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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SOLECTRON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-2447045
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
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777 GIBRALTAR DRIVE
MILPITAS, CALIFORNIA 95035
(408) 957-8500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SUSAN S. WANG
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
SOLECTRON CORPORATION
777 GIBRALTAR DRIVE
MILPITAS, CALIFORNIA 95035
(408) 957-8500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
STEVEN E. BOCHNER, ESQ.
JOHN A. FORE, ESQ.
WILSON SONSINI GOODRICH & ROSATI, PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(415) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
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Liquid Yield Option Notes
(Zero Coupon -- Senior) due
2019(2)..................... $1,656,000,000 51.752% $857,013,120 $238,249.65
Common Stock, $0.001 par
value....................... (3) (3) (3) (4)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the bid and asked prices
of the Liquid Yield Option Notes (Zero Coupon -- Senior) due 2019 ("LYONs")
on The Portal Market on April 5, 1999.
(2) LYONs were issued at an original price of $452.89 per $1,000 principal at
maturity, which represents an aggregate issue price of $749,985,840 and a
principal amount at maturity of $1,656,000,000.
(3) Includes 12,373,632 shares of Common Stock issuable upon conversion of the
LYONs at the rate of 7.472 shares of Common Stock per $1,000 principal
amount at maturity of the LYONs. Pursuant to Rule 416 under the Securities
Act, such number of shares of Common Stock registered hereby shall include
an indeterminate number of shares of Common Stock that may be issued in
connection with a stock split, stock dividend, recapitalization or similar
event.
(4) Pursuant to Rule 457(i), there is no additional filing fee with respect to
the shares of Common Stock issuable upon conversion of the LYONs because no
additional consideration will be received in connection with the exercise of
the conversion privilege.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 7, 1999
SOLECTRON CORPORATION
$1,656,000,000
LIQUID YIELD OPTION(TM) NOTES (ZERO COUPON -- SENIOR) DUE 2019
AND
THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE LYONS
We issued the LYONs in a private placement in January, 1999 at an issue
price of $452.89 per LYON. This prospectus will be used by selling
securityholders to resell their LYONs and the common stock issuable upon
conversion of their LYONs.
The LYONs are convertible at any time prior to maturity into common stock
at a conversion rate of 7.472 shares of common stock per LYON, subject to
adjustment in certain events.
We will not pay interest on the LYONs prior to maturity. The issue price
represents a yield to maturity of 4% per year.
We may redeem all or a portion of the LYONs on or after January 27, 2003.
Holders may require us to repurchase their LYONs at a price of $510.03 per LYON
on January 27, 2002 and $672.97 per LYON on January 27, 2009. In addition,
holders may require us to repurchase the LYONs upon a change in control on or
before January 27, 2002.
The last reported sales price of our common stock on The New York Stock
Exchange on April 6, 1999 was 54 5/16 per share. Our common stock is traded on
the New York Stock Exchange under the symbol "SLR."
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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(TM )Trademark of Merrill Lynch & Co.
This prospectus is dated , 1999
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS.
TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information......................... 2
Prospectus Summary.......................................... 3
Risk Factors................................................ 6
Use of Proceeds............................................. 11
Ratio of Earnings to Fixed Charges.......................... 11
Description of LYONs........................................ 12
Description of Capital Stock................................ 27
Federal Income Tax Considerations........................... 28
Selling Securityholders..................................... 32
Plan of Distribution........................................ 42
Legal Matters............................................... 43
Experts..................................................... 44
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WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Commission, in accordance with the Securities Exchange Act of 1934. You may read
and copy our reports, proxy statements and other information filed by us at the
public reference facilities of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Commission at 1-800-SEC-0330 for further information about the public
reference rooms. Our reports, proxy statements and other information filed with
the Commission are available to the public over the Internet at the Commission's
World Wide Web site at http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information we
filed with them, which means that we can disclose important information by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until our offering is complete.
- Annual Report on Form 10-K for the fiscal year ended August 31, 1998.
- Quarterly Report on Form 10-Q for the fiscal quarter ended November 30,
1998.
- Current Reports on Form 8-K filed on January 26, 1999 and February 18,
1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Susan S. Wang
Chief Financial Officer
Solectron Corporation
777 Gilbraltar Drive
Milpitas, California 95035
(408) 957-8500
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume the
information in this prospectus is accurate as of any date other than the date on
the front of those documents.
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PROSPECTUS SUMMARY
Because this is a summary, it may not contain all information that may be
important to you. You should read this entire prospectus, including the
information incorporated by reference and the financial data and related notes,
before making an investment decision. When used in this prospectus, the terms
"we," "our" and "us" refer to Solectron Corporation and not to the selling
stockholders.
SOLECTRON CORPORATION
Solectron Corporation is an independent provider of customized
manufacturing services to electronics original equipment manufacturers. Our
customers compete in the networking, data and voice communications, workstation,
personal computer and computer peripheral segments of the electronics industry.
We provide a wide variety of pre-manufacturing, manufacturing and
post-manufacturing services, including:
- system box-build manufacture and testing;
- component manufacture and testing;
- printed circuit board assembly and testing; and
- engineering design tools and services.
Our goal is to offer our customers the significant competitive advantages
that can be obtained from manufacturing outsourcing, such as:
- access to advanced manufacturing technologies;
- shortened product time-to-market;
- reduced cost of production; and
- more effective asset utilization.
We have manufacturing operations in locations throughout the world,
including North America, Europe, the Asia/Pacific region and Brazil. We believe
that the geographically diverse locations of our facilities allow us to build
closer regional relationships with our customers and to better meet our
customers' cost and local market content requirements.
We were originally incorporated in California in August 1977. In February
1997, we were reincorporated in Delaware. Our principal executive offices are
located at 777 Gibraltar Drive, Milpitas, California 95035. Our telephone number
is (408) 957-8500.
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THE OFFERING
LYONS........................ $1,656,000,000 aggregate principal amount at
maturity of LYONs due January 27, 2019. We will
not pay interest on the LYONs prior to maturity.
Each LYON was issued at a price of $452.89 per
LYON. Each LYON has a principal amount at
maturity of $1,000.
MATURITY..................... January 27, 2019.
YIELD TO MATURITY OF LYONS... 4% per year calculated from January 27, 1999.
CONVERSION RIGHTS............ Holders may convert LYONs at any time on or
before the maturity date, unless the LYONs have
previously been redeemed or purchased. For each
$1,000 principal amount at maturity of LYONs
converted, we will deliver 7.472 shares of our
common stock. The conversion rate may be
adjusted for certain reasons, but will not be
adjusted for accrued original issue discount.
Upon conversion, you will not receive any cash
payment representing accrued original issue
discount. Instead, accrued original issue
discount will be deemed paid by the common stock
received by you on conversion. See "Description
of LYONs -- Conversion Right."
RANKING...................... The LYONs will be unsecured and unsubordinated
obligations. The LYONs will rank on a parity in
right of payment with all existing and future
unsecured and unsubordinated indebtedness of
Solectron.
ORIGINAL ISSUE DISCOUNT...... We are offering each LYON at an original issue
discount for United States federal income tax
purposes. Original issue discount is equal to
the principal amount at maturity of each LYON
less the issue price to investors. You should be
aware that, although we will not pay interest on
the LYONs, U.S. investors must include accrued
original issue discount in their gross income
for United States federal income tax purposes
prior to the conversion, redemption, sale or
maturity of the LYONs. This will be true even if
such LYONs are ultimately not converted,
redeemed, sold or paid at maturity. See "Federal
Income Tax Considerations -- Original Issue
Discount."
SINKING FUND................. None.
OPTIONAL REDEMPTION.......... We may redeem all or a portion of the LYONs for
cash at any time on or after January 27, 2003,
at the redemption prices set forth in this
prospectus. See "Descriptions of
LYONs -- Redemption of LYONs at the Option of
Solectron."
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PURCHASE OF THE LYONS AT THE
OPTION OF THE HOLDER....... Holders may require us to purchase their LYONs
on January 27, 2002, at a price of $510.03 per
LYON, and on January 27, 2009, at a price of
$672.97 per LYON. We may choose to pay the
purchase price in cash or common stock or a
combination of cash and common stock. See
"Descriptions of LYONs -- Purchase of LYONs at
the Option of the Holder."
CHANGE IN CONTROL............ Upon a change in control of Solectron occurring
on or before January 27, 2002, each holder may
require us to repurchase all or a portion of
such holder's LYONs. This repurchase price will
be equal to the issue price of the LYONs plus
accrued original issue discount to the date of
repurchase. The term "change in control" is
defined in the "Descriptions of LYONs -- Change
in Control Permits Purchase of LYONs at the
Option of the Holder" section of this
Prospectus.
OPTIONAL CONVERSION TO
SEMIANNUAL COUPON NOTE UPON
TAX EVENT.................. From and after a tax event date, at our option,
interest instead of future original issue
discount shall accrue on each LYON from the
option exercise date at 4% per year on the
restated principal amount. In such event, the
redemption price, purchase price and change in
control purchase price shall be adjusted as
described in this prospectus. However, there
will be no changes in the holder's conversion
rights. See "Descriptions of LYONs -- Optional
Conversion to Semiannual Coupon Note upon Tax
Event."
USE OF PROCEEDS.............. Solectron will not receive any of the proceeds
from the sale by any selling securityholder of
the LYONs or the underlying common stock.
TRADING...................... The LYONs issued in the initial private
placement are eligible for trading in The Portal
Market. However, LYONs sold using this
prospectus will no longer be eligible for
trading in The Portal Market. Our common stock
is traded on the New York Stock Exchange under
the symbol "SLR."
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RISK FACTORS
This prospectus contains or incorporates by reference forward-looking
statements that involve risks and uncertainties. The statements contained or
incorporated by reference in this prospectus that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including, but not limited to, statements as to our future operating
results and business plans, that involve risks and uncertainties. These
statements may be identified by the use of words such as "expects,"
"anticipates," "intends," "plans," and similar expressions. Our actual results
could differ materially from those discussed herein. You should carefully
consider the risks and uncertainties described below and the other information
in this prospectus and in any documents incorporated herein by reference, before
making an investment decision.
WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR THE MAJORITY OF OUR REVENUES.
A small number of our customers are responsible for the majority of our
annual revenues. In fiscal 1998, our 10 largest customers accounted for 68.7% of
our revenues. In fiscal 1997, our 10 largest customers accounted for 65.5% of
our revenues. We are dependent upon continued revenue from our 10 largest
customers and any material delay, cancellation or reduction of orders from these
or other significant customers could have a material adverse effect on our
results of operations. Several of our customers individually account for more
than 10% of our annual revenues. Hewlett-Packard company has historically been
one of our largest customers and sales to that corporation accounted for 13.9%
of our annual revenues in fiscal 1998. In fiscal 1997, sales to Hewlett-Packard
accounted for 13.5% of our annual revenues. In fiscal 1996, sales to Hewlett
Packard accounted for 10.7% of our annual revenues. Cisco Systems, Inc.
accounted for 10.7% of our revenues in fiscal 1998. Sun Microsystems accounted
for 10.5% of our revenues in fiscal 1998. In addition, Nortel Networks Inc.,
formerly Bay Networks, Inc. accounted for 10.4% of our revenues in fiscal 1997.
The percentage of our sales to major customers may fluctuate from period to
period. If our sales to any of our 10 largest customers significantly declined,
we would experience a material adverse effect on our results of operations.
There is no guarantee that we will be able to maintain any of our 10 largest
customers. In addition, we have long-term contracts with only a few of our
customers including Ericsson, NCR, IBM and Mitsubishi. Under these contracts our
customers are obligated to purchase products from us. However, these customers,
as well as all of our other customers, are not bound to purchase products from
us in volume. Our customer contracts may be canceled or our customers could
materially reduce the volume of products ordered from us, either of which would
have a material adverse effect on our results of operations.
WE DEPEND ON THE ELECTRONICS INDUSTRY.
A majority of our sales are to corporations in the electronics industry,
which is subject to rapid technological change and product obsolescence. If we
are unable to make products that conform with the changing technological
environment, our products could become obsolete and our sales could
significantly decline. Many of our customers are original equipment
manufacturers and if we are unable to offer technologically advanced solutions
that are cost effective, our sales will suffer. In addition, if we are unable to
maintain and establish partnerships with major electronics manufacturers, we
would experience a material adverse effect on our results of operations. A
substantial portion of our revenue
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comes from our ability to offer complete product solutions for large electronic
manufacturers. If we fail to maintain a broad product offering, our sales would
decline and we would experience a material adverse effect on our results of
operations. Many of our customers use us as their primary source for the types
of products that we make. If our customers began using other suppliers, our
sales would decrease and our results of operations would suffer.
WE MUST MANAGE OUR RAPID GROWTH TO SUSTAIN PROFITABILITY.
We have experienced rapid growth over our last five fiscal years, with
revenues increasing from $1.5 billion in fiscal 1994 to $5.3 billion in fiscal
1998. Our historical growth may not continue. In recent years we have
established operations in different places throughout the world. For example, in
fiscal 1998, we opened offices in Taiwan and Israel, commenced manufacturing
operations in Mexico and Romania and announced a joint venture with Ingram
Micro, Inc. In that same fiscal year, we acquired foreign facilities in Brazil,
Sweden and Ireland. Furthermore, through acquisitions in fiscal 1998 and 1999,
we acquired facilities in Georgia and South Carolina and enhanced our
capabilities in North Carolina and Texas. All of this recent growth has strained
our management team and no assurance can be given that we will be successful in
integrating any of our new operations. If we fail to integrate any of these
operations we could experience a material adverse effect on our results of
operations. As we manage our operations, including our new operations, and
continue to expand we may incur substantial costs. If we do not achieve
sufficient growth to offset increased expenses associated with our rapid
expansion, our results of operations could be adversely affected. Our working
capital and expenses will continue to increase as our new and enhanced
facilities become fully operational. If we increase our expenses in anticipation
of sales that never materialize, our profitability would be adversely affected.
Our resources could be further strained if our customers require rapid
production increases.
OUR INTERNATIONAL SALES ARE A SIGNIFICANT PORTION OF OUR REVENUES AND THERE ARE
CERTAIN RISKS ASSOCIATED WITH OPERATING INTERNATIONALLY.
In fiscal 1998 approximately 34% of our sales came from outside of the
United States. As a result of our foreign sales and facilities, our operations
are subject to a variety of risks including the following:
- Fluctuations in the value of currency;
- Export duties;
- Import and export regulation changes;
- Potential restrictions on the transfer of funds;
- Employee turnover;
- Labor unrest;
- Longer payment cycles;
- Difficulty in collecting accounts receivable;
- The burden of compliance with foreign laws; and
- Economic and political instability.
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In addition, we have operations in several locations that have inflationary
economies or volatile currencies, including Mexico, Brazil, China and Romania.
In the future these factors may have a material adverse impact on our results of
operations. The Southeast Asian and Latin American markets are experiencing
currency, economic and political instability. To date, our operations have not
experienced significant adverse effects from this instability. However, in the
event that sales in those regions by our customers decline, there could be a
reduction in demand for our products.
WE FACE RISKS ASSOCIATED WITH POTENTIAL SHORTAGES IN THE AVAILABILITY OF
COMPONENTS.
One of the services that we perform for many of our customers is purchasing
components used in the manufacturing of products. As a result of this service,
we bear the risk of price increases for components to the extent that we are
unable to purchase the components at the same time that we agree with our
customers on the overall price for the products. At various times there have
been shortages of components in the electronics industry. If significant product
shortages should occur, we may be forced to delay manufacturing and shipments,
which could have a material adverse effect on our results of operations.
OUR OPERATING RESULTS MAY FLUCTUATE.
Our quarterly revenues may fluctuate in the future as a result of a number
of factors including the following:
- The mix of printed circuit board assembly and systems build projects;
- Our utilization of excess capacity for manufacturing;
- Price competition;
- The amount of automation that we can use in the assembly process;
- The efficiencies that we can achieve through the management of
inventories and fixed assets;
- The timing of orders from major customers;
- Fluctuations in demand for products;
- The timing of expenditures in anticipation of increased sales;
- Customer delivery schedules;
- Shortages in labor or components; and
- Whether, on behalf of our customers, we purchase the components used in
the manufacture of products.
WE FACE INTENSE COMPETITION IN THE ELECTRONICS MANUFACTURING SERVICES INDUSTRY.
We are one of many manufacturing services companies for the electronics
industry. We also face competition from current and prospective customers that
could decide to manufacture products internally, rather than using our services.
We compete with different companies depending on the type of service or
geographic area. Certain of our competitors may have greater manufacturing,
financial, research and development and/or marketing resources than we have. In
addition, we may not be able to offer prices as low as some of
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our competitors because they may have lower cost structures. We believe that the
following factors are the primary basis of competition in our targeted markets:
- Manufacturing technology;
- Quality;
- Responsiveness;
- Availability of value-added services; and
- Price.
To be competitive we believe that we must provide the following services to
our customers:
- Technologically advanced manufacturing;
- High product quality levels;
- Flexible delivery schedules; and
- Reliable delivery of products on a timely and price competitive basis.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY
RIGHT AND WE COULD BECOME INVOLVED IN INTELLECTUAL PROPERTY DISPUTES.
Our ability to effectively compete may be affected by our ability to
protect our proprietary information. We hold a limited number of patents and our
subsidiary, Force Computers, holds certain patents. These patents may not
provide meaningful protection for our manufacturing process and equipment
innovations. In addition, in the future third parties may assert infringement
claims against us or our customers. In the event of an infringement claim we may
be required to spend a significant amount of money to develop a non-infringing
manufacturing process or to obtain licenses. We may not be successful in
developing such a process or obtaining a license on reasonable terms, if at all.
In addition, any such litigation could be lengthy and costly and could have a
material adverse effect on our financial condition.
FAILURE TO COMPLY WITH ENVIRONMENTAL REGULATIONS COULD HARM OUR BUSINESS.
We are subject to a variety of environmental regulations relating to the
use, storage and discharge and disposal of hazardous chemicals used during our
manufacturing process. Any failure by us to comply with environmental laws and
regulations could result in liabilities or the suspension of production. In
addition, these laws and regulations could restrict our ability to expand our
facilities or require us to acquire costly equipment or incur other significant
costs to comply with regulations.
YEAR 2000 COMPLIANCE ISSUES COULD HARM OUR BUSINESS.
The Year 2000 issue is the result of computer programs written using two
digits rather than four to define the applicable year. Computer programs that
have this date-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in normal business activities.
We have not yet developed a formal contingency plan to handle the Year 2000
problem and we may not be successful in developing a contingency plan on a
timely basis,
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if at all. In addition, if we do develop a contingency plan, that plan may not
be successful in solving Year 2000 problems.
We are heavily dependent upon the proper functioning of our own computer or
data dependent systems. This includes, but is not limited to, our systems in
information, business, finance, operations, manufacturing and service. Any
significant failure or malfunctioning on the part of these or other systems
could adversely affect our business.
OUR HOLDING COMPANY STRUCTURE RESULTS IN SUBSTANTIAL STRUCTURAL SUBORDINATION
AND MAY AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE LYONS.
The LYONs are obligations exclusively of Solectron. We are a holding
company and, accordingly, substantially all of our operations are conducted
through our subsidiaries. As a result, our cash flow and our ability to service
our debt, including the LYONs, is dependent upon the earnings of our
subsidiaries. In addition, we are dependent on the distribution of our
subsidiaries earnings, loans or other payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the LYONs or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans or
other payments. In addition, any payment of dividends, distributions loans or
advances by our subsidiaries to us could be subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
LYONs to participate in those assets, will be effectively subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
IN CONTROL OFFER OR THE REPURCHASE REQUIRED BY THE INDENTURE.
Upon the occurrence of certain specific kinds of change in control events
on or before January 27, 2002, and on the January 27, 2002 purchase date, we
will be required to offer to repurchase all of the outstanding LYONs. However,
it is possible that we will not have sufficient funds at such time to make the
required repurchase of LYONs or that restrictions in our credit facility or
other indebtedness will not allow such repurchases. In addition, certain
important corporate events, such as leveraged recapitalizations that would
increase the level of our indebtedness, would not constitute a "Change in
Control" under the indenture.
ABSENCE OF PUBLIC MARKET FOR THE LYONS AND RESTRICTIONS ON RESALE
The initial purchaser of the LYONs, though it has advised us that it
intends to make a market in the LYONs, is not obligated to do so and may
discontinue market making at any time without notice. Its market-making activity
will be subject to the limits imposed by the securities laws. We cannot
guarantee that the market for the LYONs will be maintained. The trading price of
LYONs will decline if there ceases to be an active trading market for them. We
do not intend to apply for listing of the LYONs on any securities exchange.
10
<PAGE> 13
USE OF PROCEEDS
Solectron will not receive any proceeds from the sale by any selling
securityholder of the LYONs or the underlying common stock.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED AUGUST 31, NOVEMBER 30,
----------------------------------------- -------------------
1994 1995 1996 1997 1998 1997 1998
----- ----- ----- ----- ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges...... 6.01x 8.73x 8.99x 8.06x 9.30x 8.62x 10.82x
</TABLE>
These computations include us and our consolidated subsidiaries. For these
ratios, "earnings" represents income before taxes plus fixed charges (excluding
capitalized interest). Fixed charges consists of (1) interest on all
indebtedness and amortization of debt discount and expense, (2) capitalized
interest and (3) an interest factor attributable to rentals.
11
<PAGE> 14
DESCRIPTION OF LYONS
The LYONs are issued under an indenture, dated January 27, 1999, between us
and State Street Bank and Trust Company of California, N.A., as trustee. The
following summary of certain provisions of the indenture is not complete. You
should look at the indenture and the form of LYON that has been filed as an
exhibit to this registration statement.
GENERAL
We issued $1,656,000,000 aggregate principal amount at maturity of LYONs in
the January, 1999 private placement. The LYONs will mature on January 27, 2019.
The principal amount at maturity of each LYON is $1,000. The LYONs will be
payable at the office of the paying agent, which initially will be an office or
agency of the trustee, or an office or agency maintained by us for such purpose,
in the Borough of Manhattan, The City of New York.
The LYONs were offered at a substantial discount from their principal
amount at maturity. See "Federal Income Tax Considerations -- Original Issue
Discount." We will not make periodic payments of interest on the LYONs. However,
the LYONs will accrue original issue discount while they remain outstanding.
Original issue discount is the difference between the issue price and the
principal amount at maturity of a LYON. The calculation of the accrual of
original issue discount will be on a semi-annual bond equivalent basis using a
360-day year composed of twelve 30-day months. The issue date for the LYONs and
the commencement date for the accrual of original issue discount was January 27,
1999.
Maturity, conversion, purchase by us at the option of a holder or
redemption of a LYON will cause original issue discount and interest, if any, to
cease to accrue on such LYON under the indenture.
We may not reissue a LYON that has matured or been converted, purchased by
us at the option of a holder, redeemed or otherwise cancelled, except for
registration of transfer, exchange or replacement of such LYON.
LYONs may be presented for conversion at the office of the conversion
agent, and for exchange or registration of transfer at the office of the
registrar, each such agent initially being the trustee.
TRANSFER OR EXCHANGE
No service charge will be made for any registration of transfer or exchange
of LYONs. However, we may require the holder to pay any tax, assessment or other
governmental charge payable as a result of such transfer or exchange.
If a LYON is mutilated, defaced, destroyed, lost or stolen, we will execute
and the trustee, on our request, will authenticate and deliver a new LYON in
exchange and substitution for such LYON:
- with the same maturity and date of issuance;
- an equal principal amount at maturity;
- registered in the same manner; and
- dated the date of its authentication.
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<PAGE> 15
If the LYON is destroyed, lost or stolen, the person requesting a
substituted LYON shall furnish to us and the trustee security or indemnity in
amount that will hold us and the trustee harmless. In addition, in case of
destruction, loss or theft of a LYON, we will need satisfactory evidence from
the person requesting a substituted LYON of the destruction, loss or theft of
the LYON and ownership of the LYON.
Upon the issuance of any substituted LYON, we may require the registered
holder of the LYON to pay any fees and expenses in connection with the issuance
of the LYON.
RANKING OF LYONS
The LYONs will be unsecured and unsubordinated obligations. The LYONs will
rank on a parity in right of payment with all of our existing and future
unsecured and unsubordinated indebtedness.
CONVERSION RIGHT
A holder may convert a LYON, in multiples of $1,000, into common stock at
any time before the close of business on January 27, 2019. However, a holder may
convert a LYON only until the close of business on the redemption date if we
call a LYON for redemption.
A LYON for which a holder has delivered a purchase notice or a change in
control purchase notice requiring us to purchase the LYON may be converted only
if such notice is withdrawn in accordance with the indenture.
The conversion rate is 7.472 shares of common stock per LYON, subject to
adjustment upon the occurrence of certain events described below. We will pay
cash equal to the then current market value of a fractional share.
On conversion of a LYON, a holder will not receive any cash payment
representing accrued original issue discount. Our delivery to the holder of the
fixed number of shares of common stock into which the LYON is convertible,
together with any cash payment for fractional shares, will be deemed:
- to satisfy our obligation to pay the principal amount at maturity of the
LYON; and
- to satisfy our obligation to pay accrued original issue discount
attributable to the period from the issue date through the conversion
date.
As a result, accrued original issue discount is deemed to be paid in full rather
than cancelled, extinguished or forfeited.
The conversion rate will not be adjusted for such accrued original issue
discount. A certificate for the number of full shares of common stock into which
any LYON is converted, together with any cash payment for fractional shares,
will be delivered through the conversion agent as soon as practicable following
the conversion date.
For a discussion of the tax treatment of a holder receiving common stock
upon conversion, see "Federal Income Tax Considerations -- Disposition or
Conversion."
To convert a LYON into shares of common stock, a holder must:
- complete and manually sign the conversion notice on the back of the LYON
or complete and manually sign a facsimile of the conversion notice and
deliver the conversion notice to the conversion agent;
- surrender the LYON to the conversion agent;
13
<PAGE> 16
- if required, furnish appropriate endorsements and transfer documents; and
- if required, pay all transfer or similar taxes.
Pursuant to the indenture, the date on which all of the foregoing requirements
have been satisfied is the conversion date.
The conversion rate will be adjusted for:
- dividends or distributions on common stock payable in common stock or
other capital stock;
- subdivisions, combinations or certain reclassifications of common stock;
- distributions to all holders of common stock of certain rights to
purchase common stock for a period expiring within 60 days at less than
the Quoted Price at the time; and
- distributions to such holders of our assets or debt securities or certain
rights to purchase our securities (excluding cash dividends or other cash
distributions from current or retained earnings other than any
Extraordinary Cash Dividend).
However, no adjustment need be made if holders may participate in the
transaction or in certain other cases. In cases where the fair market value of
assets, debt securities or certain rights, warrants or options to purchase our
securities distributed to shareholders
- equals or exceeds the Average Quoted Price of the common stock, or
- such Average Quoted Price exceeds the fair market value of such assets,
debt securities or rights, warrants or options so distributed by less
than $1.00,
rather than being entitled to an adjustment in the conversion rate, the holder
of a LYON upon conversion will be entitled to receive, in addition to the shares
of common stock, the kind and amount of assets, debt securities or rights,
warrants or options comprising the distribution that such holder would have
received if such holder had converted such LYON immediately prior to the record
date for determining the shareholders entitled to receive the distribution.
If the shareholders rights plan under which any rights are issued provides
that each share of common stock issued upon conversion of LYONs at any time
prior to the distribution of separate certificates representing such rights will
be entitled to receive such rights, there shall not be any adjustment to the
conversion privilege or conversion rate as a result of:
- the issuance of the rights;
- the distribution of separate certificates representing the rights;
- the exercise or redemption of such rights in accordance with any Rights
Agreement; or
- the termination or invalidation of the rights.
The indenture permits us to increase the conversion rate from time to time.
If we are party to a consolidation, merger or binding share exchange or a
transfer of all or substantially all of our assets, the right to convert a LYON
into common stock may be changed into a right to convert it into the kind and
amount of securities, cash or other assets of Solectron or another person which
the holder would have received if the holder had converted the holder's LYONs
immediately prior to the transaction.
14
<PAGE> 17
Holders of the LYONs may, in certain circumstances, be deemed to have
received a distribution subject to Federal income tax as a dividend in the
amount of:
- a taxable distribution to holders of common stock which results in an
adjustment of the conversion rate; or
- an increase in conversion rate at our discretion.
See "Federal Income Tax Considerations -- Constructive Dividend."
If we exercise our option to have interest instead of original issue
discount accrue on a LYON following a Tax Event, the holder will be entitled on
conversion to receive the same number of shares of common stock the holder would
have received if we had not exercised such option.
If we exercise this option, LYONs surrendered for conversion by a holder
during the period from the close of business on any regular record date to the
opening of business of the next interest payment date, except for LYONs to be
redeemed on a date within this period, must be accompanied by payment of an
amount equal to the interest that the registered holder is to receive on the
LYON.
Except where LYONs surrendered for conversion must be accompanied by
payment as described above, we will not pay interest on converted LYONs on any
interest payment date subsequent to the date of conversion. See "-- Optional
Conversion to Semiannual Coupon Note upon Tax Event."
REDEMPTION OF NOTES AT THE OPTION OF SOLECTRON
No sinking fund is provided for the LYONs. Prior to January 27, 2003, the
LYONs will not be redeemable at our option. Beginning on January 27, 2003, we
may redeem the LYONs for cash as a whole at any time, or from time to time in
part. We will give not less than 15 days' nor more than 60 days' notice of
redemption by mail to holders of LYONs.
The table below shows redemption prices of a LYON on January 27, 2003, at
each January 27 thereafter prior to maturity and at maturity on January 27,
2019. These prices reflect the accrued original issue discount calculated to
each such date. The redemption price of a LYON redeemed between such dates would
include an additional amount
15
<PAGE> 18
reflecting the additional original issue discount accrued since the next
preceding date in the table.
<TABLE>
<CAPTION>
(2) (3)
(1) ACCRUED ORIGINAL REDEMPTION
NOTE ISSUE DISCOUNT PRICE
REDEMPTION DATE ISSUE PRICE AT 4% (1)+(2)
--------------- ----------- ---------------- ----------
<S> <C> <C> <C>
January 27, 2003............... $452.89 $ 77.74 $ 530.63
January 27, 2004............... 452.89 99.18 552.07
January 27, 2005............... 452.89 121.48 574.37
January 27, 2006............... 452.89 144.69 597.58
January 27, 2007............... 452.89 168.83 621.72
January 27, 2008............... 452.89 193.95 646.84
January 27, 2009............... 452.89 220.08 672.97
January 27, 2010............... 452.89 247.27 700.16
January 27, 2011............... 452.89 275.56 728.45
January 27, 2012............... 452.89 304.98 757.87
January 27, 2013............... 452.89 335.60 788.49
January 27, 2014............... 452.89 367.46 820.35
January 27, 2015............... 452.89 400.60 853.49
January 27, 2016............... 452.89 435.08 887.97
January 27, 2017............... 452.89 470.96 923.85
January 27, 2018............... 452.89 508.28 961.17
At stated maturity............. 452.89 547.11 1,000.00
</TABLE>
If converted to semiannual coupon LYONs following the occurrence of a Tax
Event, the LYONs will be redeemable at the restated principal amount plus
accrued and unpaid interest from the date of the conversion through the
redemption date. However, in no event may the LYONs be redeemed prior to January
27, 2003. See "-- Optional Conversion to Semiannual Coupon Note upon Tax Event."
If less than all of the outstanding LYONs are to be redeemed, the trustee
shall select the LYONs to be redeemed in principal amounts at maturity of $1,000
or integral multiples of $1,000. In this case, the trustee may select the LYONs
by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder's LYONs is selected for partial redemption
and the holder converts a portion of the LYONs, the converted portion shall be
deemed to be the portion selected for redemption.
PURCHASE OF NOTES AT THE OPTION OF THE HOLDER
On the purchase dates of January 27, 2002 and January 27, 2009, we will, at
the option of the holder, be required to purchase any outstanding LYON for which
a written purchase notice has been properly delivered by the holder and not
withdrawn, subject to certain additional conditions. Holders may submit their
LYONs for purchase to the paying agent at any time from the opening of business
on the date that is 20 business days prior to such purchase date until the close
of business on such purchase date.
