<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-22712
------------------------
VERITAS SOFTWARE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 94-2823068
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
1600 PLYMOUTH STREET
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 335-8000
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES AND REGISTRANT'S
TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's Common Stock outstanding on
October 31, 1997 was 30,641,103 shares.
================================================================================
<PAGE> 2
VERITAS SOFTWARE CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C> <C>
PART I CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1996......................................................... 2
Condensed Consolidated Statements of Operations for the Three Months and
Nine Months Ended September 30, 1997 and 1996............................. 3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1997 and 1996............................................... 4
Notes to Condensed Consolidated Financial Statements...................... 5
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition....................................................... 7
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds................................. 21
Item 6. Exhibits and Reports on Form 8-K.......................................... 21
Signature .......................................................................... 22
</TABLE>
1
<PAGE> 3
PART I: CONDENSED CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 18,838 $ 17,411
Short-term investments........................................... 57,146 50,145
Accounts receivable, less allowance for doubtful accounts of
$1,776 at September 30, 1997 and $697 at December 31, 1996.... 30,552 15,971
Other current assets............................................. 2,871 1,987
-------- ---------
Total current assets............................................... 109,407 85,514
Property and equipment, net........................................ 9,241 6,997
Notes receivable and other assets.................................. 670 2,013
-------- ---------
Total assets....................................................... $ 119,318 $ 94,524
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 1,852 $ 1,780
Accrued compensation and related expenses........................ 5,340 3,201
Other accrued liabilities........................................ 7,789 4,875
Deferred revenue................................................. 13,653 8,096
Current portion of notes payable................................. -- 149
-------- ---------
Total current liabilities.......................................... 28,634 18,101
Notes payable, less current portion................................ -- 463
Deferred rent...................................................... 946 1,005
Stockholders' equity
Common stock..................................................... 183,620 179,410
Accumulated deficit.............................................. (93,342) (103,813)
Notes receivable from stockholders............................... -- (282)
Deferred compensation............................................ (73) (97)
Foreign currency translation adjustment.......................... (467) (263)
-------- ---------
Total stockholders' equity......................................... 89,738 74,955
-------- ---------
Total liabilities and stockholders' equity......................... $ 119,318 $ 94,524
======== =========
</TABLE>
See accompanying notes.
2
<PAGE> 4
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenue:
User license fees................................. $24,027 $14,415 $67,719 $41,712
Services.......................................... 5,612 3,120 13,648 8,769
Porting........................................... 1,182 171 3,998 413
------- ------- ------- -------
Total net revenue......................... 30,821 17,706 85,365 50,894
Cost of revenue:
User license fees................................. 1,142 828 2,819 2,166
Services.......................................... 2,074 969 4,904 2,591
Porting........................................... 1,163 214 2,770 378
------- ------- ------- -------
Total cost of revenue..................... 4,379 2,011 10,493 5,135
------- ------- ------- -------
Gross profit........................................ 26,442 15,695 74,872 45,759
Operating expenses:
Selling and marketing............................. 10,711 6,288 30,328 18,239
Research and development.......................... 6,430 4,975 18,736 13,123
General and administrative........................ 1,889 1,663 6,104 4,873
Merger related costs.............................. -- -- 8,490 --
In-process research and development............... -- -- -- 2,200
------- ------- ------- -------
Total operating expenses.................. 19,030 12,926 63,658 38,435
------- ------- ------- -------
Income from operations.............................. 7,412 2,769 11,214 7,324
Other income, net................................... 902 960 2,572 1,624
------- ------- ------- -------
Income before income taxes.......................... 8,314 3,729 13,786 8,948
Provision for income taxes.......................... 1,580 479 3,315 1,288
------- ------- ------- -------
Net income.......................................... $ 6,734 $ 3,250 $10,471 $ 7,660
======= ======= ======= =======
Net income per share................................ $ 0.20 $ 0.10 $ 0.32 $ 0.25
======= ======= ======= =======
Shares used in per share calculations............... 33,435 31,727 32,793 30,731
======= ======= ======= =======
</TABLE>
See accompanying notes.
3
<PAGE> 5
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 10,471 $ 7,660
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................ 2,648 2,667
In-process research and development.................................. -- 2,200
Non-cash merger related costs........................................ 1,218 --
Changes in operating assets and liabilities:
Accounts receivable.................................................. (14,919) (559)
Prepaid expenses..................................................... (1,105) (27)
Other assets......................................................... 364 (1,027)
Deferred revenue..................................................... 5,594 63
Accounts payable..................................................... 91 967
Accrued compensation and related expenses............................ 2,178 739
Other accrued liabilities............................................ 3,133 (1,139)
-------- --------
Net cash provided by operating activities.............................. 9,673 11,544
INVESTING ACTIVITIES
Purchase of short-term investments, net................................ (7,001) (29,833)
Purchase of property and equipment..................................... (5,091) (3,960)
Payments received on note.............................................. 187 282
Notes receivable from officers......................................... -- (54)
Purchase of ACSC....................................................... -- (3,000)
-------- --------
Net cash used in investing activities.................................. (11,905) (36,565)
FINANCING ACTIVITIES
Payments of notes payable.............................................. (612) (8,214)
Payments under capital lease obligations............................... -- (106)
Payments on notes receivable from stockholders......................... 282 16
Proceeds from issuance of common stock................................. 4,204 38,046
-------- --------
Net cash provided by financing activities.............................. 3,874 29,742
Effect of exchange rates on cash and equivalents....................... (215) (161)
-------- --------
Net increase in cash and cash equivalents.............................. 1,427 4,560
Cash and cash equivalents at beginning of period....................... 17,411 3,527
-------- --------
Cash and cash equivalents at end of period............................. $ 18,838 $ 8,087
======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 6
VERITAS SOFTWARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. The results for the interim periods presented are not
necessarily indicative of the results that may be expected for any future
period. The following information should be read in conjunction with the
financial statements and notes thereto included in VERITAS Software
Corporation's annual report on Form 10-K for the year ended December 31, 1996.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. NET INCOME PER SHARE
Net income per share has been computed using the weighted average number of
shares of common stock outstanding, after giving effect to dilutive common stock
equivalents. Common stock equivalents consist of the dilutive shares issuable
upon the exercise of outstanding stock options and warrants (using the treasury
stock method). All share and per share data for prior periods have been adjusted
to reflect a 3 for 2 stock split effective September 15, 1997.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("Statement 128"), Earnings per Share, which requires adoption by the
Registrant as of December 31, 1997. At that time, the Registrant will be
required to change the method currently used to compute earnings per share and
to restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded.
Adoption of Statement 128 is expected to result in an increase in primary
earnings per share for the nine months ended September 30, 1997 and September
30, 1996 to $0.35 and $0.27 per share, respectively. The impact of Statement 128
on the calculation of fully diluted earnings per share for these quarters is not
expected to be material.
4. MERGER WITH OPENVISION
On January 13, 1997, VERITAS Software Corporation, a Delaware corporation
("the Company") and VERITAS Software Corporation, a California corporation
("Veritas California") entered into an Agreement and Plan of Reorganization (the
"Agreement") with OpenVision Technologies, Inc., a Delaware corporation
("OpenVision"), a publicly-held company that provides storage management
applications and services for client/server computing environments. The
Agreement provided for the merger of a wholly owned subsidiary of the Company
with and into VERITAS California (the "Reincorporation") and the merger of
another wholly owned subsidiary of the Company with and into OpenVision (the
"Merger"), thereby resulting in Veritas California and OpenVision both becoming
wholly owned subsidiaries of the Company. The Reincorporation and the Merger
were consummated on April 25, 1997. The Merger was a tax-free reorganization,
accounted for as a pooling of interests whereby each share of the outstanding
Common Stock of Veritas California was converted into one share of Common Stock
of the Company and each outstanding share of OpenVision Common Stock and Class B
Common Stock was exchanged for approximately .346 of a share of Common Stock of
the Company. Based on the number of shares of OpenVision Common Stock and
5
<PAGE> 7
VERITAS SOFTWARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Class B Common Stock outstanding as of April 25, 1997, approximately 9.8 million
shares of the Company's Common Stock were issued in the transaction and the
Company has reserved 1.4 million shares of its Common Stock for issuance
pursuant to the assumption of outstanding options, warrants and other rights to
purchase OpenVision Common Stock.
In connection with the Merger, the Company incurred charges to operations
of $8.5 million during the second quarter of 1997 that primarily consisted of
approximately $4.2 million for transaction fees and professional services, $1.9
million for contract terminations and asset write-offs and $2.4 million for
other costs incident to the Merger. Of the total charge, $1.2 million resulted
from the write-off of redundant assets and facilities and $7.3 million involved
cash outflows of which $1.2 million are future outflows as of September 30,
1997. The future outflows are expected to be paid before June 30, 1998.
5. SUBSEQUENT EVENT
In October 1997, the Company issued and sold $100 million principal amount
of 5.25% Convertible Subordinated Notes due 2004 (the "Notes"). The Notes are
subordinated to all existing and future senior indebtedness of the Company and
are convertible into shares of the Company's Common Stock at a conversion price
of $64.50 per share. The Company has agreed to file a shelf registration
statement with respect to the Notes and the Common Stock issuable upon
conversion thereof within 120 days after the date of original issuance of the
Notes. The Notes are redeemable at the option of the Company in whole or in part
at any time on or after November 5, 2002 at 101.5% initially, and thereafter
until the maturity date of the Notes at declining premiums to par, in cash plus
accrued interest, subject to adjustment in certain events. Upon the occurrence
of a fundamental change (meaning a transaction or event pursuant to which the
Company's Common Stock shall be exchanged for consideration, whether by means of
an exchange offer, liquidation, tender offer, merger, recapitalization or other
similar transaction, which does not consist solely or substantially of common
stock or shares listed on a U.S. national securities exchange or approved for
quotation on the Nasdaq National Market), each holder of these Notes has the
right, to require the Company to repurchase outstanding Notes, in whole or in
part, at a repurchase price equal to 101% of the principal amount of such Notes,
plus accrued interest. The costs of $3 million incurred in connection with the
Notes offering will be included in the prepaid and other assets balance. These
costs will be amortized over the 7-year term of the Notes using the
straight-line method, which in this case, approximates the effective interest
method. Interest on the Notes began accruing October 14, 1997 and is payable
semi-annually on May 1 and November 1, commencing May 1, 1998. The proceeds of
the Notes will be used for general corporate purposes, including working
capital, possible facilities expansion or acquisitions of businesses, products
or technologies that would complement the Company's business.
6
<PAGE> 8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion contains forward-looking statements that involve
risks and uncertainties. Such forward-looking statements consist of statements
that are not purely historical, including, without limitation, statements
regarding the Company's expectations, beliefs, intentions or strategies
regarding the future. All forward-looking statements included in this document
are based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward-looking statement.
There are certain important factors that could cause actual results to differ
materially from those projected in the forward-looking statements contained in
the following discussion. Among such important factors are (i) the Company's
timely development and market acceptance of new non-OEM products, (ii) the
timely creation of versions of the Company's products for Microsoft Windows NT
operating system ("Windows NT"), (iii) the impact of Windows NT and other
operating systems on the UNIX market upon which the Company's current products
are dependent, (iv) the reliance on OEMs to continue porting and shipping the
Company's products, (v) the Company's ability to expand the distribution of its
products through new and unproven channels, including resellers, integrators,
distributors and end users, (vi) the impact of competitive products and pricing,
(vii) the uncertainty of the labor market and local regulations in India, where
a subsidiary of the Company, which performs research and development activities,
is located, (viii) the Company's ability to hire and retain research and
development, marketing and sales personnel with appropriate skills in a highly
competitive labor market, (ix) the integration of the businesses of VERITAS
California and OpenVision, and (x) such risks and uncertainties as are detailed
from time to time in the Company's SEC reports and filings, including its Annual
Report on Form 10-K for the year ended December 31, 1996 and the Registration
Statement on Form S-4 filed by the Company in connection with the Merger with
OpenVision.
RESULTS OF OPERATIONS
OVERVIEW
The Company designs, develops, markets and supports enterprise data storage
management solutions, providing advanced storage management software for open
system environments. The Company's products provide performance improvement and
reliability enhancement features that are critical for many commercial
applications. These products enable protection against data loss and file
corruption, rapid recovery after disk or system failure, the ability to process
large files efficiently and the ability to manage and back-up large networks of
systems without interrupting users. The Company's high availability products
provide an automated failover between computer systems organized in clusters
sharing disk resources. The Company's highly scalable products can be used
independently, and certain products can be combined to provide interoperable
client/ server storage management solutions. The Company's products offer
centralized administration with a high degree of automation, enabling customers
to manage complex, distributed environments cost-effectively by increasing
system administrator productivity and system availability. The Company also
provides a comprehensive range of services to assist customers in planning and
implementing storage management solutions. The Company markets its products and
associated services through a combination of direct sales and indirect channels
(resellers, VARs, hardware distributors, application software vendors and
systems integrators). Before its Merger with OpenVision, the Company primarily
distributed its products through OEM partners whose operating systems
incorporated one or more of the Company's products. Currently, the Company
supports sales of binary versions of its products predominately through several
OEM partnerships as well as through an increasing effort to market and develop
shrink-wrap versions of its products for distribution through non-OEM channels.
The Company merged with OpenVision pursuant to the terms of an Agreement
and Plan of Reorganization dated January 13, 1997. The transaction was
consummated on April 25, 1997 and was accounted for as a "pooling of interests"
for financial reporting purposes in accordance with generally accepted
accounting principles. The following discussion reflects the combined results of
the Company and OpenVision for all periods covered.
The Company derives its net revenues from user license fees, services
revenue and porting fees. The Company's OEM customers either bundle the
Company's products with operating systems licensed by such
7
<PAGE> 9
OEMs or offer such products as options. The Company generally receives a
one-time source license fee upon entering into a license agreement with an OEM,
as well as a user license fee each time the OEM licenses a copy of any operating
system to a customer that incorporates one or more of the Company's products.
The Company's license agreements with OEM customers generally contain no minimum
sales requirements and there can be no assurance that any OEM will either
commence or continue shipping operating systems incorporating the Company's
products in the future. The Company's services revenue consists of fees derived
from annual maintenance agreements and consulting and training. Porting fees
consist of fees derived from porting and other non-recurring engineering efforts
when the Company ports (i.e. adapts) its storage management products to OEMs'
operating systems and when the Company develops new product features or
extensions of existing product features upon request of a customer.
The Company's international sales are generated primarily through its
international sales subsidiaries. International revenue outside the United
States and Canada, most of which is collectible in foreign currencies, accounted
for 20% and 27% of the Company's revenue in the nine months ended September 30,
1997 and 1996, respectively. International revenue during this period grew at a
slower rate than in the United States and Canada. The Company's international
revenue increased 21% from $13.9 million for the nine months ended September 30,
1996 to $16.9 million for the nine months ended September 30, 1997. Since much
of the Company's international operating expenses are also incurred in local
currencies, the relative impact of exchange rates on net income or loss is less
than on revenues. Although the Company's operating and pricing strategies take
into account changes in exchange rates over time, the Company's operating
results may be significantly affected in the short term by fluctuations in
foreign currency exchange rates. The Company believes that its success depends
upon continued expansion of its international operations. The Company currently
has sales and service offices in the United States, Canada, Japan, England,
Germany and France. The Company has a development center in India. The Company
also has resellers located in North America, Europe, Asia Pacific, South America
and the Middle East. International expansion may require that the Company
establish additional foreign offices, hire additional personnel and recruit
additional international resellers. This may necessitate significant management
attention and financial resources and could adversely affect the Company's
operating margin. To the extent the Company is unable to effect these additions
efficiently and in a timely manner, its growth, if any, in international sales
will be limited, and the Company's business, operating results and financial
condition could be materially and adversely affected. There can be no assurance
that the Company will be able to maintain or increase international market
demand for its products.
