
end of the existing Eurodollar Interest Period applicable to such Fixed Rate
Loan (the "Agreed Interest Rate") and any interest received by the Assignee in
excess of the Agreed Interest Rate shall be remitted to the Assignor. In the
event interest for the period from the Effective Date to but not including the
Payment Date is not paid by the Borrower with respect to any Fixed Rate Loan
sold by the Assignor to the Assignee hereunder, the Assignee shall pay to the
Assignor interest for such period on the portion of such Fixed Rate Loan sold by
the Assignor to the Assignee hereunder at the applicable rate provided by the
Credit Agreement. In the event a prepayment of any Fixed Rate Loan which is
existing on the Payment Date and assigned by the Assignor to the Assignee
hereunder occurs after the Payment Date but before the end of the Eurodollar
Interest Period applicable to such Fixed Rate Loan, the Assignee shall remit to
the Assignor the excess of the prepayment penalty paid with respect to the
portion of such Fixed Rate Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to the
Assignor (i) any principal payments received from the Agent with respect to
Fixed Rate Loans prior to the Payment Date and (ii) any amounts of interest on
Loans and fees and reimbursement payments received from the Agent which relate
to the portion of the Loans and Facility Letters of Credit assigned to the
Assignee hereunder for periods prior to the Effective Date, in the case of
Floating Rate Loans or fees, or the Payment Date, in the case of Fixed Rate
Loans, and not previously paid by the Assignee to the Assignor.]* In the event
that either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such amount
shall promptly remit it to the other party hereto.
*Each Assignor may insert its standard payment provisions in lieu of the payment
terms included in this Exhibit.
D-2
<PAGE>
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor a
fee on each day on which a payment of interest or fees is made under the Credit
Agreement with respect to the amounts assigned to the Assignee hereunder (other
than a payment of interest or commitment fees for the period prior to the
Effective Date or, in the case of Fixed Rate Loans, the Payment Date, which the
Assignee is obligated to deliver to the Assignor pursuant to Section 4 hereof).
The amount of such fee shall be the difference between (i) the interest or fee,
as applicable, paid with respect to the amounts assigned to the Assignee
hereunder and (ii) the interest or fee, as applicable, which would have been
paid with respect to the amounts assigned to the Assignee hereunder if each
interest rate was ___ of 1% less than the interest rate paid by the Borrower or
if the [commitment fee/Facility Letter of Credit fee] was ___ of 1% less than
the commitment fee paid by the Borrower, as applicable. In addition, the
Assignee agrees to pay ___% of the recordation fee required to be paid to the
Agent in connection with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of the
terms or provisions of any of the Loan Documents, (v) inspecting any of the
Property, books or records of the Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral securing
or purporting to secure the Loans and the Facility Letters of Credit or (vii)
any mistake, error of judgment, or action taken or omitted to be taken in
connection with the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement, (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information at it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, (iii) appoints and
D-3
<PAGE>
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto, (iv)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, (v) agrees that its payment instructions and notice
instructions are as set forth in the attachment to Schedule 1, (vi) confirms
that none of the funds, monies, assets or other consideration being used to make
the purchase and assumption hereunder are "plan assets" as defined under ERISA
and that its rights, benefits and interests in and under the Loan Documents will
not be "plan assets" under ERISA, [(vii) confirms that it is an Eligible
Assignee,]* [and (viii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is entitled to receive
payments under the Loan Documents without deduction or withholding of any United
States federal income taxes].**
*to be inserted if required by the Credit Agreement.
**to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section [13.3.1] of the Credit Agreement to assign
the rights which are assigned to the Assignee hereunder to any entity or person,
provided that (i) any such subsequent assignment does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required under the
terms of the Loan Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under [Sections 4, 5 and 8] hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice of
Assignment embody the entire agreement and understanding between the
D-4
<PAGE>
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
------------------------------
Title:
------------------------------
------------------------------
------------------------------
[NAME OF ASSIGNEE]
By:
------------------------------
Title:
------------------------------
------------------------------
------------------------------
D-5
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: _____________, 19
3. Amounts (As of Date of Item 2 above):
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $
5. Proposed Effective Date: ___________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
---------------- ----------------
Title: Title:
------------- -------------
** If a Commitment has been terminated, insert outstanding Loans in place of
Commitment
*** Percentage taken to 10 decimal places
D-6
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
D-7
<PAGE>
EXHIBIT "F"
GUARANTY
E-1
<PAGE>
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
-------------
____________, 19__
To: [NAME OF BORROWER]*
-----------------------
-----------------------
[NAME OF AGENT]
-----------------------
-----------------------
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement") described
in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