The purchase price of a LYON will be:
- $510.03 per LYON on January 27, 2002; and
- $672.97 per LYON on January 27, 2009.
These purchase prices equal the issue price plus accrued original issue
discount to the purchase dates.
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<PAGE> 19
We may, at our option, elect to pay the purchase price in cash or shares of
common stock, or any combination thereof. For a discussion of the tax treatment
of a holder receiving cash, common stock or any combination thereof, see
"Federal Income Tax Considerations -- Disposition or Conversion."
If prior to a purchase date the LYONs have been converted to semiannual
coupon LYONs following the occurrence of a Tax Event, the purchase price will be
equal to the restated principal amount plus accrued and unpaid interest from the
date of the conversion to the purchase date. See "-- Optional Conversion to
Semiannual Coupon Note upon Tax Event."
We will be required to give notice on a date not less than 20 business days
prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
- whether we will pay the purchase price of LYONs in cash or common stock
or any combination thereof, specifying the percentages of each;
- if we elect to pay in common stock the method of calculating the Market
Price of the common stock; and
- the procedures that holders must follow to require us to purchase their
LYONs.
The purchase notice given by each holder electing to require us to purchase
LYONs shall state:
- the certificate numbers of the holder's LYONs to be delivered for
purchase;
- the portion of the principal amount at maturity of LYONs to be purchased,
which must be $1,000 or an integral multiple of $1,000;
- that the LYONs are to be purchased by us pursuant to the applicable
provisions of the LYONs; and
- in the event we elect, pursuant to the notice that we are required to
give, to pay the purchase price in common stock, in whole or in part, but
the purchase price is ultimately to be paid to the holder entirely in
cash because any of the conditions to payment of the purchase price or
portion of the purchase price in common stock is not satisfied prior to
the close of business on the purchase date, as described below, whether
the holder elects:
(1) to withdraw the purchase notice as to some or all of the LYONs to
which it relates, or
(2) to receive cash in respect of the entire purchase price for all LYONs
or portions of LYONs subject to such purchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder shall be deemed
to have elected to receive cash in respect of the entire purchase price for all
LYONs subject to the purchase notice in these circumstances. For a discussion of
the tax treatment of a holder receiving cash instead of common stock, see
"Federal Income Tax Considerations -- Disposition or Conversion."
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
purchase date.
17
<PAGE> 20
The notice of withdrawal shall state:
- the principal amount at maturity being withdrawn;
- the certificate numbers of the LYONs being withdrawn; and
- the principal amount at maturity, if any, of the LYONs that remains
subject to the purchase notice.
If we elect to pay the purchase price, in whole or in part, in shares of
common stock, the number of shares of common stock to be delivered by us shall
be equal to the portion of the purchase price to be paid in common stock divided
by the Market Price of a share of common stock.
We will pay cash based on the Market Price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Federal Income Tax
Considerations -- Disposition or Conversion."
Because the Market Price of the common stock is determined prior to the
applicable purchase date, holders of LYONs bear the market risk with respect to
the value of the common stock to be received from the date such Market Price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the Market Price is published in a daily newspaper of national
circulation.
Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will publish such information on
our Web site on the World Wide Web.
Our right to purchase LYONs, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
- the registration of the common stock under the Securities Act and the
Exchange Act, if required; and
- any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the purchase date, we will pay the purchase price of the
LYONs of the holder entirely in cash. See "Federal Income Tax
Considerations -- Disposition or Conversion." We may not change the form or
components or percentages of components of consideration to be paid for the
LYONs once we have given required the notice that we are required to give to
holders of LYONs, except as described in the first sentence of this paragraph.
In connection with any purchase offer, we will:
- comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable; and
- file Schedule 13E-4 or any other required schedule under the Exchange
Act.
Payment of the purchase price for a LYON for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
LYON, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
LYON will be made promptly following the later of the purchase date or the time
of delivery of the LYON.
18
<PAGE> 21
If the paying agent holds money or securities sufficient to pay the
purchase price of the LYON on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the purchase
date, the LYON will cease to be outstanding and original issue discount on such
LYON will cease to accrue, whether or not the LYON is delivered to the paying
agent. Thereafter, all other rights of the holder shall terminate, other than
the right to receive the purchase price upon delivery of the LYON.
Our ability to purchase LYONs with cash may be limited by the terms of our
then existing borrowing agreements.
No LYONs may be purchased for cash at the option of holders if there has
occurred and is continuing an Event of Default with respect to the LYONs
described under "-- Events of Default; Notice and Waiver," other than a default
in the payment of the purchase price with respect to such LYONs.
CHANGE IN CONTROL PERMITS PURCHASE OF LYONS AT THE OPTION OF THE HOLDER
In the event of any Change in Control occurring on or prior to January 27,
2002, each holder will have the right, at the holder's option, subject to the
terms and conditions of the indenture, to require us to purchase all or any
portion of the holder's LYONs. However, principal amount at maturity submitted
for purchase by a holder must be $1,000 or an integral multiple of $1,000.
We will be required to purchase the LYONs as of the date that is 35
business days after the occurrence of such Change in Control (a "change in
control purchase date") at a cash price equal to the issue price plus accrued
original issue discount to the change in control purchase date.
If prior to a change in control purchase date the LYONs have been converted
to semiannual coupon LYONs following the occurrence of a Tax Event, we will be
required to purchase the LYONs at a cash price equal to the restated principal
amount plus accrued and unpaid interest from the date of the conversion to the
change in control purchase date.
Within 15 business days after the occurrence of a Change in Control, we are
obligated to mail to the trustee and to all holders of LYONs at their addresses
shown in the register of the registrar and to beneficial owners as required by
applicable law a notice regarding the Change in Control, which notice shall
state, among other things:
- the events causing a Change in Control;
- the date of such Change in Control;
- the last date on which the purchase right may be exercised;
- the change in control purchase price;
- the change in control purchase date;
- the name and address of the paying agent and the conversion agent;
- the conversion rate and any adjustments to the conversion rate;
- that LYONs with respect to which a change in control purchase notice is
given by the holder may be converted only if the change in control
purchase notice has been withdrawn in accordance with the terms of the
indenture; and
- the procedures that holders must follow to exercise these rights.
19
<PAGE> 22
To exercise this right, the holder must deliver a written notice to the
paying agent prior to the close of business on the change in control purchase
date. The required purchase notice upon a Change in Control shall state:
- the certificate numbers of the LYONs to be delivered by the holder;
- the portion of the principal amount at maturity of LYONs to be purchased,
which portion must be $1,000 or an integral multiple of $1,000; and
- that we are to purchase such LYONs pursuant to the applicable provisions
of the LYONs.
Any change in control purchase notice may be withdrawn by the holder by a
written notice of withdrawal delivered to the paying agent prior to the close of
business on the change in control purchase date.
The notice of withdrawal shall state:
- the principal amount at maturity being withdrawn;
- the certificate numbers of the LYONs being withdrawn; and
- the principal amount at maturity, if any, of the LYONs that remain
subject to a change in control purchase notice.
Payment of the change in control purchase price for a LYON for which a
change in control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the LYON, together with necessary endorsements,
to the paying agent at any time after the delivery of such change in control
purchase notice. Payment of the change in control purchase price for such LYON
will be made promptly following the later of the change in control purchase date
or the time of delivery of such LYON.
If the paying agent holds money sufficient to pay the change in control
purchase price of the LYON on the business day following the change in control
purchase date in accordance with the terms of the indenture, then, immediately
after the change in control purchase date, original issue discount the such LYON
will cease to accrue, whether or not the LYON is delivered to the paying agent.
Thereafter, and all other rights of the holder shall terminate, other than the
right to receive the change in control purchase price upon delivery of the LYON.
The indenture does not permit our board of directors to waive our
obligation to purchase LYONs at the option of holders in the event of a Change
in Control.
In connection with any purchase offer in the event of a Change in Control,
we will:
- comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable; and
- file Schedule 13E-4 or any other required schedule under the Exchange
Act.
The Change in Control purchase feature of the LYONs may in certain
circumstances make more difficult or discourage a takeover of Solectron. The
Change in Control purchase feature, however, is not the result of our knowledge
of any specific effort:
- to accumulate shares of common stock;
- to obtain control of Solectron by means of a merger, tender offer,
solicitation or otherwise; or
- part of a plan by management to adopt a series of anti-takeover
provisions.
20
<PAGE> 23
Instead, the Change in Control purchase feature is a standard term contained in
other LYONs offerings that have been marketed by Merrill Lynch. The terms of the
Change in Control purchase feature resulted from negotiations between Merrill
Lynch and us.
We could, in the future, enter into certain transactions, including certain
recapitalizations, that would not constitute a Change in Control with respect to
the Change in Control purchase feature of the LYONs but that would increase the
amount of our outstanding indebtedness.
No LYONs may be purchased at the option of holders upon a Change in Control
if there has occurred and is continuing an Event of Default with respect to the
LYONs, other than a default in the payment of the change in control purchase
price with respect to the LYONs.
OPTIONAL CONVERSION TO SEMIANNUAL COUPON NOTE UPON TAX EVENT
From and after the date of the occurrence of a Tax Event, we shall have the
option to elect to have interest in lieu of future original issue discount
accrue at 4% per year on a principal amount per LYON (the "restated principal
amount") equal to the issue price plus original issue discount accrued to the
date of the Tax Event or the date on which we exercise the option described
below, whichever is later (the "option exercise date").
Such interest shall accrue from the option exercise date and shall be
payable semiannually on the interest payment dates of January 27 and July 27 of
each year to holders of record at the close of business on January 12 or July 12
immediately preceding the interest payment date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Interest will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the option exercise date.
President Clinton's fiscal year 1998 budget proposed a series of tax law
changes that would have, if enacted and made applicable to the LYONs, prevented
us from deducting interest, including original issue discount, payable on the
LYONs on a current accrual basis for United States federal income tax purposes.
In addition, these proposed tax law changes could have caused some or all of the
interest, including original issue discount, payable on the LYONs to fail to be
deductible by us under any other method for United States federal income tax
purposes. This proposal was not adopted by Congress and was not part of the
Taxpayer Relief Act of 1997. A similar proposal was included in President
Clinton's fiscal year 1999 budget proposal introduced in February 1998 but was
not adopted by Congress and was not part of the Internal Revenue Services
Restructuring and Reform Bill of 1998 or the Tax and Trade Relief Extension Act
of 1998.
If a similar proposal were ever enacted and made applicable to the LYONs in
a manner that would limit our ability to either
- deduct the interest, including original issue discount, payable on the
LYONs on a current accrual basis, or
- deduct the interest, including original issue discount, payable on the
LYONs under any other method for United States federal income tax
purposes,
such enactment would result in a Tax Event and the terms of the LYONs would be
subject to modification at our option as described above.
The modification of the terms of LYONs by us upon a Tax Event as described
above could possibly alter the timing of income recognition by holders of the
LYONs with
21
<PAGE> 24
respect to the semiannual payments of interest due on the LYONs after the option
exercise date. See "Federal Income Tax Considerations."
MERGER AND SALES OF ASSETS:
The indenture provides that we may not consolidate with or merge into any
other person or convey, transfer or lease its properties and assets
substantially as an entirety to another person, unless among other items:
- the resulting, surviving or transferee person, if other than us, is
organized and existing under the laws of the United States, any state
thereof or the District of Columbia and such person assumes all of our
obligations under the LYONs and the indenture; and
- we or such successor person shall not immediately thereafter be in
default under the indenture.
Upon the assumption our obligations in such circumstances, subject to
certain exceptions, we shall be discharged from all obligations under the LYONs
and the indenture. Although such transactions are permitted under the indenture,
certain of the foregoing transactions occurring on or prior to January 27, 2002
could constitute a Change in Control permitting each holder to require us to
purchase the holder's LYONs as described above.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The indenture provides that, if an Event of Default specified therein shall
have happened and be continuing, either the trustee or the holders of not less
than 25% in aggregate principal amount at maturity of the LYONs then outstanding
may declare the issue price of the LYONs plus the original issue discount on the
LYONs accrued, or if the LYONs have been converted to semiannual coupon notes
following a Tax Event, the restated principal amount, plus accrued and unpaid
interest through the date of such declaration to be immediately due and payable.
In the case of certain events of bankruptcy or insolvency, the issue price
of the LYONs plus the original issue discount accrued on the LYONs, or if the
LYONs have been converted to semiannual coupon notes following a Tax Event, the
restated principal amount, plus accrued and unpaid interest through the
occurrence of such event shall automatically become and be immediately due and
payable.
Under certain circumstances, the holders of a majority in aggregate
principal amount at maturity of the outstanding LYONs may rescind any
acceleration with respect to the LYONs and its consequences. Interest shall, to
the extent permitted by law, accrue and be payable on demand with respect to any
LYON upon a default in the payment of:
- the principal amount at maturity, or if the LYONs have been converted to
semiannual coupon notes following a Tax Event, the restated principal
amount;
- the issue price;
- accrued original issue discount, or if the LYONs have been converted to
semiannual coupon notes following a Tax Event, accrued and unpaid
interest;
- the redemption price;
- the purchase price; or
- the change in control purchase price.
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<PAGE> 25
This interest shall be compounded semi-annually. The accrual of interest on
overdue amounts shall be instead of, and not in addition to, the continued
accrual of original issue discount.
Under the indenture, an Event of Default includes any of the following:
- default in payment of the principal amount at maturity, or if the LYONs
have been converted to semiannual coupon notes following a Tax Event, the
restated principal amount, issue price, accrued original issue discount,
or if the LYONs have been converted to semiannual coupon notes following
a Tax Event, accrued and unpaid interest, redemption price, purchase
price or change in control purchase price with respect to any LYON when
such becomes due and payable;
- our failure to comply with any of its other agreements in the LYONs or
the indenture upon receipt by us of notice of such default by the trustee
or by holders of not less than 25% in aggregate principal amount at
maturity of the LYONs then outstanding and our failure to cure or obtain
a waiver of such default within 60 days after receipt by us of such
notice;
- (a) our failure to make any payment by the end of any applicable grace
period after maturity of indebtedness, which term as used in the
indenture means obligations, other than nonrecourse our obligations for
borrowed money or evidenced by bonds, debentures, notes or similar
instruments in an amount in excess of $100,000,000 and continuance of
such failure, or
(b) the acceleration of such indebtedness in an amount in excess of
$100,000,000 because of a default with respect to such indebtedness
without such indebtedness having been discharged or such acceleration
having been cured, waived, rescinded or annulled, in the case of (a) or
(b) above, for a period of 30 days after written notice to us by the
trustee or to us and the trustee by the holders of not less than 25% in
aggregate principal amount at maturity of the LYONs then outstanding;
provided, however, that if any such failure or acceleration referred to
in (a) or (b) above shall cease or be cured, waived, rescinded or
annulled, then the Event of Default by reason thereof shall be deemed not
to have occurred;
- certain events of bankruptcy or insolvency.
The holders of a majority in aggregate principal amount at maturity of the
outstanding LYONs may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. However, this direction shall not be in conflict
with any law or the indenture and subject to certain other limitations. Before
proceeding to exercise any right or power under the indenture at the direction
of such holders, the trustee shall be entitled to receive from such holders
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which might be incurred by it in complying with any such
direction.
No holder of any LYON will have any right to pursue any remedy with respect
to the indenture or the LYONs, unless:
- such holder shall have previously given the trustee written notice of a
continuing Event of Default;
- the holders of at least 25% in aggregate principal amount at maturity of
the outstanding LYONs shall have made a written request to the trustee to
pursue such remedy;
23
<PAGE> 26
- such holder or holders have offered to the trustee reasonable indemnity
satisfactory to the trustee;
- the holders of a majority in aggregate principal amount at maturity of
the outstanding LYONs have not given the trustee a direction inconsistent
with such request within 60 days after receipt of such request; and
- the trustee shall have failed to comply with the request within such
60-day period.
Notwithstanding the above provisions, the following rights of any holder
shall not be impaired or adversely affected without the holder's consent:
- to receive payment of the principal amount at maturity, or if the LYONs
have been converted to semiannual coupon notes following a Tax Event, the
restated principal amount, issue price, accrued original issue discount,
or if the LYONs have been converted to semiannual coupon notes following
a Tax Event, accrued and unpaid interest, redemption price, purchase
price or change in control purchase price with respect to any LYON and
any interest in respect of a default in the payment of any such amounts
on such LYON on or after the due date expressed in the LYON;
- to convert LYONs; or
- to institute suit for the enforcement of any such payments or conversion.
The holders of at least a majority in aggregate principal amount at
maturity of the outstanding LYONs may waive an existing default and its
consequences, other than:
- any default in any payment on the LYONs;
- any default which constitutes a failure to convert any LYON in accordance
with its terms; or
- any default in respect of certain covenants or provisions in the
indenture which may not be modified without the consent of the holder of
each LYON as described in "Modification" below.
We will be required to furnish to the trustee annually a statement as to
any default by us in the performance and observance of its obligations under the
indenture. The trustee will be required to give notice to holders of the LYONs
of any continuing default known to the trustee within 90 days after the
occurrence thereof, unless such default shall have been cured or waived before
the giving of such notice. However, the trustee may withhold such notice, as to
any default other than a payment default, if it determines in good faith that
withholding the notice is in the interests of the holders.
MODIFICATION
Without the consent of any holder of LYONs, we may, together with the
trustee, amend the indenture to:
- cure any ambiguity, defect or inconsistency;
- provide for the assumption by a successor corporation of our obligations
under the indenture;
- provide for uncertificated LYONs in addition to certificated LYONs, so
long as any uncertificated LYONs are in registered form for purposes of
the Internal Revenue Code;
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<PAGE> 27
- make any change that does not adversely affect the rights of any holder
of LYONs; or
- make any change to comply with the Trust Indenture Act of 1939, or to
comply with any requirement of the Commission in connection with the
qualification of the indenture under the Trust Indenture Act of 1939.
Modification and amendment of the indenture or the LYONs may be effected by
us and the trustee with the consent of the holders of not less than a majority
in aggregate principal amount at maturity of the LYONs then outstanding.
However, without the consent of each holder affected thereby, no amendment may,
among other things:
- reduce the principal amount at maturity, restated principal amount, issue
price, purchase price, change in control purchase price or redemption
price with respect to any LYON;
- extend the stated maturity of any LYON;
- alter the manner or rate of accrual of original issue discount or
interest on any LYON;
- make any LYON payable in money or securities other than that stated in
the LYON;
- make any reduction in the principal amount at maturity of LYONs whose
holders must consent to an amendment or any waiver under the indenture or
modify the indenture provisions relating to such amendments or waivers;
- make any change that adversely affects the right to convert any LYON;
- make any change that adversely affects the right to require us to
purchase a LYON; or
- impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, the LYONs.
DISCHARGE OF THE INDENTURE
We may satisfy and discharge its obligations under the indenture by
delivering to the trustee for cancellation all outstanding LYONs or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable after the LYONs have become due and payable, whether at stated
maturity, or any redemption date, or any purchase date, or a change in control
purchase date, or upon conversion or otherwise, cash or common stock, as
applicable under the indenture, sufficient to pay all of the outstanding LYONs
and paying all other sums payable by us under the indenture.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced with respect to us, the claim of
the holder of a LYON is, under Title 11 of the United States Code, limited to
the issue price of the LYON plus that portion of the original issue discount
that has a accrued from the date of issue to the commencement of the proceeding.
In addition, the holders of the LYONs will be effectively subordinated to the
indebtedness and other obligations of our subsidiaries. See "Risk Factors -- Our
Holding Company Structure Results in Substantial Structural Subordination and
May Affect Our Ability to Make Payments on LYONs."
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<PAGE> 28
INFORMATION CONCERNING THE TRUSTEE
State Street Bank and Trust company of California, N.A. is the trustee,
registrar, paying agent and conversion agent under the indenture. We may
maintain deposit accounts and conduct other banking transactions with the
trustee in the normal course of business.
DEFINITIONS USED IN THE DESCRIPTION OF LYONS
"Change in Control" with respect to Solectron is deemed to have occurred at
such time as:
- any person, including its Affiliates and Associates, other than the
company, its subsidiaries or their employee benefit plans, files a
Schedule 13D or 14D-1 (or any successor schedule, form or report under
the Exchange Act) disclosing that such person has become the beneficial
owner of 50% or more of the voting power of our common stock or other
Capital Stock into which the common stock is reclassified or changed,
with certain exceptions; and
- there shall be consummated any consolidation or merger of the company
pursuant to which the common stock would be converted into cash,
securities or other property, in each case other than a consolidation or
merger of the company in which the holders of the common stock
immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the total voting power in the
aggregate of all classes of capital stock of the continuing or surviving
corporation immediately after the consolidation or merger.
"Market Price" means the average of the Sale Prices of the common stock for
the five trading day Period ending on (if the third business day prior to the
applicable purchase date is a trading day, or if not, then on the last trading
day prior to) the third business day prior to the applicable purchase date,
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of such trading days during such five trading day period
and ending on such purchase date, of certain events that would result in an
adjustment of the conversion rate with respect to the common stock.
"Sale Price" of the common stock on any date means the closing per share
sale price (or if no closing sale price is reported, the average of the bid and
ask prices or, if more than one in either case, the average of the average bid
and the average ask prices) on such date as reported in composite transactions
for the principal United States securities exchange on which the common stock is
traded or, if the common stock is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System.
"Tax Event" means that we shall have received an opinion from independent
tax counsel experienced in such matters to the effect that, on or after January
21, 1999, as a result of (a) any amendment to, or change, including any
announced prospective change, in, the laws, or any regulations thereunder, of
the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations by any legislative body, court, governmental agency
or regulatory authority, in each case which amendment or change is enacted,
promulgated, issued or announced or which interpretation is issued or announced
26
<PAGE> 29
or which action is taken, on or after January 21, 1999, there is more than an
insubstantial risk that interest, including original issue discount, payable on
the LYONs either:
- would not be deductible on a current accrual basis, or
- would not be deductible under any other method, in either case in whole
or in part, by the company, by reason of deferral, disallowance, or
otherwise, for United States federal income tax purposes.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 401,200,000 shares. Those shares
consist of (1) 400,000,000 shares designated as common stock, $0.001 par value,
and (2) 1,200,000 shares designated as preferred stock, $0.001 par value. The
only equity securities currently outstanding are shares of common stock. As of
April 5, 1999, there were approximately 252,439,875 shares of common stock
issued and outstanding.
COMMON STOCK
Holders of common stock are entitled to receive dividends declared by the
board of directors, out of funds legally available for the payment of dividends,
subject to the rights of holders of preferred stock. Currently, we are not
paying a dividend. Each holder of common stock is entitled to one vote per
share. Upon any liquidation, dissolution or winding up of our business, the
holders of common stock are entitled to share equally in all assets available
for distribution after payment of all liabilities and provision for liquidation
preference of shares of preferred stock then outstanding. The holders of common
stock have no preemptive rights and no rights to convert their common stock into
any other securities. There are also no redemption or sinking fund provisions
applicable to the common stock.
All outstanding shares of common stock are fully paid and nonassessable.
Our common stock is listed on the New York Stock Exchange under the symbol
"SLR." The transfer agent and registrar for the common stock is Boston Equiserve
Limited Partnership.
PREFERRED STOCK
The board of directors has the authority, without further action by the
stockholders, to issue up to 1,200,000 shares of preferred stock in one or more
series and to fix the following terms of the preferred stock:
- designations, powers, preferences, privileges,
- relative participating, optional or special rights, and
- the qualifications, limitations or restrictions, including dividend
rights, conversion rights, voting rights, terms of redemption and
liquidation preferences.
Any or all of these rights may be greater than the rights of the common
stock.
The board of directors, without stockholder approval, can issue stock with
voting, conversion or other rights that could negatively affect the voting power
and other rights of the holders of common stock. Preferred stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
Solectron or make it more difficult to
27
<PAGE> 30
remove our management. Additionally, the issuance of preferred stock may have
the effect of decreasing the market price of the common stock.
DELAWARE GENERAL CORPORATION LAW SECTION 203
We are a Delaware corporation subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203 prohibits
a publicly held Delaware corporation from engaging in a "business combination"
transaction with an "interested stockholder" for a period of three years after
the person became an interested stockholder, unless (with certain exceptions)
the business combination or the transaction in which the person became an
interested stockholder is approved in a prescribed manner, as described below.
The Section 203 restrictions do not apply if:
(1) the business combination or transaction is approved by our Board of
Directors before the date the interested stockholder obtained such
status,
(2) Upon consummation of the transaction which resulted in the stockholder
obtaining such status, the stockholder owned at least 85% of the shares
of stock entitled to vote generally in the election of directors (the
"voting stock") that are outstanding at the time the transaction
commenced. The 85% calculation does not include those shares
- owned by directors who are also officers of the target corporation,
and
- held by employee stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer, or
- on or after the date the interested stockholder obtained such status,
the business combination is approved by our Board of Directors and at
a stockholder meeting by the affirmative vote of at least 66 2/3% of
the outstanding voting stock which is not owned by the interested
stockholder.
Generally, a "business combination" includes a merger, asset sale, or other
transaction resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with affiliates
and associates, owns, or within three years prior to the determination of
interested stockholder status, did own, 15% or more of a corporations's voting
stock. Section 203 may prohibit or delay mergers or other takeover or change in
control attempts with respect to Solectron. As a result, Section 203 may
discourage attempts to acquire us even though such transaction may offer our
stockholders the opportunity to sell their stock at a price above the prevailing
market price.
FEDERAL INCOME TAX CONSIDERATIONS
This is a summary of certain United States federal income tax
considerations relevant to holders of LYONs. This summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
Internal Revenue Service rulings and judicial decisions now in effect, all of
which are subject to change (possibly with retroactive effect) or different
interpretations. There can be no assurance that the Internal Revenue Service
will not challenge one or more of the conclusions described herein, and we have
not obtained, nor do we intend to obtain, a ruling from the Internal Revenue
Service with respect to the United States federal income tax consequences of
acquiring or holding LYONs.
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<PAGE> 31
This summary does not purport to deal with all aspects of United States
federal income taxation that may be relevant to a holder (for example, persons
subject to the alternative minimum tax provisions of the Code). Also, it is not
intended to be wholly applicable to all categories of investors, such as foreign
corporations and individuals who are not citizens or residents of the United
States, some of which may be subject to special rules.
This summary also does not discuss the tax consequences arising under the
laws of any state, local or foreign jurisdiction. In addition, this summary is
limited to original purchasers of LYONs who acquire LYONs at their original
issue price within the meaning of Section 1273 of the Code and who will hold the
LYONs and common stock into which the LYONs may be converted as "capital assets"
within the meaning of Section 1221 of the Code.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, CONVERSION OR OTHER
DISPOSITION OF LYONS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL
INCOME TAX CONSEQUENCES AND THE CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
We have been advised by our counsel, Wilson Sonsini Goodrich & Rosati,
Professional Corporation, that in such counsel's opinion the LYONs will be
treated as indebtedness for United States federal income tax purposes. Counsel
has further advised us that it is counsel's opinion that, while the following
does not purport to discuss all tax matters relating to the LYONs, based upon
the LYONs being treated as indebtedness, the following are the material federal
income tax consequences of the LYONs, subject to the qualifications set forth
above.
ORIGINAL ISSUE DISCOUNT
The LYONs are being issued at a substantial discount from their principal
amount at maturity. For United States federal income tax purposes, the
difference between the issue price (the initial price at which a substantial
number of the LYONs are sold for money) and the stated principal amount at
maturity of each LYON constitutes original issue discount. Holders of the LYONs
will be required to include original issue discount in income periodically over
the term of the LYONs before receipt of the cash or other payment attributable
to such income.
A holder of a LYON must include in gross income for federal income tax
purposes, such holder's "accrued original issue discount," which is the sum of
the daily portions of original issue discount with respect to the LYON for each
day during the taxable year or portion of a taxable year on which such holder
holds the LYON. The daily portion is determined by allocating to each day of an
accrual period a pro rata portion of an amount equal to the adjusted issue price
of the LYON at the beginning of the accrual period multiplied by the yield to
maturity of the LYON. The accrual period of a LYON may be of any length and may
vary in length over the term of the LYON, provided that each accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs at the end of an accrual period or on the first day of an accrual period.
The adjusted issue price of the LYON at the start of any accrual period is the
issue price of the LYON increased by the accrued original issue discount for
each prior accrual period. Under these rules, holders will have to include in
gross income increasingly greater amounts of original issue discount in each
successive accrual period. Any amount included in income as original issue
discount will increase a holder's tax basis in the LYON.
We will be required to furnish annually to the Internal Revenue Service and
to certain noncorporate holders information regarding the amount of the original
issue discount
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<PAGE> 32
attributable to that year. For this purpose, we will use a six-month accrual
period which ends on the day in each calendar year corresponding to the maturity
day of the LYON or the date six months before such maturity date.
DISPOSITION OR CONVERSION
Except as described below, gain or loss upon a sale or other disposition of
a LYON will generally be capital gain or loss (which will be long term if the
LYON is held for more than one year). Net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary income.
In the case of individuals, long-term capital gains with respect to property
held for more than one year are taxed at a maximum 20% federal tax rate. Net
capital gain of corporations is taxed the same as ordinary income, with a
maximum federal rate of 35%.
A holder's conversion of a LYON into common stock is generally not a
taxable event (except with respect to cash received in lieu of a fractional
share). The holder's obligation to include in gross income the daily portions of
original issue discount with respect to a LYON will terminate prospectively on
the date of conversion. The holder's basis in the common stock received on
conversion of a LYON will be the same as the holder's basis in the LYON at the
time of conversion (exclusive of any tax basis allocable to a fractional share).
The holding period for the common stock received on conversion will include the
holding period of the converted LYON (assuming each is held as a capital asset)
except that the holder's holding period for common stock attributable to accrued
original issue discount may commence on the day following the date of
conversion.
If a holder elects to exercise its option to tender a LYON to the Company
on a purchase date and the Company issues common stock in satisfaction of all or
part of the purchase price, the exchange of the LYON for common stock should
qualify as a reorganization or an otherwise nontaxable transaction for federal
income tax purposes.
If the purchase price is paid solely in common stock, neither gain nor loss
would generally be recognized by the holder, except as described below with
respect to a fractional share.
If the purchase price is paid in a combination of shares of common stock
and cash (other than cash received in lieu of a fractional share), gain (but not
loss) realized by the holder would be recognized, but only to the extent such
gain does not exceed such cash.
A holder's tax basis in the common stock received in the exchange will be
the same as the holder's tax basis in the LYON tendered to us in exchange for
the LYON (exclusive of any tax basis allocable to a fractional share interest as
described below). However, this tax basis will be decreased by the amount of
cash (other than cash received in lieu of a fractional share), if any, received
in exchange and increased by the amount of any gain recognized by the holder on
the exchange (other than gain with respect to a fractional share).
The holding period for common stock received in the exchange will include
the holding period for the LYON tendered to the Company in exchange for the LYON
(assuming each is held as a capital asset). However, the holding period for
common stock attributable to accrued original issue discount may commence on the
day following the purchase date.
Cash received in lieu of a fractional share of common stock upon conversion
of a LYON or upon a put of a LYON to the Company on a purchase date should be
treated as a payment in exchange for the fractional share. Accordingly, if the
common stock is a
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<PAGE> 33
capital asset in the hands of the holder, the receipt of cash in lieu of a
fractional share of common stock should generally result in capital gain or
loss, if any, measured by the difference between the cash received for the
fractional share and the holder's basis in the fractional share.
If a holder elects to exercise its option to tender a LYON to us on a
purchase date or a change in control purchase date and we deliver cash in
satisfaction of the purchase price, the holder would recognize gain or loss,
measured by the difference between the amount of cash transferred by us to the
holder and the holder's basis in the tendered LYON. Gain or loss recognized by
the holder would generally be capital gain or loss.
If a holder sells a LYON in the market, it will be a taxable sale with the
same results to the holder as a tender to the Company with a payment in cash.