8
<PAGE> 10
The following tables set forth the percentage of total revenue represented
by certain line items from the Company's Condensed Consolidated Statements of
Operations for the three months and nine months ended September 30, 1997 and
1996, respectively, and the percentage change between the comparative periods:
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL REVENUE PERIOD-TO-PERIOD
THREE MONTHS ENDED PERCENTAGE CHANGE
SEPTEMBER 30, THREE MONTHS ENDED
------------------- SEPTEMBER 30,
1997 1996 1997 COMPARED TO 1996
---- ---- ---------------------
<S> <C> <C> <C>
Net revenue:
User license fees.......................... 78% 81% 67%
Services................................... 18 18 80
Porting.................................... 4 1 591
--- ---
Total revenue........................... 100 100 74
Cost of revenue:
User license fees.......................... 3 5 38
Services................................... 7 5 114
Porting.................................... 4 1 443
--- ---
Total cost of revenue................... 14 11 118
Gross profit................................. 86 89 68
Operating expenses:
Selling and marketing...................... 35 36 70
Research and development................... 21 28 29
General and administrative................. 6 9 14
--- ---
Total operating expenses................ 62 73 47
--- ---
Income from operations....................... 24 16
Other income, net............................ 3 5
Provision for income taxes................... (5) (3)
--- ---
Net income................................... 22% 18%
=== ===
Gross margin:
User license fees....................... 95% 94%
Services................................ 63% 69%
Porting................................. 2 % -25%
</TABLE>
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<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL REVENUE PERIOD-TO-PERIOD
NINE MONTHS ENDED PERCENTAGE CHANGE
SEPTEMBER 30, NINE MONTHS ENDED
------------------- SEPTEMBER 30,
1997 1996 1997 COMPARED TO 1996
---- ---- ---------------------
<S> <C> <C> <C>
Net revenue:
User license fees.......................... 79% 82% 62%
Services................................... 16 17 56
Porting.................................... 5 1 868
--- ---
Total revenue........................... 100 100 68
Cost of revenue:
User license fees.......................... 3 4 30
Services................................... 6 5 89
Porting.................................... 3 1 633
--- ---
Total cost of revenue................... 12 10 104
--- ---
Gross profit................................. 88 90 64
Operating expenses:
Selling and marketing...................... 36 36 66
Research and development................... 22 26 43
General and administrative................. 7 10 25
Merger related costs....................... 10 -- n/m
In-process research and development........ -- 4 n/m
--- ---
Total operating expenses................ 75 76 66
--- ---
Income from operations....................... 13 14
Other income, net............................ 3 3
Provision for income taxes................... (4) (2)
--- ---
Net income................................... 12% 15%
=== ===
Gross margin:
User license fees.......................... 96% 95%
Services................................ 64% 70%
Porting................................. 31% 8 %
</TABLE>
- ---------------
n/m = not meaningful
NET REVENUE
Total net revenue increased 74% from $17.7 million for the three months
ended September 30, 1996, to $30.8 million for the three months ended September
30, 1997, and increased 68% from $50.9 million for the nine months ended
September 30, 1996, to $85.4 million for the nine months ended September 30,
1997. The Company believes that the percentage increases in total revenue are
not indicative of future results. The Company's revenue is comprised of user
license fees, services revenue and porting fees. Growth in user license fees has
been driven primarily by increasing market acceptance of the Company's products
and a larger percentage of total license revenue coming through the direct sales
channel. Services revenue is derived primarily from contracts for software
maintenance and technical support and, to a lesser extent, consulting and
training services. The growth in services revenue has been driven primarily by
increased sales of service and support contracts on new license sales and, to a
lesser extent, by increasing renewals of these contracts as the Company's
installed base of licensees has increased. Porting fees are derived from the
Company's funded development efforts typically associated with the licensing of
source code to OEMs. User license fees for the three months ended September 30,
1997 decreased to 78% of total net revenue from 81% for the three months ended
September 30, 1996. User license fees for the nine months ended September 30,
1997 and the nine months ended September 30, 1996 were 79% and 82%,
respectively.
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<PAGE> 12
User License Fees. User license fees increased 67% from $14.4 million for
the three months ended September 30, 1996 to $24.0 million for the three months
ended September 30, 1997. License revenues increased 62% from $41.7 million for
the nine months ended September 30, 1996 to $67.7 million for the nine months
ended September 30, 1997. The increase is primarily due to increased market
acceptance of the Company's products and introduction of new products. In
particular, the Company's license revenue from storage products increased by
approximately 88%, accounting for 77% and 89% of license revenue in the nine
months ended September 30, 1996 and 1997, respectively.
Services Revenue. Services revenue increased 80% from $3.1 million for the
three months ended September 30, 1996 to $5.6 million for the three months ended
September 30, 1997, and increased 56% from $8.8 million for the nine months
ended September 30, 1996 to $13.6 million for the nine months ended September
30, 1997, primarily due to increased sales of service and support contracts on
new licenses, renewal of service and support contracts on existing licenses and,
to a lesser extent, an increase in consulting services revenue.
Porting Fees. Porting fees increased from $0.2 million for the three months
ended September 30, 1996 to $1.2 million for the three months ended September
30, 1997, and increased from $0.4 million for the nine months ended September
30, 1996 to $4.0 million for the nine months ended September 30, 1997. During
the third quarter of 1996, the Company entered into an agreement with Microsoft
Corporation whereby the Company has committed to develop versions of its Volume
Manager products to be included in future releases of Microsoft Windows NT.
During the three months and nine months ended September 30, 1997, the increase
in porting fees was directly related to the efforts incurred in supporting the
development needs of the Microsoft project for which revenue is being recognized
under the percentage of completion method.
COST OF REVENUE
Cost of user license fees consists primarily of media, manuals,
distribution costs and royalties. Cost of services consists primarily of
personnel-related costs in providing maintenance, technical support, consulting
and training to customers. Cost of porting consists primarily of
personnel-related costs in providing development efforts. Gross margin on user
license fees is substantially higher than gross margin on service revenue and
porting fees, reflecting the low materials, packaging and other costs of
software products compared with the relatively high personnel costs associated
with providing maintenance, technical support, consulting, training services and
development efforts. Cost of services also varies based upon the mix of
maintenance, technical support, consulting and training services.
Cost of User License Fees. Cost of user license fees increased 38% from
$0.8 million for the three months ended September 30, 1996 to $1.1 million for
the three months ended September 30, 1997, and increased 30% from $2.2 million
for the nine months ended September 30, 1996 to $2.8 million for the nine months
ended September 30, 1997. Gross margin on user license fees increased from 94%
and 95% for the three months and nine months ended September 30, 1996,
respectively, to 95% and 96% for the three months and nine months ended
September 30, 1997, respectively, primarily due to a greater percentage of user
license fees generated from products with lower royalty rates. The Company does
not expect improvements in gross margin on license revenue.
Cost of Services Revenue. Cost of services revenue increased 114% from $1.0
million for the three months ended September 30, 1996 to $2.1 million for the
three months ended September 30, 1997, and increased 89% from $2.6 million for
the nine months ended September 30, 1996 to $4.9 million for the nine months
ended September 30, 1997. Gross margin on services decreased from 69% for the
three months ended September 30, 1996 to 63% for the three months ended
September 30, 1997 and decreased from 70% for the nine months ended September
30, 1996 to 64% for the nine months ended September 30, 1997, primarily due to
personnel additions to the Company's support organization to provide maintenance
and other service.
Cost of Porting Fees. Cost of porting fees increased to $1.2 million for
the three months ended September 30, 1997 compared to $0.2 for the same period
of 1996, and increased to $2.8 million for the nine months ended September 30,
1997, compared to $0.4 million for the same period in 1996, primarily due to the
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efforts incurred related to the development of versions of the Company's Volume
Manager products intended to be included in future versions of Windows NT.
OPERATING EXPENSES
Selling and Marketing. Selling and marketing expenses consist primarily of
salaries, related benefits, commissions, fees for purchased services and other
costs associated with the Company's sales and marketing efforts. Selling and
marketing expenses increased 70% from $6.3 million for the three months ended
September 30, 1996 to $10.7 million for the three months ended September 30,
1997, and increased 66% from $18.2 million for the nine months ended September
30, 1996 to $30.3 million for the nine months ended September 30, 1997. Selling
and marketing expenses as a percentage of total net revenue decreased from 36%
for the three months ended September 30, 1996 to 35% for the three months ended
September 30, 1997, and was 36% for both of the nine month periods ended
September 30, 1996 and September 30, 1997. The increase in absolute dollars is
primarily attributable to increased selling and marketing staffing and increased
costs associated with certain marketing programs. The Company intends to
continue to expand its global sales and marketing infrastructure, and
accordingly, the Company expects its selling and marketing expenses to increase
in the future.
Research and Development. Research and development expenses consist
primarily of salaries, related benefits, third-party consultant fees and other
costs. Research and development expenses increased 29% from $5.0 million for the
three months ended September 30, 1996 to $6.4 million for the three months ended
September 30, 1997, and increased 43% from $13.1 million for the nine months
ended September 30, 1996 to $18.7 million for the nine months ended September
30, 1997, primarily reflecting increased staffing levels. As a percentage of
total net revenue, research and development expenses decreased from 28% for the
three months ended September 30, 1996 to 21% for the three months ended
September 30, 1997, and decreased from 26% for the nine months ended September
30, 1996 to 22% for the nine months period ended September 30, 1997. The Company
believes that a significant level of research and development investment is
required to remain competitive and expects such expenses will increase in future
periods, although such expenses may continue to decline as a percentage of total
net revenue to the extent revenue increases.
General and Administrative. General and administrative expenses consist
primarily of salaries, related benefits and fees for professional services, such
as legal and accounting services. General and administrative expenses increased
14% from $1.7 million for the three months ended September 30, 1996 to $1.9
million for the three months ended September 30, 1997, and increased 25% from
$4.9 million for the nine months ended September 30, 1996 to $6.1 million for
the nine months ended September 30, 1997. The increase in the three and nine
month comparisons was primarily due to additional costs associated with the
Company enhancing its infrastructure to allow operations to expand. General and
administrative expenses as a percentage of total net revenue decreased between
the three month periods from 9% to 6%, and decreased between the nine month
periods from 10% to 7%. General and administrative expenses are expected to
increase in future periods to the extent the Company expands its operations.
Merger-related costs. As a result of the Merger, the Company incurred
charges to operations of $8.5 million for the nine months ended September 30,
1997 consisting of approximately $4.2 million for transaction fees and
professional services, $1.9 million for contract terminations and asset
write-offs and $2.4 million for other costs incident to the Merger. Of the total
charge, $1.2 million resulted from the write-off of assets related to redundant
assets and facilities and $7.3 million involved cash outflows of which $1.2
million are future outflows as of September 30, 1997. The future outflows are
expected to be paid before June 30, 1998.
In-Process Research and Development. On April 1, 1996, the Company acquired
all of the outstanding capital stock of Advanced Computing Systems Company
("ACSC"), a company that develops media management software, for a total cost of
$3.5 million. Of the total cost, $2.2 million was allocated to in-process
research and development and was expensed in the second quarter of 1996 and
approximately $1.3 million was allocated to intangibles assets that originally
were amortized and then fully written off in the quarter ended
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June 30, 1997 as part of the Merger-related costs since the ACSC product line
became redundant upon the Merger.
Other Income, Net. Other income, net remained substantially constant at
$1.0 million for the three months ended September 30, 1996 and $0.9 million for
the three months ended September 30, 1997. Other income, net increased from $1.6
million for the nine months ended September 30, 1996 to $2.6 million for nine
months ended September 30, 1997, due primarily to increased amounts of interest
income attributable to the higher level of funds available for investment and,
to a lesser extent, the repayment of certain interest bearing debt.
Provision for Income Taxes. The Company had an effective tax rate of 24%
and 14% for the nine-month periods ended September 30, 1997 and 1996,
respectively. The Company's effective tax rate is lower than the combined
federal and state statutory rates primarily due to the utilization of federal
net operating loss carry forwards. The tax provision recorded for the second
quarter of 1997 reflects the impact of certain non-recurring merger related
expenses that are not deductible for tax purposes. The effective tax rate for
the remainder of 1997 is expected to be significantly lower than the effective
rate recorded year to date, as the entire impact of the Merger related charges
were taken into account in the second quarter.
The Company accounts for its income taxes under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." Under
SFAS 109, deferred tax liabilities and assets are recognized for the expected
future tax consequences of temporary differences between the carrying amount of
assets and liabilities for financial reporting and the amounts used for income
taxes. At September 30, 1997, the Company had approximately $29 million of gross
deferred tax assets comprised primarily of net operating loss carryforwards. The
Company believes that, based on a number of factors, the available objective
evidence creates sufficient uncertainty regarding the realizability of the
deferred tax assets such that a full valuation allowance has been recorded. The
Company intends to reevaluate the need for a valuation allowance on a quarterly
basis.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and short-term investments totaled
$76.0 million at September 30, 1997 and represented 64% of total assets. Cash
and cash equivalents are highly liquid with original maturities of ninety days
or less. Short-term investments consist mainly of investment grade commercial
paper. At September 30, 1997, the Company had $0.9 million of long-term
obligations and stockholders' equity was approximately $89.7 million.
Net cash provided from operating activities was $9.7 million in the nine
months ended September 30, 1997 down from $11.5 million in the nine months ended
September 30, 1996. The reduction in cash provided from operating activities
resulted primarily from an increase of accounts receivable of $14.9 million,
partially offset by increases in deferred revenue and other accrued liabilities
of $5.6 million and $3.1 million, respectively, in the nine months ended
September 30, 1997. The increase in accounts receivable reflects the overall
revenue increase and a shift in revenue distribution to a higher percentage of
revenue being generated through the Company's direct sales channel. The Company
typically recognizes a significant portion of its direct sales license revenue
in the last two weeks of a quarter. The Company also used $6.0 million of cash
from operations to provide for non-recurring costs related to the Merger in the
nine months ended September 30, 1997.
The Company's investing activities used cash of $11.9 million in the nine
months ended September 30, 1997 primarily due to the net increase in short-term
investments of $7.0 million and by capital expenditures of $5.1 million. The
Company's investing activities used cash of $36.6 million in the nine months
ended September 30, 1996 and consisted primarily of $29.8 million of net
purchases of short-term investments, $4.0 million used for capital expenditures
and $3.0 million used for the purchase of ACSC.
Financing activities provided cash of $3.9 million in the nine months ended
September 30, 1997, primarily from the issuance of common stock under the
Company's employee stock plans, partially offset by payments of notes payable.
In the nine months ended September 30, 1996, financing activities provided cash
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of $29.7 million that reflects the net proceeds of $36.5 million from
OpenVision's May 1996 initial public stock offering partially offset by the
payments of notes payable.
In October 1997, the Company issued $100,000,000 of 5.25% Convertible
Subordinated Notes due 2004, for which the Company received net proceeds of
$97,500,000. The Notes provide for semi-annual interest payments each May 1 and
November 1, commencing on May 1, 1998. The Notes are convertible into the
Company's Common Stock at any time prior to the close of business on the
maturity date, unless previously redeemed or repurchased, at a conversion price
of $64.50 per share, subject to adjustment in certain events. On or after
November 5, 2002, the Notes will be redeemable over the period of time until
maturity at the option of the Company at declining premiums to par. The debt
issuance costs are being amortized ratably over the term of the Notes.
The Company believes that its current cash, cash equivalents and short-term
investment balances and cash flow from operations, if any, will be sufficient to
meet the Company's working capital and capital expenditure requirements for at
least the next twelve months. Thereafter, the Company may require additional
funds to support its working capital requirements or for other purposes and may
seek to raise such additional funds through public or private equity financing
or from other sources. There can be no assurance that additional financing will
be available at all or that if available, such financing will be obtainable on
terms favorable to the Company.
FACTORS THAT MAY AFFECT FUTURE RESULTS
In addition to other information in this Report on Form 10-Q, the following
factors should be considered carefully in evaluating the Company and its
business.
Fluctuating Operating Results. The Company's operating results have
fluctuated in the past, and may fluctuate significantly in the future depending
on a number of factors. Factors that have resulted in fluctuations in operating
results include: (i) the timing and level of sales by the Company's OEM
licensees of computer systems incorporating the Company's storage management
products, (ii) a significant increase in dependence upon non-OEM channels, which
tend to be more unpredictable than OEM channels; (iii) timing of lump sum
payments for source code license fees; (iv) achievement of porting milestones;
and (v) financial expenses for investment in new products and distribution
channels, including the hiring of additional selling and marketing personnel and
outlay of promotional expenses.
In addition to the factors described above, factors that may contribute to
future fluctuations in quarterly operating results include, but are not limited
to: (i) development and introduction of new operating systems that require
additional development efforts; (ii) introduction or enhancement of products by
the Company or its competitors; (iii) the ability of the Company to integrate
and assimilate the business, operations and technology of OpenVision; (iv)
changes in pricing policies of the Company or its competitors; (v) increased
competition; (vi) technological changes in computer systems and environments;
(vii) the ability of the Company to develop, introduce and market new products
in a timely manner; (viii) quality control of products sold; (ix) market
readiness to deploy storage management products for distributed computing
environments; (x) market acceptance of new products and product enhancements;
(xi) customer order deferrals in anticipation of new products and product
enhancements; (xii) the Company's success in expanding its sales and marketing
programs; (xiii) personnel changes; (xiv) foreign currency exchange rates; (xv)
mix of products sold; (xvi) acquisition costs; (xvii) the size and timing of
orders; (xviii) seasonality of revenue; and (xix) general economic conditions.
The Company's operating results are highly sensitive to the timing of
larger orders. Orders typically range from a few thousand dollars to several
hundred thousand dollars. Revenue is difficult to forecast because the
client/server systems management software market is an emerging market that is
highly fragmented and subject to rapid change. The sale of the Company's
products also typically involves a significant technical evaluation and
commitment of capital and other resources, with delays frequently arising from
customers' internal procedures, including delays to approve capital
expenditures, to engineer deployment of new technologies within their networks,
and to test and accept new technologies that affect key operations. For these
and other reasons, the sales cycle associated with the Company's products is
typically lengthy, is subject
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to a number of significant risks, including customers' budgetary constraints and
internal acceptance reviews, that are beyond the Company's control, and varies
substantially from customer to customer. Given the lengthy sales cycle and the
large size of certain transactions, if orders forecasted for a specific
transaction for a particular quarter are not realized in that quarter, the
Company's operating results for that quarter could be materially adversely
affected.