[the Borrower and] the Agent pursuant to Section [13.3.2] of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of ___________, 19__ (the "Assignment"), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstandings, rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment
shall be the later of the date specified in Item 5 of Schedule 1 or two Business
Days (or such shorter period as agreed to by the Agent) after this Notice of
Assignment and any consents and fees required by Sections 13.3.1 and 13.3.2 of
the Credit Agreement have been delivered to the Agent, provided that the
Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The Assignor
will confer with the Agent before the date specified in Item 5 of Schedule 1 to
determine if
I-1
<PAGE>
the Assignment Agreement will become effective on such date pursuant to Section
3 hereof, and will confer with the Agent to determine the Effective Date
pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall notify
the Agent if the Assignment Agreement does not become effective on any proposed
Effective Date as a result of the failure to satisfy the conditions precedent
agreed to by the Assignor and the Assignee. At the request of the Agent, the
Assignor will give the Agent written confirmation of the satisfaction of the
conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before the
Effective Date the processing fee of $4,000 required by Section 13.3.2 of the
Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Agent prepare and cause the Borrower to
execute and deliver new Notes or, as appropriate, replacements notes, to the
Assignor and the Assignee. The Assignor and, if applicable, the Assignee each
agree to deliver to the Agent the original Note received by it from the Borrower
upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and payment instructions
are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the Loan
Documents in accordance with the terms thereof. The Assignee acknowledges that
the Agent has no duty to supply information with respect to the Borrower or the
Loan Documents to the Assignee until the Assignee becomes a party to the Credit
Agreement.*
*May be eliminated if Assignee is a party to the Credit Agreement prior to the
Effective Date.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
--------------------- ---------------------
Title: Title:
------------------- ------------------
I-2
<PAGE>
ACKNOWLEDGED [AND CONSENTED TO] ACKNOWLEDGED [AND
CONSENTED TO]
BY [NAME OF AGENT] BY [NAME OF BORROWER]
By: By:
---------------------------------
- --------------------------------
Title: Title:
-------------------------------
- --------------------------------
[Attach photocopy of Schedule 1 to Assignment]
I-3
<PAGE>
EXHIBIT "E"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To American National Bank and Trust Company of Chicago
as Agent (the "Agent") under the Credit Agreement
Described Below.
Re: Credit Agreement, dated December 22, 1997 (as the same may be amended or
modified, the "Credit Agreement"), among PLATINUM technology, inc. (the
"Borrower"), the Lenders named therein and the Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned thereto
in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the following
standing money transfer instructions with respect to the proceeds of Advances or
other extensions of credit from time to time until receipt by the Agent of a
specific written revocation of such instructions by the Borrower, provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.13 of the
Credit Agreement.
Facility Identification Number(s)
-----------------------------------------------
Customer/Account Name
-----------------------------------------------------------
Transfer Funds To
---------------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
For Account No.
-----------------------------------------------------------------
Reference/Attention To
----------------------------------------------------------
Authorized Officer (Customer Representative) Date
-------------------------------
- -------------------------------- -------------------------------
(Please Print) Signature
Bank Officer Name Date
-------------------------------
- -------------------------------- -----------------------------------
(Please Print) Signature
I-4
<PAGE>
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
I-5
<PAGE>
SCHEDULE "2.18"
INITIAL CONTROL GROUP
1) Andrew Filipowski
2) Paul Humenansky
3) Michael Cullinane
4) Tom Slowey
5) Paul Tatro
6) Steve Devich
7) Gion Fulgoni
8) Jamie Cowie
9) Art Frigo
<PAGE>
SCHEDULE "5.2.1"
SUBSIDIARIES AND OTHER INVESTMENTS
(See Sections___________)
<TABLE>
<CAPTION>
Investment Owned Amount of Percent Jurisdiction of
In By Investment Ownership Organization
-- -- ---------- --------- ------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE "5.6"
LITIGATION
None
<PAGE>
SCHEDULE "5.8"
APPROVALS
None
<PAGE>
SCHEDULE "7.2"
INDEBTEDNESS AND LIENS
(See Sections___________)
<TABLE>
<CAPTION>
Maturity
Indebtedness Indebtedness Property and Amount
Incurred By Owed To Encumbered (If Any) of Indebtedness
- ------------ ------------ ------------------- ---------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 12
COMPUTATION OF
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(in thousands)
Years Ended December 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Earnings:
- --------
Earnings (loss) before income taxes $(99,063) $(74,167) $(123,247) $2,331 $5,162
Add:
Interest on Debt 9,130 1,825 782 359 545
-------- -------- --------- ------ ------
Earnings $(89,933) $(72,342) $(122,465) $2,690 $5,707
-------- -------- --------- ------ ------
Fixed Charges:
- -------------
Interest on Debt $ 9,130 $ 1,825 $ 782 $ 359 $ 545
Fixed Charges $ 9,130 $ 1,825 $ 782 $ 359 $ 545
-------- -------- --------- ------ ------
Ratio of Earnings to Fixed Charges (1) -- (2) -- (2) -- (2) 7.49 10.47
======== ======== ========= ====== ======
(1) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (earnings before income taxes plus
fixed charges less capitalized interest) by fixed charges (interest expense
plus capitalized interest and the portion of rental expense which
represents interest).
(2) Earnings available for fixed charges of $(89,933,000), $(72,342,000), and
$(122,465,000) were inadequate to cover fixed charges of $9,130,000,
$1,825,000 and $782,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF PLATINUM technology, inc.