Gain or loss upon a sale or other disposition of the common stock received
upon conversion of a LYON or in satisfaction of the purchase price of a LYON put
to us generally will be capital gain or loss if the common stock is held as a
capital asset (which gain or loss will be long-term if the holding period for
such common stock is more than one year). In the case of individuals, long-term
capital gains with respect to property held for more than one year are taxed at
a maximum 20% federal tax rate. Net capital gain of corporations is taxed the
same as ordinary income, with a maximum federal tax rate of 35%.
CONSTRUCTIVE DIVIDEND
If at any time we make a distribution of property to our stockholders that
would be taxable to the stockholders as a dividend for United States federal
income tax purposes and, in accordance with the anti-dilution provisions of the
LYONs, the conversion rate of the LYONs is increased, such increase may be
deemed to be the payment of a taxable dividend to holders of the LYONs.
For example, an increase in the conversion rate in the event of
distributions of evidences of indebtedness or assets of the Company or an
increase in the event of an Extraordinary Cash Dividend will generally result in
deemed dividend treatment to holders of the LYONs, but generally an increase in
the event of stock dividends or the distribution of rights to subscribe for
common stock will not. See "Description of LYONS -- Conversion Rights."
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting will apply to payments of interest or dividends, if
any, made by us on, or the proceeds of the sale or other disposition of, the
LYONs or shares of common stock with respect to certain noncorporate holders,
and backup withholding at a rate of 31% may apply unless the recipient of such
payment supplies a taxpayer identification number, certified under penalties of
perjury, as well as certain other information or otherwise establishes an
exemption from backup withholding. Any amount withheld under the backup
withholding rules will be allowable as a credit against the holder's federal
income tax, provided that the required information is provided to the Internal
Revenue Service.
TAX EVENT
The modification of the terms of the LYONs by us upon a Tax Event as
described in "Description of LYONs -- Optional Conversion to Semiannual Coupon
Note upon Tax Event," could possibly alter the timing of income recognition by
the holders with respect to the semiannual payments of interest due after the
option exercise date.
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<PAGE> 34
SELLING SECURITYHOLDERS
We originally issued the LYONs in a private placement in January, 1999. The
LYONs were resold by the initial purchaser to qualified institutional buyers
under Rule 144A under the Securities Act and to a limited number of
institutional accredited investors, as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act, in transactions exempt from registration under the
Securities Act. Selling securityholders may offer and sell the LYONs and the
underlying common stock pursuant to this prospectus.
The following table contains information as of April 5, 1999 about the
principal amount at maturity of LYONs and the underlying common stock,
beneficially owned by each selling security holder, that may be offered using
this prospectus.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Al-Bank Al-Saudi Al-Alami
Limited Saudi
International Bank....... $11,000,000 * 82,192 *
Allstate Insurance
Company.................. 9,000,000 * 67,248 *
Allstate Life Insurance
Company.................. 24,000,000 1.4% 179,328 *
American Investors Life
Insurance Company........ 3,000,000 * 22,416 *
Amerisure Companies/
Michigan Mutual Insurance
Company.................. 2,400,000 * 17,933 *
Amerus-Converts............ 1,500,000 * 11,208 *
Anthricite Mutual Fire
Insurance Company........ 30,000 * 224 *
ARBCO Associates, L.P...... 3,000,000 * 22,416 *
Argent Classic Convertible
Arbitrage Fund (Bermuda)
L.P...................... 7,000,000 * 52,304 *
Argent Classic Convertible
Arbitrage Fund L.P....... 7,000,000 * 52,304 *
Arkansas Teachers
Retirement Fund.......... 8,226,000 * 61,465 *
Arpeggio Fund, LP.......... 1,900,000 * 14,197 *
Associated Electric & Gas
Insurance Services
Limited.................. 2,605,000 * 19,465 *
Baltimore Life Insurance
Company.................. 350,000 * 2,615 *
BancBoston Robertson
Stephens................. 12,000 * 90 *
Bank of Montreal US Corp.
Sec...................... 20,000,000 1.2% 149,440 *
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Bankers Life Insurance
Company of New York-Lord
Abbett................... $ 75,000 * 560 *
Bankers Trust Trustee for
Chrysler Corp Emp#1
Pension Plan dated
4/1/89................... 5,485,000 * 40,984 *
Banque Nationale de Paris
Georgetown Branch........ 8,000,000 * 59,776 *
Baptist Health of South
Florida.................. 601,000 * 4,491 *
BayState Health Systems,
Inc...................... 130,000 * 971 *
Bear, Stearns & Co......... 11,000,000 * 82,192 *
Blue Cross Blue Shield of
Florida.................. 4,350,000 * 32,503 *
Boston Museum of Fine
Arts..................... 418,000 * 3,123 *
Brahma-Converts............ 300,000 * 2,242 *
BS Debt Income Fund-Class
A........................ 25,000 * 187 *
BWC Advent Capital
Management............... 260,000 * 1,943 *
Calamos Convertible Fund... 4,400,000 * 32,877 *
Calamos Global Growth and
Income Fund.............. 245,000 * 1,831 *
Calamos Growth and Income
Fund..................... 925,000 * 6,912 *
California Public Employees
Retirement System........ 20,000,000 1.2% 149,440 *
Century National Insurance
Company.................. 1,300,000 * 9,714 *
Champion International
Corporation Master
Retirement Trust......... 3,400,000 * 25,405 *
Chase Manhattan NA Trustee
for IBM Retirement Plan
dated 12/18/45........... 9,313,000 * 69,587 *
Chrysler Corporation Master
Retirement Trust......... 11,525,000 * 86,115 *
City of Birmingham
Retirement & Relief
System................... 4,100,000 * 30,635 *
City of Knoxville Pension
System................... 2,400,000 * 17,933 *
CMAC Convertible
Portfolio................ 1,100,000 * 8,219 *
Continental Assurance
Company.................. 5,200,000 * 38,854 *
Continental Casualty
Company.................. 34,800,000 2.1% 260,026 *
</TABLE>
33
<PAGE> 36
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Cova Bond Debenture........ $ 1,600,000 * 11,955 *
Delta Airlines Master
Trust.................... 7,225,000 * 53,985 *
Delta Airlines Master
Trust.................... 4,790,000 * 35,791 *
Deutsche Bank A.G.......... 17,500,000 1.1% 130,760 *
Dorinco Reinsurance
Company.................. 2,875,000 * 21,482 *
Dunham & Associates........ 354,000 * 2,645 *
Elf Aquataine.............. 350,000 * 2,615 *
Employee Benefit
Convertible Securities
Fund..................... 650,000 * 4,857 *
Employers Reinsurance...... 3,500,000 * 26,152 *
Engineers Joint Pension
Fund..................... 1,133,000 * 8,466 *
Everen Securities.......... 3,200,000 * 23,910 *
Evergreen American
Retirement Fund.......... 4,000,000 * 29,888 *
Evergreen Income Income &
Growth Fund.............. 16,000,000 * 119,552 *
Fidelity Devonshire
Trust.................... 31,370,000 1.9% 234,397 *
Fidelity Financial Trust... 3,000,000 * 22,416 *
Fidelity Management Trust
Company.................. 3,540,000 * 26,451 *
Fiduciary Trust Company
International............ 750,000 * 5,604 *
Financial
Benefit -- Converts...... 350,000 * 2,615 *
First Mercury Insurance
Company.................. 200,000 * 1,494 *
Franklin & Marshall
College.................. 425,000 * 3,176 *
General Electric Mortgage
Insurance Company........ 12,475,000 * 93,213 *
General Motors............. 12,500,000 * 93,400 *
Genesee County Employees'
Retirement System........ 1,100,000 * 8,219 *
Global Fund Luxembourg
Performa................. 550,000 * 4,110 *
Goldman Sachs and Company.. 1,000,000 * 7,472 *
Greek Catholic Union....... 70,000 * 523 *
Gryphon Domestic III,
LLC...................... 9,700,000 * 72,478 *
Harris Insight Convertible
Securities Fund.......... 250,000 * 1,868 *
Healthcare Underwriters
Mutual Insurance
Company.................. 1,000,000 * 7,472 *
High Quality Convertible... 55,000 * 411 *
Highbridge Capital
Corporation.............. 2,128,000 * 15,900 *
Ila Annuity and Insurance
Co. Lord Abbett & Co..... 45,000,000 2.7% 336,240 *
</TABLE>
34
<PAGE> 37
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Ila Annuity and Insurance
Co. Lord Abbett & Co.
RGA...................... $ 450,000 * 3,362 *
Investcorp SAM Fund
Limited.................. 17,400,000 1.1% 130,013 *
JNL Balanced............... 25,000 * 187 *
Julius Baer Securities..... 2,000,000 * 14,944 *
Kettering Medical Center
Funded Depreciation
Account.................. 460,000 * 3,437 *
Key Asset Management, Inc.
as Agent for the
Charitable Sec. Fd....... 1,900,000 * 14,197 *
Key Asset Management, Inc.
as Agent for the EB
Convertible Sec. Fd...... 2,400,000 * 17,933 *
Key Asset Management, Inc.
as Agent for the Key Tr.
Convertible Sec. Fd...... 450,000 * 3,362 *
Key Asset Management, Inc.
as Agent for the Parker
Society/Convertible
Fund..................... 300,000 * 2,242 *
Key Asset Management, Inc.
as Agent for the Union
Security Life Ins Co
Misc..................... 50,000 * 374 *
Key Asset Management, Inc.
as Investment Manager for
the Potlatch-First Trust
Co. of St. Paul.......... 900,000 * 6,725 *
Liberty View Plus Fund..... 1,800,000 * 13,450 *
Lincoln Mutual Life
Insurance Company........ 90,000 * 672 *
Lord Abbett Bond Debenture
Fund, Inc................ 25,000,000 1.5% 186,800 *
Lutheran Brotherhood....... 12,000,000 * 89,664 *
Macomb Count Employees'
Retirement System........ 725,000 * 5,417 *
Mainstay Convertible
Fund..................... 3,000,000 * 22,416 *
Mainstay Equity Income
Fund..................... 500,000 * 3,736 *
Mainstay Strategic Value
Fund..................... 700,000 * 5,230 *
Mainstay VP Convertible
Portfolio................ 1,300,000 * 9,714 *
MassMutual Corporate
Investors................ 750,000 * 5,604 *
Massachusetts Mutual Life
Insurance Company........ 13,745,000 * 102,703 *
</TABLE>
35
<PAGE> 38
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
MassMutual Corporate Value
Partners Limited......... $ 2,000,000 * 14,944 *
MassMutual High Yield
Partners II LLC.......... 3,000,000 * 22,416 *
MassMutual Participation
Investors................ 375,000 * 2,802 *
Medical Liability Mutual
Insurance Company........ 36,000,000 2.2% 268,992 *
Mega Life and Health
Insurance................ 1,000,000 * 7,472 *
Merril Lynch Insurance
Group.................... 480,000 * 3,587 *
Merrill Lynch Pierce Fenner
& Smith, Inc............. 20,918,000 1.3% 156,299 *
MFS Series Trust V-MFS
Total Return Fund........ 6,978,000 * 52,140 *
MFS Series Trust VI -- MFS
Convertible Securities
Fund..................... 22,000 * 164 *
Michigan Mutual Insurance
Co....................... 2,200,000 * 16,438 *
Michigan Mutual Insurance
Co....................... 2,000,000 * 14,944 *
Millville Mutual Life
Insurance Company........ 160,000 * 1,196 *
ML Capital Services........ 44,100,000 2.7% 329,515 *
Morgan Stanley Dean
Witter................... 48,000,000 2.9% 358,656 *
Morgan Stanley Dean Witter
Convertible Securities
Trust.................... 6,000,000 * 44,832 *
Motion Picture Industry
Health Plan -- Active
Member Fund.............. 1,365,000 * 10,199 *
Motion Picture Industry
Health Plan -- Retiree
Member Fund.............. 680,000 * 5,081 *
Motors Insurance Corp...... 2,000,000 * 14,944 *
MSC Life................... 70,000 * 523 *
New Era Life Insurance
Company.................. 400,000 * 2,989 *
New Orleans Fire
Fighters................. 210,000 * 1,569 *
New York Life Insurance &
Annuity Corporation...... 3,000,000 * 22,416 *
New York Life Insurance
Company.................. 45,000,000 2.7% 336,240 *
New York Life Separate
Account #7............... 4,500,000 * 33,624 *
</TABLE>
36
<PAGE> 39
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Nicholas Applegate
Convertible Fund......... $11,665,000 * 87,161 *
NW Balanced Fund........... 300,000 * 2,242 *
OCM Convertible Limited
Partnership.............. 330,000 * 2,466 *
OCM Convertible Trust...... 11,530,000 * 86,152 *
Ohio Insurance Company..... 500,000 * 3,736 *
Oxford Lord Abbett &
Company.................. 4,400,000 * 32,877 *
Pacific Horizon Capital
Income Fund.............. 8,600,000 * 64,259 *
Pacific Innovations Trust
Capital Income Fund...... 750,000 * 5,604 *
Pacific Life Insurance
Company.................. 1,500,000 * 11,208 *
Paloma Securities LLC...... 5,000,000 * 37,360 *
Partner Reinsurance Company
Ltd...................... 1,210,000 * 9,041 *
Penn Treaty Network America
Insurance Company........ 367,000 * 2,742 *
Physicians Life............ 1,394,000 * 10,416 *
Physicians Life Insurance
Company.................. 900,000 * 6,725 *
Physicians' Reciprocal
Insurers Account #7...... 6,250,000 * 46,700 *
PIMCO Total Return Fund.... 4,000,000 * 29,888 *
Port Authority of Allegheny
County Retirement and
Disability Allowance Plan
for the Employees
Represented by Local 85
of the Amalgamated
Transit Union............ 3,750,000 * 28,020 *
Premera Blue Cross......... 1,500,000 * 11,208 *
Public Employees'
Retirement Association of
Colorado................. 4,000,000 * 29,888 *
Putnam Advisory Company,
Inc. on behalf of
Employers' Reinsurance
Corporation.............. 1,641,000 * 12,262 *
Putnam Advisory Company,
Inc. on behalf of Museum
of Fine Arts, Boston..... 74,000 * 553 *
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Putnam Advisory Company,
Inc. on behalf of New
Hampshire Retirement
System................... $ 487,000 * 3,639 *
Putnam Advisory Company,
Inc. on behalf of Parker-
Hannifin Corporation..... 116,000 * 867 *
Putnam Advisory Company,
Inc. on behalf of
ProMutual................ 345,000 * 2,578 *
Putnam Advisory Company,
Inc. on behalf of Rhone-
Poulenc Rorer Pension
Plan..................... 321,000 * 2,399 *
Putnam Advisory Company,
Inc. on behalf of
University of
Rochester................ 90,000 * 672 *
Putnam Balanced Retirement
Fund..................... 261,000 * 1,950 *
Putnam Convertible Income-
Growth Trust............. 11,000,000 * 82,192 *
Putnam Convertible
Opportunities and Income
Trust.................... 273,000 * 2,040 *
Raytheon Company Master
Pension Trust............ 5,805,000 * 43,375 *
Regence Blue Cross/Blue
Shield of Idaho.......... 325,000 * 2,428 *
Regence Blue Cross/Blue
Shield of Oregon......... 565,000 * 4,222 *
Regence Blue Cross/Blue
Shield of Utah........... 172,000 * 1,285 *
Regence Blue Cross/Blue
Shield of Washington..... 938,000 * 7,009 *
Rhapsody Fund, LP.......... 2,900,000 * 21,669 *
Sage Capital............... 100,000 * 747 *
San Diego City
Retirement............... 3,169,000 * 23,679 *
San Diego County
Convertible.............. 9,218,000 * 68,877 *
SB Total Return............ 1,000,000 * 7,472 *
SB Variable Total Return... 25,000 * 187 *
SG Cowen Securities........ 14,500,000 * 108,344 *
Shell Pension Trust........ 280,000 * 2,092 *
Southern Farm Bureau Life
Insurance Company........ 2,650,000 * 19,801 *
Southport Management
Partners................. 2,150,000 * 16,065 *
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Southport Partners
International, Ltd....... $ 5,475,000 * 40,909 *
Spear, Leeds & Kellogg..... 1,000,000 * 7,472 *
SPT........................ 2,175,000 * 16,252 *
State Employees' Retirement
Fund of the State of
Delaware................. 4,025,000 * 30,075 *
State National Insurance
Company.................. 200,000 * 1,494 *
State of Connecticut
Combined Investment
Funds.................... 13,570,000 * 101,395 *
State Street Bank Custodian
for GE Pension Trust..... 2,910,000 * 21,744 *
Teacher Retirement System
of Texas................. 8,000,000 * 59,776 *
Teachers Insurance and
Annuity Association of
America.................. 17,000,000 1.0% 127,024 *
The Dow Chemical Company
Employees' Retirement
Plan..................... 6,425,000 * 48,008 *
The Foundren Foundation.... 380,000 * 2,839 *
The Midland Life Insurance
Company.................. 1,000,000 * 7,472 *
The Northwestern Mutual
Life Insurance Company... 47,000,000 2.8% 351,184 *
The TCW Group, Inc......... 58,260,000 3.5% 435,319 *
The Travelers Indemnity
Company.................. 16,918,400 1.0% 126,414 *
The Travelers Insurance
Company.................. 43,917,500 2.7% 328,152 *
The Travelers Insurance
Company Separate Account
TLAC..................... 1,270,500 * 9,493 *
The Travelers Managed
Assets Trust............. 662,400 * 4,949 *
The Travelers Series Trust
Convertible Bond
Portfolio................ 331,200 * 2,475 *
Toronto Dominion (New
York), Inc............... 42,100,000 2.5% 314,571 *
Transamerica Life Insurance
& Annuity Company TAM
Institutional............ 22,100,000 1.3% 165,131 *
Travelers.................. 120,000 * 897 *
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT AT
MATURITY OF NUMBER OF
LYONS SHARES OF
BENEFICIALLY PERCENTAGE OF COMMON STOCK PERCENTAGE OF
OWNED THAT LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD(1) OUTSTANDING(2)
---- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Tufts Associated Health
Plan c/o Income Research
& Management............. $ 3,100,000 * 23,163 *
UBS A.G. -- London Branch.. 42,000,000 2.5% 313,824 *
Unifi, Inc. Profit Sharing
Plan and Trust........... 645,000 * 4,819 *
United Food and Commercial
Workers Local 1262 and
Employers Pension Fund... 2,600,000 * 19,427 *
University of Massachusetts
c/o Income Research &
Management............... 500,000 * 3,736 *
University of Massachusetts
Medical Center c/o Income
Research & Management.... 2,700,000 * 20,174 *
Value Line Convertible
Fund, Inc................ 3,000,000 * 22,416 *
Van Waters & Rogers, Inc.
Retirement Plan.......... 1,550,000 * 11,582 *
Vanguard Convertible
Securities Fund, Inc..... 9,170,000 * 68,518 *
Variable Insurance Products
Fund..................... 15,490,000 * 115,741 *
Wake Forest University..... 2,468,000 * 18,441 *
Warburg Dillon Read LLC.... 7,250,000 * 54,172 *
White River Securities
LLC...................... 5,000,000 * 37,360 *
Zazove Convertible
Securities Fund Inc...... 2,500,000 * 18,680 *
Any other holder of LYONs
or future transferee,
pledgee, donee or
successor of any
holder(3)(4)............. 401,418,000 24.2% 2,999,395 1.2%
</TABLE>
- -------------------------
* Less than 1%.
(1) Assumes conversion of all of the holder's LYONs at a conversion rate of
7.472 shares of common stock per $1,000 principal amount at maturity of the
LYONs. However, this conversion rate will be subject to adjustment as
described under "Description of LYONs -- Conversion Right." As a result, the
amount of common stock issuable upon conversion of the LYONs may increase or
decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using 252,439,875
shares of common stock outstanding as of April 5, 1999. In calculating this
amount, we treated as outstanding the number of shares of common stock
issuable upon conversion of all of that particular holder's LYONs. However,
we did not assume the conversion of any other holder's LYONs.
40
<PAGE> 43
(3) Information about other selling security holders will be set forth in
prospectus supplements, if required.
(4) Assumes that any other holders of LYONs, or any future transferees,
pledgees, donees or successors of or from any such other holders of LYONs,
do not beneficially own any common stock other than the common stock
issuable upon conversion of the LYONs at the initial conversion rate.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their LYONs since the date on which the
information is presented in the above table. Information about the selling
securityholders may change from over time. Any changed information will be set
forth in prospectus supplements.
Because the selling securityholders may offer all or some of their LYONs or
the underlying common stock from time to time, we can not estimate the amount of
the LYONs or the underlying common stock that will be held by the selling
securityholders upon the termination of any particular offering. See "Plan of
Distribution."
41
<PAGE> 44
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the LYONs and the
underlying common stock offered by this prospectus. The LYONs and the underlying
common stock may be sold from time to time to purchasers:
- directly by the selling securityholders;
- through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or commissions from
the selling securityholders or the purchasers of the LYONs and the
underlying common stock.
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the LYONs and the underlying common stock may
be deemed to be "underwriters." As a result, any profits on the sale of the
LYONs and the underlying common stock by selling securityholders and any
discounts, commissions or concessions received by any such broker-dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. If the selling securityholders were deemed to be underwriters,
the selling securityholders may be subject to certain statutory liabilities of,
including, but not limited to, Sections 11, 12 and 17 of the Securities Act and
Rule 10b-5 under the Exchange Act.
If the LYONs and the underlying common stock are sold through underwriters
or broker-dealers, the selling securityholders will be responsible for
underwriting discounts or commissions or agent's commissions.
The LYONs and the underlying common stock may be sold in one or more
transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- varying prices determined at the time of sale; or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which the
LYONs and underlying common stock may be listed or quoted at the time of
the sale, including the New York Stock Exchange in the case of the common
stock;
- in the over-the-counter market;
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or
- through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the LYONs and the underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
LYONs and the underlying common stock in the course of hedging their positions.
The selling securityholders may also sell the LYONs and underlying common stock
short and deliver LYONs and the underlying common stock to close out short
positions, or loan or pledge
42
<PAGE> 45
LYONs and the underlying common stock to broker-dealers that in turn may sell
the LYONs and the underlying common stock.
To our knowledge, there are currently no plans, arrangement or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the LYONs and the underlying common
stock by the selling securityholders. Selling securityholders may not sell any
or all of the LYONs and the underlying common stock offered by it pursuant to
this prospectus. In addition, we cannot assure you that any such selling
securityholder will not transfer, devise or gift the LYONs and the underlying
common stock by other means not described in this prospectus.
Our common stock trades on the New York Stock Exchange under the symbol
"SLR". We do not intend to apply for listing of the LYONs on any securities
exchange or for quotation through Nasdaq. Accordingly, no assurance can be given
as to the development of liquidity or any trading market for the LYONs. See
"Risk Factors -- Absence of Public Market."
There can be no assurance that any selling securityholder will sell any or
all of the LYONs or the underlying common stock pursuant to this prospectus. In
addition, any LYONs or underlying common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the LYONs and the underlying common stock by the
selling securityholders and any other such person. In addition, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the LYONs and the underlying common stock to engage in
market-making activities with respect to the particular LYONs and the underlying
common stock being distributed for a period of up to five business days prior to
the commencement of such distribution. This may affect the marketability of the
LYONs and the underlying common stock and the ability of any person or entity to
engage in market-making activities with respect to the LYONs and the underlying
common stock.
Pursuant to the registration rights agreement that has been filed as an
exhibit to this registration statement, we and the selling securityholders will
be indemnified by the other against certain liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection with these liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the LYONs and underlying common stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
LEGAL MATTERS
The validity of the issuance of Solectron's securities offered by this
prospectus will be passed upon for Solectron by Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Palo Alto, California. Wilson Sonsini Goodrich
& Rosati has advised Solectron as to certain tax matters relating to the LYONs.
43
<PAGE> 46
EXPERTS
The consolidated financial statements and schedule of Solectron Corporation
as of August 31, 1998 and 1997, and for each of the years in the three-year
period ended August 31, 1998, have been incorporated by reference herein and in
the registration statement in reliance upon the report of KPMG LLP, independent
auditors, incorporated by reference herein, and upon the authority of said firm
as experts in auditing and accounting.
44
<PAGE> 47
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The aggregate estimated (other than the registration fee) expenses to be
paid by the Registrant in connection with this offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $238,250
Trustee's fees and expenses................................. 25,000
Accounting fees and expenses................................ 25,000
Legal fees and expenses..................................... 50,000
Miscellaneous............................................... 30,750
--------
Total............................................. $369,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF SOLECTRON
CERTIFICATE OF INCORPORATION
Article 11 of our Certificate of Incorporation provides that, to the
fullest extent permitted by Delaware law, as the same now exists or may
hereafter be amended, a director shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Delaware law provides that directors of a corporation will
not be personally liable for monetary damages for breach of their fiduciary
duties as directors, except for liability:
- for any breach of their duty of loyalty to the corporation or its
stockholders,
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law,
- for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law, or
- for any transaction from which the director derived an improper personal
benefit.
BYLAWS
Article VI of our Bylaws provides that we:
- will indemnify each director and officer who is or was a director or
officer of the corporation, who is or was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or who was a director or
officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation, and
- may indemnify any person, other than directors and officers, who is or
was an employee or agent of the corporation, who is or was serving at the
request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or
who was an employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of
such predecessor corporation against expenses, including attorneys'
II-1
<PAGE> 48
fees, judgments, fines and other amounts actually and reasonably incurred
in connection with any proceeding.
Unless indemnification is mandated by law or the order, judgment or decree
of any court of competent jurisdiction, we shall not indemnify any person if
such indemnification
- would be inconsistent with a provision of our Certificate of
Incorporation, Bylaws, a resolution of the stockholders or an agreement
in effect at the time of the accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification,
or
- would be inconsistent with any condition expressly imposed by a court in
approving a settlement.
Our Bylaws also permit us to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the Bylaws would permit
indemnification. We currently maintain liability insurance for our officers and
directors.
We have entered into agreements to indemnify our directors and officers, in
addition to the indemnification provided for in our Certificate of Incorporation
and Bylaws. These agreements, among other things, indemnify our directors and
officers for certain expenses, including attorney's fees, judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of Solectron, arising out of such
person's services as a director or officer of Solectron, any subsidiary of
Solectron or any other company or enterprise to which the person provides
services at the request of Solectron.
II-2
<PAGE> 49
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference
herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
3.1 Certificate of Incorporation.(1)
3.2 Bylaws.(1)
4.1 Indenture.
4.2 Form of LYON (included in Exhibit 4.1).
4.3 Registration Rights Agreement.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.*
8.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to certain tax matters.*
12.1 Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of KPMG LLP, independent auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).*
24.1 Power of Attorney of certain directors and officers of
Solectron Corporation (see page II-5 of initial filing of
this Form S-3).
25.1 Form T-1 Statement of Eligibility of Trustee for Indenture
under the Trust Indenture Act of 1939.*
</TABLE>
- -------------------------
* To be filed by amendment.
(1) Incorporated by reference to Solectron's Annual Report on Form 10-K for the
fiscal year ended August 31, 1997.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act,
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement,
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
II-3
<PAGE> 50
provided, however, that clauses (a) and (b) do not apply if the information
required to be included in a post-effective amendment by such clauses is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrant undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities, other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding, is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
4. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Milpitas, State of California, on April 7, 1999.
SOLECTRON CORPORATION
By: /s/ KOICHI NISHIMURA
-----------------------------------
Koichi Nishimura, Ph.D.
President, Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Koichi Nishimura and Susan S. Wang, and each of
them, as his true and lawful attorneys-in-fact and agents, each with the power
of substitution, for him in his name, place and stead, in any and all
capacities, to sign the Registration Statement filed herewith and any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ KOICHI NISHIMURA President, Chief April 7, 1999
- --------------------------------------------------- Executive Officer and
Koichi Nishimura, Ph.D. Chairman of the Board
/s/ SUSAN S. WANG Chief Financial Officer April 7, 1999
- --------------------------------------------------- (Principal Financial
Susan S. Wang and Accounting
Officer), Senior Vice
President and Secretary
</TABLE>
II-5
<PAGE> 52
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ WINSTON H. CHEN Director April 7, 1999
- ---------------------------------------------------
Winston H. Chen
/s/ RICHARD A. D'AMORE Director April 7, 1999
- ---------------------------------------------------
Richard A. D'Amore
/s/ CHARLES A. DICKINSON Director April 7, 1999
- ---------------------------------------------------
Charles A. Dickinson
/s/ HEINZ FRIDRICH Director April 7, 1999
- ---------------------------------------------------
Heinz Fridrich
/s/ PHILIP V. GERDINE Director April 7, 1999
- ---------------------------------------------------
Philip V. Gerdine, Ph.D.
/s/ WILLIAM A. HASLER Director April 7, 1999
- ---------------------------------------------------
William A. Hasler
/s/ KENNETH E. HAUGHTON Director April 7, 1999
- ---------------------------------------------------
Kenneth E. Haughton, Ph.D.
/s/ PAUL R. LOW Director April 7, 1999
- ---------------------------------------------------
Paul R. Low, Ph.D.
/s/ OSAMU YAMADA Director April 7, 1999
- ---------------------------------------------------
Osamu Yamada
</TABLE>
II-6
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
3.1 Certificate of Incorporation.(1)
3.2 Bylaws.(1)
4.1 Indenture.
4.2 Form of LYON (included in Exhibit 4.1).
4.3 Registration Rights Agreement.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.*
8.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to certain tax matters.*
12.1 Computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of KPMG LLP, independent auditors.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).*
24.1 Power of Attorney of certain directors and officers of
Solectron Corporation (see page II-5 of initial filing of
this Form S-3).
25.1 Form T-1 Statement of Eligibility of Trustee for Indenture
under the Trust Indenture Act of 1939.*
</TABLE>
- -------------------------
* To be filed by amendment.
(1) Incorporated by reference to Solectron's Annual Report on Form 10-K for the
fiscal year ended August 31, 1997.
<PAGE> 1
EXHIBIT 4.1
- --------------------------------------------------------------------------------
SOLECTRON CORPORATION
Liquid Yield Option(TM) Notes
due 2019
(Zero Coupon-Senior)
------------------------------------------
INDENTURE
Dated as of January 27, 1999
------------------------------------------
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
TRUSTEE
- --------------------------------------------------------------------------------
(TM)Trademark of Merrill Lynch & Co., Inc.
<PAGE> 2
CROSS REFERENCE TABLE(1)
<TABLE>
<CAPTION>
IA Indenture
Section Section
- --------- ------------------
<S> <C> <C>
310(a)(1) ............................................................... 7.10
(a)(2) ............................................................... 7.10
(a)(3) ............................................................... N.A.
(a)(4) ............................................................... N.A.
(b) ............................................................... 7.08; 7.10
(c) ............................................................... N.A.
311(a) ............................................................... 7.11
(b) ............................................................... 7.11
(c) ............................................................... N.A.
312(a) ............................................................... 2.05
(b) ............................................................... 12.03
(c) ............................................................... 12.03
313(a) ............................................................... 7.06
(b)(1) ............................................................... N.A.
(b)(2) ............................................................... 7.06
(c) ............................................................... 12.02
(d) ............................................................... 7.06
314(a) ............................................................... 4.02; 4.03; 12.02
(b) ............................................................... N.A.
(c)(1) ............................................................... 12.04
(c)(2) ............................................................... 12.04
(c)(3) ............................................................... N.A.
(d) ............................................................... N.A.
(e) ............................................................... 12.05
(f) ............................................................... N.A.
315(a) ............................................................... 7.01
(b) ............................................................... 7.05; 12.02
(c) ............................................................... 7.01
(d) ............................................................... 7.01
(e) ............................................................... 6.11
316(a) (last sentence) .................................................. 2.08
(a)(1)(A) ............................................................ 6.05
(a)(1)(B) ............................................................ 6.04
(a)(2) ............................................................... N.A.
(b) ............................................................... 6.07
317(a)(1) ............................................................... 6.08
(a)(2) ............................................................... 6.09
(b) ............................................................... 2.04
318(a) .............................................................. 12.01
</TABLE>
N.A. means Not Applicable.