The Company's future revenue will also be difficult to predict, and the
Company has, in the past, failed to achieve its revenue expectations for certain
periods. Because the Company generally ships software products within a short
period after receipt of an order, it typically does not have a material backlog
of unfilled orders, and revenue in any quarter is substantially dependent on
orders booked and shipped in that quarter. In addition, the Company typically
recognizes a significant portion of its direct sales license revenue in the last
two weeks of a quarter. The Company's expense levels are based, in part, on its
expectations as to future revenue and to a large extent are fixed in the short
term. The Company will not be able to adjust expenses in the short term to
compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall of revenue in relation to the Company's expectations or any material
delay of customer orders would have an immediate adverse effect on its business,
operating results and financial condition. As a result of all of the foregoing
factors, the Company believes that period-to-period comparisons of the Company's
results of operations are not and will not necessarily be meaningful and should
not be relied upon as any indication of future performance. Furthermore, it is
possible that in future quarters the Company's operating results may be below
the expectations of public market analysts and investors. In such event, the
price of the Company's Common Stock and the Notes would be materially and
adversely affected.
Management of Growth; Dependence on Key Personnel. The Company increased
significantly in size as a result of the Merger and has continued to grow since
that time. The Company expects to continue to experience periods of significant
growth that place strain upon its management control systems and resources. In
the future, the Company will be required to continue to improve its financial
and management controls, reporting systems and procedures on a timely basis, to
expand, train and manage its employee work force and to secure additional
facilities when and if needed There can be no assurance that the Company will be
able to manage such growth effectively. Its failure to do so would have a
material adverse effect on its business, operating results and financial
condition. Competition for qualified sales, technical and other personnel is
intense, and there can be no assurance that the Company will be able to attract,
assimilate or retain additional highly qualified employees in the future. If the
Company is unable to hire and retain such personnel, particularly those in key
positions, its business, operating results and financial condition would be
materially and adversely affected. The Company's future success also depends in
significant part upon the continued service of its key technical, sales and
senior management personnel. The loss of the services of one or more of these
key employees could have a material adverse effect on its business, operating
results and financial condition. Additions of new personnel and departures of
existing personnel, particularly in key positions, can be disruptive and can
result in departures of other existing personnel, which could have a material
adverse effect on the Company's business, operating results and financial
condition.
New Distribution Channels. A substantial portion of the Company's net
revenue are derived from user license fees received from computer OEMs that
incorporate the Company's storage management software products into their
operating systems. The Company has no control over the shipping dates or volumes
of systems shipped by its OEM customers, and there can be no assurance that any
OEMs will ship operating systems incorporating the Company's products in the
future. Furthermore, the Company's license agreements with its OEM customers
generally do not require the OEMs to recommend or offer the Company's products
exclusively, have no minimum sales requirements, and may be terminated by the
OEMs without cause.
The Company recently has made significant investments in the establishment
of other distribution channels. Efforts by the Company in this area include: (i)
the introduction of shrink-wrap packages of two of its storage management
software products in 1992; (ii) the distribution of end user products for the
Sun Microsystems' Solaris operating system in 1994; (iii) the acquisition of
Tidalwave Technologies, Inc. in April 1995, as a result of which the Company
began distributing the VERITAS FirstWatch end user products; and (iv) the Merger
with OpenVision that provided an established and significant direct sales
channel to the Company.
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The Company has entered into a Development, License and Distribution
Agreement with Sun Microsystems which will also provide a new distribution
channel for the Company's products. The Company has agreed to develop a
specialized, integrated version of the Company's Volume Manager product that
will be bundled with certain Sun Microsystems' products. While the Company
believes that this arrangement with Sun Microsystems will be beneficial, there
can be no assurance that the Company will be able to deliver its products to Sun
Microsystems in a timely manner despite the dedication of significant
engineering and other resources to the development of such products. Any such
failure would result in the Company having expended significant resources with
little or no return on its investment, which could have a material adverse
effect on the Company's business, operating results and financial condition. The
Company also assumed an OpenVision Development, License and Distribution
Agreement with Sun Microsystems, under which Sun Microsystems was granted a
limited exclusive license with respect to VERITAS NetBackup and VERITAS HSM and
to certain enhancements to and extensions of such products. There can be no
assurance that the simultaneous sales efforts of Sun Microsystems and the
Company with respect to such products will not create certain sales channel
conflicts, and possibly lead to a loss of revenue, which could have a material
adverse effect on the Company's business, operating results and financial
condition.
These additional investments and responsibilities will require the
expenditure by the Company of substantial resources, including the diversion of
employees from other projects to provide the support services and development
efforts required to provide products and services that the Company has limited
experience in providing. The Company's direct sales force is marketing and
selling the Company's products in competition with indirect sellers of its
products, such as OEMs and resellers, which could adversely affect the Company's
relations with such indirect sellers and result in such sellers being less
willing to aggressively market the Company's products. There can be no assurance
that such sales and marketing efforts by the Company's direct sales force will
not result in a decline in indirect sales as a result of actual or potential
competition between the Company's direct sales force and such indirect sellers,
or that such efforts will not have a material adverse effect on the Company's
business, operating results and financial condition. In addition, any such
decline in indirect sales may require the Company to accelerate investments for
expansion into alternative distribution channels, and no assurance can be given
that the Company will have sufficient resources to devote to such other
channels.
Inability to Integrate Current and Future Products and
Technologies. Following the Merger, the Company's commenced integration of
selected products and technologies to enhance storage management functionality
the integration of certain products throughout its entire product line through
the availability of a common set of services. The Company's success is dependent
in significant part on the Company's ability to integrate its products as
planned and the resultant products achieving market acceptance by end users,
resellers and OEMs. No assurance can be given that the Company will successfully
integrate its products as planned. If the Company is unable to develop and
introduce new integrated products and technologies, or enhancements to existing
products, in a timely manner, its business, operating results and financial
condition would be materially and adversely affected.
Competition. The markets in which the Company competes are intensely
competitive and rapidly changing. The Company's principal competition in the
storage management market comes from internal development groups of current and
prospective OEM customers, which have the resources to develop their own storage
management solutions. The Company also encounters competition from other third
party software vendors and hardware companies offering products that incorporate
certain of the features provided by the Company's products and from disk
controller and disk subsystem manufacturers who have included or may include
similar features.
As a result of the Merger and the associated higher visibility of the
Company in certain markets, the Company faces competition from additional
competitors and experience new competitive factors. In particular, new
competitors include: (i) hardware and software vendors that offer a management
platform or framework to support vendor-created and third-party systems
management applications; (ii) vendors that provide systems management software
for the mainframe environment who are migrating their products to the
client/server environment; (iii) vendors that provide "point" products that
address specific problems and offer specific functionality; and (iv) vendors
that provide integrated and interoperable solutions. Specific competi-
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tors that the Company has encountered competition from include Computer
Associates International, Inc., IBM Corporation, Legato Systems, Inc. and EMC.
Such competitors have substantially greater financial, technical, sales,
marketing and other resources, as well as greater name recognition and a larger
installed customer base, than the Company. The Company expects that the market
for storage management software, which historically has been large and
fragmented, will become more consolidated with larger companies being better
positioned to compete in such environment in the long term. Moreover, as the
open systems management software market develops, a number of companies with
greater resources than the Company could attempt to increase their presence in
this market by acquiring or forming strategic alliances with competitors or
business partners of the Company. For example, IBM Corporation purchased Tivoli
Systems Inc. and Computer Associates International purchased Cheyenne Software,
both competitors of the Company.
The Company's success will depend significantly on its ability to adapt to
these new competing forces, to develop more advanced products more rapidly and
less expensively than its competitors and to educate potential customers as to
the benefits of licensing the Company's products rather than developing their
own products. The Company's future and existing competitors could introduce
products with superior features, scalability and functionality at lower prices
than the Company's products and could also bundle existing or new products with
other more established products in order to compete with the Company. Given the
relatively low barriers of entry for the software market, the Company
anticipates competition from other established and emerging companies. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, any of which could materially and adversely affect the
Company's business, operating results and financial condition. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors, and the failure to do so would result in the Company's
business, operating results and financial condition being materially and
adversely affected.
Rapid Technological Change and Requirement for Frequent Product
Transitions. The market for the Company's products is intensely competitive,
highly fragmented and characterized by rapid technological developments,
evolving industry standards and rapid changes in customer requirements. The
introduction of products embodying new technologies, the emergence of new
industry standards or changes in customer requirements could render the
Company's existing products obsolete and unmarketable. As a result, the
Company's success depends upon its ability to continue to enhance existing
products, respond to changing customer requirements and develop and introduce in
a timely manner new products that keep pace with technological developments and
emerging industry standards. Customer requirements include, but are not limited
to, product operability and support across distributed and changing
heterogeneous hardware platforms, operating systems, relational databases and
networks. For example, as certain of the Company's customers start to utilize
Windows NT or other emerging operating platforms, it will be necessary for the
Company to enhance its products to operate on such platforms in order to meet
these customers' requirements. There can be no assurance that the Company's
products will achieve market acceptance or will adequately address the changing
needs of the marketplace or that the Company will be successful in developing
and marketing enhancements to its existing products, or new products
incorporating new technology, on a timely basis. The Company has in the past
experienced delays in product development, and there can be no assurance that
the Company will not experience further delays in connection with its current
product development or future development activities. If the Company is unable
to develop and introduce new products, or enhancements to existing products, in
a timely manner in response to changing market conditions or customer
requirements, the Company's business, operating results and financial condition
will be materially and adversely affected. Because the Company has limited
resources, it must restrict its product development efforts to a relatively
small number of products and operating systems. There can be no assurance that
these efforts will be successful or, even if successful, that any resulting
product or operating system will achieve market acceptance.
Increasing Product Concentration; Dependence on Growth of Storage
Management Software Market. A substantial majority of the Company's revenues
have been, and in future periods will be, derived from storage management
products. Storage management products accounted for 77% and 89% of the Company's
license revenue in the nine months ended September 30, 1996 and 1997,
respectively. The Company expects that
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storage management products will continue to account for a substantial majority
of the Company's revenues in future periods as a result of its strategic
decision to devote greater financial and other resources to selling, servicing
and supporting its storage management products. The allocation of greater levels
of sales, service and support resources to such products could adversely affect
the Company's ability to continue enhancing and supporting its other product
lines. Any failure by the Company to enhance and support its other product lines
could result in adverse customer reactions and the loss of an existing revenue
base, and could have a material adverse effect on the Company's business,
operating results and financial condition.
The Company's future financial performance will depend in large part on the
continued growth in the number of companies adopting storage management
solutions for their client/server computing environments. There can be no
assurance that the market for storage management software and services will
continue to grow. If the storage management software and services market fails
to grow or grows more slowly than the Company currently anticipates, or in the
event of a decline in unit price or demand for the Company's storage management
products, as a result of competition, technological change or other factors, the
Company's business, operating results and financial condition would be
materially and adversely affected. The Company's financial performance may, in
the future, experience substantial fluctuations as a consequence of such
industry patterns, general economic conditions affecting the timing of orders,
and other factors affecting capital spending. There can be no assurance that
such factors will not have a material adverse effect on the Company's business,
operating results and financial condition.
Merger with OpenVision. The Company merged with OpenVision with the
expectation that the Merger will result in beneficial synergistic effects for
the Company. Achieving the anticipated benefits of the Merger will depend in
part upon whether the integration of the two companies' businesses is achieved
in a timely, efficient and effective manner, and there can be no assurance that
this will occur. The combination of the two companies requires, among other
things, integration of the two companies' sales forces and product offerings and
coordination of research and development efforts. There can be no assurance that
such integration and coordination will be accomplished smoothly or successfully.
The integration of the two organizations is also requiring the dedication of
management resources that will temporarily distract management from attention to
the day-to-day business of the Company. The difficulties of integration may be
increased by a variety of other factors, which include: the conflicts that may
arise with respect to the direct sales distribution model of OpenVision and the
Company's distribution model which is dependent on the efforts of third parties
such as OEMs and resellers; the difficulties coordinating geographically
separated organizations; differences between the corporate cultures of the
Company and OpenVision; and integrating personnel with disparate business
backgrounds. The process of combining the companies may cause an interruption
of, or a loss of momentum in, the activities of the Company's business and may
adversely affect the revenues and results of operations of the Company, at least
in the near term. Furthermore, the process of combining the companies could have
a material adverse effect on employee morale and on the ability of the Company
to retain the key management, technical and sales and marketing personnel who
are critical to the Company's future operations. In addition, the consummation
of the Merger and integration efforts could cause customers or potential
customers to delay or cancel orders for products because of uncertainty over the
integration and continued support of the products of the Company following the
Merger. Failure to accomplish the integration of the two companies' operations
effectively would have a material adverse effect on the Company's business,
operating results and financial condition.
Risks Associated With International Operations. International revenue
outside the United States and Canada, most of which is collectible in foreign
currencies, accounted for 20% and 27% of the Company's revenue in the nine
months ended September 30, 1997 and 1996, respectively. International revenue
during this period grew at a slower rate than in the United States and Canada.
The Company's international revenue increased 21% from $13.9 million for the
nine months ended September 30, 1996 to $16.9 million for the nine months ended
September 30, 1997. The Company believes that its future success depends upon
continued expansion of its international operations. The Company currently has
sales and service offices in the United States, Canada, the United Kingdom,
Germany, France and Japan and has a product development group in India. The
Company also has resellers in North America, Europe, Asia Pacific, South America
and the Middle East. International expansion may require the Company to
establish additional foreign offices, hire
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additional personnel and recruit additional international resellers. This may
require significant management attention and financial resources and could
adversely affect the Company's operating margin. To the extent the Company is
unable to effect these additions efficiently and in a timely manner, its growth,
if any, in international sales will be limited, and its business, operating
results and financial condition could be materially and adversely affected.
There can be no assurance that the Company will be able to maintain or increase
international market demand for its products.
As of September 30, 1997, the Company had 32 engineers employed by its
Indian subsidiary located in Pune, India, who perform certain product
development work. These international operations subject the Company to a number
of risks inherent in developing products outside of the United States, including
the potential loss of developed technology, imposition of governmental controls,
export license requirements, restrictions on the export of critical technology,
political and economic instability, trade restrictions, difficulties in managing
international operations and lower levels of intellectual property protection.
Furthermore, if the Company were required to discontinue its product development
efforts in India, it would incur significantly higher operating expenses as a
result of having to perform such development work in the United States.
From time to time, the Company may engage in exchange rate-hedging
activities. Such activities have been insignificant to date. There can be no
assurance that any hedging techniques implemented by the Company will be
successful.
The Company's international business also involves a number of additional
risks, including lack of acceptance of localized products, cultural differences
in the conduct of business, longer accounts receivable payment cycles, greater
difficulty in accounts receivable collection, seasonality due to the slow-down
in European business activity during the Company's third fiscal quarter,
unexpected changes in regulatory requirements and royalty and withholding taxes
that restrict the repatriation of earnings, tariffs and other trade barriers,
and the burden of complying with a wide variety of foreign laws. The Company's
international sales are generated primarily through its international sales
subsidiaries and are denominated in local currency, creating a risk of foreign
currency translation gains and losses. To the extent profit is generated or
losses are incurred in foreign countries, the Company's effective income tax
rate may be materially and adversely affected. In some markets, localization of
the Company's products is essential to achieve market penetration. The Company
may incur substantial costs and experience delays in localizing its products,
and there can be no assurance that any localized product will ever generate
significant revenue. There can be no assurance that any of the factors described
herein will not have a material adverse effect on the Company's future
international sales and operations and, consequently, its business, operating
results and financial condition.
Year 2000 Compliance. The Company is aware of the issues associated with
the programming code in existing computer systems as the millennium ("Year
2000") approaches. The Year 2000 problem is pervasive and complex as virtually
every computer operation will be affected in some way by the rollover of the two
digit year value to 00. The issue is whether computer systems will properly
recognize date sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous data or
cause a system to fail. The Company is utilizing resources to identify, correct
or reprogram, and test its products for Year 2000 compliance. The Company
supplies storage management solutions to customers in commercial markets
throughout the world. Any failure of the Company's products to perform,
including system malfunctions due to the onset of the calendar year 2000 could
result in claims against the Company. A claim brought against the Company could
have a material adverse effect on the Company's business, financial condition or
results of operations. Moreover, the Company's customers could chose to convert
to other calendar year 2000 compliant systems or to develop their own systems in
order to avoid such malfunctions. An increasing rate of conversion would result
in an increasing rate of decline of revenue, and could have a material adverse
effect on the Company's business, financial condition or results of operations.