-----------------------------------------
<TABLE>
<CAPTION>
Jurisdiction of
Entity Incorporation
- ------ -------------
<S> <C>
Trinzic UK Ltd. United Kingdom
Trinzic (Deutschland) GmbH Germany
Trinzic Australasia pty Ltd. Australia
Trinzic Europe BV Netherlands
AICorp Netherlands BV Netherlands
AICorp Canada, Inc. Ontario, Canada
Altai, Inc. Texas
Altai Software France SARL France
Altai Software Canada Inc. Ontario, Canada
PLATINUM technology solutions, inc. Delaware
PLATINUM technology solutions, inc. California
Locus Computing Corporation Ltd. United Kingdom
I&S Informationstechnik und Services GmbH Germany
PLATINUM Technology-Solutions Pty Limited Australia
Software Interfaces Q.T.B.V. The Netherlands
Softool Technologies SARL France
PLATINUM Air, Inc. Illinois
Advanced System Technologies, Inc. Colorado
Prodea Software Corporation Minnesota
Browning & Clements, Inc. Illinois
Axis Systems International, Inc. New York
Paradigm systems Corporation of America New York
Platinum technology Itda. Brazil
Grateful Data, Inc. California
VREAM, Inc. Illinois
GEJAC, Inc. Maryland
GEJAC UK Limited United Kingdom
GEJAC International Benelux B.V. Netherlands
Platinum Technology Holdings, Inc. United States
PLATINUM Holdings I, Inc. Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PLATINUM Holdings II, Inc. Delaware
PLATINUM technology Financial Services, Inc. Delaware
PLATINUM Internet Advance Group, Inc. Illinois
PLATINUM technology AG Switzerland
PLATINUM technology Australasia Pty. Limited Australia
PLATINUM technology B.V. Netherlands
PLATINUM technology Denmark A/S Denmark
PLATINUM technology Gesellschaft m.b.H. Austria
PLATINUM technology GmbH Germany
PLATINUM technology Finland Oy Finland
Platinum Technology International, Inc. US Virgin Islands
PLATINUM technology N.V./S.A. Belgium
PLATINUM technology S.r.l. Italy
PLATINUM technology Software SL Spain
PLATINUM technology Sweden AB Sweden
PLATINUM technology UK Limited United Kingdom
Echo-Soft Technologies S.A.R.L. France
STARTUP Software S.A.R.L. France
PLATINUM technology Sdn. Bhd. Malaysia
PLATINUM technology Norway AS Norway
PLATINUM technology Limited Hong Kong
PLATINUM technology Pte. Ltd. Singapore
PLATINUM technology Pty. Ltd. South Africa
PLATINUM technology KK Japan
DB Tech Limited United Kingdom
Australian Technology Resources (WA) Pty Limited Australia
Australian Technology Resources (ACT) Pty Limited Australia
Australian Technology Resources & Consulting (SA) Pty Limited Australia
Australian Technology Solutions Pty Limited Australia
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ACN 074 421 186 Pty Limited Australia
PLATINUM Technology Canada Inc./Platinum Technologie Canada Inc. Canada
Beijing Platinum Technology Computer Co., Limited People's Republic of China
Platinum technology S.A. France
Platinum Technology China, Limited Hong Kong
PLATINUM technology, Ltd. South Korea
PLATINUM Technology (Philippines) Incorporated Philippines
Platinum Technology Taiwan, Inc. Taiwan
PLATINUM technology Ltd. Thailand
Prometrics Group Limited United Kingdom
Prometrics Limited United Kingdom
Mergetime Limited United Kingdom
Alvering Limited United Kingdom
Integrated Image Technology Limited United Kingdom
Vayda Consulting, Inc.
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
PLATINUM technology, inc.:
We consent to incorporation by reference in the registration statements
(Nos. 33-41248, 33-85798, 33-96762, 333-00454, 333-03284 and 333-20897) on Form
S-8 of PLATINUM technology, inc. of our reports dated February 9, 1998 (except
for Note 18, which is as of March 14, 1998), relating to the consolidated
balance sheets of PLATINUM technology, inc. and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997, and related consolidated financial statement
schedule, which reports appear in the December 31, 1997 annual report on Form
10-K of PLATINUM technology, inc.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
March 16, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 178,138
<SECURITIES> 83,150
<RECEIVABLES> 214,344
<ALLOWANCES> 1,613
<INVENTORY> 0
<CURRENT-ASSETS> 511,188
<PP&E> 131,730
<DEPRECIATION> 53,888
<TOTAL-ASSETS> 834,177
<CURRENT-LIABILITIES> 222,839
<BONDS> 0
0
18
<COMMON> 64
<OTHER-SE> 243,478
<TOTAL-LIABILITY-AND-EQUITY> 834,177
<SALES> 0
<TOTAL-REVENUES> 623,503
<CGS> 0
<TOTAL-COSTS> 739,295
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9,146
<INTEREST-EXPENSE> 9,130
<INCOME-PRETAX> (99,063)
<INCOME-TAX> 18,721
<INCOME-CONTINUING> (117,784)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (117,784)
<EPS-PRIMARY> (1.90)
<EPS-DILUTED> (1.90)
</TABLE>