- --------
(1) Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS(1)
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions.......................................................1
SECTION 1.02. Other Definitions.................................................6
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.................7
SECTION 1.04. Rules of Construction.............................................7
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating...................................................8
SECTION 2.02. Execution and Authentication......................................9
SECTION 2.03. Registrar, Paying Agent and Conversion Agent.....................10
SECTION 2.04. Paying Agent to Hold Money and Securities in Trust...............11
SECTION 2.05. Securityholder Lists.............................................11
SECTION 2.06. Transfer and Exchange............................................11
SECTION 2.07. Replacement Securities...........................................13
SECTION 2.08. Outstanding Securities; Determinations of Holders' Action........14
SECTION 2.09. Temporary Securities.............................................15
SECTION 2.10. Cancellation.....................................................15
SECTION 2.11. Persons Deemed Owners............................................16
SECTION 2.12. Global Securities................................................16
SECTION 2.13. CUSIP Numbers....................................................22
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01. Right to Redeem; Notices to Trustee..............................22
SECTION 3.02. Selection of Securities to Be Redeemed...........................23
SECTION 3.03. Notice of Redemption.............................................23
SECTION 3.04. Effect of Notice of Redemption...................................24
SECTION 3.05. Deposit of Redemption Price......................................24
SECTION 3.06. Securities Redeemed in Part......................................24
SECTION 3.07. Conversion Arrangement on Call for Redemption....................25
</TABLE>
- --------
(1) Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 3.08. Purchase of Securities at Option of the Holder..................25
SECTION 3.09. Purchase of Securities at Option of the Holder upon Change in
Control.....................................................33
SECTION 3.10. Effect of Purchase Notice or Change in Control Purchase
Notice......................................................36
SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase Price...38
SECTION 3.12. Securities Purchased in Part....................................38
SECTION 3.13. Covenant to Comply With Securities Laws Upon Purchase of
Securities..................................................38
SECTION 3.14. Repayment to the Company........................................38
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities...........................................39
SECTION 4.02. SEC and Other Reports...........................................39
SECTION 4.03. Compliance Certificate..........................................40
SECTION 4.04. Further Instruments and Acts....................................40
SECTION 4.05. Maintenance of Office or Agency.................................40
SECTION 4.06. Delivery of Certain Information.................................41
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge or Transfer Assets.......................41
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default...............................................42
SECTION 6.02. Acceleration....................................................44
SECTION 6.03. Other Remedies..................................................45
SECTION 6.04. Waiver of Past Defaults.........................................45
SECTION 6.05. Control by Majority.............................................45
SECTION 6.06. Limitation on Suits.............................................46
SECTION 6.07. Rights of Holders to Receive
Payment..............................................46
SECTION 6.08. Collection Suit by Trustee......................................47
SECTION 6.09. Trustee May File Proofs of Claim................................47
SECTION 6.10. Priorities......................................................48
SECTION 6.11. Undertaking for Costs...........................................48
SECTION 6.12. Waiver of Stay, Extension or Usury Laws.........................48
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee...............................................49
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 7.02. Rights of Trustee................................................50
SECTION 7.03. Individual Rights of Trustee.....................................51
SECTION 7.04. Trustee's Disclaimer.............................................51
SECTION 7.05. Notice of Defaults...............................................51
SECTION 7.06. Reports by Trustee to Holders....................................52
SECTION 7.07. Compensation and Indemnity.......................................52
SECTION 7.08. Replacement of Trustee...........................................53
SECTION 7.09. Successor Trustee by Merger......................................54
SECTION 7.10. Eligibility; Disqualification....................................54
SECTION 7.11. Preferential Collection of Claims Against Company................54
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. Discharge of Liability on Securities.............................54
SECTION 8.02. Repayment to the Company.........................................54
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders.......................................55
SECTION 9.02. With Consent of Holders..........................................55
SECTION 9.03. Compliance with Trust Indenture Act..............................56
SECTION 9.04. Revocation and Effect of Consents, Waivers and Actions...........56
SECTION 9.05. Notation on or Exchange of Securities............................57
SECTION 9.06. Trustee to Sign Supplemental Indentures..........................57
SECTION 9.07. Effect of Supplemental Indentures................................57
ARTICLE 10
SPECIAL TAX EVENT CONVERSION
SECTION 10.01. Optional Conversion to Semiannual Coupon Note Upon Tax
Event.......................................................57
SECTION 10.02. Payment of Interest; Interest Rights Preserved..................58
ARTICLE 11
CONVERSION
SECTION 11.01. Conversion Privilege............................................60
SECTION 11.02. Conversion Procedure............................................61
SECTION 11.03. Fractional Shares...............................................63
SECTION 11.04. Taxes on Conversion.............................................63
SECTION 11.05. Company to Provide Stock........................................63
SECTION 11.06. Adjustment for Change in Capital Stock..........................64
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 11.07. Adjustment for Rights Issue.....................................64
SECTION 11.08. Adjustment for Other Distributions..............................66
SECTION 11.09. When Adjustment May Be Deferred.................................68
SECTION 11.10. When No Adjustment Required.....................................69
SECTION 11.11. Notice of Adjustment............................................69
SECTION 11.12. Voluntary Increase..............................................69
SECTION 11.13. Notice of Certain Transactions..................................70
SECTION 11.14. Reorganization of Company; Special Distributions................70
SECTION 11.15. Company Determination Final.....................................71
SECTION 11.16. Trustee's Adjustment Disclaimer.................................71
SECTION 11.17. Simultaneous Adjustments........................................71
SECTION 11.18. Successive Adjustments..........................................72
SECTION 11.19. Rights Issued in Respect of Common Stock Issued Upon
Conversion..................................................72
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls....................................72
SECTION 12.02. Notices.........................................................72
SECTION 12.03. Communication by Holders with Other Holders.....................73
SECTION 12.04. Certificate and Opinion as to Conditions Precedent..............74
SECTION 12.05. Statements Required in Certificate or Opinion...................74
SECTION 12.06. Separability Clause.............................................74
SECTION 12.07. Rules by Trustee, Paying Agent, Conversion Agent and
Registrar....................................................74
SECTION 12.08. Legal Holidays..................................................74
SECTION 12.09. GOVERNING LAW...................................................75
SECTION 12.10. No Recourse Against Others......................................75
SECTION 12.11. Successors......................................................75
SECTION 12.12. Multiple Originals..............................................75
</TABLE>
EXHIBIT A Form of Security
EXHIBIT B-1 FORM OF TRANSFER CERTIFICATE
EXHIBIT B-2 FORM OF LETTER TO BE DELIVERED BY ACCREDITED
INVESTORS
v
<PAGE> 7
INDENTURE dated as of January 27, 1999 between SOLECTRON
CORPORATION, a Delaware corporation ("Company"), and STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association organized under the
laws of the United States ("Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's Liquid Yield
Option(TM) Notes due 2019 (Zero Coupon - Senior) ("Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"144A Global Security" means a permanent Global Security in the form
of the Security attached hereto as Exhibit A-1, and that is deposited with and
registered in the name of the Depositary, representing Securities sold in
reliance on Rule 144A under the Securities Act.
"Affiliate" of any specified person means any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of such board.
- ----------
(TM) Trademark of Merrill Lynch & Co., Inc.
<PAGE> 8
"Business Day" means each day of the year other than a Saturday or a
Sunday on which banking institutions are not required or authorized to close in
the City of New York or Los Angeles, California.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.
"Certificated Securities" means Securities that are in the form of
the Securities attached hereto as Exhibit A-2.
"Common Stock" shall mean the shares of Common Stock, $0.001 par
value, of the Company as it exists on the date of this Indenture or any other
shares of Capital Stock of the Company into which the Common Stock shall be
reclassified or changed.
"Company" means the party named as the "Company" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor. The foregoing sentence shall likewise apply to any subsequent such
successor or successors.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President, a Senior Vice President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Debt" means with respect to the Company at any date, without
duplication, obligations (other than nonrecourse obligations) for borrowed money
or evidenced by bonds, debentures, notes or similar instruments.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Global Securities" means Securities that are in the form of the
Securities attached hereto as Exhibit A-1, and to the extent that such
Securities are required to bear the Legend required by Section 2.06, such
Securities will be in the form of a 144A Global Security.
"Holder" or "Securityholder" means a person in whose name a Security
is registered on the Registrar's books.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms
2
<PAGE> 9
hereof, including the provisions of the TIA that are deemed to be a part hereof.
"Institutional Accredited Investor Security" means a Security in the
form of the Security attached hereto as Exhibit A-2, representing Securities
sold to institutional "accredited investors" (as defined in Rule 501(a)(1), (2),
(3) and (7) under the Securities Act).
"Issue Date" of any Security means the date on which the Security
was originally issued or deemed issued as set forth on the face of the Security.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is sold
as set forth on the face of the Security.
"Officer" means the Chairman of the Board, the President, any Senior
Vice President, any Vice President, the Treasurer or the Secretary or any
Assistant Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 12.04 and 12.05, signed in the name of the
Company by its Chairman of the Board, its President, a Senior Vice President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee. An Officers' Certificate
given pursuant to Section 4.03 shall be signed by the principal executive,
financial or accounting officer of the Company but need not contain the
information specified in Sections 12.04 and 12.05.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 12.04 and 12.05, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel to, the
Company or the Trustee.
"Original Issue Discount" of any Security means the difference
between the Issue Price and the Principal Amount at Maturity of the Security as
set forth on the face of the Security.
"person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
3
<PAGE> 10
"Principal Amount at Maturity" of a Security means the Principal
Amount at Maturity as set forth on the face of the Security.
"Redemption Date" or "redemption date" shall mean the date specified
for redemption of the Securities in accordance with the terms of the Securities
and this Indenture.
"Redemption Price" or "redemption price" shall have the meaning set
forth in paragraph 5 of the Securities.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Department (or any successor group)
including without limitation any vice president, any assistant vice president,
any assistant secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Security" means a Security required to bear the
restrictive legend set forth in the form of Security set forth in Exhibits A-1
and A-2 of this Indenture.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities" means any of the Company's Liquid Yield Option Notes
due 2019 (Zero Coupon-Senior), as amended or supplemented from time to time,
issued under this Indenture.
"Securityholder" or "Holder" means a person in whose name a Security
is registered on the Registrar's books.
"Special Record Date" means for the payment of any Defaulted
Interest, the date fixed by the Trustee pursuant to Section 10.02(b).
"Stated Maturity", when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the Principal Amount at Maturity of such Security is due and payable.
"Subsidiary" means (i) a corporation, a majority of whose Capital
Stock with voting power, under ordinary circumstances, to elect directors is, at
the date of
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<PAGE> 11
determination, directly or indirectly owned by the Company, by one or more
Subsidiaries of the Company or by the Company and one or more Subsidiaries of
the Company, (ii) a partnership in which the Company or a Subsidiary of the
Company holds a majority interest in the equity capital or profits of such
partnership, or (iii) any other person (other than a corporation) in which the
Company, a Subsidiary of the Company or the Company and one or more Subsidiaries
of the Company, directly or indirectly, at the date of determination, has (x) at
least a majority ownership interest or (y) the power to elect or direct the
election of a majority of the directors or other governing body of such person.
"Tax Event" means that the Company shall have received an opinion
from independent tax counsel experienced in such matters to the effect that, on
or after January 21, 1999, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, in each case which
amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after
January 21, 1999, there is more than an insubstantial risk that interest
(including Original Issue Discount) payable on the Securities either (i) would
not be deductible on a current accrual basis or (ii) would not be deductible
under any other method, in either case in whole or in part, by the Company (by
reason of deferral, disallowance, or otherwise) for United States Federal income
tax purposes.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
of this Indenture, provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.
"trading day" means a day during which trading in securities
generally occurs on the New York Stock Exchange or, if the Common Stock is not
listed on the New York Stock Exchange, on the principal other national or
regional securities exchange on which the Common Stock is then listed or, if the
Common Stock is not listed on a national or regional securities exchange, on the
National Association of Securities Dealers Automated Quotation System or, if the
Common Stock is not quoted on the National Association of Securities Dealers
Automated Quotation System, on the principal other market on which the Common
Stock is then traded.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it
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<PAGE> 12
pursuant to the applicable provisions of this Indenture and, thereafter, shall
mean such successor. The foregoing sentence shall likewise apply to any
subsequent such successor or successors.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Agent Members"........................................................ 2.12(e)
"Associate" ........................................................... 3.09(a)
"Average Quoted Price" ................................................ 11.01
"Bankruptcy Law" ...................................................... 6.01
"beneficial owner" .................................................... 3.09(a)
"cash" ................................................................ 3.08(b)
"Change in Control" ................................................... 3.09(a)
"Change in Control Purchase Date" ..................................... 3.09(a)
"Change in Control Purchase Notice" ................................... 3.09(c)
"Change in Control Purchase Price" .................................... 3.09(a)
"Company Notice" ...................................................... 3.08(e)
"Company Notice Date".................................................. 3.08(c)
"Conversion Agent" .................................................... 2.03
"Conversion Date" ..................................................... 11.02
"Conversion Rate" ..................................................... 11.01
"Custodian" ........................................................... 6.01
"Defaulted Interest"................................................... 10.02(b)
"Depositary" .......................................................... 2.01(a)
"Event of Default" .................................................... 6.01
"Exchange Act" ........................................................ 3.08(d)
"Ex-Dividend Time" .................................................... 11.01
"Extraordinary Cash Dividend" ......................................... 11.08
"Institutional Accredited Investors"................................... 2.01(b)
"Interest Payment Date"................................................ 10.01
"Legal Holiday" ....................................................... 12.08
"Legend" .............................................................. 2.06(f)
"Market Price" ........................................................ 3.08(d)
"Notice of Default" ................................................... 6.01
"Paying Agent" ........................................................ 2.03
"Purchase Date" ....................................................... 3.08(a)
"Purchase Notice" ..................................................... 3.08(a)
"Purchase Price" ...................................................... 3.08(a)
"QIB".................................................................. 2.01(a)
"Quoted Price" ........................................................ 11.01
"Registrar" ........................................................... 2.03
"Regular Record Date" ................................................. 10.01
"Restated Principal Amount"............................................ 10.01
"Rights" .............................................................. 11.19
"Rights Agreement" .................................................... 11.19
"Rule 144A Information" ............................................... 4.06
"Sale Price" .......................................................... 3.08(d)
</TABLE>
6
<PAGE> 13
<TABLE>
<S> <C>
"Securities Act" ...................................................... 3.08(d)
"Tax Event Date" ...................................................... 10.01
"Time of Determination" ............................................... 11.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the 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 Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the
Company.
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 have the
meanings assigned to them by such definitions.
SECTION 1.04. 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 generally accepted accounting principles
as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the
plural include the singular.
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<PAGE> 14
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibits A-1
and A-2, which are a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage (provided
that any such notation, legend or endorsement required by usage is in a form
acceptable to the Company). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each Security shall be dated
the date of its authentication.
(a) 144A Global Securities. Securities offered and sold within the
United States to qualified institutional investors as defined in Rule 144A
("QIBs") in reliance on Rule 144A shall be issued, initially in the form of a
144A Global Security, which shall be deposited with the Trustee at its corporate
trust offices, as custodian for the Depositary and registered in the name of The
Depository Trust Company ("DTC") or the nominee thereof (such depositary, or any
successor thereto, and any such nominee being hereinafter referred to as the
"Depositary"), duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the 144A Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary as hereinafter provided.
(b) Institutional Accredited Investor Securities. Except as provided
in this Section 2.01, 2.06 or 2.12, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of Certificated
Securities. Securities offered and sold within the United States to
institutional accredited investors as defined in Rule 501(a)(1), (2) (3) and (7)
under the Securities Act ("Institutional Accredited Investors") shall be issued,
initially in the form of an Institutional Accredited Investor Security, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided.
(c) Global Securities in General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions and conversions.
Any adjustment of the aggregate principal amount of a Global Security to reflect
the amount of any increase or decrease in the amount of outstanding Securities
8
<PAGE> 15
represented thereby shall be made by the Trustee in accordance with instructions
given by the Holder thereof as required by Section 2.12 hereof and shall be made
on the records of the Trustee and the Depositary.
(d) Book-Entry Provisions. This Section 2.01(d) shall apply only to
Global Securities deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(d), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary, (b) shall
be delivered by the Trustee to the Depositary or pursuant to the Depositary's
instructions and (c) shall bear legends substantially to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER 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 THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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. TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS, IN WHOLE BUT NOT IN PART, TO
NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF."
(e) Certificated Securities. Securities not issued as interests in
the Global Securities will be issued in certificated form substantially in the
form of Exhibit A-2 attached hereto.
SECTION 2.02. Execution and Authentication. The Securities shall be
executed on behalf of the Company by its Chairman of the Board, its President,
one of its Senior Vice Presidents or one of its Vice Presidents, under its
corporate seal reproduced thereon, and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at the time of the execution of the Securities the proper Officers of
the Company shall bind the Company, notwithstanding that such individuals or any
of them
9
<PAGE> 16
have ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of authentication of
such Securities.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
The Trustee shall authenticate and deliver Securities for original
issue in an aggregate Principal Amount at Maturity of up to $1,656,000,000 upon
a Company Order without any further action by the Company. The aggregate
Principal Amount at Maturity of Securities outstanding at any time may not
exceed the amount set forth in the foregoing sentence, except as provided in
Section 2.07.
The Securities shall be issued only in registered form without
coupons and only in denominations of $1,000 of Principal Amount at Maturity and
any integral multiple thereof.
SECTION 2.03. Registrar, Paying Agent and Conversion Agent. The
Company shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented for purchase or payment ("Paying Agent") and
an office or agency where Securities may be presented for conversion
("Conversion 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,
one or more additional paying agents and one or more additional conversion
agents. The term Paying Agent includes any additional paying agent, including
any named pursuant to Section 4.05. The term Conversion Agent includes any
additional conversion agent, including any named pursuant to Section 4.05.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent, Conversion Agent or co-registrar (other than the
Trustee). The agreement shall implement the provisions of this Indenture that
relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying
Agent or Conversion Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.07. The Company or
any Subsidiary or an Affiliate of either of them may act as Paying Agent,
Registrar, Conversion Agent or co-registrar.
10
<PAGE> 17
The Company initially appoints the Trustee as Registrar, Conversion
Agent and Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent to Hold Money and Securities in Trust.
Except as otherwise provided herein, on or prior to each due date of payments in
respect of any Security, the Company shall deposit with the Paying Agent a sum
of money (in immediately available funds if deposited on the due date) or Common
Stock sufficient to make such payments when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money and Common Stock held by the Paying Agent for the making of
payments in respect of the Securities and shall notify the Trustee of any
default by the Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money and Common Stock
so held in trust. If the Company, a Subsidiary or an Affiliate of either of them
acts as Paying Agent, it shall segregate the money and Common Stock held by it
as Paying Agent and hold it as a separate trust fund. The Company at any time
may require a Paying Agent to pay all money and Common Stock held by it to the
Trustee and to account for any funds and Common Stock disbursed by it. Upon
doing so, the Paying Agent shall have no further liability for the money or
Common Stock.
SECTION 2.05. Securityholder 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 Securityholders. If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee at least
semiannually on May 1 and November 1 a listing of Securityholders dated within
15 days of the date on which the list is furnished 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 may reasonably require of the names and addresses of
Securityholders.
SECTION 2.06. Transfer and Exchange. Subject to Section 2.12 hereof,
(a) upon surrender for registration of transfer of any Security, together with a
written instrument of transfer satisfactory to the Registrar duly executed by
the Securityholder or such Securityholder's attorney duly authorized in writing,
at the office or agency of the Company designated as Registrar or co-registrar
pursuant to Section 2.03, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations, of a like aggregate Principal Amount at Maturity. The Company
shall not charge a service charge for any registration of
11
<PAGE> 18
transfer or exchange, but the Company may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges that may be imposed in
connection with the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
Principal Amount at Maturity, upon surrender of the Securities to be exchanged,
together with a written instrument of transfer satisfactory to the Registrar
duly executed by the Securityholder or such Securityholder's attorney duly
authorized in writing, at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
The Company shall not be required to make, and the Registrar need
not register, transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities in respect of which a Purchase Notice or
Change in Control Purchase Notice has been given and not withdrawn by the Holder
thereof in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before a selection of Securities to be
redeemed.
(b) Notwithstanding any provision to the contrary herein, so long as
a Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.06(b). Transfers of a
Global Security shall be limited to transfers of such Global Security in whole,
or in part, to nominees of the Depositary or to a successor of the Depositary or
such successor's nominee.
(c) Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.03 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.
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<PAGE> 19
(e) No Registrar shall be required to make registrations of transfer
or exchange of Securities during any periods designated in the text of the
Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.
(f) If Securities are issued upon the transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the form of Security attached hereto as Exhibits A-1 and
A-2 setting forth such restrictions (collectively, the "Legend"), or if a
request is made to remove the Legend on a Security, the Securities so issued
shall bear the Legend, or the Legend shall not be removed, as the case may be,
unless (i) there is delivered to the Company and the Registrar such satisfactory
evidence, which shall include an Opinion of Counsel, as may be reasonably
required by the Company and the Registrar, that neither the Legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A or Rule 144 under the Securities
Act or that such Securities are not "restricted" within the meaning of Rule 144
under the Securities Act. Upon (i) provision of such satisfactory evidence, or
(ii) notification by the Company to the Trustee and Registrar of the sale of
such Security pursuant to a registration statement that is effective at the time
of such sale, the Trustee, at the written direction of the Company, shall
authenticate and deliver a Security that does not bear the Legend. If the Legend
is removed from the face of a Security and the Security is subsequently held by
an Affiliate of the Company, the Legend shall be reinstated.
SECTION 2.07. Replacement Securities. If (a) any mutilated Security
is surrendered to the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Trustee shall authenticate and deliver, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and Principal Amount at Maturity, bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article 3 hereof, the Company in its discretion may, instead
of issuing a new Security, pay or purchase such Security, as the case may be.
13
<PAGE> 20
Upon the issuance of any new Securities under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.08. Outstanding Securities; Determinations of Holders'
Action. Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.08 as not outstanding. A
Security does not cease to be outstanding because the Company or an Affiliate
thereof holds the Security; provided, however, that in determining whether the
Holders of the requisite Principal Amount at Maturity of Securities have given
or concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Subject to the foregoing,
only Securities outstanding at the time of such determination shall be
considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following the Purchase Date or a Change
in Control Purchase Date, or on Stated Maturity, money or securities, if
permitted hereunder, sufficient to pay Securities payable on that date, then
14
<PAGE> 21
immediately after such Redemption Date, Purchase Date, Change in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Original Issue Discount and interest, if any, on
such Securities shall cease to accrue; provided, that if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made.
If a Security is converted in accordance with Article 11, then from
and after the time of conversion on the Conversion Date, such Security shall
cease to be outstanding and Original Issue Discount and interest, if any, shall
cease to accrue on such Security.
SECTION 2.09. Temporary Securities. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.03, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
Principal Amount at Maturity of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities.
SECTION 2.10. Cancellation. All Securities surrendered for payment,
purchase by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange shall, if surrendered to any person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Securities so delivered
shall be
15
<PAGE> 22
promptly cancelled by the Trustee. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation or
that any Holder has converted pursuant to Article 11. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be destroyed by the Trustee and the Trustee
shall deliver a certificate of destruction to the Company.
SECTION 2.11. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of the Security or the payment of any Redemption Price, Purchase Price
or Change in Control Purchase Price in respect thereof, and interest thereon,
for the purpose of conversion and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by notice to the contrary.
SECTION 2.12. Global Securities.
(a) Notwithstanding any other provisions of this Indenture or the
Securities, (A) transfers of a Global Security, in whole or in part, shall be
made only in accordance with Section 2.06 and Section 2.12(a)(i), (B) transfer
of a beneficial interest in a Global Security for a Certificated Security shall
comply with Section 2.06 and Section 2.12(b)(ii) below, and (C) transfers of a
Certificated Security shall comply with Section 2.06 and Section 2.12(b)(iii)
and (iv) below.
(i) Transfer of Global Security. A Global Security may not be
transferred, in whole or in part, to any Person other than the
Depositary or a nominee or any successor thereof, and no such
transfer to any such other Person may be registered; provided that
this clause (i) shall not prohibit any transfer of a Security that
is issued in exchange for a Global Security but is not itself a
Global Security. No transfer of a Security to any Person shall be
effective under this Indenture or the Securities unless and until
such Security has been registered in the name of such Person.
Nothing in this Section 2.12(a)(i) shall prohibit or render
ineffective any transfer of a beneficial interest in a Global
Security effected in accordance with the other provisions of this
Section 2.12(a).
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<PAGE> 23
(ii) Restrictions on Transfer of a Beneficial Interest in a
Global Security for a Certificated Security. A beneficial interest
in a Global Security may not be exchanged for a Certificated
Security except upon satisfaction of the requirements set forth
below. Upon receipt by the Trustee of a transfer of a beneficial
interest in a Global Security in accordance with Applicable
Procedures for a Certificated Security in the form satisfactory to
the Trustee, together with:
(a) so long as the Securities are Restricted Securities,
certification, in the form set forth in Exhibit B-1,
and, if requested by the Company or the Registrar,
certification in the form set forth in Exhibit B-2, that
such beneficial interest in the Global Security is being
transferred to an Institutional Accredited Investor in
accordance with Sections 501(a)(1), (2), (3) or (7) of
the Securities Act; and
(b) written instructions to the Trustee to make, or direct
the Registrar to make, an adjustment on its books and
records with respect to such Global Security to reflect
a decrease in the aggregate Principal Amount of the
Securities represented by the Global Security, such
instructions to contain information regarding the
Depositary account to be credited with such decrease,
then the Trustee shall cause, or direct the Registrar to cause, in
accordance with the standing instructions and procedures existing
between the Depositary and the Registrar, the aggregate Principal
Amount at Maturity of Securities represented by the Global Security
to be decreased by the aggregate Principal Amount at Maturity of the
Certificated Security to be issued, shall issue such Certificated
Security and shall debit or cause to be debited to the account of
the Person specified in such instructions a beneficial interest in
the Global Security equal to the Principal Amount at Maturity of the
Certificated Security so issued.
(iii) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented to the Registrar with a
request:
(x) to register the transfer of such Certificated
Securities; or
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(y) to exchange such Certificated Securities for an
equal Principal Amount at Maturity of Certificated Securities
of other authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are
met; provided, however, that the Certificated Securities surrendered
for transfer or exchange:
(a) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(b) so long as such Securities are Restricted Securities, such
Securities are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or
pursuant to clause (A), (B) or (C) below, and are accompanied by the
following additional information and documents, as applicable:
(A) if such Certificated Securities are being
delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a
certification from such Holder to that effect; or
(B) if such Certificated Securities are being
transferred to the Company, a certification to that
effect; or
(C) if such Certificated Securities are being
transferred pursuant to an exemption from registration
in accordance with Rule 144, (i) a certification to that
effect (in the form set forth in Exhibit B-1) and (ii)
if the Company or Registrar so requests, an opinion of
counsel or other evidence reasonably satisfactory to
them as to the compliance with the restrictions set
forth in the Legend.
(iv) Restrictions on Transfer of a Certificated Security for a
Beneficial Interest in a Global Security. A Certificated Security
may not be exchanged for a beneficial interest in a Global Security
except upon satisfaction of the requirements set forth below.
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Upon receipt by the Trustee of a Certificated Security, duly
endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:
(a) so long as the Securities are Restricted Securities,
certification, in the form set forth in Exhibit B-1, that such
Certificated Security is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A; and
(b) written instructions directing the Trustee to make,
or to direct the Registrar to make, an adjustment on its books
and records with respect to such Global Security to reflect an
increase in the aggregate Principal Amount at Maturity of the
Securities represented by the Global Security, such
instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such Certificated Security and cause,
or direct the Registrar to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Registrar, the aggregate Principal Amount at Maturity of Securities
represented by the Global Security to be increased by the aggregate
Principal Amount at Maturity of the Certificated Security to be
exchanged, and shall credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest
in the Global Security equal to the Principal Amount at Maturity of
the Certificated Security so cancelled. If no Global Securities are
then outstanding, the Company shall issue and the Trustee shall
authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate
Principal Amount at Maturity.
(b) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the Legend. Whenever any
Restricted Security is presented or surrendered for registration of transfer or
for exchange for a Security registered in a name other than that of the Holder,
such Security must be accompanied by a certificate in substantially the form set
forth in Exhibit B-1, dated the date of such surrender and signed by the Holder
of such Security, as to compliance with such restrictions on transfer. The
Registrar shall not be required to accept for such registration of transfer
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or exchange any Security not so accompanied by a properly completed certificate.
(c) The restrictions imposed by the Legend upon the transferability
of any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act or
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a transfer
in compliance with Rule 144 or any successor provision, by an opinion of counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and in form
acceptable to the Company, to the effect that the transfer of such Security has
been made in compliance with Rule 144 or such successor provision), be exchanged
for a new Security, of like tenor and aggregate Principal Amount at Maturity,
which shall not bear the restrictive Legend. The Company shall inform the
Trustee of the effective date of any registration statement registering the
Securities under the Securities Act. The Trustee shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
aforementioned opinion of counsel or registration statement.
(d) As used in the preceding two paragraphs of this Section 2.12,
the term "transfer" encompasses any sale, pledge, transfer, hypothecation or
other disposition of any Security.
(e) The provisions of clauses (1), (2), (3) and (4) below shall
apply only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or
the Securities, except as provided in Section 2.12(a)(ii), a Global
Security shall not be exchanged in whole or in part for a Security
registered in the name of any Person other than the Depositary or
one or more nominees thereof, provided that a Global Security may be
exchanged for Securities registered in the names of any person
designated by the Depositary in the event that (i) the Depositary
has notified the Company that it is unwilling or unable to continue
as Depositary for such Global Security or such Depositary has ceased
to be a "clearing agency" registered under
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the Exchange Act, and a successor Depositary is not appointed by the
Company within 90 days or (ii) an Event of Default has occurred and
is continuing with respect to the Securities. Any Global Security
exchanged pursuant to clause (i) above shall be so exchanged in
whole and not in part, and any Global Security exchanged pursuant to
clause (ii) above may be exchanged in whole or from time to time in
part as directed by the Depositary. Any Security issued in exchange
for a Global Security or any portion thereof shall be a Global
Security; provided that any such Security so issued that is
registered in the name of a Person other than the Depositary or a
nominee thereof shall not be a Global Security.
(2) Securities issued in exchange for a Global Security or any
portion thereof shall be issued in definitive, fully registered
form, without interest coupons, shall have an aggregate Principal
Amount at Maturity equal to that of such Global Security or portion
thereof to be so exchanged, shall be registered in such names and be
in such authorized denominations as the Depositary shall designate
and shall bear the applicable legends provided for herein. Any
Global Security to be exchanged in whole shall be surrendered by the
Depositary to the Trustee, as Registrar. With regard to any Global
Security to be exchanged in part, either such Global Security shall
be so surrendered for exchange or, if the Trustee is acting as
custodian for the Depositary or its nominee with respect to such
Global Security, the Principal Amount at Maturity thereof shall be
reduced, by an amount equal to the portion thereof to be so
exchanged, by means of an appropriate adjustment made on the records
of the Trustee. Upon any such surrender or adjustment, the Trustee
shall authenticate and deliver the Security issuable on such
exchange to or upon the order of the Depositary or an authorized
representative thereof.
(3) Subject to the provisions of clause (5) below, the
registered Holder may grant proxies and otherwise authorize any
Person, including Agent Members and persons that may hold interests
through Agent Members, to take any action which a holder is entitled
to take under this Indenture or the Securities.
(4) In the event of the occurrence of any of the events
specified in clause (1) above, the Company will promptly make
available to the Trustee a reasonable supply of Certificated
Securities in definitive, fully registered form, without interest
coupons.