The Company is also currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. The Company does not
currently have information concerning the Year 2000 compliance status of its
suppliers and customers. In the event that any of the Company's significant
suppliers or customers does not successfully and timely achieve Year 2000
compliance, the Company's business or operations could be adversely affected.
19
<PAGE> 21
Significant Leverage; Debt Service. In connection with the sale of the
Notes, the Company has incurred $100 million indebtedness which, on a proforma
basis, results in a ratio of long-term debt to total capitalization at September
30, 1997 of approximately 53.1%. As a result of this additional indebtedness,
the Company's principal and interest payment obligations will increase
substantially. The degree to which the Company will be leveraged could
materially and adversely affect the Company's ability to obtain financing for
working capital, acquisitions or other purposes and could make it more
vulnerable to industry downturns and competitive pressures. The Company's
ability to meet its debt service obligations will be dependent upon the
Company's future performance, which will be subject to financial, business and
other factors affecting the operations of the Company, many of which are beyond
its control.
The Company will require substantial amounts of cash to fund scheduled
payments of principal and interest on its indebtedness, including the Notes,
future capital expenditures and any increased working capital requirements. If
the Company is unable to meet its cash requirements out of cash flow from
operations, there can be no assurance that it will be able to obtain alternative
financing. In the absence of such financing, the Company's ability to respond to
changing business and economic conditions, to make future acquisitions, to
absorb adverse operating results or to fund capital expenditures or increased
working capital requirements may be adversely affected. If the Company does not
generate sufficient increases in cash flow from operations to repay the Notes at
maturity, it could attempt to refinance the Notes; however, no assurance can be
given that such a refinancing would be available on terms acceptable to the
Company, if at all. Any failure by the Company to satisfy its obligations with
respect to the Notes at maturity (with respect to payments of principal) or
prior thereto (with respect to payments of interest or required repurchases)
would constitute a default under the Indenture and could cause a default under
agreements governing other indebtedness, if any, of the Company.
Volatility of Stock Price. The market price for the Company's Common Stock
is highly volatile. The trading price of the Company's Common Stock could be
subject to wide fluctuations in response to quarterly variations in operating
and financial results, announcements of technological innovations, new products,
new customer relationships or new strategic relationships by the Company or its
competitors, changes in prices of the Company's or its competitors' products and
services, changes in product mix, changes in revenue and revenue growth rates
for the Company. Statements or changes in opinions, ratings, or earnings
estimates made by brokerage firms or industry analysts relating to the markets
in which the Company does business, or relating to the Company specifically,
have resulted, and could in the future result, in an immediate and adverse
effect on the market price of the Company's Common Stock. In addition, the stock
market has from time to time experienced extreme price and volume fluctuations
which have particularly affected the market price for the securities of many
high-technology companies and that often have been unrelated or disproportionate
to the operating performance of these companies. These fluctuations, as well as
general economic, market and political conditions such as recessions or military
conflicts may adversely affect the market price of the Company's Common Stock.
20
<PAGE> 22
PART II: OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On October 14, 1997, 5.25% Convertible Subordinated Notes due 2004 (the
"Notes") amounting to $100,000,000 in aggregate principal amount were issued and
sold by the Company to UBS Securities LLC (the "Initial Purchaser") in reliance
upon Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act") for resale by the Initial Purchaser (i) to qualified institutional buyers
within the United States in reliance upon Rule 144A promulgated under the
Securities Act, and (ii) to non-U.S. persons outside the United States in
reliance upon Regulation S promulgated under the Securities Act. The initial
purchase price for the Notes was $100,000,000 less the Initial Purchaser's
discount of 2.5% ($2,500,000) of the principal amount purchased. The Notes are
convertible into the Company's Common Stock at any time prior to the close of
business on the maturity of the Notes on November 1, 2004, unless previously
redeemed or repurchased, at a conversion price of $64.50 per share, subject to
adjustment in certain events.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -------------------------------------------------------------
<S> <C> <C>
4.06 Indenture dated as of October 1, 1997 between the Registrant
and State Street Bank and Trust Company of California, N.A.
4.07 Registration Rights Agreement dated as of October 1, 1997
between the Registrant and UBS Securities LLC
11.1 Statement Regarding Computation of Net Income Per Share
27.1 Financial Data Schedule (EDGAR only)
</TABLE>
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended September 30, 1997.
21
<PAGE> 23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 12, 1997 VERITAS SOFTWARE CORPORATION
/s/ KENNETH E. LONCHAR
--------------------------------------
Kenneth E. Lonchar
Vice President, Finance and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
22
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.06 Indenture dated as of October 1, 1997 between the Registrant and State Street
Bank and Trust Company of California, N.A.
4.07 Registration Rights Agreement dated as of October 1, 1997 between the
Registrant and UBS Securities LLC
11.1 Statement Regarding Computation of Net Income Per Share
27.1 Financial Data Schedule (EDGAR only)
</TABLE>
<PAGE> 1
EXHIBIT 4.06
- --------------------------------------------------------------------------------
VERITAS SOFTWARE CORPORATION,
COMPANY
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
TRUSTEE
---------------------
INDENTURE
DATED AS OF OCTOBER 1, 1997
---------------------
5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
RECITALS...................................................................1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......1
SECTION 1.1. Definitions..............................................1
Act ............................................................2
Affiliate..........................................................2
Authenticating Agent...............................................2
Board of Directors.................................................2
Board ............................................................2
Board Resolution...................................................2
Business Day.......................................................2
Cedel ............................................................2
Closing Price......................................................2
Code ............................................................2
Commission.........................................................3
Common Stock.......................................................3
Company............................................................3
Company Order......................................................3
Company Notice.....................................................3
Conversion Agent...................................................3
Conversion Price...................................................3
Corporate Trust Office.............................................3
corporation........................................................4
Custodian..........................................................4
Defaulted Interest.................................................4
Depositary.........................................................4
Designated Senior Indebtedness.....................................4
Dollar ............................................................4
U.S.$ ............................................................4
DTC ............................................................4
Euroclear..........................................................4
Event of Default...................................................4
Exchange Act.......................................................4
Fundamental Change.................................................4
Global Security....................................................5
Holder ............................................................5
Indebtedness.......................................................5
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Indenture..........................................................6
Interest Payment Date..............................................6
Liquidated Damages.................................................6
Maturity...........................................................6
Non-electing Share.................................................6
Note Register......................................................6
Note Registrar.....................................................6
Officer............................................................6
Officers' Certificate..............................................6
Opinion of Counsel.................................................6
Outstanding........................................................7
Paying Agent.......................................................7
Payment Blockage Notice............................................7
Person ............................................................8
Place of Conversion................................................8
Place of Payment...................................................8
Predecessor Security...............................................8
Purchase Agreement.................................................8
Purchased Shares...................................................8
Record Date........................................................8
Redemption Date....................................................8
Redemption Price...................................................8
Registration Rights Agreement......................................8
Regular Record Date................................................8
Regulation S.......................................................8
Regulation S Global Security.......................................8
Representative.....................................................8
Repurchase Date....................................................9
Repurchase Price...................................................9
Responsible Officer................................................9
Restricted Security................................................9
Rule 144A..........................................................9
Rule 144A Global Security..........................................9
Rule 144A Information..............................................9
Securities.........................................................9
Securities Act.....................................................9
Senior Indebtedness................................................9
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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(CONTINUED)
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<S> <C>
Significant Subsidiary................................................10
Special Record Date...................................................10
Stated Maturity.......................................................10
Subsidiary............................................................10
Successor Security....................................................10
Trading Day...........................................................10
Trust Indenture Act...................................................10
Trustee...............................................................10
SECTION 1.2. Compliance Certificates and Opinions........................11
SECTION 1.3. Form of Documents Delivered to the Trustee..................11
SECTION 1.4. Acts of Holders of Securities...............................12
SECTION 1.5. Notices, Etc., to Trustee and Company.......................14
SECTION 1.6. Notice to Holders of Securities; Waiver.....................15
SECTION 1.7. Effect of Headings and Table of Contents....................15
SECTION 1.8. Successors and Assigns......................................16
SECTION 1.9. Separability Clause.........................................16
SECTION 1.10. Benefits of Indenture......................................16
SECTION 1.11. Governing Law..............................................16
SECTION 1.12. Legal Holidays.............................................16
SECTION 1.13. Conflict with Trust Indenture Act..........................17
SECTION 1.14. Indenture and Securities Solely Corporate Obligations......17
ARTICLE TWO SECURITY FORMS...................................................17
SECTION 2.1. Forms Generally.............................................17
SECTION 2.2. Form of Security............................................18
SECTION 2.3. Assignment Form and Certificate of Transfer.................29
SECTION 2.4. Form of Election of Holder to Require Repurchase............31
SECTION 2.5. Form of Conversion Notice...................................32
SECTION 2.6. Form of Certificate of Authentication.......................33
ARTICLE THREE THE SECURITIES.................................................33
SECTION 3.1. Title and Terms.............................................33
SECTION 3.2. Denominations...............................................34
SECTION 3.3. Execution, Authentication, Delivery and Dating..............34
SECTION 3.4. Registration, Registration of Transfer and Exchange;
Restrictions on Transfer..................................36
SECTION 3.5. Temporary Securities........................................43
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities...........44
SECTION 3.7. Payment of Interest; Interest Rights Preserved............45
SECTION 3.8. Persons Deemed Owners.....................................46
SECTION 3.9. Cancellation..............................................46
SECTION 3.10. Computation of Interest..................................47
SECTION 3.11. CUSIP Numbers............................................47
ARTICLE FOUR SATISFACTION AND DISCHARGE....................................47
SECTION 4.1. Satisfaction and Discharge of Indenture...................47
SECTION 4.2. Application of Trust Money................................48
ARTICLE FIVE REMEDIES......................................................49
SECTION 5.1. Events of Default.........................................49
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment........50
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee............................................51
SECTION 5.4. Trustee May File Proofs of Claim..........................52
SECTION 5.5. Trustee May Enforce Claims Without Possession
of Securities.........................................53
SECTION 5.6. Application of Money Collected............................53
SECTION 5.7. Limitation on Suits.......................................53
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.....................54
SECTION 5.9. Restoration of Rights and Remedies........................54
SECTION 5.10. Rights and Remedies Cumulative...........................55
SECTION 5.11. Delay or Omission Not Waiver.............................55
SECTION 5.12. Control by Holders of Securities.........................55
SECTION 5.13. Waiver of Past Defaults..................................56
SECTION 5.14. Undertaking for Costs....................................56
SECTION 5.15. Waiver of Stay, Extension and Usury Laws.................56
ARTICLE SIX THE TRUSTEE....................................................57
SECTION 6.1. Certain Duties and Responsibilities.......................57
SECTION 6.2. Notice of Defaults........................................58
SECTION 6.3. Certain Rights of Trustee.................................58
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities....59
SECTION 6.5. May Hold Securities, Act as Trustee Under
Other Indentures........................................60
SECTION 6.6. Money Held in Trust.......................................60
SECTION 6.7. Compensation and Reimbursement............................60
</TABLE>
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of the Indenture.
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(CONTINUED)
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SECTION 6.8. Corporate Trustee Required; Eligibility....................61
SECTION 6.9. Resignation and Removal; Appointment of Successor..........61
SECTION 6.10. Acceptance of Appointment by Successor....................63
SECTION 6.11. Merger, Conversion, Consolidation or
Succession to Business..................................63
SECTION 6.12. Authenticating Agents.....................................63
SECTION 6.13. Disqualification; Conflicting Interests...................65
SECTION 6.14. Preferential Collection of Claims Against Company.........65
ARTICLE SEVEN CONSOLIDATION, MERGER, TRANSFER OR LEASE......................65
SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms.......65
SECTION 7.2. Successor Substituted......................................66
ARTICLE EIGHT SUPPLEMENTAL INDENTURES.......................................66
SECTION 8.1. Supplemental Indentures Without Consent of
Holders of Securities....................................66
SECTION 8.2. Supplemental Indentures with Consent of
Holders of Securities....................................67
SECTION 8.3. Execution of Supplemental Indentures.......................68
SECTION 8.4. Effect of Supplemental Indentures..........................69
SECTION 8.5. Reference in Securities to Supplemental Indentures.........69
SECTION 8.6. Notice of Supplemental Indentures..........................69
ARTICLE NINE MEETINGS OF HOLDERS OF SECURITIES..............................69
SECTION 9.1. Purposes for Which Meetings May Be Called..................69
SECTION 9.2. Call, Notice and Place of Meetings.........................69
SECTION 9.3. Persons Entitled to Vote at Meetings.......................70
SECTION 9.4. Quorum; Action.............................................70
SECTION 9.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings .................................71
SECTION 9.6. Counting Votes and Recording Action of Meetings............72
ARTICLE TEN COVENANTS.......................................................72
SECTION 10.1. Payment of Principal, Premium and Interest................72
SECTION 10.2. Maintenance of Offices or Agencies........................72
SECTION 10.3. Money for Security Payments To Be Held in Trust...........73
SECTION 10.4. Corporate Existence.......................................74
SECTION 10.5. Statement by Officers as to Default.......................74
SECTION 10.6. Delivery of Certain Information...........................75
ARTICLE ELEVEN REDEMPTION OF SECURITIES.....................................75
</TABLE>
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of the Indenture.
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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<S> <C>
SECTION 11.1. Right of Redemption......................................75
SECTION 11.2. Applicability of Article.................................76
SECTION 11.3. Election to Redeem; Notice to Trustee....................76
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed........76
SECTION 11.5. Notice of Redemption.....................................76
SECTION 11.6. Deposit of Redemption Price..............................77
SECTION 11.7. Securities Payable on Redemption Date....................78
SECTION 11.8. Securities Redeemed in Part..............................78
SECTION 11.9. Conversion Arrangement on Call for Redemption............78
ARTICLE TWELVE CONVERSION OF SECURITIES....................................79
SECTION 12.1. Conversion Privilege and Conversion Price................79
SECTION 12.2. Exercise of Conversion Privilege.........................80
SECTION 12.3. Fractions of Shares......................................81
SECTION 12.4. Adjustment of Conversion Price...........................82
SECTION 12.5. Notice of Adjustments of Conversion Price................90
SECTION 12.6. Notice of Certain Corporate Action.......................90
SECTION 12.7. Company to Provide Common Stock..........................91
SECTION 12.8. Taxes on Conversions.....................................92
SECTION 12.9. Company Covenant as to Common Stock......................92
SECTION 12.10. Cancellation of Converted Securities.....................92
SECTION 12.11. Effect of Reclassification, Consolidation,
Merger or Sale........................................92
SECTION 12.12. Responsibility of Trustee for Conversion Provisions......93
ARTICLE THIRTEEN SUBORDINATION OF SECURITIES...............................94
SECTION 13.1. Agreement of Subordination...............................94
SECTION 13.2. Payments to Holders......................................94
SECTION 13.3. Subrogation of Securities................................97
SECTION 13.4. Authorization to Effect Subordination....................98
SECTION 13.5. Notice to Trustee........................................98
SECTION 13.6. Trustee's Relation to Senior Indebtedness of the
Company................................................99
SECTION 13.7. No Impairment of Subordination..........................100
SECTION 13.8. Article Applicable to Paying Agents.....................100
SECTION 13.9. Senior Indebtedness of the Company Entitled to Rely.....100
SECTION 13.10. Certain Conversions Deemed Payment......................100
</TABLE>
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of the Indenture.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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ARTICLE FOURTEEN REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER
UPON A FUNDAMENTAL CHANGE..................................................101
SECTION 14.1. Right to Require Repurchase.................................101
SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc.........102
SECTION 14.3. Merger, Consolidation, etc..................................103
ARTICLE FIFTEEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY............104
SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders...104
SECTION 15.2. Trustee to Furnish Company Names and Addresses of Holders...104
SECTION 15.3. Preservation of Information.................................105
SECTION 15.4. Reports by Trustee..........................................105
SECTION 15.5. Reports by Company..........................................106
SECTION 15.6. Reports with Respect to Registration of Securities..........106
EXHIBIT A
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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<PAGE> 9
INDENTURE, dated as of October 1, 1997, between VERITAS Software
Corporation, a Delaware corporation (herein called the "Company"), and State
Street Bank and Trust Company of California, N.A., as Trustee hereunder (herein
called the "Trustee").
RECITALS
The Company has duly authorized the creation of an issue of its 5 1/4%
Convertible Subordinated Notes due 2004 (herein called the "Securities") in an
aggregate principal amount not to exceed $115,000,000, and to provide therefor
the Company has duly authorized the execution and delivery of this Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, the Company and the Trustee mutually covenant
and agree, for the equal and proportionate benefit of all Holders of the
Securities as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States, and, except as otherwise
herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation, other than for the purpose of
the definition of Indebtedness and Senior Indebtedness set forth herein;
and
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(3) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 1.4.
"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 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.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.12 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" or "Board" means either the board of directors of
the Company or any committee of that board empowered to act for it with respect
to this Indenture.
"Board Resolution" means a resolution duly adopted by the Board, a copy
of which, certified by the Secretary or an Assistant Secretary of the Company to
have been duly adopted by the Board and to be in full force and effect on the
date of such certification, shall have been delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place of
Conversion or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in such Place of Payment, Place of Conversion or other place, as the case may
be, are authorized or obligated by law or executive order to close; provided,
however, that a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close shall not be a
Business Day for purposes of Section 10.1, 10.3, 11.6 or 13.5.
"Cedel" means Cedel Bank, societe anonyme.
"Closing Price" has the meaning specified in Section 12.4(8)(a).
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
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"Common Stock" includes any stock or shares of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company; provided,
however, subject to the provisions of Section 12.11, shares issuable on
conversion of Securities shall include only shares of the class designated as
Common Stock of the Company at the date of this Indenture or shares of any class
or classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided,
further, however, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Order" or "Company Request" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President or a Senior
Vice President or a Vice President, and by its principal financial officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Company Notice" has the meaning specified in Section 14.2.
"Conversion Agent" means any Person authorized by the Company to convert
Securities in accordance with Article Twelve. The Company has initially
appointed the Trustee as its Conversion Agent, which shall maintain an office or
agency in the Borough of Manhattan, The City of New York, New York.
"Conversion Price" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered
(which at the date of this Indenture is located at 725 South Figueroa Street,
Suite 3100, Los Angeles, California 90017), except that with respect to
presentation of securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which at
any particular time, its corporate agency business shall be conducted.
"corporation" means a corporation, company, including, without
limitation, a limited liability company, association, joint-stock company or
business trust.
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"Custodian" shall mean State Street Bank and Trust Company of
California, N.A., as custodian with respect to a Global Security, or any
successor entity thereto.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to any Securities issued in whole or in
part in the form of one or more Global Securities, the clearing agency that is
registered under the Exchange Act and designated to act as Depositary for such
Securities, as contemplated by Section 3.4, or any successor clearing agency
registered under the Exchange Act as contemplated by Section 3.4.
"Designated Senior Indebtedness" means any particular Senior
Indebtedness of the Company in which the instrument creating or evidencing the
same or the assumption or guarantee thereof (or related agreements or documents
to which the Company is a party) expressly provides that such Senior
Indebtedness shall be "Designated Senior Indebtedness" for purposes of the
Indenture (provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of the Designated Senior Indebtedness).
"Dollar" or "U.S.$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means Euroclear System.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended from time to time.
"Fundamental Change" means the occurrence of any transaction or event in
connection with which all or substantially all of the Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive, consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock or shares which are (or, upon consummation of or immediately following
such transaction or event, will be) listed on a United States national
securities exchange or approved for quotation on the Nasdaq National Market or
any similar United States system of automated dissemination of quotations of
securities prices.
"Global Security" means any Security issued in the form set forth in
Section 2.2 and registered in the Note Register in the name of a Depositary or a
nominee thereof.
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"Holder", when used with respect to any Security, means the Person in
whose name the Security is registered in the Note Register.
"Indebtedness" means, with respect to any Person, and without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of the Person for borrowed money (including obligations of the
Person in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of the Person or to only a portion
thereof) or obligations in respect of deferred and unpaid purchase price of
assets or property, (b) all reimbursement obligations and other liabilities
(contingent or otherwise) of the Person with respect to letters of credit, bank
guarantees or bankers' acceptances, (c) all obligations and liabilities
(contingent or otherwise) in respect of leases of the Person required, in
conformity with generally accepted accounting principles, to be accounted for as
capitalized lease obligations on the balance sheet of the Person or under other
leases for facilities, equipment or related assets, whether or not capitalized,
entered into or leased for financing purposes (as determined by the Company) and
all obligations and other liabilities (contingent or otherwise) under any lease
or related document (including a purchase agreement) in connection with the
lease of real property or improvements thereon which provides that the Person is
contractually obligated to purchase or cause a third party to purchase the
leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and the obligations of the Person under such lease or
related document to purchase or to cause a third party to purchase such leased
property, (d) all obligations of the Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by the Person in respect of, and obligations or liabilities
(contingent or otherwise) of the Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by the Person, regardless of whether
the indebtedness or other obligation secured thereby shall have been assumed by
the Person and (g) any and all deferrals, renewals, extensions, refinancings and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).
Notwithstanding anything to the contrary in the foregoing, Indebtedness shall
not include any indebtedness of or amounts owed by any Person for compensation
to employees, or for goods, services or materials purchased in the ordinary
course of business.
"Indenture" means this Indenture as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this Indenture and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Indenture and any such supplemental indenture,
respectively.
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"Initial Purchaser" means UBS Securities LLC.
"Institutional Accredited Investor" means an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Liquidated Damages" has the meaning specified in the Registration
Rights Agreement.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, exercise of the repurchase right set forth in
Article Fourteen or otherwise.
"Non-electing Share" has the meaning specified in Section 12.11.
"Note Register" shall have the meaning specified in Section 3.4.
"Note Registrar" has the meaning specified in Section 2.2. The Company
has initially appointed the Trustee as its Note Registrar for the purpose of
registering Securities and transfers and exchange of Securities as provided for
herein. The Trustee shall maintain an office or agency for such purposes in the
City of New York.
"Officer" means the Chairman of the Board, a Vice Chairman of the Board,
the Chief Executive Officer, the President or a Senior Vice President or a Vice
President, the principal financial officer, the Treasurer, or Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the principal financial officer, Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of independent counsel of
recognized standing who may be counsel for the Company and who shall be
reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
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(ii) Securities for the payment or redemption of which money in
the necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities, 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;
(iii) Securities which have been paid pursuant to Section 3.6 or
in exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; and
(iv) Securities converted into Common Stock pursuant to Article
Twelve;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given 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 making such calculation or in relying upon any such determination as to the
presence of a quorum or upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent, which shall maintain an office or agency in The
City of New York, New York.
"Payment Blockage Notice" has the meaning specified in Section 13.2.
"Person" means any individual, corporation, partnership, joint venture,
association, trust, estate, unincorporated organization or government or any
agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
"Place of Payment" has the meaning specified in Section 3.1.
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"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means the Purchase Agreement, dated October 9,
1997, between the Company and the Initial Purchaser, as such agreement may be
amended from time to time.
"Purchased Shares" has the meaning specified in Section 12.4(6).
"QIB" shall mean a "qualified institutional buyer" as defined in Rule
144A.
"Record Date" means any Regular Record Date or Special Record Date.
"Redemption Date", when used with respect to any Security to be redeemed
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of October 1, 1997, between the Company and the Initial Purchaser, as
such agreement may be amended from time to time.
"Regular Record Date" for interest payable in respect of any Security on
any Interest Payment Date means the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation S Global Security" has the meaning specified in Section 3.4.
"Representative" means the (a) indenture trustee or other trustee, agent
or representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative,
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.
"Repurchase Date" has the meaning specified in Section 14.1.
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"Repurchase Price", when used with respect to any Security to be
repurchased in whole or in part, means 101% of the principal amount thereof.
"Responsible Officer", when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee and also means, with
respect to a particular corporate trust matter, any other officer of the Trustee
to whom such matter is referred because of his knowledge and familiarity with
the particular subject.
"Restricted Security" has the meaning specified in Section 3.4(d).
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Global Security" has the meaning specified in Section 3.4.
"Rule 144A Information" has the meaning specified in Section 10.6.
"Securities" has the meaning ascribed to it in the first paragraph under
the caption "Recitals".
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time.
"Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in such proceeding) and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, Indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by the Company (including all deferrals, renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing), unless in the case of any particular Indebtedness the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness shall not be senior in right of payment to the
Securities or expressly provides that such Indebtedness is "pari passu" or
"junior" to the Securities. Notwithstanding the foregoing, Senior Indebtedness
shall not include any Indebtedness of the Company to any Subsidiary of the
Company.
"Significant Subsidiary" means, as of any date of determination, a
Subsidiary of the Company, if as of such date of determination either (a) the
assets of such subsidiary equal 10% or more of the Company's total consolidated
assets as of the date of the Company's latest audited balance sheet or (b) the
total revenue of which represented 10% or more of the Company's consolidated
total revenue for the most recently completed fiscal year. As of the date of
this Indenture, the term "Significant Subsidiary" shall include VERITAS Software
Corporation, a California corporation, and Open Vision Technologies, Inc., a
Delaware Corporation.
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"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means, with respect to any Person, a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries, or by such Person and one
or more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock or other similar interests in the corporation which ordinarily has
or have voting power for the election of directors, or persons performing
similar functions, whether at all times or only so long as no senior class of
stock or other interests has or have such voting power by reason of any
contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.6 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Trading Day" has the meaning specified in Section 12.4(8)(e).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this Indenture was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
The definitions of certain other terms are specified in Article Twelve
and elsewhere in this Indenture.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee or any
Paying Agent to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee or the Paying Agent, as the case may be, an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and if required hereunder, an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request
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<PAGE> 19
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (excluding certificates provided for
in Section 10.5) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to enable
him or her, as the case may be, to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which such certificate or opinion is based are erroneous. Any
such certificate or opinion of counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Officer or Officers stating that the information with respect to such factual
matters is in the possession of the Company unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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SECTION 1.4. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by such Holders in person
or by agents or proxies duly appointed in writing by such Holders, (2) the
record of Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities duly
called and held in accordance with the provisions of Article Nine or (3) a
combination of such instruments and any such record. Such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instruments and
records delivered to the Trustee with a courtesy copy to Company's counsel at
the address listed in Section 1.5 and if pertaining to any conversion notice,
with a courtesy copy to Company's common stock transfer agent at the address
listed in Section 1.5. Such instrument or instruments and record (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders of Securities signing such instrument or instruments and so
voting at such meeting. Proof of execution of any such instrument or of a
writing appointing any such agent or proxy, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company if made in the
manner provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 9.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The principal amount and serial number of any Security held by any
Person, and the date of his holding the same, shall be proved by the Note
Register.
(d) The fact and date of execution of any such instrument or writing and
the authority of the Person executing the same may also be proved in any other
manner which the Trustee or the Paying Agent deems sufficient; and the Trustee
or any Paying Agent may in any instance require further proof with respect to
any of the matters referred to in this Section 1.4.
(e) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a record
date, the Company shall notify the Trustee, each Paying Agent and the Holders of
such record date. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such
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<PAGE> 21
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 15.1)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, the Holders on such date (or their duly appointed agents or
proxies), and only such Persons, shall be entitled to give or take, or vote on,
the relevant action, whether or not such Holders remain Holders after such
record date. Notwithstanding the foregoing, the Company shall not set a record
date for, and the provisions of this paragraph shall not apply with respect to,
any notice, declaration or direction referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of default
or breach referred to in Section 5.1(3), if such default or breach has occurred
and is continuing and the Trustee shall not have given such a notice to the
Company, (ii) any declaration of acceleration referred to in Section 5.2, if an
Event of Default has occurred and is continuing and the Trustee shall not have
given such a declaration to the Company, or (iii) any direction referred to in
Section 5.12, if the Trustee shall not have taken the action specified in such
direction, then a record date shall automatically and without any action by the
Company or the Trustee be set for determining the Holders entitled to join in
such notice, declaration or direction, which record date shall be the close of
business on the tenth day (or, if such day is not a Business Day, the first
Business Day thereafter) following the day on which the Trustee receives such
notice, declaration or direction. Promptly after such receipt by the Trustee,
and as soon as practicable thereafter, the Trustee shall notify the Company and
the Holders of any such record date so fixed. The Holders on such record date
(or their duly appointed agents or proxies), and only such Persons, shall be
entitled to join in such notice, declaration or direction, whether or not such
Holders remain Holders after such record date; provided that, unless such
notice, declaration or direction shall have become effective by virtue of
Holders of the requisite principal amount of Securities on such record date (or
their duly appointed agents or proxies) having joined therein on or prior to the
90th day after such record date, such notice, declaration or direction shall
automatically and without any action by any Person be canceled and of no further
effect. Nothing in this paragraph shall be construed to prevent a Holder (or a
duly appointed agent or proxy thereof) from giving, before or after the
expiration of such 90-day period, a notice, declaration or direction contrary to
or different from, or, after the expiration of such period, identical to, the
notice, declaration or direction to which such record date relates, in which
event a new record date in respect thereof shall be set pursuant to this
paragraph. In addition, nothing in this paragraph shall be construed to render
ineffective any notice, declaration or direction of the type referred to in this
paragraph given at any time to the Trustee and the Company by Holders (or their
duly appointed agents or proxies) of the requisite principal amount of
Securities on the date such notice, declaration or direction is so given.
(f) Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Successor Security
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
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(g) The provisions of this Section 1.4 are subject to the provisions of
Section 9.5.
SECTION 1.5. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders of Securities or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with,
(1) the Trustee in Los Angeles, California or the office or
agency of the Trustee in New York, New York by any Holder of Securities
or by the Company shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the Trustee and
received at its Corporate Trust Office, 725 South Figueroa Street, Los
Angeles, California 90017, Attention: Corporate Trust Department -
VERITAS Software Corporation 5 1/4% Convertible Subordinated Notes due
2004 (facsimile number (213) 362-7357), or to or with the office or
agency of the Trustee at State Street Bank and Trust Company, N.A., 61
Broadway, Concourse Level, Corporate Trust Window, New York, New York
10006, Attention: VERITAS Software Corporation 5 1/4% Convertible
Subordinated Notes due 2004. In addition, a courtesy copy shall be sent
to Trustee's counsel (which shall not constitute notice to the Trustee):
Shipman & Goodwin LLP, One American Row, Hartford, Connecticut
06103-2819, Attention: Daniel Putnam Brown, Jr., Esq. (facsimile number
(860) 251-5999) or
(2) the Company by the Trustee or any Paying Agent or by any
Holder of Securities shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing, mailed,
first-class postage prepaid, or telecopied and confirmed by mail,
first-class postage prepaid, or delivered by hand or overnight courier,
addressed to the Company at VERITAS Software Corporation, 1600 Plymouth
Street, Mountain View, California 94043 (facsimile number: (415)
335-8050), Attention: Chief Financial Officer, or at any other address
previously furnished in writing to the Trustee by the Company. In
addition, a courtesy copy shall be sent to Company's counsel (which
shall not constitute notice to the Company): Two Palo Alto Square, Palo
Alto, California 94306 (facsimile number (650) 494-0600), Attention:
Horace L. Nash, Esq. and if relating to a conversion notice as described
in Section 2.2, with a copy to Company's common stock transfer agent,
ChaseMellon Shareholder Services L.L.C., Securities Transfer Services,
P.O. Box 3312, South Hackensack, New Jersey 07606 (telephone number
(800) 356-2017).
Any request, demand, authorization, direction, notice, consent, election
or waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
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SECTION 1.6. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders of Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Security affected by such
event, at the address of such Holder as it appears in the Note Register, not
earlier than the earliest date and not later than the latest date prescribed for
the giving of such notice. Such notice shall be conclusively deemed to have been
given and received by Holders when such notice is mailed, whether or not such
Holder receives such notice.
In any case where notice to Holders of Securities is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder of a Security shall affect the sufficiency of such
notice with respect to other Holders of Securities given as provided above. In
case by reason of the suspension of or irregularities in regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification to Holders of Securities as shall be made with the
approval of the Trustee, which approval shall not be unreasonably withheld,
shall constitute a sufficient notification to such Holders for every purpose
hereunder.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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<PAGE> 24
SECTION 1.8. Successors and Assigns.
All covenants, stipulations, promises and agreements in this Indenture
by the Company shall bind its successors and assigns, whether so expressed or
not.
SECTION 1.9. Separability Clause.
In case any provision in this Indenture or 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 1.10. Benefits of Indenture.
Except as provided in the next sentence, nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article Thirteen are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness of
the Company.
SECTION 1.11. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 1.12. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Repurchase
Date or Stated Maturity of any Security or the last day on which a Holder of a
Security has a right to convert his Security shall not be a Business Day at any
Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal and premium, if any, or delivery for conversion
of such Security need not be made at such Place of Payment or Place of
Conversion, as the case may be, on or by such day, but may be made on or by the
next succeeding Business Day at such Place of Payment or Place of Conversion, as
the case may be, with the same force and effect as if made on the Interest
Payment Date, Redemption Date or Repurchase Date, or at the Stated Maturity or
by such last day for conversion; provided, however, that in the case that
payment is made on such succeeding Business Day, no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date,
Redemption Date, Repurchase Date, Stated Maturity or last day for conversion, as
the case may be.
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<PAGE> 25
SECTION 1.13. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under the Trust Indenture Act to be
a part of and to govern this Indenture, the latter provision shall control. If
any provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes hereof to be subject to and governed by the Trust Indenture Act to
the same extent as would be the case if this Indenture were so qualified on the
date hereof.
SECTION 1.14. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest (including any Liquidated Damages) on any Security and no recourse
under or upon any obligation, covenant or agreement of the Company in this
Indenture or in any supplemental indenture or in any Security, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issue of
the Securities.