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(5) Neither any members of, or participants in, the Depositary
("Agent Members") nor any other Persons on whose behalf Agent
Members may act shall have any rights under this Indenture with
respect to any Global Security registered in the name of the
Depositary or any nominee thereof, or under any such Global
Security, and the Depositary or such nominee, as the case may be,
may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner and holder of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or
any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or such nominee, as the case may be, or impair, as
between the Depositary, its Agent Members and any other person on
whose behalf an Agent Member may act, the operation of customary
practices of such Persons governing the exercise of the rights of a
holder of any Security.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01. Right to Redeem; Notices to Trustee. The Company, at
its option, may redeem the Securities in accordance with the provisions of
paragraphs 5 and 7 of the Securities. If the Company elects to redeem Securities
pursuant to paragraph 5 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the Principal Amount at Maturity of Securities
to be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in
this Section 3.01 by a Company Order, in the case of any redemption of less than
all of the Securities, at least 30 days before the Redemption Date and, in the
case of any
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redemption of all of the Securities, on or prior to the date of notice of
redemption (in each case, unless a shorter notice shall be satisfactory to the
Trustee).
SECTION 3.02. Selection of Securities to Be Redeemed. If less than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by any other method the Trustee considers
fair and appropriate (so long as such method is not prohibited by the rules of
any stock exchange on which the Securities are then listed). The Trustee shall
make the selection at least 15 days but not more than 60 days before the
Redemption Date from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the Principal
Amount at Maturity of Securities that have denominations larger than $1,000.
Securities and portions of them the Trustee selects shall be in Principal
Amounts at Maturity of $1,000 or an integral multiple of $1,000. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be redeemed.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as outstanding for the purpose of such selection.
SECTION 3.03. Notice of Redemption. At least 15 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 each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and Conversion Agent;
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(5) that Securities called for redemption may be converted at any
time before the close of business on the Redemption Date;
(6) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 8 of the Securities;
(7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(8) if fewer than all the outstanding Securities are to be redeemed,
the certificate number and Principal Amounts at Maturity of the particular
Securities to be redeemed;
(9) that, unless the Company defaults in making payment of such
Redemption Price, Original Issue Discount on Securities called for
redemption, and interest, if any, will cease to accrue on and after the
Redemption Date; and
(10) the CUSIP number of the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense, provided that the
Company makes such request at least three Business Days prior to such notice of
redemption.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and payable on
the Redemption Date and at the Redemption Price stated in the notice except for
Securities which are converted in accordance with the terms of this Indenture.
Upon surrender to the Paying Agent, such Securities shall be paid at the
Redemption Price stated in the notice.
SECTION 3.05. Deposit of Redemption Price. Prior to or on the
Redemption Date, the Company shall deposit with the Paying Agent (or if the
Company or a Subsidiary or an Affiliate of either of them is the Paying Agent,
shall segregate and hold in trust) money sufficient to pay the Redemption Price
of all Securities to be redeemed on that date other than Securities or portions
of Securities called for redemption which on or prior thereto have been
delivered by the Company to the Trustee for cancellation or have been converted.
The Paying Agent shall as promptly as practicable return to the Company any
money, with interest, if any, thereon (subject to the provisions of Section
7.01(f)) not required for that purpose because of conversion of Securities
pursuant to Article 11. If such money is then held by the Company in trust and
is not required for such purpose it shall be discharged from such trust.
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SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder a new Security in an authorized
denomination equal in Principal Amount at Maturity to the unredeemed portion of
the Security surrendered.
SECTION 3.07. Conversion Arrangement on Call for Redemption. In
connection with any redemption of Securities, the Company may arrange for the
purchase and conversion of any Securities called for redemption by an agreement
with one or more investment bankers or other purchasers to purchase such
Securities by paying to the Trustee in trust for the Securityholders, on or
before the close of business on the Redemption Date, an amount that, together
with any amounts deposited with the Trustee by the Company for the redemption of
such Securities, is not less than the Redemption Price, of such Securities.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price of such Securities, 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, any Securities 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, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 11) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the Redemption Date, subject to
payment of the above amount as aforesaid. The Trustee shall hold and pay to the
Holders whose Securities are selected for redemption any such amount paid to it
for purchase and conversion in the same manner as it would moneys 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 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.
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SECTION 3.08. Purchase of Securities at Option of the Holder.
(a) General. Securities shall be purchased by the Company pursuant
to paragraph 6 of the Securities as of January 27, 2002 and January 27, 2009
(each, a "Purchase Date"), at the purchase price specified therein (each, a
"Purchase Price"), at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent, by the Holder of a written notice
of purchase (a "Purchase Notice") at any time from the opening of business
on the date that is 20 Business Days prior to a Purchase Date until the
close of business on such Purchase Date stating:
(A) the certificate number of the Security which the Holder
will deliver to be purchased,
(B) the portion of the Principal Amount at Maturity of the
Security which the Holder will deliver to be purchased, which
portion must be $1,000 or an integral multiple thereof,
(C) that such Security shall be purchased as of the Purchase
Date pursuant to the terms and conditions specified in paragraph 6
of the Securities and in this Indenture, and
(D) in the event the Company elects, pursuant to Section
3.08(b), to pay the Purchase Price to be paid as of such Purchase
Date, in whole or in part, in shares of Common Stock but such
portion of the Purchase Price shall ultimately be payable to such
Holder entirely in cash because any of the conditions to payment of
the Purchase Price in Common Stock is not satisfied prior to the
close of business on such Purchase Date, as set forth in Section
3.08(d), whether such Holder elects (i) to withdraw such Purchase
Notice as to some or all of the Securities to which such Purchase
Notice relates (stating the Principal Amount at Maturity and
certificate numbers of the Securities as to which such withdrawal
shall relate), or (ii) to receive cash in respect of the entire
Purchase Price for all Securities (or portions thereof) to which
such Purchase Notice relates; and
(2) delivery of such Security to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by
the Holder of the Purchase Price therefor; provided, however, that such
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Purchase Price shall be so paid pursuant to this Section 3.08 only if the
Security so delivered to the Paying Agent shall conform in all respects to
the description thereof in the related Purchase Notice.
If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of Section
3.10, fails to indicate such Holder's choice with respect to the election set
forth in clause (D) of Section 3.08(a)(1), such Holder shall be deemed to have
elected to receive cash in respect of the Purchase Price for all Securities
subject to such Purchase Notice in the circumstances set forth in such clause
(D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.08, a portion of a Security if the Principal Amount at Maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions
of this Section 3.08 shall be consummated by the delivery of the consideration
to be received by the Holder promptly following the later of the Purchase Date
and the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.08(a) shall have the right to withdraw such Purchase Notice at any time prior
to the close of business on the Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price.
The Securities to be purchased pursuant to Section 3.08(a) may be paid for, at
the election of the Company, in U.S. legal tender ("cash") or Common Stock, or
in any combination of cash and Common Stock, subject to the conditions set forth
in Sections 3.08(c) and (d). The Company shall designate, in the Company Notice
delivered pursuant to Section 3.08(e), whether the Company will purchase the
Securities for cash or Common Stock, or, if a combination thereof, the
percentages of the Purchase Price of Securities in respect of which it will pay
in cash or Common Stock; provided that the Company will pay cash for fractional
interests in Common Stock. For purposes of determining the existence of
potential fractional
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interests, all Securities subject to purchase by the Company held by a Holder
shall be considered together (no matter how many separate certificates are to be
presented). Each Holder whose Securities are purchased pursuant to this Section
3.08 shall receive the same percentage of cash or Common Stock in payment of the
Purchase Price for such Securities, except (i) as provided in Section 3.08(d)
with regard to the payment of cash in lieu of fractional shares of Common Stock
and (ii) in the event that the Company is unable to purchase the Securities of a
Holder or Holders for Common Stock because any necessary qualifications or
registrations of the Common Stock under applicable state securities laws cannot
be obtained, the Company may purchase the Securities of such Holder or Holders
for cash. The Company may not change its election with respect to the
consideration (or components or percentages of components thereof) to be paid
once the Company has given its Company Notice to Securityholders except pursuant
to this Section 3.08(b) or pursuant to Section 3.08(d) in the event of a failure
to satisfy, prior to the close of business on the Purchase Date, any condition
to the payment of the Purchase Price, in whole or in part, in Common Stock.
At least three Business Days before the Company Notice Date, the
Company shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.08(e),
(iii) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 3.08(d) have been or will be
complied with, and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.08(e).
(c) Purchase with Cash. On each Purchase Date, at the option of the
Company, the Purchase Price of Securities in respect of which a Purchase Notice
pursuant to Section 3.08(a) has been given, or a specified percentage thereof,
may be paid by the Company with cash equal to the aggregate Purchase Price of
such Securities. If the Company elects to purchase Securities with cash, the
Company Notice, as provided in Section 3.08(e), shall be sent to Holders (and to
beneficial owners as required by applicable law) not less than 20 Business Days
prior to such Purchase Date (the "Company Notice Date").
(d) Payment by Issuance of Common Stock. On each Purchase Date, at
the option of the Company, the Purchase Price of Securities in respect of which
a Purchase Notice pursuant to
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Section 3.08(a) has been given, or a specified percentage thereof, may be paid
by the Company by the issuance of a number of shares of Common Stock equal to
the quotient obtained by dividing (i) the amount of cash to which the
Securityholders would have been entitled had the Company elected to pay all or
such specified percentage, as the case may be, of the Purchase Price of such
Securities in cash by (ii) the Market Price of a share of Common Stock, subject
to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in
payment of the Purchase Price. Instead the Company will pay cash for the current
market value of the fractional share. The current market value of a fraction of
a share shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent. It is understood that if a
Holder elects to have more than one Security purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.
If the Company elects to purchase the Securities by the issuance of
shares of Common Stock, the Company Notice, as provided in Section 3.08(e),
shall be sent to the Holders (and to beneficial owners as required by applicable
law) not later than the Company Notice Date.
The Company's right to exercise its election to purchase the
Securities pursuant to Section 3.08 through the issuance of shares of Common
Stock shall be conditioned upon:
(i) the Company's not having given its Company Notice of an election
to pay entirely in cash and its giving of timely Company Notice of
election to purchase all or a specified percentage of the Securities with
Common Stock as provided herein;
(ii) the registration of the shares of Common Stock to be issued in
respect of the payment of the Purchase Price under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in each case, if required;
(iii) any necessary qualification or registration under applicable
state securities laws or the availability of an exemption from such
qualification and registration; and
(iv) the receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel each stating that (A) the terms of the issuance of the
Common Stock are in conformity with this Indenture and (B) the shares of
Common Stock to be issued by the Company in payment of the Purchase
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Price in respect of Securities have been duly authorized and, when issued
and delivered pursuant to the terms of this Indenture in payment of the
Purchase Price in respect of the Securities, will be validly issued, fully
paid and non-assessable and, to the best of such counsel's knowledge, free
from preemptive rights, and, in the case of such Officer's Certificate,
stating that conditions (i), (ii) and (iii) above and the condition set
forth in the second succeeding sentence have been satisfied and, in the
case of such Opinion of Counsel, stating that conditions (ii) and (iii)
above has been satisfied.
Such Officers' Certificate shall also set forth the number of shares of Common
Stock to be issued for each $1,000 Principal Amount at Maturity of Securities
and the Sale Price of a share of Common Stock on each trading day during the
period commencing on the first trading day of the period during which the Market
Price is calculated and ending on the applicable Purchase Date. The Company may
pay the Purchase Price (or any portion thereof) in Common Stock only if the
information necessary to calculate the Market Price is published in a daily
newspaper of national circulation. If the foregoing conditions are not satisfied
with respect to a Holder or Holders prior to the close of business on the
Purchase Date and the Company has elected to purchase the Securities pursuant to
this Section 3.08 through the issuance of shares of Common Stock, the Company
shall pay the entire Purchase Price of the Securities of such Holder or Holders
in cash.
The "Market Price" means the average of the Sale Prices of the
Common Stock for the five trading day period ending on (if the third Business
Day prior to the applicable Purchase Date is a trading day, or if not, then on
the last trading day prior to) the third Business Day prior to the applicable
Purchase Date, appropriately adjusted to take into account the occurrence,
during the period commencing on the first of such trading days during such five
trading day period and ending on such Purchase Date, of any event described in
Section 11.06, 11.07 or 11.08; subject, however, to the conditions set forth in
Sections 11.09 and 11.10.
The "Sale Price" of the Common Stock on any date means the closing
per share sale price (or, if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of the
average bid and average ask prices) on such date as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States
national or regional securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System.
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(e) Notice of Election. The Company's notice of election to purchase
with cash or Common Stock or any combination thereof shall be sent to the
Holders (and to beneficial owners as required by applicable law) in the manner
provided in Section 12.02 at the time specified in Section 3.08(c) or (d), as
applicable (the "Company Notice"). Such Company Notice shall state the manner of
payment elected and shall contain the following information:
In the event the Company has elected to pay the Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a Market
Price determined as of a specified date prior to the Purchase Date equal
to such specified percentage of the Purchase Price of the Securities held
by such Holder (except any cash amount to be paid in lieu of fractional
shares);
(2) set forth the method of calculating the Market Price of the
Common Stock; and
(3) state that because the Market Price of Common Stock will be
determined prior to the Purchase Date, Holders will bear the market risk
with respect to the value of the Common Stock to be received from the date
such Market Price is determined to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase
Notice to be completed by a Securityholder and shall state:
(i) the Purchase Price and the Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion
Agent;
(iii) that Securities as to which a Purchase Notice has been given
may be converted pursuant to Article 11 hereof only if the applicable
Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;
(iv) that Securities must be surrendered to the Paying Agent to
collect payment;
(v) that the Purchase Price for any security as to which a Purchase
Notice has been given and not withdrawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Security
as described in (iv);
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(vi) the procedures the Holder must follow to exercise rights under
Section 3.08 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities; and
(viii) the procedures for withdrawing a Purchase Notice (including,
without limitation, for a conditional withdrawal pursuant to the terms of
Section 3.08(a)(1)(D) or Section 3.10).
At the Company's request, the Trustee shall give such Company Notice
in the Company's name and at the Company's expense; provided, however, that, in
all cases, the text of such Company Notice shall be prepared by the Company.
Upon determination of the actual number of shares of Common Stock to
be issued for each $1,000 Principal Amount at Maturity of Securities, the
Company will publish such determination on the Company's Web site on the World
Wide Web.
(f) Covenants of the Company. All shares of Common Stock delivered
upon purchase of the Securities shall be newly issued shares or treasury shares,
shall be duly authorized, validly issued, fully paid and nonassessable and shall
be free from preemptive rights and free of any lien or adverse claim.
The Company shall use its best efforts to list or cause to have
quoted any shares of Common Stock to be issued to purchase Securities on each
national securities exchange or over-the-counter or other domestic market on
which the Common Stock is then listed or quoted.
(g) Procedure upon Purchase. The Company shall deposit cash (in
respect of a cash purchase under Section 3.08(c) or for fractional interests, as
applicable) or shares of Common Stock, or a combination thereof, as applicable,
at the time and in the manner as provided in Section 3.11, sufficient to pay the
aggregate Purchase Price of all Securities to be purchased pursuant to this
Section 3.08. As soon as practicable after the Purchase Date, the Company shall
deliver to each Holder entitled to receive Common Stock through the Paying
Agent, a certificate for the number of full shares of Common Stock issuable in
payment of the Purchase Price and cash in lieu of any fractional interests. The
person in whose name the certificate for Common Stock is registered shall be
treated as a holder of record of shares of Common Stock on the Business Day
following the Purchase Date. Subject to Section 3.08(d), no payment or
adjustment will be made for dividends on the Common Stock the record date for
which occurred on or prior to the Purchase Date.
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(h) Taxes. If a Holder of a Security is paid in Common Stock, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
such issue of shares of Common Stock. However, the Holder shall pay any such tax
which is due because the Holder requests the shares of Common Stock to be issued
in a name other than the Holder's name. The Paying Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the Holder's name until the Paying Agent receives a sum sufficient to pay any
tax which will be due because the shares of Common Stock are to be issued in a
name other than the Holder's name. Nothing herein shall preclude any income tax
withholding required by law or regulations.
SECTION 3.09. Purchase of Securities at Option of the Holder upon
Change in Control. (a) If on or prior to January 27, 2002 there shall have
occurred a Change in Control, Securities shall be purchased by the Company, at
the option of the Holder thereof, at the purchase price specified in paragraph 6
of the Securities (the "Change in Control Purchase Price"), as of the date that
is 35 Business Days after the occurrence of the Change in Control (the "Change
in Control Purchase Date"), subject to satisfaction by or on behalf of the
Holder of the requirements set forth in Section 3.09(c).
A "Change in Control" shall be deemed to have occurred at such time
as either of the following events shall occur:
(i) There shall be consummated any consolidation or merger of the
Company pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case other than a consolidation or
merger of the Company in which the holders of the Common Stock immediately
prior to the consolidation or merger have, directly or indirectly, at
least a majority of the total voting power in the aggregate of all classes
of capital stock of the continuing or surviving corporation immediately
after such consolidation or merger; or
(ii) There is a report filed on Schedule 13D or 14D-1 (or any
successor schedule, form or report) pursuant to the Exchange Act,
disclosing that any person (for the purposes of this Section 3.09 only, as
the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 50% or more of the voting power of
the Common Stock then outstanding; provided, however, that a person shall
not be deemed beneficial owner of, or to own beneficially, (A) any
securities tendered pursuant to a tender or exchange offer
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made by or on behalf of such person or any of such person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange thereunder, or (B) any securities if such beneficial ownership
(1) arises solely as a result of a revocable proxy delivered in response
to a proxy or consent solicitation made pursuant to the applicable rules
and regulations under the Exchange Act, and (2) is not also then
reportable on Schedule 13D (or any successor schedule) under the Exchange
Act.
Notwithstanding the foregoing provisions of this Section 3.09, a Change in
Control shall not be deemed to have occurred by virtue of the Company, any
Subsidiary, any employee stock ownership plan or any other employee benefit plan
of the Company or any Subsidiary, or any person holding Common Stock for or
pursuant to the terms of any such employee benefit plan, filing or becoming
obligated to file a report under or in response to Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report) under the Exchange Act
disclosing beneficial ownership by it of shares of Common Stock, whether in
excess of 50% or otherwise.
"Associate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date hereof.
(b) Within 15 Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of Change in Control by
first-class mail to the Trustee and to each Holder (and to beneficial owners as
required by applicable law). The notice shall include a form of Change in
Control Purchase Notice to be completed by the Securityholder and shall state:
(1) briefly, the events causing a Change in Control and the date of
such Change in Control;
(2) the date by which the Change in Control Purchase Notice pursuant
to this Section 3.09 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent and the Conversion
Agent;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Change in Control Purchase Notice
has been given may be converted pursuant to Article 11 hereof only if the
Change in Control Purchase
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Notice has been withdrawn in accordance with the terms of this Indenture;
(8) that Securities must be surrendered to the Paying Agent to
collect payment;
(9) that the Change in Control Purchase Price for any Security as to
which a Change in Control Purchase Notice has been duly given and not
withdrawn will be paid promptly following the later of the Change in
Control Purchase Date and the time of surrender of such Security as
described in (8);
(10) briefly, the procedures the Holder must follow to exercise
rights under this Section 3.09;
(11) briefly, the conversion rights of the Securities; and
(12) the procedures for withdrawing a Change in Control Purchase
Notice.
(c) A Holder may exercise its rights specified in Section 3.09(a)
upon delivery of a written notice of purchase (a "Change in Control Purchase
Notice") to the Paying Agent at any time prior to the close of business on the
Change in Control Purchase Date, stating:
(1) the certificate number of the Security which the Holder will
deliver to be purchased;
(2) the portion of the Principal Amount at Maturity of the Security
which the Holder will deliver to be purchased, which portion must be
$1,000 or an integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the terms and
conditions specified in paragraph 6 of the Securities.
The delivery of such Security to the Paying Agent prior to, on or
after the Change in Control Purchase Date (together with all necessary
endorsements) at the offices of the Paying Agent shall be a condition to the
receipt by the Holder of the Change in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.09 only if the Security so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.
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The Company shall purchase from the Holder thereof, pursuant to this
Section 3.09, a portion of a Security if the Principal Amount at Maturity of
such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions
of this Section 3.09 shall be consummated by the delivery of the consideration
to be received by the Holder promptly following the later of the Change in
Control Purchase Date and the time of delivery of the Security to the Paying
Agent in accordance with this Section 3.09.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change in Control Purchase Notice
contemplated by this Section 3.09(c) shall have the right to withdraw such
Change in Control Purchase Notice at any time prior to the close of business on
the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
SECTION 3.10. Effect of Purchase Notice or Change in Control
Purchase Notice. Upon receipt by the Paying Agent of the Purchase Notice or
Change in Control Purchase Notice specified in Section 3.08(a) or Section
3.09(c), as applicable, the Holder of the Security in respect of which such
Purchase Notice or Change in Control Purchase Notice, as the case may be, was
given shall (unless such Purchase Notice or Change in Control Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Change in Control Purchase Price, as the
case may be, with respect to such Security. Such Purchase Price or Change in
Control Purchase Price shall be paid to such Holder, subject to receipts of
funds and/or securities by the Paying Agent, promptly following the later of (x)
the Purchase Date or the Change in Control Purchase Date, as the case may be,
with respect to such Security (provided the conditions in Section 3.08(a) or
Section 3.09(c), as applicable, have been satisfied) and (y) the time of
delivery of such Security to the Paying Agent by the Holder thereof in the
manner required by Section 3.08(a) or Section 3.09(c), as applicable. Securities
in respect of which a Purchase Notice or Change in Control Purchase Notice, as
the case may be, has been given by the Holder thereof may not be converted
pursuant to Article 11 hereof on or after the date of the delivery of such
Purchase Notice or Change in Control Purchase Notice, as the case may be, unless
such Purchase Notice or Change
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in Control Purchase Notice, as the case may be, has first been validly withdrawn
as specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case
may be, may be withdrawn by means of a written notice of withdrawal delivered to
the office of the Paying Agent in accordance with the Purchase Notice or Change
in Control Purchase Notice, as the case may be, at any time prior to the close
of business on the Purchase Date or the Change in Control Purchase Date, as the
case may be, specifying:
(1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted,
(2) the Principal Amount at Maturity of the Security with respect to
which such notice of withdrawal is being submitted, and
(3) the Principal Amount at Maturity, if any, of such Security which
remains subject to the original Purchase Notice or Change in Control
Purchase Notice, as the case may be, and which has been or will be
delivered for purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the
form set forth in the preceding paragraph or may be in the form of (i) a
conditional withdrawal contained in a Purchase Notice pursuant to the terms of
Section 3.08(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.08(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
There shall be no purchase of any Securities pursuant to Section
3.08 (other than through the issuance of Common Stock in payment of the Purchase
Price, including cash in lieu of fractional shares) or 3.09 if there has
occurred (prior to, on or after, as the case may be, the giving, by the Holders
of such Securities, of the required Purchase Notice or Change in Control
Purchase Notice, as the case may be) and is continuing an Event of Default
(other than a default in the payment of the Purchase Price or Change in Control
Purchase Price, as the case may be, with respect to such Securities). The Paying
Agent will promptly return to the respective Holders thereof any Securities (x)
with respect to which a Purchase Notice or Change in Control Purchase Notice, as
the case may be, has been withdrawn in compliance with this Indenture, or (y)
held by it during the continuance of an Event of Default (other than a default
in the payment of the Purchase Price or Change in Control Purchase Price, as the
case may be, with respect to such Securities) in which case, upon such
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return, the Purchase Notice or Change in Control Purchase Notice with respect
thereto shall be deemed to have been withdrawn.
SECTION 3.11. Deposit of Purchase Price or Change in Control
Purchase Price. Prior to 1:00 p.m. (local time in The City of New York) on the
Business Day following the Purchase Date or the Change in Control Purchase Date,
as the case may be, the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) an amount of money (in immediately available funds if
deposited on such Business Day) or Common Stock, if permitted hereunder,
sufficient to pay the aggregate Purchase Price or Change in Control Purchase
Price, as the case may be, of all the Securities or portions thereof which are
to be purchased as of the Purchase Date or Change in Control Purchase Date, as
the case may be.
SECTION 3.12. Securities Purchased in Part. Any Security which is to
be purchased only in part shall be surrendered at the office of the Paying Agent
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder in aggregate Principal Amount at Maturity equal to, and in exchange
for, the portion of the Principal Amount at Maturity of the Security so
surrendered which is not purchased.
SECTION 3.13. Covenant to Comply With Securities Laws Upon Purchase
of Securities. In connection with any offer to purchase or purchase of
Securities under Section 3.08 or 3.09 hereof (provided that such offer or
purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which
term, as used herein, includes any successor provision thereto) under the
Exchange Act at the time of such offer or purchase), the Company shall (i)
comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the
related Schedule 13E-4 (or any successor schedule, form or report) under the
Exchange Act, and (iii) otherwise comply with all Federal and state securities
laws so as to permit the rights and obligations under Sections 3.08 and 3.09 to
be exercised in the time and in the manner specified in Sections 3.08 and 3.09.
SECTION 3.14. Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company any cash or shares of Common Stock that remain
unclaimed as provided in
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paragraph 13 of the Securities, together with interest or dividends, if any,
thereon (subject to the provisions of Section 7.01(f)), held by them for the
payment of the Purchase Price or Change in Control Purchase Price, as the case
may be; provided, however, that to the extent that the aggregate amount of cash
or shares of Common Stock deposited by the Company pursuant to Section 3.11
exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the
case may be, of the Securities or portions thereof which the Company is
obligated to purchase as of the Purchase Date or Change in Control Purchase
Date, as the case may be, then promptly after the Business Day following the
Purchase Date or Change in Control Purchase Date, as the case may be, the
Trustee shall return any such excess to the Company together with interest or
dividends, if any, thereon (subject to the provisions of Section 7.01(f)).
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall promptly make
all payments in respect of the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture. Principal Amount at
Maturity, Restated Principal Amount, Issue Price plus accrued Original Issue
Discount, Redemption Price, Purchase Price, Change in Control Purchase Price and
interest, if any, shall be considered paid on the applicable date due if on such
date (or, in the case of a Purchase Price or Change in Control Purchase Price,
on the Business Day following the applicable Purchase Date or Change in Control
Purchase Date, as the case may be) the Trustee or the Paying Agent holds, in
accordance with this Indenture, money or securities, if permitted hereunder,
sufficient to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay interest on
overdue amounts at the rate per annum set forth in paragraph 1 of the
Securities, compounded semiannually, which interest shall accrue from the date
such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
SECTION 4.02. SEC and Other Reports. The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of such
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portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time
no longer subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it shall continue to provide the Trustee with reports containing
substantially the same information as would have been required to be filed with
the SEC had the Company continued to have been subject to such reporting
requirements. In such event, such reports shall be provided at the times the
Company would have been required to provide reports had it continued to have
been subject to such reporting requirements. The Company also shall comply with
the other provisions of TIA Section 314(a).
SECTION 4.03. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on August 31, 1999) an Officers'
Certificate stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 4.04. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 4.05. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities
may be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer, exchange, purchase, redemption or conversion and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The office of State Street Bank and Trust
Company, N.A., an Affiliate of the Trustee, located at 61 Broadway, 15th Floor,
New York, New York 10006 (Attention: Corporate Trust Administration - Solectron
Corporation, Liquid Yield Option Notes due 2019 (Zero Coupon - Senior)), shall
initially be such office or agency for all of the aforesaid purposes. The
Company shall give prompt written notice to the Trustee of the location, and of
any change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). 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
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thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 12.02.
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.
SECTION 4.06. 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 or any beneficial holder of Securities or shares of Common
Stock issued upon conversion thereof, the Company will promptly furnish or cause
to be furnished Rule 144A Information (as defined below) to such Holder or any
beneficial holder of Securities or holder of shares of Common Stock issued upon
conversion of 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 or holder with Rule 144A under the Securities
Act in connection with the resale of any such security. "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to any
person, unless:
(a) either (1) the Company shall be the continuing corporation or
(2) the person (if other than the Company) formed by such consolidation or
into which the Company is merged or the person which acquires by
conveyance, transfer or lease the properties and assets of the Company
substantially as an entirety (i) shall be organized and validly existing
under the laws of the United States or any State thereof or the District
of Columbia and (ii) shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all of the obligations of the Company under the Securities and
this Indenture;
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(b) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, comply with this Article 5 and that all
conditions precedent herein provided for relating to such transaction have
been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of the properties and assets of one or more Subsidiaries
(other than to the Company or another Subsidiary), which, if such assets were
owned by the Company, would constitute all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
The successor person formed by such consolidation or into which the
Company is merged or the successor person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor had been named as the Company herein; and thereafter, except in
the case of a lease and obligations the Company may have under a supplemental
indenture pursuant to Section 11.14, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities. Subject to
Section 9.06, the Company, the Trustee and the successor person shall enter into
a supplemental indenture to evidence the succession and substitution of such
successor person and such discharge and release of the Company.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) after exercise of its option pursuant to Section 10.01 hereof
following a Tax Event, the Company defaults in the payment of interest
upon any Security when such interest becomes due and payable, and such
default continues for a period of 30 days;
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(2) the Company defaults in the payment of the Principal Amount at
Maturity (or, if the Securities have been converted to semiannual coupon
notes following a Tax Event pursuant to Article 10, the Restated Principal
Amount), Issue Price plus accrued Original Issue Discount, Redemption
Price, Purchase Price or Change in Control Purchase Price on any Security
when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration, when due for purchase by the Company or
otherwise;
(3) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in clauses (1)
and (2) above) and such failure continues for 60 days after receipt by the
Company of a Notice of Default;
(4) (a) failure of the Company to make any payment by the end of any
applicable grace period after maturity of Debt in an amount in excess of
$100,000,000 and continuance of such failure, or (b) the acceleration of
Debt in an amount in excess of $100,000,000 because of a default with
respect to such Debt without such Debt having been discharged or such
acceleration having been cured, waived, rescinded or annulled, in the case
of (a) or (b) above, for a period of 30 days after receipt by the Company
of a Notice of Default; provided, however, that if any such failure or
acceleration referred to in (a) or (b) above shall cease or be cured,
waived, rescinded or annulled, then the Event of Default by reason thereof
shall be deemed not to have occurred; or
(5) the Company pursuant to or under or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding or the commencement of any case
against it;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
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(E) files a petition in bankruptcy or answer or consent
seeking reorganization or relief; or
(F) consents to the filing of such petition or the appointment
of or taking possession by a Custodian; or
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case
or proceeding, or adjudicates the Company insolvent or bankrupt;
(B) appoints a Custodian of the Company or for any substantial
part of its property; or
(C) orders the winding up or liquidation of the Company;
and the order or decree remains unstayed and in effect for
60 days.
"Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
A Default under clause (3) or clause (4) above is not an Event of
Default until the Trustee notifies the Company, or the Holders of at least 25%
in aggregate Principal Amount at Maturity of the Securities at the time
outstanding notify the Company and the Trustee, of the Default and the Company
does not cure such Default (and such Default is not waived) within the time
specified in clause (3) or clause (4) above after actual receipt of such notice.
Any such notice must specify the Default, demand that it be remedied and state
that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after it
becomes aware of the occurrence thereof, written notice of any event which with
the giving of notice or the lapse of time, or both, would become an Event of
Default under clause (3) or clause (4) above, its status and what action the
Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(5) or (6)) occurs and is continuing,
the Trustee by notice to the
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Company, or the Holders of at least 25% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding by notice to the Company and
the Trustee, may declare the Issue Price plus accrued Original Issue Discount
through the date of declaration on all the Securities to be immediately due and
payable. Upon such a declaration, such Issue Price plus accrued Original Issue
Discount shall be due and payable immediately. If an Event of Default specified
in Section 6.01(5) or (6) occurs and is continuing, the Issue Price plus accrued
Original Issue Discount on all the Securities shall become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding, by notice to the Trustee
(and without notice to any other Securityholder) may rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of the Issue Price plus accrued Original Issue Discount that have
become due solely as a result of acceleration and if all amounts due to the
Trustee under Section 7.07 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Issue Price plus accrued Original Issue Discount on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not
possess any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate Principal Amount at Maturity of the Securities at the time
outstanding, by notice to the Trustee (and without notice to any other
Securityholder), may waive an existing Default and its consequences except (1)
an Event of Default described in Section 6.01(1) or (2), (2) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected or (3) a Default which constitutes a
failure to convert any Security in accordance with the terms of Article 11. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
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This Section 6.04 shall be in lieu of Section 316(a)1(B) of the TIA and such
Section 316(a)1(B) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
SECTION 6.05. Control by Majority. The Holders of a majority in
aggregate Principal Amount at Maturity of the Securities at the time outstanding
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or that the Trustee determines in good
faith is unduly prejudicial to the rights of other Securityholders or would
involve the Trustee in personal liability unless the Trustee is offered
indemnity satisfactory to it. This Section 6.05 shall be in lieu of Section
316(a)1(A) of the TIA and such Section 316(a)1(A) is hereby expressly excluded
from this Indenture, as permitted by the TIA.