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the Securities Act
and the Exchange Act, applicable state securities law or the rules of any
securities exchange, the Code, and the treasury regulations under the Code, or
as may, consistently herewith, be determined by the Officers executing such
Securities, as evidenced by their execution thereof.
The Assignment Form and Certificate of Transfer shall be in
substantially the form set forth in Section 2.3.
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<PAGE> 26
The Election of Holder to Require Repurchase Form shall be substantially
in the form set forth in Section 2.4. The Conversion Notice shall be in
substantially the form set forth in Section 2.5. The Trustee's certificate of
authentication shall be in substantially the form set forth in Section 2.6.
The Securities may be printed, lithographed, typewritten, mimeographed
or otherwise produced, as determined by the Officers executing such Security, as
evidenced by their execution thereof.
SECTION 2.2. Form of Security.
[For Global Security only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT, PRIOR
TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO VERITAS
SOFTWARE CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
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<PAGE> 27
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
(D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES
TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), IT WILL FURNISH TO STATE STREET
BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE
STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO
CLAUSE 2(F) ABOVE OR UPON ANY TRANSFER OF THE SECURITIES EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
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<PAGE> 28
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
-20-
<PAGE> 29
VERITAS SOFTWARE CORPORATION
5 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
No. _____________ U.S.$_____
CUSIP NO. __________
VERITAS Software Corporation, a Delaware corporation (herein called the
"Company", which term includes any successor Person under the Indenture referred
to on the reverse hereof), for value received, hereby promises to pay to
_______________, or registered assigns (the "Holder"), the principal sum of
_____________ United States Dollars (U.S.$_____) [(which amount may from time to
time be increased or decreased to such other principal amounts (which, taken
together with the principal amounts of all other Outstanding Securities, shall
not exceed $115,000,000 in the aggregate at any time) by adjustments made on the
records of the Trustee, as Custodian of the Depositary, in accordance with the
rules and procedures of the Depositary)](1) on November 1, 2004 and to pay
interest thereon, from October 14, 1997, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly provided
for, semi-annually in arrears on May 1 and November 1 in each year (each, an
"Interest Payment Date"), commencing May 1, 1998, at the rate of 5 1/4% per
annum (together with any Liquidated Damages that the Company may be required to
pay) until the principal hereof is due, and at a rate of 5 1/4% per annum on any
overdue principal and premium, if any, and, to the extent permitted by law, on
any overdue interest.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so punctually paid or
duly provided for ("Defaulted Interest") will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Company, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Payments of principal shall be made upon the
surrender of this Security, at the Corporate Trust Office of the Trustee in Los
Angeles, California or at the office or agency of the Trustee in the Borough of
Manhattan, The City of New York or, subject to the right of the Company to
terminate such appointment, at such other office or agency of the Company as may
be designated by it for such
- --------
(1) This language shall appear on each Global Security.
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<PAGE> 30
purpose in the Borough of Manhattan, The City of New York in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, or at such other
offices or agencies as the Company may designate, by United States Dollar check
drawn on a bank in the United States, or transfer to a United States Dollar
account (such a transfer to be made only to a Holder of an aggregate principal
amount of Securities in excess of U.S. $2,000,000, and only if such Holder shall
have furnished wire instructions in writing to the Trustee no later than 15 days
prior to the relevant payment date) maintained by the Holder with a bank in the
United States. Payment of interest on this Security may be made by United States
Dollar check mailed to the address of the Person entitled thereto as such
address shall appear in the Note Register, or, upon written application by the
Holder to the Security Registrar setting forth wire instructions not later than
the relevant Record Date, by transfer to a United States Dollar account (such a
transfer to be made only to a Holder of an aggregate principal amount of
Securities in excess of U.S.$2,000,000 and only if such Holder shall have
furnished wire instructions in writing to the Trustee no later than 15 days
prior to the relevant payment date) maintained by the Holder with a bank in the
United States.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place. Capitalized terms used
herein, including on the reverse hereof, and not defined herein or on the
reverse hereof shall have the respective meanings given to such terms in the
Indenture.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers under its corporate
seal.
Dated:
VERITAS Software Corporation
[seal] By:
---------------------------------
Name:
Title:
Attest
By:
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<PAGE> 31
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its "5 1/4% Convertible Subordinated Notes due 2004"
(herein called the "Securities"), limited in aggregate principal amount to U.S.
$115,000,000, issued and to be issued under and pursuant to an Indenture, dated
as of October 1, 1997 (herein called the "Indenture"), between the Company and
State Street Bank and Trust Company of California, N.A., Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness of the Company and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. The
Securities are issuable in the denomination of U.S.$1,000 and integral multiples
thereof. As provided in the Indenture and subject to the limitations therein set
forth, the Securities are exchangeable at the Corporate Trust Office of the
Trustee, or the office or agency of the Trustee, or at such other office or
agency of the Company as may be designated by it for such purpose, in The City
of New York (each a "Note Registrar").
No sinking fund is provided for the Securities. The Securities will not
be redeemable at the option of the Company prior to November 5, 2002. At any
time on or after November 5, 2002, and prior to maturity, the Securities are
subject to redemption at the option of the Company at any time, in whole or in
part, at the following Redemption Prices (expressed as percentages of the
principal amount) upon not less than 20 nor more than 60 days' notice to the
Holders prior to the Redemption Date.
If redeemed during the 12-month period beginning November 1 (beginning
November 5, 2002 and ending October 31, 2003, in the case of the first such
period):
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 101.50%
2003 100.75
</TABLE>
and 100% at November 1, 2004, together, in each case, with accrued interest
(including any Liquidated Damages) to, but excluding, the Redemption Date;
provided, however, that interest installments on Securities whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
In the event of a redemption of less than all of the Securities, the
Company will not be required (a) to register the transfer or exchange of
Securities for a period of 15 days immediately preceding the date notice is
given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer or exchange of any Security, or
portion thereof, called for redemption.
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<PAGE> 32
In any case where the due date for the payment of the principal or
premium, if any, or interest, including Liquidated Damages, if any, on, any
Security or the last day on which a Holder of a Security has a right to convert
his Security shall be, at any Place of Payment or Place of Conversion, as the
case may be, a day on which banking institutions at such Place of Payment or
Place of Conversion are authorized or obligated by law or executive order to
close, then payment of principal, premium, if any, or interest, including
Liquidated Damages, if any, or delivery for conversion of such Security need not
be made on or by such date at such place but may be made on or by the next
succeeding day at such place which is not a day on which banking institutions
are authorized or obligated by law or executive order to close, with the same
force and effect as if made on the date for such payment or the date fixed for
redemption or repurchase, or by such last day for conversion, and no interest
shall accrue on the amount so payable for the period after such date.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time prior to the
close of business on November 1, 2004, or in case this Security or a portion
hereof is called for redemption or the Holder hereof has exercised his right to
require the Company to repurchase this Security, or such portion hereof, then in
respect of this Security until and including, but (unless the Company defaults
in making the payment due upon redemption or repurchase, as the case may be) not
after, the close of business on the Business Day next preceding the Redemption
Date or the Repurchase Date, as the case may be, to convert this Security (or
any portion of the principal amount hereof that is an integral multiple of
U.S.$1,000, provided that the unconverted portion of such principal amount is
U.S.$1,000 or any integral multiple thereof) into fully paid and nonassessable
Common Stock of the Company at an initial Conversion Price of U.S. $64.50 for
each share of Common Stock (or at the then current adjusted Conversion Price if
an adjustment has been made as provided in the Indenture).
In order to convert such Security, a Holder must surrender this
Security, duly endorsed or assigned to the Company or in blank and, in case such
surrender shall be made during the period from the close of business of any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date ("Interest Period") (except Securities
called for redemption on a Redemption Date or to be repurchased on a Repurchase
Date during, in each case, such Interest Period), also accompanied by payment in
New York Clearing House or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted, and also the conversion notice
hereon duly executed, to the Company at the Corporate Trust Office of the
Trustee in Los Angeles, California, or the office or agency of the Trustee in
the Borough of Manhattan, The City of New York or at such other office or agency
of the Company, subject to any laws or regulations applicable thereto and
subject to the right of the Company to terminate the appointment of any
Conversion Agent (as defined below) as may be designated by it for such purpose
in the Borough of Manhattan, The City of New York, or at such other offices or
agencies as the Company may designate (each a "Conversion Agent"), provided
further, that if this Security or portion hereof has been called for redemption
on a Redemption Date or is repurchasable on a Repurchase Date occurring, in
either case, during the Interest Period and is surrendered for conversion during
such Interest Period, then the Holder of this Security who converts this
Security or a portion hereof during such Interest Period will
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<PAGE> 33
be entitled to receive the interest accruing hereon from the Interest Payment
Date next preceding the date of such conversion to such succeeding Interest
Payment Date and shall not be required to pay such interest upon surrender of
this Security for conversion. Subject to the aforesaid requirement for payment
and, in the case of a conversion after the Regular Record Date next preceding
any Interest Payment Date and on or before such Interest Payment Date, to the
right of the Holder of this Security (or any Predecessor Security) of record at
such Regular Record Date to receive an installment of interest, no cash payment
or adjustment is to be made on conversion, if the date of conversion is not an
Interest Payment Date, for interest accrued hereon from the Interest Payment
Date next preceding the date of conversion, or for dividends on the Common Stock
issued on conversion hereof. The Company shall thereafter deliver to the Holder
the fixed number of shares of Common Stock (together with any cash adjustment,
as provided in the Indenture) into which this Security is convertible and such
delivery will be deemed to satisfy the Company's obligation to pay the principal
amount of this Security. No fractions of shares or scrip representing fractions
of shares will be issued on conversion, but instead of any fractional interest
(calculated to the nearest 1/100th of a share) the Company shall pay a cash
adjustment as provided in the Indenture. The Conversion Price is subject to
adjustment as provided in the Indenture. No adjustment in the Conversion Price
will be made until such adjustment would require an increase or decrease of at
least one percent of such price, provided that any adjustment that would
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.
Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security or the holder of Common Stock issued upon conversion thereof, the
Company will promptly furnish or cause to be furnished Rule 144A Information to
such Holder of Restricted Securities or such holder of Common Stock issued upon
conversion of Restricted Securities, or to a prospective purchaser of any such
security designated by any such Holder or holder, as the case may be, to the
extent required to permit compliance by such Holder or holder with Rule 144A
under the Securities Act in connection with the resale of any such security.
The Holder of this Security and the Common Stock issuable upon
conversion thereof is entitled to the benefits of a Registration Rights
Agreement (subject to the provisions thereof), dated as of October 1, 1997,
between the Company and the Initial Purchaser.
If a Fundamental Change (as defined in the Indenture) occurs at any time
on or prior to November 1, 2004, each Holder shall have the right, at such
Holder's option, to require the Company to repurchase all of such Holder's
Securities (or any portion of such Securities that is $1,000 or an integral
multiple of $1,000 in excess thereof) on the 45th day after notice thereof at a
repurchase price of 101% of the principal amount thereof, plus accrued interest
(including any Liquidated Damages), if any, on such Securities to, but
excluding, the Repurchase Date; provided that if such Repurchase Date is May 1
or November 1, then the interest payable on such date shall be paid to the
Holder of record of the Securities on the Regular Record Date next preceding
such Repurchase Date. Whenever in this Security there is a reference, in any
context, to the principal of any Security as of any time, such reference shall
be deemed to include reference to the Repurchase Price payable in
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<PAGE> 34
respect of such Security to the extent that such Repurchase Price is, was or
would be so payable at such time, and express mention of the Repurchase Price in
any provision of this Security shall not be construed as excluding the
Repurchase Price in those provisions of this Security when such express mention
is not made.
[The following paragraph shall appear in each Security that is not a
Global Security:
In the event of redemption, repurchase or conversion of this Security in
part only, a new Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof.]
[The following paragraph shall appear in the Global Security:
In the event of a deposit or withdrawal of an interest in this Security,
including an exchange, transfer, redemption, repurchase or conversion of this
Security in part only, the Trustee, as Custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in accordance
with the rules and procedures of the Depositary.]
The indebtedness evidenced by this Security and the obligations of the
Company under the Indenture are to the extent and in the manner provided in the
Indenture, subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness (as defined in the Indenture) of the Company,
and this Security is issued subject to such provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the Trustee
on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default (as defined in the Indenture) shall occur and be
continuing, the principal of all the Securities, together with accrued interest
to the date of declaration, may be declared due and payable in the manner and
with the effect provided in the Indenture. Upon payment (i) of the amount of
principal so declared due and payable, together with accrued interest and
premium, if any, and Liquidated Damages, if any, to the date of declaration, and
(ii) of interest on any overdue principal and overdue interest, to the extent
permitted by law, all of the Company's obligations in respect of the payment of
the principal of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding (as defined in the Indenture), or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least the lesser of (i) a
majority in aggregate principal amount of the Securities at the time Outstanding
and (ii) 66-2/3% in aggregate principal amount of the Outstanding Securities
represented
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<PAGE> 35
and entitled to vote at such meeting. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Successor Security to this Security, whether or not notation of such consent
or waiver is made upon this Security or such other Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless (a) such Holder shall have previously
given the Trustee written notice of a continuing Event of Default, (b) the
Holders of not less than 25% in aggregate principal amount of the Securities
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in aggregate principal amount of the Securities
Outstanding a direction inconsistent with such request, and (c) shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof, premium, if any, or interest hereon (including any
Liquidated Damages) on or after the respective due dates expressed herein or for
the enforcement of the right to convert this Security as provided in the
Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on (including Liquidated Damages, if any) this Security at the times,
places and rate, and in the coin or currency, herein prescribed or to convert
this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of Securities is registrable on the Note Register (as
defined in the Indenture) upon surrender of a Security for registration of
transfer (a) at the Corporate Trust Office of the Trustee or at the office or
agency of the Trustee in the Borough of Manhattan or at such other office or
agency of the Company as may be designated by it for such purpose in the Borough
of Manhattan, The City of New York, or (b) subject to any laws or regulations
applicable thereto and to the right of the Company to terminate the appointment
of any Note Registrar, at the offices of the Note Registrars described herein or
at such other offices or agencies as the Company may designate, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Note Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees by the Note Registrar. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to recover any tax or
other governmental charge payable in connection therewith.
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<PAGE> 36
No recourse for the payment of the principal (and premium, if any) or
interest (including Liquidated Damages, if any) on this Security and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or any indenture supplemental thereto or in any Security, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, employee, agent, officer or director or
subsidiary, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of consideration for the issue
hereof, expressly waived and released.
Prior to due presentation 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 thereof for
all purposes, whether or not such Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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<PAGE> 37
SECTION 2.3. Assignment Form and Certificate of Transfer.
ASSIGNMENT FORM AND
CERTIFICATE OF TRANSFER
To assign this Security fill in the form below:
(I) or (we) assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
In connection with any transfer of any of the Securities within the
period prior to the expiration of the holding period applicable to the sales
thereof under Rule 144(k) (other than any transfer pursuant to a registration
statement that has been declared effective under the Securities Act of 1933, as
amended (the "Securities Act") (or any successor provision)), the undersigned
confirms that such Securities are being transferred:
CHECK ONE BOX BELOW
[ ] to the Company or a subsidiary thereof; or
[ ] pursuant to and in compliance with Rule 144A under the Securities
Act; or
[ ] pursuant to and in compliance with Regulation S under the
Securities Act; or
[ ] to an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act; or
[ ] pursuant to Rule 144 of the Securities Act;
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").
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[ ] The transferee is an Affiliate of the Company.
Dated:____________________
---------------------------------
---------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a major stock exchange with
membership in an approved signature
guarantee medallion program pursuant to the
Securities and Exchange Commission Rule
17Ad-15 if shares of Common Stock are to be
issued, or Securities to be delivered, other
than to or in the name of the registered
Holder.
---------------------------------
Signature Guarantee
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<PAGE> 39
SECTION 2.4. Form of Election of Holder to Require Repurchase.
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
2. The undersigned hereby directs the Company to pay it or
_______________ the Repurchase Price plus interest accrued to, but excluding,
the Repurchase Date, as provided in the Indenture.
Dated:____________________
---------------------------------
---------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange with
membership in an approved signature
guarantee medallion program pursuant to the
Securities and Exchange Commission Rule
17Ad-15 if shares of Common Stock are to be
issued, or Securities to be delivered,
other than to or in the name of the
registered Holder.
----------------------------------
Signature Guaranteed
Principal amount to be repurchased: ____________________
Remaining principal amount following such repurchase: ______________
NOTICE: The signature to the foregoing Election must correspond to the name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
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<PAGE> 40
SECTION 2.5. Form of Conversion Notice.
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is an integral multiple of U.S.$1,000) below designated, into shares of
Common Stock of the Company in accordance with the terms of the Indenture
referred to in this Security, and directs that such shares, together with a
check in payment for any fractional shares and any Securities representing any
unconverted principal amount hereof, be delivered to and be registered in the
name of the undersigned unless a different name has been indicated below. If
shares of Common Stock or Securities are to be registered in the name of a
Person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the undersigned
on account of interest accompanies this Security.