SECTION 6.06. Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of such notice, request and offer of security or indemnity;
and
(5) the Holders of a majority in aggregate Principal Amount at
Maturity of the Securities at the time outstanding do not give the Trustee
a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of any other Securityholder or to obtain a preference or priority over any other
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of the Principal Amount at Maturity (or if the Securities have been
converted to semiannual
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coupon notes following a Tax Event pursuant to Article 10, the Restated
Principal Amount), Issue Price plus accrued Original Issue Discount, Redemption
Price, Purchase Price, Change in Control Purchase Price or interest, if any, in
respect of the Securities held by such Holder, on or after the respective due
dates expressed in the Securities or any Redemption Date, and to convert the
Securities in accordance with Article 11, or to bring suit for the enforcement
of any such payment on or after such respective dates or the right to convert,
shall not be impaired or affected adversely without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
described in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount owing with respect to the Securities and the
amounts provided for in Section 7.07.
SECTION 6.09. 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 other obligor or their creditors, the
Trustee (irrespective of whether the Principal Amount at Maturity, Issue Price
plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change
in Control Purchase Price or interest, if any, in respect 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 any such amount) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of the Principal
Amount at Maturity, Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price, or
interest, if any, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel or any
other amounts due the Trustee under Section 7.07) and of the Holders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
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 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 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan 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 6.10. Priorities. If the Trustee collects any money pursuant
to this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for the Principal Amount at Maturity, Issue Price plus accrued
Original Issue Discount, Redemption Price, Purchase Price, Change in
Control Purchase Price or interest, if any, as the case may be, ratably,
without preference or priority of any kind, according to such amounts due
and payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and the Company a
notice that states the record date, the payment date and the amount to be paid.
SECTION 6.11. Undertaking for Costs. 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 or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section
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6.07 or a suit by Holders of more than 10% in aggregate Principal Amount at
Maturity of the Securities at the time outstanding. This Section 6.11 shall be
in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly
excluded from this Indenture, as permitted by the TIA.
SECTION 6.12. 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, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the Principal Amount at
Maturity, Issue Price plus accrued Original Issue Discount, Redemption Price,
Purchase Price or Change in Control Purchase Price in respect of Securities, or
any interest on such amounts, as contemplated herein, or which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the
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certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
This Section 7.01(b) shall be in lieu of Section 3.15(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.
(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 (c) does not limit the effect of paragraph
(b) of this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(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 6.05.
Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
(acting in any capacity hereunder) shall be under no liability for interest on
any money received by it hereunder unless otherwise agreed in writing with the
Company.
SECTION 7.02. Rights of Trustee. Subject to its duties and
responsibilities under the TIA,
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the
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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 require
an Officers' Certificate or an Opinion of Counsel. 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 agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) Subject to the provisions of Section 7.01(c), 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.
(e) The Trustee may consult with counsel selected by it and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel.
(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.
SECTION 7.03. 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 or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion
Agent or co-registrar may do the same with like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use or application of
the proceeds from the Securities, it shall not be responsible for any statement
in the registration statement for the Securities under the Securities Act or in
the Indenture or the Securities (other than its certificate of authentication),
or the determination as to which beneficial owners are entitled to receive any
notices hereunder.
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SECTION 7.05. Notice of Defaults. If a Default occurs and if it is
known to the Trustee, the Trustee shall give to each Securityholder notice of
the Default within 90 days after it occurs unless such Default shall have been
cured or waived before the giving of such notice. Except in the case of a
Default described in Section 6.01(1) or (2), the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
The second sentence of this Section 7.05 shall be in lieu of the proviso to
Section 315(b) of the TIA and such proviso is hereby expressly excluded from
this Indenture, as permitted by the TIA. The Trustee shall not be deemed to have
knowledge of a Default unless a Responsible Officer of the Trustee has received
written notice of such Default.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each May 1 beginning with the May 1 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such May 1
that complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify the Trustee whenever the
Securities become listed on any securities exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited (to the extent permitted by law) by any provision of law in regard
to the compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses, advances and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, damage, claim, liability, cost or expense (including attorney's
fees) incurred without negligence or bad faith on its part, arising out of
or in
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connection with the acceptance or administration of this trust, including
the 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.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay the Principal
Amount at Maturity, Issue Price plus accrued Original Issue Discount, Redemption
Price, Purchase Price, Change in Control Purchase Price or interest, if any, as
the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.07
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(5) or (6), the
expenses are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company; provided, however, no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
7.08. The Holders of a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding may remove the Trustee by so notifying the
Trustee and the Company. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise 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, by
resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon 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. The successor Trustee shall mail a
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notice of its succession to Securityholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the lien provided for in Section 7.07.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding 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 Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The
Trustee (or its parent holding company) shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition. Nothing herein contained shall prevent the Trustee from
filing with the Commission the application referred to in the penultimate
paragraph of 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 therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. Discharge of Liability on Securities. When (i) the
Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable and the Company deposits with
the Trustee cash or, if expressly permitted by the terms of the Securities,
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Common Stock sufficient to pay all amounts due and owing on all outstanding
Securities (other than Securities replaced pursuant to Section 2.07), and if in
either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Section 7.07, cease to be of further
effect. The Trustee shall join in the execution of a document prepared by the
Company acknowledging satisfaction and discharge of this Indenture on demand of
the Company accompanied by an Officers' Certificate and Opinion of Counsel and
at the cost and expense of the Company.
SECTION 8.02. Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company upon written request any money or securities
held by them for the payment of any amount with respect to the Securities that
remains unclaimed for two years, subject to applicable unclaimed property law.
After return to the Company, Holders entitled to the money or securities must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person and the Trustee and the Paying
Agent shall have no further liability to the Securityholders with respect to
such money or securities for that period commencing after the return thereof.
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders. The Company
and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5 or Section 11.14;
(3) to provide for uncertificated Securities in addition to
certificated Securities so long as such uncertificated Securities are in
registered form for purposes of the Internal Revenue Code of 1986, as
amended;
(4) to make any change that does not adversely affect the rights of
any Securityholder; or
(5) to make any change to comply with the TIA, or any amendment
thereto, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA.
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SECTION 9.02. With Consent of Holders. With the written consent of
the Holders of at least a majority in aggregate Principal Amount at Maturity of
the Securities at the time outstanding, the Company and the Trustee may amend
this Indenture or the Securities. However, without the consent of each
Securityholder affected, an amendment to this Indenture or the Securities may
not:
(1) make any change to the Principal Amount at Maturity of
Securities whose Holders must consent to an amendment;
(2) make any change in the manner or rate of accrual in connection
with Original Issue Discount, reduce the rate of interest referred to in
paragraph 1 of the Securities, reduce the rate of interest referred to in
Section 10.01 upon the occurrence of a Tax Event, or extend the time for
payment of Original Issue Discount or interest, if any, on any Security;
(3) reduce the Principal Amount at Maturity, Restated Principal
Amount or the Issue Price of or extend the Stated Maturity of any
Security;
(4) reduce the Redemption Price, Purchase Price or Change in Control
Purchase Price of any Security;
(5) make any Security payable in money or securities other than that
stated in the Security;
(6) make any change in Section 6.04, Section 6.07 or this Section
9.02, except to increase any percentage set forth therein;
(7) make any change that adversely affects the right to convert any
Security; or
(8) make any change that adversely affects the right to require the
Company to purchase the Securities in accordance with the terms thereof
and this Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment.
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SECTION 9.03. Compliance with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall comply with the
TIA.
SECTION 9.04. Revocation and Effect of Consents, Waivers and
Actions. Until an amendment, waiver or other action by Holders becomes
effective, a consent thereto by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the consent, waiver or action is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the date the amendment, waiver
or action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Securityholder.
SECTION 9.05. Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
SECTION 9.06. Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9 if
the amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall be entitled to receive, and (subject to the provisions of
Section 7.01) shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that such amendment is authorized or permitted
by this Indenture.
SECTION 9.07. Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
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ARTICLE 10
SPECIAL TAX EVENT CONVERSION
SECTION 10.01. Optional Conversion to Semiannual Coupon Note Upon
Tax Event. From and after (i) the date (the "Tax Event Date") of the occurrence
of a Tax Event and (ii) the date the Company exercises such option, whichever is
later (the "Option Exercise Date"), at the option of the Company, interest in
lieu of future Original Issue Discount shall accrue at the rate of 4% per annum
on a restated principal amount per $1,000 original Principal Amount at Maturity
(the "Restated Principal Amount") equal to the Issue Price plus Original Issue
Discount accrued through the Option Exercise Date and shall be payable
semiannually on January 27 and July 27 of each year (each an "Interest Payment
Date") to holders of record at the close of business on January 12 or July 12
(each a "Regular Record Date") immediately preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-
day months and will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Option Exercise Date. Within 15
days of the occurrence of a Tax Event, the Company shall mail a written notice
of such Tax Event by first-class mail to the Trustee and within 15 days of its
exercise of such option the Company shall mail a written notice of the Option
Exercise Date by first-class mail to the Trustee and Holders of the Securities.
From and after the Option Exercise Date, (i) the Company shall be obligated to
pay at Stated Maturity, in lieu of the Principal Amount at Maturity of a
Security, the Restated Principal Amount thereof and (ii) "Issue Price and
accrued Original Issue Discount," "Issue Price plus Original Issue Discount" or
similar words, as used herein, shall mean Restated Principal Amount plus accrued
and unpaid interest with respect to any Security. Securities authenticated and
delivered after the Option Exercise Date may, and shall if required by the
Trustee, bear a notation in a form approved by the Trustee as to the conversion
of the Securities to semiannual coupon notes.
SECTION 10.02. Payment of Interest; Interest Rights Preserved. (a)
Interest on any Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Security is registered at the close of business on the Regular Record
Date for such interest at the office or agency of the Company maintained for
such purpose. Each installment of interest on any Security shall be paid in
same-day funds by transfer to an account maintained by the payee located inside
the United States. In the case of a permanent Global Security, interest payable
on any Interest Payment Date will be paid to the Depositary, with respect to
that portion of such permanent Global Security held
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for its account by Cede & Co. for the purpose of permitting such party to credit
the interest received by it in respect of such permanent Global Security to the
accounts of the beneficial owners thereof.
(b) Except as otherwise specified with respect to the Securities,
any interest on any Security that is payable, but is not punctually paid or duly
provided for, within 30 days following on any Interest Payment Date (herein
called "Defaulted Interest", which term shall include any accrued and unpaid
interest that has accrued on such defaulted amount in accordance with paragraph
1 of the Securities), shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, as its election
in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the 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 (which shall not be less than 20 days after
such notice is received by the Trustee), and at the same time the
Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as in
this clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date
of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to
each Holder of Securities at his address as it appears on the list
of Securityholders maintained pursuant to Section 2.05 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
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therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the persons in whose names the Securities are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section
2.06, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
ARTICLE 11
CONVERSION
SECTION 11.01. Conversion Privilege. A Holder of a Security may
convert such Security into Common Stock at any time during the period stated in
paragraph 8 of the Securities. The number of shares of Common Stock issuable
upon conversion of a Security per $ 1,000 of Principal Amount at Maturity
thereof (the "Conversion Rate") shall be that set forth in paragraph 8 in the
Securities, subject to adjustment as herein set forth.
A Holder may convert a portion of the Principal Amount at Maturity
of a Security if the portion is $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to conversion of all of a Security also
apply to conversion of a portion of a Security.
"Quoted Price" means, for any given day, the last reported per share
sale price (or, if no sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid and
average ask prices) on such day of the Common Stock on the New York Stock
Exchange Composite Tape or, in the event shares of Common Stock are not listed
on the New York Stock Exchange, in the composite transactions for such other
national or regional securities exchange upon which the Common Stock is listed,
or, if the shares of Common Stock are not listed on a national or regional
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securities exchange, as quoted on the National Association of Securities Dealers
Automated Quotation System or by the National Quotation Bureau Incorporated. In
the absence of such quotations, the Company shall be entitled to determine the
Quoted Price on the basis of such quotations as it considers
appropriate.
"Average Quoted Price" means the average of the Quoted Prices of the
Common Stock for the shorter of
(i) 30 consecutive trading days ending on the last full trading day
prior to the Time of Determination with respect to the rights, warrants or
options or distribution in respect of which the Average Quoted Price is
being calculated, or
(ii) the period (x) commencing on the date next succeeding the first
public announcement of (a) the issuance of rights, warrants or options or
(b) the distribution, in each case, in respect of which the Average Quoted
Price is being calculated and (y) proceeding through the last full trading
day prior to the Time of Determination with respect to the rights,
warrants or options or distribution in respect of which the Average Quoted
Price is being calculated (excluding days within such period, if any,
which are not trading days), or
(iii) the period, if any, (x) commencing on the date next succeeding
the Ex-Dividend Time with respect to the next preceding (a) issuance of
rights, warrants or options or (b) distribution, in each case, for which
an adjustment is required by the provisions of Section 11.06(4), 11.07 or
11.08 and (y) proceeding through the last full trading day prior to the
Time of Determination with respect to the rights, warrants or options or
distribution in respect of which the Average Quoted Price is being
calculated (excluding days within such period, if any, which are not
trading days).
In the event that the Ex-Dividend Time (or in the case of a
subdivision, combination or reclassification, the effective date with respect
thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 11.06(1), (2), (3) or (5) applies occurs
during the period applicable for calculating "Average Quoted Price" pursuant to
the definition in the preceding sentence, "Average Quoted Price" shall be
calculated for such period in a manner determined by the Board of Directors to
reflect the impact of such dividend, subdivision, combination or
reclassification on the Quoted Price of the Common Stock during such period.
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"Time of Determination" means the time and date of the earlier of
(i) the determination of stockholders entitled to receive rights, warrants or
options or a distribution, in each case, to which Section 11.07 or 11.08 applies
and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for such rights, warrants or options or distribution on
the New York Stock Exchange or such other national or regional exchange or
market on which the Common Stock is then listed or quoted.
SECTION 11.02. Conversion Procedure. To convert a Security a Holder
must satisfy the requirements in paragraph 8 of the Securities. The date on
which the Holder satisfies all those requirements is the conversion date (the
"Conversion Date"). As soon as practicable after the Conversion Date, the
Company shall deliver to the Holder, through the Conversion Agent, a certificate
for the number of full shares of Common Stock issuable upon the conversion and
cash in lieu of any fractional share determined pursuant to Section 11.03. The
person in whose name the certificate is registered shall be treated as a
stockholder of record on and after the Conversion Date; provided, however, that
no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the shares of Common Stock upon such conversion as the
record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such
stock transfer books are open; such conversion shall be at the Conversion Rate
in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Security, such person shall no longer be a Holder of such
Security.
No payment or adjustment will be made for dividends on, or other
distributions with respect to, any Common Stock except as provided in this
Article 11. On conversion of a Security, that portion of accrued Original Issue
Discount (or interest, if the Company has exercised its option provided for in
Section 10.01) attributable to the period from the Issue Date (or, if the
Company has exercised the option provided for in Section 10.01, the later of (x)
the date of such exercise and (y) the date on which interest was last paid) of
the Security through the Conversion Date with respect to the converted Security
shall not be cancelled, extinguished or forfeited, but rather shall be deemed to
be paid in full to the Holder thereof through delivery of the Common Stock
(together with the cash payment, if any, in lieu of fractional shares) in
exchange for the Security being converted pursuant to the provisions hereof; and
the fair market
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value of such shares of Common Stock (together with any such cash payment in
lieu of fractional shares) shall be treated as issued, to the extent thereof,
first in exchange for Original Issue Discount (or interest, if the Company has
exercised its option provided for in Section 10.01) accrued through the
Conversion Date, and the balance, if any, of such fair market value of such
Common Stock (and any such cash payment) shall be treated as issued in exchange
for the Issue Price of the Security being converted pursuant to the provisions
hereof.
If the Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be based on
the total Principal Amount at Maturity of the Securities converted.
If the last day on which a Security may be converted is a Legal
Holiday, the Security may be surrendered on the next succeeding day that is not
a Legal Holiday.
Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security in an authorized denomination equal in Principal Amount at Maturity
to the unconverted portion of the Security surrendered.
SECTION 11.03. Fractional Shares. The Company will not issue a
fractional share of Common Stock upon conversion of a Security. Instead, the
Company will deliver cash for the current market value of the fractional share.
The current market value of a fractional share shall be determined, to the
nearest 1/1,000th of a share, by multiplying the Quoted Price, on the last
trading day prior to the Conversion Date, of a full share by the fractional
amount and rounding the product to the nearest whole cent.
SECTION 11.04. Taxes on Conversion. If a Holder converts a Security,
the Company shall pay any documentary, stamp or similar issue or transfer tax
due on the issue of shares of Common Stock upon the conversion. However, the
Holder shall pay any such tax which is due because the Holder requests the
shares to be issued in a name other than the Holder's name. The Conversion Agent
may refuse to deliver the certificates representing the Common Stock being
issued in a name other than the Holder's name until the Conversion Agent
receives a sum sufficient to pay any tax which will be due because the shares
are to be issued in a name other than the Holder's name. Nothing herein shall
preclude any tax withholding required by law or regulations.
SECTION 11.05. Company to Provide Stock. The Company shall, prior to
issuance of any Securities under this Article 11,
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and from time to time as may be necessary, reserve out of its authorized but
unissued Common Stock a sufficient number of shares of Common Stock to permit
the conversion of the Securities.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall be duly and
validly issued and fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all Federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then listed or quoted.
SECTION 11.06. Adjustment for Change in Capital Stock. If, after the
Issue Date of the Securities, the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) pays a dividend or makes a distribution on its Common Stock in
shares of its Capital Stock (other than Common Stock or rights, warrants
or options for its Capital Stock); or
(5) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than rights, warrants or options for its Capital
Stock),
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of Capital Stock of the
Company which such Holder would have owned immediately following such action if
such Holder had converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
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If after an adjustment a Holder of a Security upon conversion of
such Security may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article 11 with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article 11.
SECTION 11.07. Adjustment for Rights Issue. If after the Issue Date
of the Securities, the Company distributes any rights, warrants or options to
all holders of its Common Stock entitling them, for a period expiring within 60
days after the record date for such distribution, to purchase shares of Common
Stock at a price per share less than the Quoted Price as of the Time of
Determination, the Conversion Rate shall be adjusted in accordance with the
formula:
R' = R x (O + N)
---------------
(O + (N x P)/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
O = the number of shares of Common Stock outstanding on the record
date for the distribution to which this Section 11.07 is being
applied.
N = the number of additional shares of Common Stock offered pursuant
to the distribution.
P = the offering price per share of the additional shares.
M = the Average Quoted Price, minus, in the case of (i) a
distribution to which Section 11.06(4) applies or (ii) a distribution
to which Section 11.08 applies, for which, in each case, (x) the
record date shall occur on or before the record date for the
distribution to which this Section 11.07 applies and (y) the
Ex-Dividend Time shall occur on or after the date of the Time of
Determination for the distribution to which this Section 11.07
applies, the fair market value (on the record date for the
distribution to which this Section 11.07 applies) of the
(1) Capital Stock of the Company distributed in respect of
each share of Common Stock in such Section 11.06(4)
distribution and
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(2) assets of the Company or debt securities or any rights,
warrants or options to purchase securities of the Company
distributed in respect of each share of Common Stock in such
Section 11.08 distribution.
The Board of Directors shall determine fair market values for the purposes
of this Section 11.07.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the rights,
warrants or options to which this Section 11.07 applies. If all of the shares of
Common Stock subject to such rights, warrants or options have not been issued
when such rights, warrants or options expire, then the Conversion Rate shall
promptly be readjusted to the Conversion Rate which would then be in effect had
the adjustment upon the issuance of such rights, warrants or options been made
on the basis of the actual number of shares of Common Stock issued upon the
exercise of such rights, warrants or options.
No adjustment shall be made under this Section 11.07 if the
application of the formula stated above in this Section 11.07 would result in a
value of R' that is equal to or less than the value of R.
SECTION 11.08. Adjustment for Other Distributions. If, after the
Issue Date of the Securities, the Company distributes to all holders of its
Common Stock any of its assets, or debt securities or any rights, warrants or
options to purchase securities of the Company (including securities or cash, but
excluding (x) distributions of Capital Stock referred to in Section 11.06 and
distributions of rights, warrants or options referred to in Section 11.07 and
(y) cash dividends or other cash distributions that are paid out of consolidated
current net earnings or earnings retained in the business as shown on the books
of the Company unless such cash dividends or other cash distributions are
Extraordinary Cash Dividends) the Conversion Rate shall be adjusted, subject to
the provisions of the last paragraph of this Section 11.08, in accordance with
the formula:
R' = R x M
-
M-F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Quoted Price, minus, in the case of a distribution to
which Section 11.06(4) applies, for
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which (i) the record date shall occur on or before the record date
for the distribution to which this Section 11.08 applies and (ii) the
Ex-Dividend Time shall occur on or after the date of the Time of
Determination for the distribution to which this Section 11.08
applies, the fair market value (on the record date for the
distribution to which this Section 11.08 applies) of any Capital
Stock of the Company distributed in respect of each share of Common
Stock in such Section 11.06(4) distribution.
F = the fair market value (on the record date for the distribution to
which this Section 11.08 applies) of the assets, securities, rights,
warrants or options to be distributed in respect of each share of
Common Stock in the distribution to which this Section 11.08 is being
applied (including, in the case of cash dividends or other cash
distributions giving rise to an adjustment, all such cash distributed
concurrently).
The Board of Directors shall determine fair market values for the purposes
of this Section 11.08.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution
to which this Section 11.08 applies.
For purposes of this Section 11.08, the term "Extraordinary Cash
Dividend" shall mean any cash dividend with respect to the Common Stock the
amount of which, together with the aggregate amount of cash dividends on the
Common Stock to be aggregated with such cash dividend in accordance with the
provisions of this paragraph, equals or exceeds the threshold percentages set
forth in item (i) or (ii) below:
(i) If, upon the date prior to the Ex-Dividend Time with respect to
a cash dividend on the Common Stock, the aggregate amount of such cash
dividend together with the amounts of all cash dividends on the Common
Stock with Ex-Dividend Times occurring in the 85 consecutive day period
ending on the date prior to the Ex-Dividend Time with respect to the cash
dividend to which this provision is being applied equals or exceeds on a
per share basis 12.5% of the average of the Quoted Prices during the
period beginning on the date after the first such Ex-Dividend Time in such
period and ending on the date prior to the Ex-Dividend Time with respect
to the cash dividend to which this provision is being applied (except that
if no other cash dividend has had an Ex-Dividend Time occurring in such
period, the period for calculating the average of the Quoted Prices shall
be the period commencing 85 days prior to the
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date prior to the Ex-Dividend Time with respect to the cash dividend to
which this provision is being applied), such cash dividend together with
each other cash dividend with an Ex-Dividend Time occurring in such 85 day
period shall be deemed to be an Extraordinary Cash Dividend and for
purposes of applying the formula set forth above in this Section 11.08,
the value of "F" shall be equal to (w) the aggregate amount of such cash
dividend together with the amounts of the other cash dividends with
Ex-Dividend Times occurring in such period minus (x) the aggregate amount
of such other cash dividends with Ex-Dividend Times occurring in such
period for which a prior adjustment in the Conversion Rate was previously
made under this Section 11.08.
(ii) If, upon the date prior to the Ex-Dividend Time with respect to
a cash dividend on the Common Stock, the aggregate amount of such cash
dividend together with the amounts of all cash dividends on the Common
Stock with Ex-Dividend Times occurring in the 365 consecutive day period
ending on the date prior to the Ex-Dividend Time with respect to the cash
dividend to which this provision is being applied equals or exceeds on a
per share basis 25% of the average of the Quoted Prices during the period
beginning on the date after the first such Ex-Dividend Time in such period
and ending on the date prior to the Ex-Dividend Time with respect to the
cash dividend to which this provision is being applied (except that if no
other cash dividend has had an Ex-Dividend Time occurring in such period,
the period for calculating the average of the Quoted Prices shall be the
period commencing 365 days prior to the date prior to the Ex-Dividend Time
with respect to the cash dividend to which this provision is being
applied), such cash dividend together with each other cash dividend with
an Ex-Dividend Time occurring in such 365 day period shall be deemed to be
an Extraordinary Cash Dividend and for purposes of applying the formula
set forth above in this Section 11.08, the value of "F" shall be equal to
(y) the aggregate amount of such cash dividend together with the amounts
of the other cash dividends with Ex-Dividend Times occurring in such
period minus (z) the aggregate amount of such other cash dividends with
Ex-Dividend Times occurring in such period for which a prior adjustment in
the Conversion Rate was previously made under this Section 11.08.
In making the determinations required by items (i) and (ii) above,
the amount of cash dividends paid on a per share basis and the average of
the Quoted Prices, in each case during the period specified in item (i) or
(ii) above, as applicable, shall be appropriately adjusted to reflect the
occurrence during such period of any event described in Section 11.06.
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In the event that, with respect to any distribution to which this
Section 11.08 would otherwise apply, the difference "M-F" as defined in the
above formula is less than $1.00 or "F" is equal to or greater than "M", then
the adjustment provided by this Section 11.08 shall not be made and in lieu
thereof the provisions of Section 11.14 shall apply to such distribution.
SECTION 11.09. When Adjustment May Be Deferred. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article 11 shall be made to the nearest
cent or to the nearest 1/1,000th of a share, as the case may be.
SECTION 11.10. When No Adjustment Required. No adjustment need be
made for a transaction referred to in Section 11.06, 11.07, 11.08 or 11.14 if
Securityholders are to participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Common Stock participate in the
transaction. Such participation by Securityholders may include participation
upon conversion provided that an adjustment shall be made at such time as the
Securityholders are no longer entitled to participate.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Securities become convertible pursuant to this
Article 11 into cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
SECTION 11.11. Notice of Adjustment. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. The certificate shall be conclusive evidence that the adjustment is correct.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate except to exhibit the same
to any Holder desiring inspection thereof.
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SECTION 11.12. Voluntary Increase. The Company from time to time may
increase the Conversion Rate by any amount for any period of time. Whenever the
Conversion Rate is increased, the Company shall mail to Securityholders and file
with the Trustee and the Conversion Agent a notice of the increase. The Company
shall mail the notice at least 15 days before the date the increased Conversion
Rate takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.
A voluntary increase of the Conversion Rate does not change or
adjust the Conversion Rate otherwise in effect for purposes of Section 11.06,
11.07 or 11.08.
SECTION 11.13. Notice of Certain Transactions. If:
(1) the Company takes any action that would require an adjustment in
the Conversion Rate pursuant to Section 11.06, 11.07 or 11.08 (unless no
adjustment is to occur pursuant to Section 11.10); or
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.14; or
(3) there is a liquidation or dissolution of the Company;
then the Company shall mail to Securityholders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date (or 10 days in the event of stock dividends payable to
holders of record of Common Stock on February 10, 1999). Failure to file or mail
the notice or any defect in it shall not affect the validity of the transaction.
SECTION 11.14. Reorganization of Company; Special Distributions. If
the Company is a party to a transaction subject to Section 5.01 (other than a
sale of all or substantially all of the assets of the Company in a transaction
in which the holders of Common Stock immediately prior to such transaction do
not receive securities, cash or other assets of the Company or any other person)
or a merger or binding share exchange which reclassifies or changes its
outstanding Common Stock, the person obligated to deliver securities, cash or
other assets upon conversion of Securities shall enter into a supplemental
indenture. If the issuer of securities deliverable upon conversion of Securities
is an Affiliate of the successor Company, that issuer shall join in the
supplemental indenture.
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The supplemental indenture shall provide that the Holder of a
Security may convert it into the kind and amount of securities, cash or other
assets which such Holder would have received immediately after the
consolidation, merger, binding share exchange or transfer if such Holder had
converted the Security immediately before the effective date of the transaction,
assuming (to the extent applicable) that such Holder (i) was not a constituent
person or an Affiliate of a constituent person to such transaction; (ii) made no
election with respect thereto; and (iii) was treated alike with the plurality of
non-electing Holders. The supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Article 11. The successor Company shall mail to
Securityholders a notice briefly describing the supplemental indenture.
If this Section applies, neither Section 11.06 nor 11.07 applies.
If the Company makes a distribution to all holders of its Common
Stock of any of its assets, or debt securities or any rights, warrants or
options to purchase securities of the Company that, but for the provisions of
the last paragraph of Section 11.08, would otherwise result in an adjustment in
the Conversion Rate pursuant to the provisions of Section 11.08, then, from and
after the record date for determining the holders of Common Stock entitled to
receive the distribution, a Holder of a Security that converts such Security in
accordance with the provisions of this Indenture shall upon such conversion be
entitled to receive, in addition to the shares of Common Stock into which the
Security is convertible, the kind and amount of securities, cash or other assets
comprising the distribution that such Holder would have received if such Holder
had converted the Security immediately prior to the record date for determining
the holders of Common Stock entitled to receive the distribution.
SECTION 11.15. Company Determination Final. Any determination that
the Company or the Board of Directors must make pursuant to Section 11.03,
11.06, 11.07, 11.08, 11.09, 11.10, 11.14 or 11.17 is conclusive.
SECTION 11.16. Trustee's Adjustment Disclaimer. The Trustee has no
duty to determine when an adjustment under this Article 11 should be made, how
it should be made or what it should be. The Trustee has no duty to determine
whether a supplemental indenture under Section 11.14 need be entered into or
whether any provisions of any supplemental indenture are correct. The Trustee
shall not be accountable for and makes no representation as to the validity or
value of any securities or assets issued upon conversion of Securities. The
Trustee shall not be responsible for the Company's failure to comply with this
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Article 11. Each Conversion Agent shall have the same protection under this
Section 11.16 as the Trustee.
SECTION 11.17. Simultaneous Adjustments. In the event that this
Article 11 requires adjustments to the Conversion Rate under more than one of
Sections 11.06(4), 11.07 or 11.08, and the record dates for the distributions
giving rise to such adjustments shall occur on the same date, then such
adjustments shall be made by applying, first, the provisions of Section 11.06,
second, the provisions of Section 11.08 and, third, the provisions of Section
11.07.
SECTION 11.18. Successive Adjustments. After an adjustment to the
Conversion Rate under this Article 11, any subsequent event requiring an
adjustment under this Article 11 shall cause an adjustment to the Conversion
Rate as so adjusted.
SECTION 11.19. Rights Issued in Respect of Common Stock Issued Upon
Conversion. Each share of Common Stock issued upon conversion of Securities
pursuant to this Article 11 shall be entitled to receive the appropriate number
of common stock or preferred stock purchase rights, as the case may be (the
"Rights"), if any, 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 any shareholder rights agreement adopted by the
Company, as the same may be amended from time to time (in each case, a "Rights
Agreement"). Provided that such Rights Agreement requires that each share of
Common Stock issued upon conversion of Securities at any time prior to the
distribution of separate certificates representing the Rights be entitled to
receive such Rights, then, notwithstanding anything else to the contrary in this
Article 11, there shall not be any adjustment to the conversion privilege or
Conversion Rate as a result of the issuance of Rights, the distribution of
separate certificates representing the Rights, the exercise or redemption of
such Rights in accordance with any such Rights Agreement, or the termination or
invalidation of such Rights.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 12.02. Notices. Any request, demand, authorization, notice,
waiver, consent or communication shall be
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in writing and delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows or transmitted by facsimile transmission
(confirmed by guaranteed overnight courier) to the following facsimile numbers:
if to the Company:
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Telephone No. (408) 957-8500
Facsimile No. (408) 956-6060
Attention: Chief Financial Officer
if to the Trustee:
State Street Bank and Trust
Company of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, California 90071
Telephone No. (213) 362-7345
Facsimile No. (213) 362-7357
Attention: Corporate Trust Department
The Company or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication given to a Securityholder shall be
mailed to the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.
SECTION 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights
73
<PAGE> 80
under this Indenture or the Securities. The Company, the Trustee, the Registrar,
the Paying Agent, the Conversion Agent and anyone else shall have the protection
of TIA Section 312(c).
SECTION 12.04. 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 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 stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each person making such Officers' Certificate
or Opinion of Counsel 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
Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement that, in the opinion of such person, such covenant
or condition has been complied with.
SECTION 12.06. Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.07. Rules by Trustee, Paying Agent, Conversion Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The
74
<PAGE> 81
Registrar, Conversion Agent and the Paying Agent may make reasonable rules for
their functions.
SECTION 12.08. Legal Holidays. A "Legal Holiday" is any day other
than a Business Day. If any specified date (including a date for giving notice)
is a Legal Holiday, the action shall be taken on the next succeeding day that is
not a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no Original Issue Discount or interest, if any, shall
accrue for the intervening period.
SECTION 12.09. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
SECTION 12.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 12.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
75
<PAGE> 82
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
SOLECTRON CORPORATION
By /s/ KOICHI NISHIMURA
------------------------------------
Name: Koichi Nishimura
Title: President, Chief Executive
Officer and Chairman
of the Board
Attest:
/s/ SUSAN S. WANG
- ----------------------------------
Name: Susan S. Wang
Title: Chief Financial Officer,
Senior Vice President
and Secretary
[SEAL]
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
By /s/ STEPHEN RIVERO
------------------------------------
Name: Stephen Rivero
Title: Vice President
Attest:
- ----------------------------------
Title: Assistant Vice President
[SEAL]
76
<PAGE> 83
EXHIBIT A-1
[FORM OF FACE OF GLOBAL SECURITY]
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY IS $547.11, THE ISSUE DATE IS JANUARY 27, 1999, THE
YIELD TO MATURITY IS 4%.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER 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 THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF ANY SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES
A-1-1
<PAGE> 84
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
[THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.]
SOLECTRON CORPORATION
Liquid Yield Option(TM) Note due 2019
(Zero Coupon-Senior)
No. R- CUSIP:
Issue Date: January 27, 1999 Original Issue Discount: $547.11
Issue Price: $452.89 (for each $1,000 Principal
(for each $1,000 Principal Amount at Maturity)
Amount at Maturity)
SOLECTRON CORPORATION, a California corporation, promises to pay to or
registered assigns, the Principal Amount at Maturity of Dollars on January 27,
2019.
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
A-1-2
<PAGE> 85
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: SOLECTRON CORPORATION
[SEAL] By
------------------------------------
Title:
Attest:
- ----------------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.
By
-------------------------------
Authorized Signatory
Dated:
-------------------------------
A-1-3
<PAGE> 86
[FORM OF REVERSE SIDE OF LYON]
Liquid Yield Option(TM) Note Due 2019
(Zero Coupon-Senior)
1. Interest.
This Security shall not bear interest, except as specified in this
paragraph or in paragraph 10 hereof. If the Principal Amount at Maturity hereof
or any portion of such Principal Amount at Maturity is not paid when due
(whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the
date set for payment of the Redemption Price pursuant to paragraph 5 hereof,
upon the date set for payment of the Purchase Price or Change in Control
Purchase Price pursuant to paragraph 6 hereof or upon the Stated Maturity of
this Security)or if interest due hereon or any portion of such interest is not
paid when due in accordance with paragraph 10 hereof, then in each such case the
overdue amount shall, to the extent permitted by law, bear interest at the rate
of 5% per annum, compounded semi-annually, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Maturity of the Security), in the period during which a
Security remains outstanding, shall accrue at 4% per annum, on a semiannual bond
equivalent basis using a 360-day year composed of twelve 30-day months, from the
Issue Date of this Security.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of Redemption Prices, Purchase Prices, Change in Control
Purchase Prices and at Stated Maturity to Holders who surrender Securities to a
Paying Agent to collect such payments in respect of the Securities. The Company
will pay cash amounts in money of the United States that at the time of payment
is legal tender for payment of public and private debts. However, the Company
may make such cash payments by check payable in such money.
A-1-4
<PAGE> 87
3. Paying Agent, Conversion Agent and Registrar.
Initially, State Street Bank and Trust Company of California, N.A., a
national banking association organized under the laws of the United States (the
"Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The
Company may appoint and change any Paying Agent, Conversion Agent, Registrar or
co-registrar without notice, other than notice to the Trustee except that the
Company will maintain at least one Paying Agent in the State of New York, City
of New York, Borough of Manhattan, which shall initially be an office or agency
of the Trustee. The Company or any of its Subsidiaries or any of their
Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as of January
27, 1999 (the "Indenture"), between the Company and the Trustee. 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 of 1939, as in effect from
time to time (the "TIA"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the TIA
for a statement of those terms.
The Securities are general unsecured obligations of the Company limited to
$1,656,000,000 aggregate Principal Amount at Maturity (subject to Section 2.07
of the Indenture). The Indenture does not limit other indebtedness of the
Company, secured or unsecured.
5. Redemption at the Option of the Company.
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Securities are not redeemable prior to January 27, 2003.
The table below shows Redemption Prices of a Security per $1,000 Principal
Amount at Maturity on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Security redeemed between such dates shall include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table.
A-1-5
<PAGE> 88
<TABLE>
<CAPTION>
(1) (2) (3)
Accrued
Original
Issue Redemption
LYON Discount Price
Redemption Date Issue Price at 4% (1) + (2)
- --------------- ----------- --------- ---------
<S> <C> <C> <C>
January 27, 2003................ $452.89 $77.74 $530.63
January 27, 2004................ 452.89 99.18 552.07
January 27, 2005................ 452.89 121.48 574.37
January 27, 2006................ 452.89 144.69 597.58
January 27, 2007................ 452.89 168.83 621.72
January 27, 2008................ 452.89 193.95 646.84
January 27, 2009................ 452.89 220.08 672.97
January 27, 2010................ 452.89 247.27 700.16
January 27, 2011................ 452.89 275.56 728.45
January 27, 2012................ 452.89 304.98 757.87
January 27, 2013................ 452.89 335.60 788.49
January 27, 2014................ 452.89 367.46 820.35
January 27, 2015................ 452.89 400.60 853.49
January 27, 2016................ 452.89 435.08 887.97
January 27, 2017................ 452.89 470.96 923.85
January 27, 2018................ 452.89 508.28 961.17
At Stated Maturity.............. 452.89 547.11 1,000.00
</TABLE>
If converted to a semiannual coupon note following the occurrence of
a Tax Event, this Security will be redeemable at the Restated Principal Amount
plus accrued and unpaid interest from the date of such conversion through the
Redemption Date; but in no event will this Security be redeemable before January
27, 2003.
6. Purchase By the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, the Securities
held by such Holder on the following Purchase Dates and at the following
Purchase Prices per $1,000 Principal Amount at Maturity, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, at any
time from the opening of business on the date that is 20 Business Days prior to
such Purchase Date until the close of business on such Purchase Date and upon
delivery of the Securities to the Paying Agent by the Holder as set forth in the
Indenture.
<TABLE>
<CAPTION>
Purchase Date Purchase Price
------------- --------------
<S> <C>
January 27, 2002 $510.03
January 27, 2009 $672.97
</TABLE>
A-1-6
<PAGE> 89
The Purchase Price (equal to the Issue Price plus accrued Original
Issue Discount to the Purchase Date) may be paid, at the option of the Company,
in cash or by the issuance and delivery of shares of Common Stock of the
Company, or in any combination thereof.
If prior to a Purchase Date this Security has been converted to a
semiannual coupon note following the occurrence of a Tax Event, the Purchase
Price will be equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of conversion to the Purchase Date.
At the option of the Holder and subject to the terms and conditions
of the Indenture, the Company shall become obligated to purchase the Securities
held by such Holder 35 Business Days after the occurrence of a Change in Control
of the Company occurring on or prior to January 27, 2002 for a Change in Control
Purchase Price equal to the Issue Price plus accrued Original Issue Discount to
the Change in Control Purchase Date, which Change in Control Purchase Price
shall be paid in cash. If prior to a Change in Control Purchase Date this
Security has been converted to a semiannual coupon note following the occurrence
of a Tax Event, the Change in Control Purchase Price shall be equal to the
Restated Principal Amount plus accrued and unpaid interest from the date of
conversion to the Change in Control Purchase Date.
Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.
If cash (and/or securities if permitted under the Indenture)
sufficient to pay the Purchase Price or Change in Control Purchase Price, as the
case may be, of all Securities or portions thereof to be purchased as of the
Purchase Date or the Change in Control Purchase Date, as the case may be, is
deposited with the Paying Agent on the Business Day following the Purchase Date
or the Change in Control Purchase Date, as the case may be, Original Issue
Discount ceases to accrue on such Securities (or portions thereof) immediately
after such Purchase Date or Change in Control Purchase Date, as the case may be,
and the Holder thereof shall have no other rights as such (other than the right
to receive the Purchase Price or Change in Control Purchase Price, as the case
may be, upon surrender of such Security).
7. Notice of Redemption.
Notice of redemption will be mailed at least 15 days but not more
than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at the Holder's registered address. If money sufficient to pay the
Redemption Price of all Securities (or
A-1-7
<PAGE> 90
portions thereof) to be redeemed on the Redemption Date is deposited with the
Paying Agent prior to or on the Redemption Date, immediately after such
Redemption Date Original Issue Discount ceases to accrue on such Securities or
portions thereof. Securities in denominations larger than $1,000 of Principal
Amount at Maturity may be redeemed in part but only in integral multiples of
$1,000 of Principal Amount at Maturity.
8. Conversion.
Subject to the next two succeeding sentences, a Holder of a Security
may convert it into Common Stock of the Company at any time before the close of
business on January 27, 2019. If the Security is called for redemption, the
Holder may convert it at any time before the close of business on the Redemption
Date. A Security in respect of which a Holder has delivered a Purchase Notice or
Change in Control Purchase Notice exercising the option of such Holder to
require the Company to purchase such Security may be converted only if such
notice of exercise is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 3.736 shares of Common Stock per
$1,000 Principal Amount at Maturity, subject to adjustment in certain events
described in the Indenture. The Company will deliver cash or a check in lieu of
any fractional share of Common Stock.
In the event the Company exercises its option pursuant to Section
10.01 of the Indenture to have interest in lieu of Original Issue Discount
accrue on the Security following a Tax Event, the Holder will be entitled on
conversion to receive the same number of shares of Common Stock such Holder
would have received if the Company had not exercised such option. If the Company
exercises such option, Securities surrendered for conversion during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business of such Interest Payment Date
(except Securities to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that the
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment as described above, no interest on
converted Securities will be payable by the Company on any Interest Payment Date
subsequent to the date of conversion.
To convert a Security, a Holder must (1) complete and manually sign
the conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the
A-1-8
<PAGE> 91
Company or the Trustee and (4) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the Principal Amount
at Maturity of such portion is $1,000 or an integral multiple of $1,000. No
payment or adjustment will be made for dividends on the Common Stock except as
provided in the Indenture. On conversion of a Security, that portion of accrued
Original Issue Discount (or interest if the Company has exercised its option
provided for in paragraph 10 hereof) attributable to the period from the Issue
Date (or, if the Company has exercised the option referred to in paragraph 10
hereof, the later of (x) the date of such exercise and (y) the date on which
interest was last paid) through the Conversion Date with respect to the
converted Security shall not be cancelled, extinguished or forfeited, but rather
shall be deemed to be paid in full to the Holder thereof through the delivery of
the Common Stock (together with the cash payment, if any, in lieu of fractional
shares) in exchange for the Security being converted pursuant to the terms
hereof; and the fair market value of such shares of Common Stock (together with
any such cash payment in lieu of fractional shares) shall be treated as issued,
to the extent thereof, first in exchange for Original Issue Discount (or
interest, if the Company has exercised its option provided for in paragraph 10
hereof) accrued through the Conversion Date, and the balance, if any, of such
fair market value of such Common Stock (and any such cash payment) shall be
treated as issued in exchange for the Issue Price of the Security being
converted pursuant to the provisions hereof.
The Conversion Rate will be adjusted for dividends or distributions
on Common Stock payable in Common Stock or other Capital Stock; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days at less than the Quoted Price at the Time of
Determination; and distributions to such holders of assets or debt securities of
the Company or certain rights to purchase securities of the Company (excluding
certain cash dividends or distributions). However, no adjustment need be made if
Securityholders may participate in the transaction or in certain other cases.
The Company from time to time may voluntarily increase the Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another person.
A-1-9
<PAGE> 92
9. Conversion Arrangement on Call for Redemption.
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed to
be purchased from the Holders of such Securities at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Securities from the Holders, to convert
them into Common Stock of the Company and to make payment for such Securities to
the Trustee in trust for such Holders.
10. Tax Event
(a) From and after (i) the date (the "Tax Event Date") of the
occurrence of a Tax Event and (ii) the date the Company exercises such option,
whichever is later (the "Option Exercise Date"), at the option of the Company,
interest in lieu of future Original Issue Discount shall accrue at the rate of
4% per annum on a principal amount per Security (the "Restated Principal
Amount") equal to the Issue Price plus Original Issue Discount accrued through
the Option Exercise Date and shall be payable semiannually on January 27 and
July 27 of each year (each an "Interest Payment Date") to holders of record at
the close of business on January 12 or July 12 (each a "Regular Record Date")
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the Option Exercise Date.
(b) Interest on any Security that is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the person
in whose name that Security is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose. Each installment of interest on any Security shall
be paid in same-day funds by transfer to an account maintained by the payee
located inside the United States.
(c) Except as otherwise specified with respect to the Securities, any
Defaulted Interest on any Security shall forthwith cease to be payable to the
registered Holder thereof on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company
as provided for in Section 10.02(b) of the Indenture.
11. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount at Maturity and integral multiples
of $1,000. A Holder may transfer
A-1-10
<PAGE> 93
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 transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or any Securities in
respect of which a Purchase Notice or Change in Control Purchase Notice has been
given and not withdrawn (except, in the case of a Security to be purchased in
part, the portion of the Security not to be purchased) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.
12. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
13. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property law. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.
14. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding and (ii) certain Defaults may be waived with
the written consent of the Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 or Section 11.14 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated Securities
or to make any change that does not adversely affect the rights of any
Securityholder, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA.
A-1-11
<PAGE> 94
15. Defaults and Remedies.
Under the Indenture, Events of Default include (i) if the Securities
have been converted to semiannual coupon notes following a Tax Event, default in
the payment of interest which default continues for a period of 30 days; (ii)
default in payment of the Principal Amount at Maturity (or, if the Securities
have been converted to semiannual coupon notes following a Tax Event, the
Restated Principal Amount), Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price or Change in Control Purchase Price, as the
case may be, in respect of the Securities when the same becomes due and payable;
(iii) failure by the Company to comply with other agreements in the Indenture or
the Securities, subject to notice and lapse of time; (iv) failure of the Company
to make any payment by the end of any applicable grace period after maturity of
Debt in an amount in excess of $100,000,000, or (b) the acceleration of Debt in
an amount in excess of $100,000,000 because of a default with respect to such
Debt without such Debt having been discharged or such acceleration having been
cured, waived, rescinded or annulled, subject to notice and lapse of time;
provided, however, that if any such failure or acceleration referred to in (a)
or (b) above shall cease or be cured, waived, rescinded or annulled, then the
Event of Default by reason thereof shall be deemed not to have occurred; and (v)
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee, or the Holders of at least 25% in aggregate Principal
Amount at Maturity of the Securities at the time outstanding, may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities becoming
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in aggregate Principal
Amount at Maturity of the Securities at the time outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing Default (except a Default in payment of
amounts specified in clause (i) or (ii) above) if it determines that withholding
notice is in their interests.
16. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the
A-1-12
<PAGE> 95
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Authentication.
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
19. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder
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 Gift to Minors
Act).
20. GOVERNING LAW.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THIS SECURITY, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
----------------------
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture which has in it the text of this
Security in larger type. Requests may be made to:
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Attention: Chief Financial Officer
A-1-13
<PAGE> 96
ASSIGNMENT FORM CONVERSION NOTICE
To assign this Security, fill To convert this Security into
in the form below: Common Stock of the Company, check
the box:
I or we assign and transfer ----
this Security to : :
: :
----------------------- ----
: :
----------------------- To convert only part of this
Security, state the Principal
(Insert assignee's soc. Amount at Maturity to be converted
sec. or tax ID no.) (which must be $1,000 or an
integral multiple of $1,000):
_________________________________ -----------------------
:$ :
_________________________________ -----------------------
_________________________________
If you want the stock certificate made
_________________________________ out in another person's name, fill
(Print or type assignee's in the form below:
name, address and zip code) -----------------------
: :
and irrevocably appoint -----------------------
________________________ agent (Insert other person's
to transfer this Security on soc. sec. or tax ID no.)
the books of the Company.
The agent may substitute ________________________________________
another to act for him.
________________________________________
________________________________________
________________________________________
(Print or type other person's
name, address and zip code)
________________________________________________________________________________
Date: ________________________ Your Signature: ________________________________
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
A-1-14
<PAGE> 97
EXHIBIT A-2
[Form of Certificated Security]
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY IS $547.11, THE ISSUE DATE IS JANUARY 27, 1999, THE
YIELD TO MATURITY IS 4%.
[INCLUDE IF SECURITY IS A CERTIFICATED SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR--IN CONNECTION WITH ANY TRANSFER, THE HOLDER
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOLLOWING RESTRICTIONS.]
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF ANY SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2),(3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
A-2-1
<PAGE> 98
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER, PURSUANT TO
CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
[THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.]
SOLECTRON CORPORATION
Liquid Yield Option(TM) Note due 2019
(Zero Coupon-Senior)
No. R- CUSIP:
Issue Date: January 27, 1999 Original Issue Discount: $547.11
Issue Price: $452.89 (for each $1,000 Principal
(for each $1,000 Principal Amount at Maturity)
Amount at Maturity)
SOLECTRON CORPORATION, a California corporation, promises to pay to
_______ or registered assigns, the Principal Amount at Maturity of
_______Dollars on January 27, 2019.
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
A-2-2
<PAGE> 99
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: SOLECTRON CORPORATION
[SEAL] By
------------------------------------
Title:
Attest:
- ----------------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.
By
---------------------------------
Authorized Signatory
Dated:
---------------------------------
A-2-3
<PAGE> 100
[FORM OF REVERSE SIDE OF LYON]
Liquid Yield Option(TM) Note Due 2019
(Zero Coupon-Senior)
1. Interest.
This Security shall not bear interest, except as specified in this
paragraph or in paragraph 10 hereof. If the Principal Amount at Maturity hereof
or any portion of such Principal Amount at Maturity is not paid when due
(whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the
date set for payment of the Redemption Price pursuant to paragraph 5 hereof,
upon the date set for payment of the Purchase Price or Change in Control
Purchase Price pursuant to paragraph 6 hereof or upon the Stated Maturity of
this Security)or if interest due hereon or any portion of such interest is not
paid when due in accordance with paragraph 10 hereof, then in each such case the
overdue amount shall, to the extent permitted by law, bear interest at the rate
of 5% per annum, compounded semi-annually, which interest shall accrue from the
date such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Maturity of the Security), in the period during which a
Security remains outstanding, shall accrue at 4% per annum, on a semiannual bond
equivalent basis using a 360-day year composed of twelve 30-day months, from the
Issue Date of this Security.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of Redemption Prices, Purchase Prices, Change in Control
Purchase Prices and at Stated Maturity to Holders who surrender Securities to a
Paying Agent to collect such payments in respect of the Securities. The Company
will pay cash amounts in money of the United States that at the time of payment
is legal tender for payment of public and private debts. However, the Company
may make such cash payments by check payable in such money.
A-2-4
<PAGE> 101
3. Paying Agent, Conversion Agent and Registrar.
Initially, State Street Bank and Trust Company of California, N.A., a
national banking association organized under the laws of the United States (the
"Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The
Company may appoint and change any Paying Agent, Conversion Agent, Registrar or
co-registrar without notice, other than notice to the Trustee except that the
Company will maintain at least one Paying Agent in the State of New York, City
of New York, Borough of Manhattan, which shall initially be an office or agency
of the Trustee. The Company or any of its Subsidiaries or any of their
Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as of January
27, 1999 (the "Indenture"), between the Company and the Trustee. 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 of 1939, as in effect from
time to time (the "TIA"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the TIA
for a statement of those terms.
The Securities are general unsecured obligations of the Company limited to
$1,656,000,000 aggregate Principal Amount at Maturity (subject to Section 2.07
of the Indenture). The Indenture does not limit other indebtedness of the
Company, secured or unsecured.
5. Redemption at the Option of the Company.
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Securities are not redeemable prior to January 27, 2003.
The table below shows Redemption Prices of a Security per $1,000 Principal
Amount at Maturity on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Security redeemed between such dates shall include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table.
A-2-5
<PAGE> 102
<TABLE>
<CAPTION>
(1) (2) (3)
Accrued
Original
Issue Redemption
LYON Discount Price
Redemption Date Issue Price at 4% (1) + (2)
- --------------- ----------- -------- ---------
<S> <C> <C> <C>
January 27, 2003................ $452.89 $ 77.74 $ 530.63
January 27, 2004................ 452.89 99.18 552.07
January 27, 2005................ 452.89 121.48 574.37
January 27, 2006................ 452.89 144.69 597.58
January 27, 2007................ 452.89 168.83 621.72
January 27, 2008................ 452.89 193.95 646.84
January 27, 2009................ 452.89 220.08 672.97
January 27, 2010................ 452.89 247.27 700.16
January 27, 2011................ 452.89 275.56 728.45
January 27, 2012................ 452.89 304.98 757.87
January 27, 2013................ 452.89 335.60 788.49
January 27, 2014................ 452.89 367.46 820.35
January 27, 2015................ 452.89 400.60 853.49
January 27, 2016................ 452.89 435.08 887.97
January 27, 2017................ 452.89 470.96 923.85
January 27, 2018................ 452.89 508.28 961.17
At Stated Maturity.............. 452.89 547.11 1,000.00
</TABLE>
If converted to a semiannual coupon note following the occurrence of
a Tax Event, this Security will be redeemable at the Restated Principal Amount
plus accrued and unpaid interest from the date of such conversion through the
Redemption Date; but in no event will this Security be redeemable before January
27, 2003.
6. Purchase By the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, the Securities
held by such Holder on the following Purchase Dates and at the following
Purchase Prices per $1,000 Principal Amount at Maturity, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, at any
time from the opening of business on the date that is 20 Business Days prior to
such Purchase Date until the close of business on such Purchase Date and upon
delivery of the Securities to the Paying Agent by the Holder as set forth in the
Indenture.
<TABLE>
<CAPTION>
Purchase Date Purchase Price
------------- --------------
<S> <C>
January 27, 2002 $510.03
January 27, 2009 $672.97
</TABLE>
A-2-6
<PAGE> 103
The Purchase Price (equal to the Issue Price plus accrued Original
Issue Discount to the Purchase Date) may be paid, at the option of the Company,
in cash or by the issuance and delivery of shares of Common Stock of the
Company, or in any combination thereof.
If prior to a Purchase Date this Security has been converted to a
semiannual coupon note following the occurrence of a Tax Event, the Purchase
Price will be equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of conversion to the Purchase Date.
At the option of the Holder and subject to the terms and conditions
of the Indenture, the Company shall become obligated to purchase the Securities
held by such Holder 35 Business Days after the occurrence of a Change in Control
of the Company occurring on or prior to January 27, 2002 for a Change in Control
Purchase Price equal to the Issue Price plus accrued Original Issue Discount to
the Change in Control Purchase Date, which Change in Control Purchase Price
shall be paid in cash. If prior to a Change in Control Purchase Date this
Security has been converted to a semiannual coupon note following the occurrence
of a Tax Event, the Change in Control Purchase Price shall be equal to the
Restated Principal Amount plus accrued and unpaid interest from the date of
conversion to the Change in Control Purchase Date.
Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.
If cash (and/or securities if permitted under the Indenture)
sufficient to pay the Purchase Price or Change in Control Purchase Price, as the
case may be, of all Securities or portions thereof to be purchased as of the
Purchase Date or the Change in Control Purchase Date, as the case may be, is
deposited with the Paying Agent on the Business Day following the Purchase Date
or the Change in Control Purchase Date, as the case may be, Original Issue
Discount ceases to accrue on such Securities (or portions thereof) immediately
after such Purchase Date or Change in Control Purchase Date, as the case may be,
and the Holder thereof shall have no other rights as such (other than the right
to receive the Purchase Price or Change in Control Purchase Price, as the case
may be, upon surrender of such Security).
7. Notice of Redemption.
Notice of redemption will be mailed at least 15 days but not more
than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at the Holder's registered address. If money sufficient to pay the
Redemption Price of all Securities (or
A-2-7
<PAGE> 104
portions thereof) to be redeemed on the Redemption Date is deposited with the
Paying Agent prior to or on the Redemption Date, immediately after such
Redemption Date Original Issue Discount ceases to accrue on such Securities or
portions thereof. Securities in denominations larger than $1,000 of Principal
Amount at Maturity may be redeemed in part but only in integral multiples of
$1,000 of Principal Amount at Maturity.
8. Conversion.
Subject to the next two succeeding sentences, a Holder of a Security
may convert it into Common Stock of the Company at any time before the close of
business on January 27, 2019. If the Security is called for redemption, the
Holder may convert it at any time before the close of business on the Redemption
Date. A Security in respect of which a Holder has delivered a Purchase Notice or
Change in Control Purchase Notice exercising the option of such Holder to
require the Company to purchase such Security may be converted only if such
notice of exercise is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 3.736 shares of Common Stock per
$1,000 Principal Amount at Maturity, subject to adjustment in certain events
described in the Indenture. The Company will deliver cash or a check in lieu of
any fractional share of Common Stock.
In the event the Company exercises its option pursuant to Section
10.01 of the Indenture to have interest in lieu of Original Issue Discount
accrue on the Security following a Tax Event, the Holder will be entitled on
conversion to receive the same number of shares of Common Stock such Holder
would have received if the Company had not exercised such option. If the Company
exercises such option, Securities surrendered for conversion during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business of such Interest Payment Date
(except Securities to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that the
registered Holder is to receive. Except where Securities surrendered for
conversion must be accompanied by payment as described above, no interest on
converted Securities will be payable by the Company on any Interest Payment Date
subsequent to the date of conversion.
To convert a Security, a Holder must (1) complete and manually sign
the conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the
A-2-8
<PAGE> 105
Company or the Trustee and (4) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the Principal Amount
at Maturity of such portion is $1,000 or an integral multiple of $1,000. No
payment or adjustment will be made for dividends on the Common Stock except as
provided in the Indenture. On conversion of a Security, that portion of accrued
Original Issue Discount (or interest if the Company has exercised its option
provided for in paragraph 10 hereof) attributable to the period from the Issue
Date (or, if the Company has exercised the option referred to in paragraph 10
hereof, the later of (x) the date of such exercise and (y) the date on which
interest was last paid) through the Conversion Date with respect to the
converted Security shall not be cancelled, extinguished or forfeited, but rather
shall be deemed to be paid in full to the Holder thereof through the delivery of
the Common Stock (together with the cash payment, if any, in lieu of fractional
shares) in exchange for the Security being converted pursuant to the terms
hereof; and the fair market value of such shares of Common Stock (together with
any such cash payment in lieu of fractional shares) shall be treated as issued,
to the extent thereof, first in exchange for Original Issue Discount (or
interest, if the Company has exercised its option provided for in paragraph 10
hereof) accrued through the Conversion Date, and the balance, if any, of such
fair market value of such Common Stock (and any such cash payment) shall be
treated as issued in exchange for the Issue Price of the Security being
converted pursuant to the provisions hereof.
The Conversion Rate will be adjusted for dividends or distributions
on Common Stock payable in Common Stock or other Capital Stock; subdivisions,
combinations or certain reclassifications of Common Stock; distributions to all
holders of Common Stock of certain rights to purchase Common Stock for a period
expiring within 60 days at less than the Quoted Price at the Time of
Determination; and distributions to such holders of assets or debt securities of
the Company or certain rights to purchase securities of the Company (excluding
certain cash dividends or distributions). However, no adjustment need be made if
Securityholders may participate in the transaction or in certain other cases.
The Company from time to time may voluntarily increase the Conversion Rate.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another person.
A-2-9
<PAGE> 106
9. Conversion Arrangement on Call for Redemption.
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed to
be purchased from the Holders of such Securities at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Securities from the Holders, to convert
them into Common Stock of the Company and to make payment for such Securities to
the Trustee in trust for such Holders.
10. Tax Event
(a) From and after (i) the date (the "Tax Event Date") of the
occurrence of a Tax Event and (ii) the date the Company exercises such option,
whichever is later (the "Option Exercise Date"), at the option of the Company,
interest in lieu of future Original Issue Discount shall accrue at the rate of
4% per annum on a principal amount per Security (the "Restated Principal
Amount") equal to the Issue Price plus Original Issue Discount accrued through
the Option Exercise Date and shall be payable semiannually on January 27 and
July 27 of each year (each an "Interest Payment Date") to holders of record at
the close of business on January 12 or July 12 (each a "Regular Record Date")
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months and will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the Option Exercise Date.
(b) Interest on any Security that is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the person
in whose name that Security is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose. Each installment of interest on any Security shall
be paid in same-day funds by transfer to an account maintained by the payee
located inside the United States.
(c) Except as otherwise specified with respect to the Securities, any
Defaulted Interest on any Security shall forthwith cease to be payable to the
registered Holder thereof on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company
as provided for in Section 10.02(b) of the Indenture.
11. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount at Maturity and integral multiples
of $1,000. A Holder may transfer
A-2-10
<PAGE> 107
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 transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the Security not to be redeemed) or any Securities in
respect of which a Purchase Notice or Change in Control Purchase Notice has been
given and not withdrawn (except, in the case of a Security to be purchased in
part, the portion of the Security not to be purchased) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.
12. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
13. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property law. After return to the Company,
Holders entitled to the money or securities must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.
14. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding and (ii) certain Defaults may be waived with
the written consent of the Holders of a majority in aggregate Principal Amount
at Maturity of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 or Section 11.14 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated Securities
or to make any change that does not adversely affect the rights of any
Securityholder, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA.
A-2-11
<PAGE> 108
15. Defaults and Remedies.
Under the Indenture, Events of Default include (i) if the Securities
have been converted to semiannual coupon notes following a Tax Event, default in
the payment of interest which default continues for a period of 30 days; (ii)
default in payment of the Principal Amount at Maturity (or, if the Securities
have been converted to semiannual coupon notes following a Tax Event, the
Restated Principal Amount), Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price or Change in Control Purchase Price, as the
case may be, in respect of the Securities when the same becomes due and payable;
(iii) failure by the Company to comply with other agreements in the Indenture or
the Securities, subject to notice and lapse of time; (iv) failure of the Company
to make any payment by the end of any applicable grace period after maturity of
Debt in an amount in excess of $100,000,000, or (b) the acceleration of Debt in
an amount in excess of $100,000,000 because of a default with respect to such
Debt without such Debt having been discharged or such acceleration having been
cured, waived, rescinded or annulled, subject to notice and lapse of time;
provided, however, that if any such failure or acceleration referred to in (a)
or (b) above shall cease or be cured, waived, rescinded or annulled, then the
Event of Default by reason thereof shall be deemed not to have occurred; and (v)
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee, or the Holders of at least 25% in aggregate Principal
Amount at Maturity of the Securities at the time outstanding, may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities becoming
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in aggregate Principal
Amount at Maturity of the Securities at the time outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing Default (except a Default in payment of
amounts specified in clause (i) or (ii) above) if it determines that withholding
notice is in their interests.
16. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the
A-2-12
<PAGE> 109
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Authentication.
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
19. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder
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 Gift to Minors
Act).