Dated:____________________
----------------------------------------
----------------------------------------
Signature(s)
If shares or Securities are to be Signature(s) must be guaranteed by a
registered in the name of a Person commercial bank or trust company or a
other than the Holder, please print member firm of a major stock exchange
such Person's name and address: with membership in an approved signature
guarantee medallion program pursuant to
the Securities and Exchange Commission
- ----------------------------------- Rule 17Ad-15 if shares of Common Stock
Name are to be issued, or Securities to be
delivered, other than to or in the
name of the registered Holder.
- -----------------------------------
Address
----------------------------------------
Signature Guaranteed
- ----------------------------------- If only a portion of the Security is
Social Security or other Taxpayer to be converted, please indicate:
Identification Number, if any
Principal amount to be converted:
U.S.$_____________________
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<PAGE> 41
SECTION 2.6. Form of Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: _______________
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
---------------------------------
Authorized Signatory
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to U.S. $115,000,000, except for
Securities authenticated and delivered in exchange for, or in lieu of, other
Securities pursuant to Section 3.4, 3.5, 3.6, 8.5, 11.8, 12.2 or 14.2(e).
The Securities shall be known and designated as the "5 1/4% Convertible
Subordinated Notes due 2004" of the Company. Their Stated Maturity shall be
November 1, 2004 and they shall bear interest on their principal amount from
October 14, 1997, payable semi-annually in arrears on May 1 and November 1 in
each year, commencing May 1, 1998, at the rate of 5 1/4% (together with any
Liquidated Damages the Company may be required to pay) until the principal
thereof is due, and at the rate of 5 1/4% per annum on any overdue principal
and, to the extent permitted by law, on any overdue interest; provided, however,
that payments shall only be made on Business Days as provided in Section 1.12.
The Securities are entitled to the benefits of registration rights as
provided by the Registration Rights Agreement.
The principal of, premium, if any, and interest on the Securities shall
be payable as provided in the form of Security set forth in Section 2.2 and the
Repurchase Price shall be payable at such places as are identified in the
Company Notice given pursuant to Section 14.2 (any city in which any Paying
Agent is located being herein called a "Place of Payment").
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<PAGE> 42
The Securities shall be redeemable at the option of the Company, in
whole or in part, and at the option of the Company as provided in Article Eleven
and in the form of Security set forth in Section 2.2.
The Securities shall be convertible as provided in Article Twelve (any
city in which any Conversion Agent is located being herein called a "Place of
Conversion").
The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article Thirteen.
The Securities shall be subject to repurchase by the Company at the
option of the Holder as provided in Article Fourteen.
SECTION 3.2. Denominations.
The Securities shall be issuable without coupons in denominations of
U.S.$1,000 and integral multiples thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or one of its Senior Vice Presidents or one of its Vice
Presidents, under an impression of its corporate seal or a facsimile of its
corporate seal reproduced thereon attested by its Treasurer or one of its
Assistant Treasurers or Secretary or one of its Assistant Secretaries. Any such
signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of an individual or
individuals who were at any time the proper officer or officers of the Company
shall bind the Company, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee or to its order for authentication (or to the Paying Agent),
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee or an Authenticating Agent in accordance with such
Company Order shall authenticate and make available for delivery such Securities
as in this Indenture provided and not otherwise. In connection with any Company
Order for authentication, an Officers' Certificate and Opinion of Counsel
pursuant to Section 1.2 shall be required.
Each Security shall be dated the date of its authentication.
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<PAGE> 43
In authenticating the Securities and in accepting the additional
responsibilities under the Indenture in relation to such Securities, the Trustee
shall be entitled to receive and shall be fully protected in relying upon, an
Opinion of Counsel stating that:
(a) the form or forms of such Securities have been established in
conformity with the provisions of this Indenture;
(b) the terms of such Securities have been established in
conformity with the provisions of this Indenture;
(c) such Securities, when completed by appropriate insertions and
executed and delivered by the Company to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights, to general equitable principles
and to such other qualifications as such counsel shall conclude do not
materially affect the rights of Holders of such Securities;
(d) all laws and requirements in respect of the execution and
delivery by the Company of such Securities and of the supplemental indenture, if
any, have been complied with and that authentication and delivery of such
Securities and the execution and delivery of the supplemental indenture, if any,
by the Trustee will not violate the terms of the Indenture;
(e) the Company has the corporate power to issue such Securities,
and has duly taken all necessary corporate action with respect to such issuance;
and
(f) the issuance of such Securities will not contravene the
articles of incorporation or by-laws of the Company or result in any violation
of any of the terms or provisions of any law or regulation or of any indenture,
mortgage or other agreement by which the Company is bound known to such Counsel,
which violation would have a material adverse effect on the Company.
The Trustee shall not be required to authenticate and deliver any such
Securities if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
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
executed by the Trustee or an Authenticating Agent by manual signature of an
authorized signatory, and such certificate upon any Security shall be conclusive
evidence, and
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<PAGE> 44
the only evidence, that such Security has been duly authenticated and delivered
hereunder is entitled to the benefits of this Indenture.
Any Global Security shall represent such of the outstanding Securities
as shall be specified therein and 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 increased or reduced to reflect transfers or exchanges
permitted hereby. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee or the Custodian, at the direction of the
Trustee, in such manner and upon instructions given by the holder of such
Securities in accordance with this Indenture. Payment of principal of and
interest and premium, if any, on any Global Security shall be made to the Holder
of such Global Security.
SECTION 3.4. Registration, Registration of Transfer and Exchange;
Restrictions on Transfer.
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company designated pursuant to Section 10.2
(including the office or agency of State Street Bank and Trust Company of
California, N.A., in the Borough of Manhattan, The City of New York) being
herein sometimes collectively referred to as the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of Securities.
Upon surrender for registration of transfer of any Security at an office
or agency of the Company designated pursuant to Section 10.2 for such purpose,
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 denominations and of a like aggregate principal amount and
tenor and bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, and subject to the further provisions of
this Section 3.4, Securities may be exchanged for other Securities of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency maintained by the
Company pursuant to Section 10.2. Whenever any Securities are so surrendered for
exchange, and subject to the further provisions of this Section 3.4, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive. Every Security
presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company or the Note Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and, subject to the other provisions of
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<PAGE> 45
this Section 3.4, entitled to the same benefits, under and subject to the same
restrictions imposed by this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Except as provided in Section 3.6, no service charge shall be made to a
Holder for any registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
8.5, 11.8, 12.2 or 14.2(e) (other than, in the case of Securities, where the
Common Stock is to be issued or delivered in a name other than that of the
Holder of the Security) not involving any transfer and other than any stamp and
other duties, if any, which may be imposed in connection with any such transfer
or exchange by the United States or any political subdivision thereof or
therein, which shall be paid by the Company.
In the event of a redemption of the Securities in part, neither the
Company nor the Note Registrar will be required (a) to register the transfer of
or exchange of Securities for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer of or exchange any Security, or
portion thereof, called for redemption.
(b) So long as the Securities are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all
Securities that are so eligible may be represented by one or more Global
Securities registered in the name of the Depositary or the nominee of the
Depositary, except as otherwise specified below. The transfer and exchange of
beneficial interests in any such Global Security shall be effected through the
Depositary in accordance with this Indenture and the procedures of the
Depositary therefor.
Securities that upon initial issuance are beneficially owned by QIBs
will be represented by a Global Security (the "Rule 144A Global Security") and
Securities that upon initial issuance are beneficially owned by Non-U.S. Persons
will be represented by another Global Security (the "Regulation S Global
Security"). Transfers of interests in the Securities between the Rule 144A
Global Security and the Regulation S Global Security will be made in accordance
with the standing instructions and procedures of the Depositary and its
participants. The Trustee shall make appropriate endorsements to reflect
increases or decreases in the principal amounts of such Global Securities as set
forth on the face of the Security ("Principal Amount") to reflect any such
transfers.
Except as provided below, beneficial owners of a Global Security shall
not be entitled to have certificates registered in their names, will not receive
or be entitled to receive physical delivery of certificates in definitive form
and will not be considered Holders of such Global Securities.
(c) So long as the Securities are eligible for book-entry
settlement, or unless otherwise required by law, upon any transfer of a
definitive Security to a QIB in accordance with Rule 144A or to a Non-U.S.
Person in accordance with Regulation S, and upon receipt of the definitive
Security or Securities being so transferred, together with a certification,
substantially in the
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<PAGE> 46
form on the reverse of the Security, from the transferor that the transfer is
being made in compliance with Rule 144A or Regulation S, as the case may be (or
other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Rule 144A Global Security or the Regulation S Global
Security, as the case may be, to reflect an increase in the aggregate Principal
Amount of the Securities represented by such Global Security, the Trustee shall
cancel such definitive Security or Securities in accordance with the standing
instructions and procedures of the Depositary, the aggregate Principal Amount of
Securities represented by such Global Security to be increased accordingly;
provided that no definitive Security, or portion thereof, in respect of which
the Company or an Affiliate of the Company held any beneficial interest shall be
included in such Global Security until such definitive Security is freely
tradable in accordance with Rule 144(k); provided further that the Trustee shall
issue Securities in definitive form upon any transfer of a beneficial interest
in the Global Security to the Company or any Affiliate of the Company.
Upon any sale or transfer of a Security to an Institutional Accredited
Investor (other than pursuant to a registration statement that has been declared
effective under the Securities Act), such Institutional Accredited Investor
shall, prior to such sale or transfer, furnish to the Company and/or the Trustee
a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit A to
this Indenture.
Any Global Security may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Securities to be tradeable on The Portal Market or as may be required for the
Securities to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or Regulation S or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
Euroclear, Cedel or any securities exchange or automated quotation system upon
which the Securities may be listed or traded or to conform with any usage with
respect thereto, or to indicate any special limitations or restrictions to which
any particular Securities are subject.
(d) Every Security that bears or is required under this Section
3.4(d) to bear the legend set forth in this Section 3.4(d) (together with any
Common Stock issued upon conversion of the Securities and required to bear the
legend set forth in Section 3.4(e), collectively, the "Restricted Securities")
shall be subject to the restrictions on transfer set forth in this Section 3.4
(d) (including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the Holder of each such Restricted Security by such Holder's acceptance thereof,
agrees to be bound by all such restrictions on transfer. As used in Sections
3.4(d) and 3.4(e), the term "transfer" encompasses any sale, pledge, transfer or
other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any,
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<PAGE> 47
issued upon conversion thereof, which shall bear the legend set forth in Section
3.4(e), if applicable) shall bear a legend in substantially the following form,
unless such Security has been sold pursuant to a registration statement that has
been declared effective under the Securities Act (and which continues to be
effective at the time of such transfer), or unless otherwise agreed by the
Company in writing, with written notice thereof to the Trustee:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES
THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE
TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY EXCEPT (A) TO VERITAS SOFTWARE CORPORATION
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK
AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 2(F) ABOVE), IT WILL FURNISH TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
IT MAY REASONABLY REQUIRE TO
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<PAGE> 48
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE
SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE STREET
BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED
HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION), AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Security (or Successor Security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to the conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of such
Security for exchange to the Note Registrar in accordance with the provisions of
this Section 3.4, be exchanged for a new Security or Securities of like tenor
and aggregate principal amount, which shall not bear the restrictive legend
required by this Section 3.4(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 3.4(b) and in this
Section 3.4(d)), a Global Security may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
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The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints DTC to act as Depositary with respect to the
Global Securities. Initially, the Rule 144A Global Security and the Regulation S
Global Security shall be issued to the Depositary, registered in the name of
Cede & Co., as the nominee of the Depositary, and deposited with the Custodian
for Cede & Co.
If at any time the Depositary for a Global Security notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security, the Company may appoint a successor Depositary with respect to such
Global Security. If a successor Depositary is not appointed by the Company
within ninety (90) days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of Securities, will authenticate and deliver,
Securities in certificated form, in aggregate principal amount equal to the
Principal Amount of such Global Security, in exchange for such Global Security.
If a Security in certificated form is issued in exchange for any portion
of a Global Security after the close of business at the office or agency where
such exchange occurs on any Record Date and before the opening of business at
such office or agency on the next succeeding Interest Payment Date, interest
will not be payable on such Interest Payment Date in respect of such Security,
but will be payable on such Interest Payment Date, subject to the provisions of
Section 3.7, only to the Person to whom interest in respect of such portion of
such Global Security is payable in accordance with the provisions of this
Indenture.
Securities in certificated form issued in exchange for all or a part of
a Global Security pursuant to this Section 3.4 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such
Securities in certificated form to the Persons in whose names such Securities in
certificated form are so registered.
At such time as all interests in a Global Security have been redeemed,
repurchased, converted, canceled, exchanged for Securities in certificated form,
or transferred to a transferee who receives Securities in certificated form
thereof, such Global Security shall, upon receipt thereof, be canceled by the
Trustee in accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a Global Security is exchanged for Securities in certificated form,
redeemed, converted, repurchased or canceled, exchanged for Securities in
certificated form or transferred to a transferee who receives Securities in
certificated form therefor or any Security in certificated form is exchanged or
transferred for part of a Global Security, the principal amount of such Security
shall, in accordance with the standing procedures and instructions existing
between the Depositary and the Custodian, be appropriately reduced or increased,
as the case may be, and an endorsement shall be made on such Global Security, by
the Trustee or the Custodian, at the direction of the Trustee, to reflect such
reduction or increase.
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(e) Until the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), any stock certificate representing Common Stock issued upon
conversion of such Security shall bear a legend in substantially the following
form, unless such Common Stock has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer) or such Common Stock has
been issued upon conversion of Securities that have been transferred pursuant to
a registration statement that has been declared effective under the Securities
Act, or unless otherwise agreed by the Company in writing with written notice
thereof to the Common Stock transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES
THAT UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO VERITAS
SOFTWARE CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO
SUCH TRANSFER FURNISHES TO CHASEMELLON SHAREHOLDER SERVICES L.L.C., AS
TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO
SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE), IT
WILL FURNISH TO CHASEMELLON SHAREHOLDER SERVICES L.L.C., AS TRANSFER
AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
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PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) IT WILL DELIVER
TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY
PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE
TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 3.4(e).
(f) Any Security or Common Stock issued upon the conversion or
exchange of a Security that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), is purchased or owned by the Company or any Affiliate
thereof may not be resold by the Company or such Affiliate unless registered
under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Securities or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).
SECTION 3.5. Temporary Securities
Pending the preparation of Securities in certificated form, the Company
may execute and the Trustee or an Authenticating Agent shall, upon the written
request of the Company, authenticate and deliver temporary Securities (printed
or lithographed). Temporary Securities shall be issuable in any authorized
denomination, and substantially in the form of the Securities in certificated
form, but with such omissions, insertions and variations as may be appropriate
for temporary Securities, all as may be determined by the Company. Every such
temporary Security shall be executed by the Company and authenticated by the
Trustee or such Authenticating Agent upon the same conditions and in
substantially the same manner, and with the same effect, as the Securities in
certificated form. Without unreasonable delay the Company will execute and
deliver to the Trustee or such Authenticating Agent Securities in certificated
form (other than in the case of Global Securities) and thereupon any or all
temporary Securities (other than any such Global Security) may be surrendered in
exchange therefor, at each office or agency maintained by the Company and the
Trustee or such
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Authenticating Agent shall authenticate and make available for delivery in
exchange for such temporary Securities an equal aggregate principal amount of
Securities in certificated form. Such exchange shall be made by the Company at
its own expense and without any charge therefor. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits and
subject to the same limitations under this Indenture as Securities in
certificated form authenticated and delivered hereunder.
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities
If any mutilated Security is surrendered to the Trustee or to a Note
Registrar, the Company shall execute, the Trustee or an Authenticating Agent
shall authenticate and the Trustee or Note Registrar shall deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there be delivered to the Company and either to the Trustee or to a
Note Registrar:
(1) evidence to their satisfaction of the destruction, loss or
theft of any Security, and
(2) such security or indemnity as may be satisfactory to the
Company and the Trustee and such Note Registrar to save each of them and any
agent of either of them harmless, then, in the absence of actual notice to the
Company, the Trustee or the Note Registrar that such Security has been acquired
by a bona fide purchaser, the Company shall execute, and upon its request, the
Trustee or an Authenticating Agent shall authenticate and the Trustee or Note
Registrar shall deliver in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security, a new Security of like tenor and principal
amount and 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, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security.
Upon the issuance of any new Security under this Section 3.6, 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 (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States of America or any political subdivision thereof or therein,
which shall be paid by the Company) and any other expenses (including the fees
and expenses of the Trustee, any Paying Agent and any Note Registrar) connected
therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
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The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security, and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon, the Trustee shall fix the 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
such Holder's address as it appears in the Note Register, not less than
10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities (or their respective Predecessor
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 in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the
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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, 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.
In the case of any Security which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Security whose Maturity is prior to such Interest Payment Date), interest
whose Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name such Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
SECTION 3.8. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company or 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, premium, if any, and
(subject to Section 3.7) interest on such Security 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.