20. GOVERNING LAW.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THIS SECURITY, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
---------------------
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture which has in it the text of this
Security in larger type. Requests may be made to:
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
Attention: Chief Financial Officer
A-2-13
<PAGE> 110
ASSIGNMENT FORM CONVERSION NOTICE
To assign this Security, fill To convert this Security into
in the form below: Common Stock of the Company, check
the box:
I or we assign and transfer ----
this Security to : :
: :
----------------------- ----
: :
----------------------- To convert only part of this
Security, state the Principal
(Insert assignee's soc. Amount at Maturity to be converted
sec. or tax ID no.) (which must be $1,000 or an
integral multiple of $1,000):
_________________________________ -----------------------
:$ :
_________________________________ -----------------------
_________________________________
If you want the stock certificate made
_________________________________ out in another person's name, fill
(Print or type assignee's in the form below:
name, address and zip code) -----------------------
: :
and irrevocably appoint -----------------------
________________________ agent (Insert other person's
to transfer this Security on soc. sec. or tax ID no.)
the books of the Company.
The agent may substitute ________________________________________
another to act for him.
________________________________________
________________________________________
________________________________________
(Print or type other person's
name, address and zip code)
________________________________________________________________________________
Date: ________________________ Your Signature: ________________________________
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
A-2-14
<PAGE> 111
EXHIBIT B-1
TRANSFER CERTIFICATE
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 registered owner of this
Security hereby certifies with respect to $______ Principal Amount at Maturity
of the above-captioned securities presented or surrendered on the date hereof
(the "Surrendered Securities") for registration of transfer, or for exchange or
conversion where the securities issuable upon such exchange or conversion are to
be registered in a name other than that of the undersigned registered owner
(each such transaction being a "transfer"), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Securities for the
reason checked below:
- The transfer of the Surrendered Securities complies with Rule 144
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"); or
- The transfer of the Surrendered Securities complies with Rule 144A
under the Securities Act; or
- The transfer of the Surrendered Securities is to an institutional
accredited investor, as described in Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act; or
- The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act.
B-1-1
<PAGE> 112
and unless the box below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act (an
"Affiliate").
- The transferee is an Affiliate of the Company.
DATE:
------------------
----------------------------------------
Signature(s)
(If the registered owner is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of
such registered owner must be stated.)
B-1-2
<PAGE> 113
EXHIBIT B-2
Form of Letter to be Delivered by Accredited Investors
Solectron Corporation
777 Gibraltar Drive
Milpitas, California 95035
State Street Bank and Trust
Company of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, California 90071
Dear Sirs:
We are delivering this letter in connection with the proposed transfer of
$_____________ Principal Amount at Maturity of the Liquid Yield Option Notes due
2019 ("LYONs") of Solectron Corporation (the "Company"), which are convertible
into shares of the Company's Common Stock, $0.001 par value per share (the
"Common Stock").
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2) or (3)
under the Securities Act (an "Institutional Accredited Investor");
(ii) (A) the purchase of LYONs by us is for our own account or for
the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an
"accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of Section 3(a)(2)
of the Securities Act, or a "savings and loan association" or other
institution described in Section 3(a)(5)(A) of the Securities Act that is
acquiring LYONs as fiduciary for the account of one or more institutions
for which we exercise sole investment discretion;
(iii) we will acquire LYONs having a minimum principal amount at
maturity of not less than $250,000 for our own account or for any separate
account for which we are acting;
B-2-1
<PAGE> 114
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing LYONs; and
(v) we are not acquiring LYONs with a view to distribution thereof
or with any present intention of offering or selling LYONs or the Common
Stock issuable upon conversion thereof, except as permitted below;
provided that the disposition of our property and property of any accounts
for which we are acting as fiduciary shall remain at all times within our
control.
We understand that the LYONs were originally offered and sold in a
transaction not involving any public offering within the United States within
the meaning of the Securities Act and that the LYONs and the shares of Common
Stock (the "Securities") issuable upon conversion thereof have not been
registered under the Securities Act, and we agree, on our own behalf and on
behalf of each account for which we acquire any LYONs, that if in the future we
decide to resell or otherwise transfer such Securities prior to the date (the
"Resale Restriction Termination Date") which is two years after the later of the
original issuance of the LYONs and the last date on which the Company or an
affiliate of the Company was the owner of the Security, such Securities may be
resold or otherwise transferred only (i) to Solectron Corporation or any
subsidiary thereof, or (ii) for as long as the LYONs are eligible for resale
pursuant to Rule 144A, to a person it reasonably believes is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) that
purchases for its own account or for the account of a qualified institutional
buyer to which notice is given that the transfer is being made in reliance on
Rule 144A, or (iii) to an Institutional Accredited Investor that is acquiring
the Security for its own account, or for the account of such Institutional
Accredited Investor for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act,
or (iv) pursuant to another available exemption from registration under the
Securities Act (if applicable), or (v) pursuant to a registration statement
which has been declared effective under the Securities Act and, in each case, in
accordance with any applicable securities laws of any State of the United States
or any other applicable jurisdiction and in accordance with the legends set
forth on the Securities. We further agree to provide any person purchasing any
of the Securities other than pursuant to clause (v) above from us a notice
advising such purchaser that resales of such securities are restricted as stated
herein. We understand that the trustee or the transfer agent, as the case may
be, for the Securities will not be required to accept for registration of
transfer any Securities pursuant to (iii) or (iv) above except upon presentation
of evidence satisfactory to the Company that the
B-2-2
<PAGE> 115
foregoing restrictions on transfer have been complied with. We further
understand that any Securities will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph other than certificates representing Securities
transferred pursuant to clause (v) above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
------------------------------------------
(Name of Purchaser)
By:
--------------------------------------
Name:
Title:
Address:
B-2-3
<PAGE> 1
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of
January 27, 1999 by and between Solectron Corporation, a Delaware corporation
("the Company"), and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, (the "Purchaser") pursuant to the Purchase Agreement, dated as of
January 21, 1999 (the "Purchase Agreement"), between the Company and the
Purchaser. In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution of this Agreement is a condition to the closing
under the Purchase Agreement.
The Company agrees with the Purchaser, (i) for its benefit as Purchaser
and (ii) for the benefit of the beneficial owners (including the Purchaser) from
time to time of the LYONs (as defined herein) and the beneficial owners from
time to time of the Underlying Common Stock (as defined herein) issued upon
conversion of the LYONs (each of the foregoing a "Holder" and together the
"Holders"), as follows:
SECTION 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Affiliate: With respect to any specified person, an "affiliate," as
defined in Rule 144, of such person.
Amendment Effectiveness Deadline Date: See Section 2(d) hereof.
Applicable Conversion Price: The Applicable Conversion Price as of any
date of determination means the Applicable Principal Amount per $1,000 principal
amount at maturity of LYONs as of such date of determination divided by the
Conversion Rate in effect as of such date of determination or, if no LYONs are
then outstanding, the Conversion Rate that would be in effect were LYONs then
outstanding.
Applicable Principal Amount: Applicable Principal Amount as of any date
of determination, with respect to each $1,000 principal amount at maturity of
LYONs means the sum of the initial issue price of such LYONs ($452.89) plus
accrued original issue discount with respect to such LYON through such date of
determination or, if no LYONs are then outstanding, such sum calculated as if
such LYONs were then outstanding.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
<PAGE> 2
Common Stock: The shares of Common Stock, $0.001 par value, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, including the Underlying Common Stock.
Conversion Rate: Conversion Rate shall have the meaning assigned such
term in the Indenture.
Damages Accrual Period: See Section 2(e) hereof.
Damages Payment Date: Each January 27 and July 27 in the case of LYONs
and the Underlying Common Stock.
Deferral Notice: See Section 3(i) hereof.
Deferral Period: See Section 3(i) hereof.
Effectiveness Deadline Date: See Section 2(a) hereof.
Effectiveness Period: The period of two years from the later of the (a)
Issue Date or (b) the last date of original issuance of the LYONs or such
shorter period ending on the date that all Registrable Securities have ceased to
be Registrable Securities.
Event: See Section 2(e) hereof.
Event Termination Date: See Section 2(e) hereof.
Event Date: See Section 2(e) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Filing Deadline Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement.
Indenture: The Indenture dated as of the date hereof between the Company
and State Street Bank and Trust Company of California, N.A., as trustee,
pursuant to which the LYONs are being issued.
Initial Shelf Registration Statement: See Section 2(a) hereof.
Issue Date: January 27, 1999.
2
<PAGE> 3
Liquidated Damages Amount: See Section 2(e) hereof.
Losses: See Section 6 hereof.
LYONs: The Liquid Yield Option Notes due 2019 of the Company to be
purchased pursuant to the Purchase Agreement.
Material Event: See Section 3(i) hereof.
Notice and Questionnaire: A written notice delivered to the Company
containing substantially the information called for by the Selling Security
Holder Notice and Questionnaire attached as Appendix B to the Offering
Memorandum of the Company issued January 21, 1999 relating to the LYONs.
Notice Holder: On any date, any Holder that has delivered a Notice and
Questionnaire to the Company on or prior to such date.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first paragraph of this Agreement.
Purchaser: Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
Record Holder: With respect to any Damages Payment Date relating to any
LYON or Underlying Common Stock as to which any Liquidated Damages Amount has
accrued, the registered holder of such LYON or Underlying Common Stock, as the
case may be, 15 days prior to the next succeeding Damages Payment Date.
Registrable Securities: The LYONs and the Underlying Common Stock, until
such securities have been converted or exchanged, and, at all times subsequent
to any such conversion or exchange, any securities into or for which such
securities have been converted or exchanged, and any security issued with
respect thereto upon any stock dividend, split or similar event until, in the
case of any such security, the earliest of (i) its effective registration under
the Securities Act and resale in accordance with the Registration Statement
covering it, (ii) expiration of the holding period that would be applicable
thereto under Rule 144(k) were it not held by an Affiliate of the Company or
(iii) its sale to the public pursuant to Rule 144.
Registration Expenses: See Section 5 hereof.
3
<PAGE> 4
Registration Statement: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
Restricted Securities: As this term is defined in Rule 144.
Rule 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: See Section 2(a) hereof.
Subsequent Shelf Registration Statement: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: State Street Bank and Trust Company of California, N.A. (or any
successor entity), the Trustee under the Indenture.
Underlying Common Stock: The Common Stock into which the LYONs are
convertible or issued upon any such conversion.
SECTION 2. Shelf Registration. (a) The Company shall prepare and file or
cause to be prepared and filed with the SEC, as soon as practicable but in any
event by the date (the "Filing Deadline Date") ninety (90) days after the Issue
Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use reasonable efforts to cause the Initial Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as is practicable but in any event by the date (the "Effectiveness
Deadline Date") that is one hundred and eighty (180) days after the Issue Date,
4
<PAGE> 5
and to keep the Initial Shelf Registration Statement (or any Subsequent Shelf
Registration Statement) continuously effective under the Securities Act until
the expiration of the Effectiveness Period. At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice
Holder on or prior to the date 10 Business Days prior to such time of
effectiveness shall be named as a selling security holder in the Initial Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of Registrable Securities
in accordance with applicable law. None of the Company's security holders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company's securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
ceased to be Registrable Securities), the Company shall use reasonable efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof, and in any event shall within thirty (30) days of such cessation of
effectiveness amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional Shelf Registration Statement covering all of the
securities that as of the date of such filing are Registrable Securities (a
"Subsequent Shelf Registration Statement"). If a Subsequent Shelf Registration
Statement is filed, the Company shall use reasonable efforts to cause the
Subsequent Shelf Registration Statement to become effective as promptly as is
practicable after such filing and to keep such Registration Statement (or
subsequent Shelf Registration Statement) continuously effective until the end of
the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or, to the extent to which the Company does
not reasonably object, as reasonably requested by the Purchaser or by the
Trustee on behalf of the registered Holders.
(d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i). Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
three (3) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as is practicable after the date a Notice and Questionnaire is
delivered, and in any event within five (5) Business Days after such date, (i)
if required by applicable law, file with the SEC a post-effective amendment to
the Shelf Registration Statement or prepare and, if required by applicable law,
file a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by
5
<PAGE> 6
reference or file any other required document so that the Holder delivering such
Notice and Questionnaire is named as a selling security holder in the Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of the Registrable
Securities in accordance with applicable law and, if the Company shall file a
post-effective amendment to the Shelf Registration Statement, use reasonable
efforts to cause such post-effective amendment to be declared effective under
the Securities Act as promptly as is practicable, but in any event by the date
(the "Amendment Effectiveness Deadline Date") that is forty-five (45) days after
the date such post-effective amendment is required by this clause to be filed;
(ii) provide such Holder copies of any documents filed pursuant to Section
2(d)(i); and (iii) notify such Holder as promptly as practicable after the
effectiveness under the Securities Act of any post-effective amendment filed
pursuant to Section 2(d)(i); provided, that if such Notice and Questionnaire is
delivered during a Deferral Period, the Company shall so inform the Holder
delivering such Notice and Questionnaire and shall take the actions set forth in
clauses (i), (ii) and (iii) above upon expiration of the Deferral Period in
accordance with Section 3(i), provided, further, that if under applicable law
the Company has more than one option as to the type or manner of making any such
filing, it will make the required filing or filings in the manner or of a type
that is reasonably expected to result in the earliest availability of the
Prospectus for effecting resales of Registrable Securities. Notwithstanding
anything contained herein to the contrary, the Company shall be under no
obligation to name any Holder that is not a Notice Holder as a selling security
holder in any Registration Statement or related Prospectus; provided, however,
that any Holder that becomes a Notice Holder pursuant to the provisions of
Section 2(d) of this Agreement (whether or not such Holder was a Notice Holder
at the time the Registration Statement was declared effective) shall be named as
a selling security holder in the Registration Statement or related Prospectus in
accordance with the requirements of this Section 2(d).
(e) The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if (i) the Initial Shelf Registration Statement
has not been filed on or prior to the Filing Deadline Date, (ii) the Initial
Shelf Registration Statement has not been declared effective under the
Securities Act on or prior to the Effectiveness Deadline Date, (iii) the Company
has failed to perform its obligations set forth in Section 2(d) within the time
period required therein, (iv) the aggregate duration of Deferral Periods in any
period exceeds the number of days permitted in respect of such period pursuant
to Section 3(i) hereof or (v) the number of Deferral Periods in any period
exceeds the number permitted in respect of such period pursuant to Section 3(i)
(each of the events of a type described in any of the foregoing clauses (i)
through (v) are individually referred to herein as an "Event," and the Filing
Deadline Date in the case of clause (i), the Effectiveness Deadline Date in the
case of clause (ii), the date by which the Company is required to perform its
obligations set forth in Section 2(d) in the case of clause (iii) (including the
filing of any post-effective amendment prior to the Amendment Effectiveness
Deadline Date), the date on which the aggregate duration of Deferral Periods in
any period exceeds the number of days permitted by Section 3(i) hereof in the
case of clause (iv), and the date of the commencement of a Deferral Period that
causes the limit on the number of Deferral Periods in any period under
6
<PAGE> 7
Section 3(i) hereof to be exceeded in the case of clause (v), being referred to
herein as an "Event Date"). Events shall be deemed to continue until the "Event
Termination Date," which shall be the following dates with respect to the
respective types of Events: the date the Initial Shelf Registration Statement is
filed in the case of an Event of the type described in clause (i), the date the
Initial Shelf Registration Statement is declared effective under the Securities
Act in the case of an Event of the type described in clause (ii), the date the
Company performs its obligations set forth in Section 2(d) in the case of an
Event of the type described in clause (iii) (including, without limitation, the
date the relevant post-effective amendment to the Shelf Registration Statement
is declared effective under the Securities Act), termination of the Deferral
Period that caused the limit on the aggregate duration of Deferral Periods in a
period set forth in Section 3(i) to be exceeded in the case of the commencement
of an Event of the type described in clause (iv), and termination of the
Deferral Period the commencement of which caused the number of Deferral Periods
in a period permitted by Section 3(i) to be exceeded in the case of an Event of
the type described in clause (v).
Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of then
outstanding LYONs that are Registrable Securities and of then outstanding shares
of Underlying Common Stock issued upon conversion of LYONs that are Registrable
Securities, as the case may be, accruing, for each portion of such Damages
Accrual Period beginning on and including a Damages Payment Date (or, in respect
of the first time that the Liquidation Damages Amount is to be paid to Holders
on a Damages Payment Date as a result of the occurrence of any particular Event,
from the Event Date) and ending on but excluding the first to occur of (A) the
date of the end of the Damages Accrual Period or (B) the Next Damages Payment
Date, at a rate per annum equal to one-quarter of one percent (0.25%) for the
first 90-day period from the Event Date and thereafter at a rate per annum equal
to one-half of one percent (0.5%) of the aggregate Applicable Principal Amount
of such LYONs and the Applicable Conversion Price of such shares of Underlying
Common Stock, as the case may be, in each case determined as of the Business Day
immediately preceding the next Damages Payment Date; provided, that in the case
of a Damages Accrual Period that is in effect solely as a result of an Event of
the type described in clause (iii) of the immediately preceding paragraph, such
Liquidated Damages Amount shall be paid only to the Holders that have delivered
Notice and Questionnaires that caused the Company to incur the obligations set
forth in Section 2(d) the non-performance of which is the basis of such Event;
provided further, that any Liquidated Damages Amount accrued with respect to any
LYON or portion thereof called for redemption on a redemption date or converted
into Underlying Common Stock on a conversion date prior to the Damages Payment
Date, shall, in any such event, be paid instead to the Holder who submitted such
LYON or portion thereof for redemption or conversion on the applicable
redemption date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion).
Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to
any Registrable Security from and after the earlier of (x) the date such
security is no
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<PAGE> 8
longer a Registrable Security and (y) expiration of the Effectiveness Period.
The rate of accrual of the Liquidated Damages Amount with respect to any period
shall not exceed the rate provided for in this paragraph notwithstanding the
occurrence of multiple concurrent Events. Following the cure of all Events
requiring the payment by the Company of Liquidated Damages Amounts to the
Holders of Registrable Securities pursuant to this Section, the accrual of
Liquidated Damages Amounts will cease (without in any way limiting the effect of
any subsequent Event requiring the payment of Liquidated Damages Amount by the
Company).
The Trustee shall be entitled, on behalf of Holders of LYONs or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.
All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
SECTION 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto with the SEC, furnish to the Purchaser copies
of all such documents proposed to be filed and use reasonable efforts to reflect
in each such document when so filed with the SEC such comments as the Purchaser
reasonably shall propose within two (2) Business Days of the delivery of such
copies to the Purchaser.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2(a); cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the Securities Act;
and use reasonable efforts to comply with the provisions of the Securities Act
applicable to it with respect to the disposition of all securities covered by
such Registration Statement during the
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<PAGE> 9
Effectiveness Period in accordance with the intended methods of disposition by
the sellers thereof set forth in such Registration Statement as so amended or
such Prospectus as so supplemented.
(c) As promptly as practicable give notice to the Notice Holders and the
Purchaser (i) when any Prospectus, Prospectus supplement, Registration Statement
or post-effective amendment to a Registration Statement has been filed with the
SEC and, with respect to a Registration Statement or any post-effective
amendment, when the same has been declared effective, (ii) of any request,
following the effectiveness of the Initial Shelf Registration Statement under
the Securities Act, by the SEC or any other federal or state governmental
authority for amendments or supplements to any Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation or threatening
of any proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of (but not the nature of or details concerning)
a Material Event (provided, however, that no notice by the Company shall be
required pursuant to this clause (v) in the event that the Company either
promptly files a Prospectus supplement to update the Prospectus or a Form 8-K or
other appropriate Exchange Act report that is incorporated by reference into the
Registration Statement, which, in either case, contains the requisite
information with respect to such Material Event that results in such
Registration Statement no longer containing any untrue statement of material
fact or omitting to state a material fact necessary to make the statements
contained therein not misleading) and (vi) of the determination by the Company
that a post-effective amendment to a Registration Statement will be filed with
the SEC, which notice may, at the discretion of the Company (or as required
pursuant to Section 3(i)), state that it constitutes a Deferral Notice, in which
event the provisions of Section 3(i) shall apply.
(d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment.
(e) If reasonably requested by the Purchaser or any Notice Holder,
promptly as reasonably practicable incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Purchaser or such Notice Holder shall, on the basis of an opinion of
nationally-recognized counsel experienced in such matters, determine to be
required to be included therein by applicable law and make any required filings
of such Prospectus supplement or such post-effective amendment; provided, that
the Company shall not be required to take any actions under this Section 3(e)
that are not, in the reasonable opinion of counsel for the Company, in
compliance with applicable law.
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<PAGE> 10
(f) Promptly as reasonably practicable furnish to each Notice Holder and
the Purchaser, upon their request and without charge, at least one (1) conformed
copy of the Registration Statement and any amendment thereto, including
financial statements but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits (unless
requested in writing to the Company by such Notice Holder or the Purchaser, as
the case may be).
(g) During the Effectiveness Period, deliver to each Notice Holder in
connection with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such Notice Holder may reasonably
request; and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.
(h) Prior to any public offering of the Registrable Securities pursuant
to the Shelf Registration Statement, use its reasonable efforts to register or
qualify or cooperate with the Notice Holders in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Notice Holder reasonably
requests in writing (which request may be included in the Notice and
Questionnaire); prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use its reasonably efforts to keep
each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period in connection with such Notice Holder's offer
and sale of Registrable Securities pursuant to such registration or
qualification (or exemption therefrom) and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of such
Registrable Securities in the manner set forth in the relevant Registration
Statement and the related Prospectus; provided, that the Company will not be
required to (i) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to qualify but for
this Agreement or (ii) take any action that would subject it to general service
of process in suits or to taxation in any such jurisdiction where it is not then
so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "Material Event") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the
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<PAGE> 11
circumstances under which they were made, not misleading, or (C) the occurrence
or existence of any pending corporate development that, in the discretion of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus, (i) in the case of clause (B)
above, subject to the next sentence, as promptly as practicable prepare and
file, if necessary pursuant to applicable law, a post-effective amendment to
such Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
that would be incorporated by reference into such Registration Statement and
Prospectus so that such Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
such Prospectus does not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, and, in the case of a
post-effective amendment to a Registration Statement, subject to the next
sentence, use reasonable efforts to cause it to be declared effective as
promptly as is reasonably practicable, and (ii) give notice to the Notice
Holders that the availability of the Shelf Registration Statement is suspended
(a "Deferral Notice") and, upon receipt of any Deferral Notice, each Notice
Holder agrees not to sell any Registrable Securities pursuant to the
Registration Statement until such Notice Holder's receipt of copies of the
supplemented or amended Prospectus provided for in clause (i) above, or until it
is advised in writing by the Company that the Prospectus may be used, and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. The Company will use
reasonable efforts to ensure that the use of the Prospectus may be resumed (x)
in the case of clause (A) above, as promptly as is practicable, (y) in the case
of clause (B) above, as soon as, in the sole judgment of the Company, public
disclosure of such Material Event would not be prejudicial to or contrary to the
interests of the Company or, if necessary to avoid unreasonable burden or
expense, as soon as reasonably practicable thereafter and (z) in the case of
clause (C) above, as soon as, in the discretion of the Company, such suspension
is no longer appropriate. The period during which the availability of the
Registration Statement and any Prospectus is suspended (the "Deferral Period")
shall, without the Company incurring any obligation to pay liquidated damages
pursuant to Section 2(e), not exceed forty-five (45) days in any three (3) month
period or ninety (90) days in any twelve (12) month period.
(j) If reasonably requested in writing in connection with a disposition
of Registrable Securities pursuant to a Registration Statement, make reasonably
available for inspection during normal business hours by a representative for
the Notice Holders of such Registrable Securities and any broker-dealers,
attorneys and accountants retained by such Notice Holders, all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the appropriate executive officers,
directors and designated employees of the Company and its subsidiaries to make
reasonably available for inspection during normal business hours all relevant
information reasonably requested by such representative for the Notice Holders
or any such broker-dealers, attorneys or accountants in connection with such
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<PAGE> 12
disposition, in each case as is customary for similar "due diligence"
examinations; provided, however, that such persons shall first agree in writing
with the Company that any information that is reasonably and in good faith
designated by the Company in writing as confidential at the time of delivery of
such information shall be kept confidential by such persons and shall be used
solely for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any
Registration Statement or the use of any Prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement; and provided further, that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
all the Notice Holders and the other parties entitled thereto by the counsel
referred to in Section 5.
(k) Use reasonable efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold pursuant to a Registration Statement, and cause such Registrable Securities
to be in such denominations as are permitted by the Indenture and registered in
such names as such Notice Holder may request in writing at least two Business
Days prior to any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities covered by each
Registration Statement not later than the effective date of such Registration
Statement and provide the Trustee and the transfer agent for the Common Stock
with printed certificates for the Registrable Securities that are in a form
eligible for deposit with The Depository Trust Company.
(n) Make a reasonable effort to provide such information as is required
for any filings required to be made with the National Association of Securities
Dealers, Inc.
(o) Upon (i) the filing of the Initial Shelf Registration Statement and
(ii) the effectiveness of the Initial Shelf Registration Statement, announce the
same, in each case by release to Reuters Economic Services and Bloomberg
Business News.
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SECTION 4. Holder's Obligations. Each Holder agrees, by acquisition of
the Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as may be required to be disclosed in the Registration Statement or that the
Company may from time to time reasonably request. Any sale of any Registrable
Securities by any Holder shall constitute a representation and warranty by such
Holder that the information relating to such Holder and its plan of distribution
is as set forth in the Prospectus delivered by such Holder in connection with
such disposition, that such Prospectus does not as of the time of such sale
contain any untrue statement of a material fact relating to or provided by such
Holder or its plan of distribution and that such Prospectus does not as of the
time of such sale omit to state any material fact relating to or provided by
such Holder or its plan of distribution necessary to make the statements in such
Prospectus, in the light of the circumstances under which they were made, not
misleading.
SECTION 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the counsel specified
in the next sentence in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company), (iii)
duplication expenses relating to copies of any Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company in connection with the Shelf Registration Statement, and
(v) reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock. In addition, the Company
shall bear or reimburse the Notice Holders for the reasonable fees and
disbursements (not to exceed $15,000) of one firm of legal counsel for the
Holders, which shall initially be Mayer Brown & Platt, but which may, upon the
written consent of the Purchaser (which shall not be unreasonably withheld), be
another nationally recognized law firm experienced in securities law matters
designated by the Company. In addition, the Company shall pay the internal
expenses of the Company (including, without limitation, all salaries and
expenses of officers and employees performing legal or accounting duties), the
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<PAGE> 14
expense of any annual audit, the fees and expenses incurred in connection with
the listing of the Registrable Securities on any securities exchange on which
similar securities of the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay all registration expenses to the extent required by applicable law.
SECTION 6. Indemnification.
(a) Indemnification by the Company. The Company shall indemnify and hold
harmless each Notice Holder and each person, if any, who controls any Notice
Holder (within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act) from and against all losses, liabilities, claims,
damages and expenses (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) (collectively, "Losses"), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement contained in or omission or alleged omission from any
of such documents in reliance upon and conformity with any of the information
relating to such Holder furnished to the Company in writing by such Holder
expressly for use therein; provided further, that the indemnification contained
in this paragraph shall not inure to the benefit of any Holder of Registrable
Securities (or to the benefit of any person controlling such Holder) on account
of any such Losses arising out of or based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
prospectus if either (A) (i) such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such Holder to the person asserting the claim from which such Losses arise and
(ii) the Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (B) (x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and (y) having previously been
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such Holder thereafter fails to deliver such Prospectus
as so amended or supplemented, with or prior to the delivery of written
confirmation of the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.
(b) Indemnification by Holders of Registrable Securities. Each Holder
agrees severally and not jointly to indemnify and hold harmless the Company and
its respective directors and officers, and each person, if any, who controls the
Company (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act), from and against all Losses arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus or in any amendment or
supplement
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<PAGE> 15
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished to the Company by such Holder expressly
for use in such Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities pursuant to
the Registration Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
as they are incurred. Such separate firm shall be designated in writing by, in
the case of parties indemnified pursuant to Section 6(a), the Holders of a
majority (with Holders of LYONs deemed to be the Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such LYONs are or would be convertible or exchangeable as of the date
on which such designation is made) of the Registrable Securities covered by the
Registration Statement held by Holders that are indemnified parties pursuant to
Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b),
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
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<PAGE> 16
claims that are the subject matter of such proceeding (and in the event of a
settlement that involves an unconditional release of such indemnified party, the
indemnifying party will send prompt written notice of such settlement to the
indemnified party).
(d) Contribution. To the extent that the indemnification provided for in
this Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement pursuant to the Purchase Agreement (before
deducting expenses) of the Registrable Securities to which such Losses relate.
Benefits received by any Holder shall be deemed to be equal to the value of
receiving Registrable Securities that are registered under the Securities Act.
The relative fault of the Holders on the one hand and the Company on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Holders
or by the Company, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this paragraph are
several in proportion to the respective number of Registrable Securities they
have sold pursuant to a Registration Statement, and not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
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<PAGE> 17
(e) The indemnity, contribution and expense reimbursement obligations of
the parties hereunder shall be in addition to any liability any indemnified
party may otherwise have hereunder, under the Purchase Agreement or otherwise.
(f) The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.
SECTION 7. Information Requirements. (a) The Company covenants that, if
at any time before the end of the Effectiveness Period the Company is not
subject to the reporting requirements of the Exchange Act, it will cooperate
with any Holder of Registrable Securities and take such further reasonable
action as any Holder of Registrable Securities may reasonably request in writing
(including, without limitation, making such reasonable representations as any
such Holder may reasonably request), all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 and Rule 144A under the Securities Act and customarily taken in
connection with sales pursuant to such exemptions. Upon the written request of
any Holder of Registrable Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such filing requirements,
unless such a statement has been included in the Company's most recent report
required to be filed and filed pursuant to Section 13 or Section 15(d) of
Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities (other than the
Common Stock) under any section of the Exchange Act.
SECTION 8. Miscellaneous.
(a) No Conflicting Agreements. The Company is not, as of the date hereof,
a party to, nor shall it, on or after the date of this Agreement, enter into,
any agreement with respect to its securities that conflicts with the rights
granted to the Holders of Registrable Securities in this Agreement. The Company
represents and warrants that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
holders of the Company's securities under any other agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of a
majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of LYONs deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such LYONs are or would be convertible or exchangeable
as of the date on which such consent is requested). Notwithstanding the
foregoing, a waiver or consent to
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depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Registrable Securities may
be given by Holders of at least a majority of the Registrable Securities being
sold by such Holders pursuant to such Registration Statement; provided, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(w) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in a Notice and
Questionnaire or any amendment thereto;
(x) if to the Company, to:
Solectron Corporation
777 Gibraltor Drive
Milpitas, CA 95035
Attention: Chief Financial Officer
Telecopy No.: (408) 957-8500
and
(y) if to the Purchaser, to:
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Attention: Syndicate Department
Telecopy No.: (212) 449-1000
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or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Purchaser or
subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Purchaser shall be deemed, for purposes of this Agreement,
to be an assignee of the Purchaser. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties and shall
inure to the benefit of and be binding upon each Holder of any Registrable
Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction, it
being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes
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all prior agreements and undertakings among the parties with respect to such
registration rights. No party hereto shall have any rights, duties or
obligations other than those specifically set forth in this Agreement. Without
limiting the generality of the foregoing, the Company shall have no obligation
to participate in a "road show" or, except as specifically provided in this
Agreement, "due diligence" activities in connection with any underwritten public
offering of Registrable Securities, and the Company shall have no obligation to
enter into underwriting or indemnification agreements with respect to, or
deliver opinions, comfort letters or closing certificates in connection with,
any such underwritten public offering.
(k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Sections 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
SOLECTRON CORPORATION
By: /s/ SUSAN S. WANG
------------------------------------
Name: Susan S. Wang
Title: Senior Vice President,
Chief Financial Officer and
Secretary
Accepted as of the date
first above written:
MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: /s/ DOUGLAS R. ROBINSON
---------------------------------
Name: Douglas R. Robinson
Title: Director
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Solectron Corporation:
We consent to incorporation herein by reference of our report dated September
14, 1998, relating to the consolidated balance sheets of Solectron Corporation
and subsidiaries as of August 31, 1998 and 1997, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
years in the three-year period ended August 31, 1998, and the related schedule,
which report appears in the August 31, 1998, annual report on Form 10-K of
Solectron Corporation, and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG LLP
Mountain View, California
April 7, 1999