None of the Company, the Trustee, any Paying Agent or the Note Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a Security
in global form or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Global Security,
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 any Depositary, as a Holder, with respect to
such Global Security or impair, as between such Depositary and owners of
beneficial interests in such Global Security, the operation of customary
practices governing the exercise of the rights of such Depositary (or its
nominee) as Holder of such Global Security.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the
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Trustee. All Securities so delivered to the Trustee shall be canceled promptly
by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as provided in this Section 3.9. The Trustee shall
destroy all canceled Securities in accordance with applicable law and its
customary practices in effect from time to time.
SECTION 3.10. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 3.11. CUSIP Numbers.
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such "CUSIP" numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of conversion, or registration of
transfer or exchange, or replacement of Securities herein expressly provided for
and any right to receive Liquidated Damages and the Company's obligations to the
Trustee pursuant to Section 6.7), and the Trustee, at the expense of the
Company, shall execute proper instruments in form and substance satisfactory to
the Trustee acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited with the Trustee or the Paying
Agent in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in Section
10.3) have been delivered to the Trustee for cancellation; or
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(B) all such Securities not theretofore delivered to the Trustee
or the Paying Agent or its agent for cancellation (other than Securities
referred to in clauses (i) and (ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
(immediately available to the Holders in the case of clause (i)) in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal, premium, if any, and interest
(including any applicable Liquidated Damages) to the date of such
deposit (in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.12 and, if money shall
have been deposited with the Trustee pursuant to clause (1)(B) of this Section
4.1, the obligations of the Trustee under Section 4.2 and the last paragraph of
Section 10.3 shall survive. Funds held in trust pursuant to this Section are not
subject to the provisions of Article Thirteen.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine to the Persons entitled thereto, of the principal, premium, if any,
and interest for whose payment such money
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has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.
All moneys deposited with the Trustee pursuant to Section 4.1 (and held
by it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon a Company Request.
ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
occasioned by the provisions of Article Thirteen or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of the principal of or premium, if
any, on any Security at its Maturity, whether or not such payment is
prohibited by the subordination provisions of Article Thirteen; or
(2) default in the payment of any interest (including any
Liquidated Damages, if any) upon any Security when it becomes due and
payable, and continuance of such default for a period of 30 days,
whether or not such payment is prohibited by the subordination
provisions of Article Thirteen; or
(3) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance or breach of which is specifically
dealt with elsewhere in this Section), and continuance of such default
or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(4) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable bankruptcy, moratorium of payments, insolvency,
reorganization or other similar law or (B) a decree or order adjudging
the Company or any Significant Subsidiary a bankrupt or insolvent, or
approving as properly filed a petition
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seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Significant Subsidiary under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or any Significant Subsidiary or of substantially all of the
Company's or Significant Subsidiary's property, as the case may be, or
ordering the winding up or liquidation of the Company's or Significant
Subsidiary's affairs and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(5) the commencement by the Company or any Significant Subsidiary
of a voluntary case or proceeding under any applicable bankruptcy,
moratorium of payments, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated a bankrupt or
insolvent or to be granted moratorium of payment, or the consent by the
Company or any Significant Subsidiary to the entry of a decree or order
for relief in respect of the Company or Significant Subsidiary, as the
case may be, in an involuntary case or proceeding under any applicable
bankruptcy, moratorium of payment, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy, moratorium of
payment or insolvency proceedings against the Company or any Significant
Subsidiary, or the filing by the Company or any Significant Subsidiary
of a petition or consent seeking reorganization or similar relief under
any applicable law, or the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or
Significant Subsidiary, as the case may be, or of substantially all of
the property of the Company or Significant Subsidiary, as the case may
be, or the making by the Company or any Significant Subsidiary of an
assignment for the benefit of creditors, or the admission by the Company
or any Significant Subsidiary in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company or any Significant Subsidiary in furtherance of any such
action; provided that a liquidation or winding up of a Significant
Subsidiary pursuant to applicable corporate law shall not be deemed to
be an Event of Default hereunder.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or (5) with respect to the Company) occurs and is continuing,
then in every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities may declare the
principal of all the Securities to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal and all accrued interest thereon shall
become immediately due and payable. If an Event of Default specified in Section
5.1(4) or (5) occurs with respect to the Company, the principal of, and accrued
interest on, all the Securities shall ipso facto become immediately due and
payable without any declaration or other Act of the Holders or any act on the
part of the Trustee.
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At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article Five provided, the Holders of a
majority in aggregate principal amount of the Outstanding Securities, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if
(1) The Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest (including any Liquidated Damages)
on all Securities,
(B) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at a rate of 5 1/4% per annum, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(2) all Events of Default, other than the nonpayment of the principal
of, and any interest on, Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
5.13.
No rescission or annulment referred to above shall affect any subsequent
default or impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that, if
(1) default is made in the payment of any interest (including any
Liquidated Damages) on any Security when it becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or
premium, if any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal and interest (including any Liquidated Damages)
and interest on any overdue principal and premium, if any, and
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on any overdue interest (including any Liquidated Damages), to the extent
permitted by law, at a rate of 5 1/4% per annum, and in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, moratorium of payments, 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 the creditors of either, the Trustee (irrespective of whether the
principal of, and any interest on, the Securities shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the
Securities and take such other actions, including participating as a
member, voting or otherwise, of any official committee of creditors
appointed in such matter, and to file such other papers or documents, in
each of the foregoing cases, as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders of Securities
allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable
or deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments
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to the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders of Securities to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due the
Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
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 of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which judgment
has been recovered.
SECTION 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article Five shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium,
if any, or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.7;
SECOND: To the payment of the amounts then due and unpaid for
principal, premium, if any, or interest (including any Liquidated
Damages) on the Securities in respect of which or for the benefit
of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due
and payable on such Securities for principal, premium, if any,
and interest (including any Liquidated Damages), respectively;
and
THIRD: Any remaining amounts shall be repaid to the Company.
SECTION 5.7. Limitation on Suits.
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No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, premium, if any, and interest on such Security on
the respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be), and to convert such Security in accordance with Article Twelve, and to
institute suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such
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case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Securities is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders of Securities may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or (subject to the
limitations contained in this Indenture) by the Holders of Securities.
SECTION 5.12. Control by Holders of Securities.
Subject to Section 6.3(6), the Holders of a majority in aggregate
principal amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee,
provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction;
(3) the Trustee need not take any action which might result in
personal liability or be unjustly prejudicial to the Holders of
Securities not consenting; and
(4) such direction shall be presented by such Holders to the
Trustee in a timely manner.
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SECTION 5.13. Waiver of Past Defaults.
The Holders, either (a) through the written consent of not less than a
majority in aggregate principal amount of the Outstanding Securities, or (b) by
the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of the lesser of (x) not
less than a majority in aggregate principal amount of Outstanding Securities and
(y) at least 66-2/3% in aggregate principal amount of the Outstanding Securities
represented at such meeting, may on behalf of the Holders of all the Securities
waive any past default hereunder and its consequences, except a default (1) in
the payment of the principal of, premium, if any, or interest on any Security,
or (2) in respect of a covenant or provision hereof which under Article Eight
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his or her acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant.
SECTION 5.15. Waiver of Stay, Extension and 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, extension law or usury law or other
law that would prohibit or forgive the Company from paying all or any portion of
its obligations on the Securities as provided herein, wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent 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.
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ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(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; but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture, but not to verify the contents thereof.
(b) In case an Event of Default has occurred and is continuing of which
a Responsible Officer of the Trustee has actual knowledge, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect
of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in aggregate principal amount of
the Outstanding Securities or such lesser percentage as provided in this
Indenture relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability has
not been provided to it.
SECTION 6.2. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder as to which
the Trustee has received written notice, the Trustee shall give to all Holders
of Securities, in the manner provided in Section 1.6, notice of such default,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders; and provided, further, that in the case of any default of the character
specified in Section 5.1(3), no such notice to Holders of Securities shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order,
and any resolution of the Board shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
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(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document, but the Trustee in its sole discretion may make such
further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder;
(8) the permissive right of the Trustee to take or refrain from
taking any actions enumerated in this Indenture shall not be construed
as a duty and the Trustee shall not be answerable in such actions other
than for its own negligence, bad faith or willful misconduct in
exercising any such right; and
(9) the Trustee shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by the Indenture.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture, of the Securities or of the
Common Stock issuable upon the conversion of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
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SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures.
The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company with the same rights it would have if it were not the
Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such other
agent.
The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as
the Company and the Trustee shall from time to time agree in writing for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except for
any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct. The Trustee agrees to repay
such expenses, disbursements and advances attributable to its
negligence, bad faith or willful misconduct upon the entry of a final
nonappealable determination that the Trustee engaged in negligence, bad
faith or willful misconduct; and
(3) to indemnify the Trustee (and its directors, officers,
employees and agents) for, and to hold it harmless against, any loss,
liability or expense incurred without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs,
expenses and reasonable attorneys' fees of defending itself against any
claim or liability in connection with the exercise or performance of any
of its powers or duties hereunder.
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When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1(4) or Section 5.1(5) in the case of
the Company, the expenses (including the reasonable charges of its counsel) and
the compensation for the services are intended to constitute expenses of the
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
Any Paying Agent or Authenticating Agent appointed hereunder shall be
entitled to the benefits of Section 6.7(3) as if the indemnity set forth
therefor were specifically afforded to such Paying Agent or Authenticating
Agent.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee, any Paying Agent
or any Authenticating Agent, as the case may be.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities.
SECTION 6.8. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having (or
if the Trustee is a member of a bank holding company, its bank holding company
has) a combined capital and surplus of at least U.S.$50,000,000, subject to
supervision or examination by Federal or state authority, in good standing. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article and a successor shall be appointed pursuant to Section 6.9.
SECTION 6.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
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(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee required
by Section 6.10 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in aggregate principal amount of the Outstanding Securities, delivered
to the Trustee and the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the removed Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 6.8 and
shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security
for at least six months, or
(2) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
shall comply with the applicable requirements of this Section and Section 6.10.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.10, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders of Securities and accepted appointment in the manner required by this
Section and Section 6.10, any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in
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Section 1.6. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
SECTION 6.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee (including the trust created by this Indenture), shall
be the successor of the Trustee hereunder, provided such corporation shall be
otherwise eligible under this Article, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.12. Authenticating Agents.
The Trustee may appoint an additional Authenticating Agent or Agents
with respect to the Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon exchange or substitution pursuant
to this Indenture.
Securities authenticated by an Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and
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delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof, the District of Columbia authorized under
such laws to act as Authenticating Agent and subject to supervision or
examination by government or other fiscal authority. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.12.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent
(including the duties under this Indenture), shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.12.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.12 and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
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This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By [Authenticating Agent],
as Authenticating Agent
By:
----------------------------------------
Authorized Signatory
SECTION 6.13. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.14. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of Section 311 of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor).
ARTICLE SEVEN
CONSOLIDATION, MERGER, TRANSFER OR LEASE
SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate or merge into any other corporation or
convey or transfer its properties and assets substantially as an entirety to any
Person, and shall not transfer and assign all its obligations of, and position
as, the Company hereunder, except for a consolidation or merger in which the
Company is the surviving party, unless:
(a) the Person formed by such consolidation or into which the
Company is merged or which acquires by conveyance or transfer the
properties and assets of the Company substantially as an entirety, or to
which obligations of, and position as, the Company hereunder are
transferred and assigned (the "Successor") (i) shall be a corporation,
limited liability company, partnership or trust organized and existing
under the laws of, and resident for tax purposes in, the United States
of America or any political subdivision thereof, and (ii) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to
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the Trustee, in form satisfactory to the Trustee, due and punctual
payment of the principal of and interest (including Liquidated Damages,
if any) on all of the Securities and the performance of every covenant
of this Indenture and in the Securities on the part of the Company to be
performed or observed;
(b) immediately after giving effect to any such consolidation,
merger, conveyance or transfer, or such transfer and assignment, no
default and no Event of Default shall have occurred and be continuing;
and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer, or such transfer and
assignment, and such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been compiled with.
SECTION 7.2. Successor Substituted.
Upon any consolidation, merger or any conveyance or transfer of the
properties and assets of the Company substantially as an entirety, or upon
transfer and assignment of all obligations of, and position as, the Company
hereunder, in accordance with Section 7.1, the Successor 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, the predecessor Person shall be relieved of all
obligations and covenants under the Indenture and the Securities.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities.
Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto in form
satisfactory to the Trustee for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants and
obligations of the Company herein and in the Securities as permitted by
this Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities, or to surrender any right or power herein
conferred upon the Company; or
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(3) to add any additional Events of Default; or
(4) to permit or facilitate the issuance of Securities in
uncertificated form; or
(5) to secure the Securities; or
(6) to provide for successor or additional trustees; or
(7) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 12.11 or the repurchase rights
of Holders of Securities pursuant to Section 14.3; or
(8) to comply with the requirements of the Trust Indenture Act or
the rules and regulations of the Commission thereunder in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by this Indenture or otherwise; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or
which is otherwise defective, or to make any other provisions with
respect to matters or questions arising under this Indenture as the
Company and the Trustee may deem necessary or desirable, provided, such
action pursuant to this clause (9) shall not adversely affect the
interests of the Holders of Securities in any material respect.
Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in Section 8.3 hereof, the Trustee shall
join with the Company in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained.
SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities.
With either (a) the written consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities, by the Act
of said Holders delivered to the Company and the Trustee, or (b) by the adoption
of a resolution, at a meeting of Holders of the Outstanding Securities at which
a quorum is present, by the Holders of the lesser of (x) not less than a
majority in aggregate principal amount of the Outstanding Securities and (y)
66-2/3% in aggregate principal amount of the Outstanding Securities represented
at such meeting, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders of Securities under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent or affirmative vote of the
Holder of each Outstanding Security,
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(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
or the rate of interest payable thereon or any premium payable upon
redemption or repurchase thereof, or change the coin or currency in
which any Security or the interest or any premium thereon or any other
amount in respect thereof is payable, or impair the right to institute
suit for the enforcement of any payment in respect of any Security on or
after the Stated Maturity thereof (or, in the case of redemption or any
repurchase, on or after the Redemption Date or Repurchase Date, as the
case may be), or modify the obligation of the Company to maintain an
office or agency in the City of New York pursuant to Section 10.2, or,
except as permitted by Section 12.11, adversely affect the right to
convert any Security as provided in Article Twelve, or modify the
provisions of this Indenture with respect to the subordination of the
Securities in a manner adverse to the Holders of Securities, or
(2) reduce the requirements of Section 9.4 for quorum or voting,
or reduce the percentage in aggregate principal amount of the
Outstanding Securities the consent of whose Holders is required for any
such supplemental indenture or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture
or certain defaults hereunder and their consequences) provided for in
this Indenture, or
(3) modify any of the provisions of this Section or Section 5.13,
except to increase any percentage contained herein or therein or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; or
(4) modify the provisions of Article Fourteen in a manner adverse
to the Holders; or
(5) modify any of the provisions of Section 10.6 in a manner
adverse to the Holders.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 8.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The
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Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 8.4. 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.
SECTION 8.5. Reference in Securities to Supplemental Indentures.
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 Company and the
Trustee, 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 8.6. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.2. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 9.1, to be held at such time and at such
place in Los Angeles, California or in the Borough of Manhattan, The City of New
York, as the Trustee shall determine. Notice of every
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meeting of Holders of Securities, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 1.6, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Securities shall have requested the Trustee to call a meeting of the Holders of
Securities for any purpose specified in Section 9.1, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have made the first publication of the notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company or
the Holders of Securities in the amount specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City of New
York for such meeting and may call such meeting for such purposes by giving
notice thereof as provided in paragraph (a) of this Section.
SECTION 9.3. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities, a Person
shall be (a) a Holder of one or more Outstanding Securities on the applicable
record date, or (b) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders shall be the Persons entitled to vote at such meeting and
their counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 9.4. Quorum; Action.
The Persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such reconvened meeting, such
reconvened meeting may be further adjourned for a period not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
reconvened meeting (subject to repeated applications of this sentence). Notice
of the reconvening of any adjourned meeting shall be given as provided in
Section 9.2(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage of the principal amount of the Outstanding Securities which shall
constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned
for a lack of a quorum, the Persons entitled to vote 25% in aggregate principal
amount of the Outstanding Securities at the
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time shall constitute a quorum for the taking of any action set forth in the
notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by the proviso to Section 8.2) shall be effectively passed and decided
if passed or decided by the lesser of (i) not less than a majority in aggregate
principal amount of the Outstanding Securities and (ii) Persons entitled to vote
not less than 66-2/3% in aggregate principal amount of Outstanding Securities
represented and entitled to vote at such meeting.
Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities, whether or not present or represented at the meeting. The
Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
1.6.
SECTION 9.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved in
the manner specified in Section 1.4 and the appointment of any proxy shall be
proved in the manner specified in Section 1.4.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman (which may be the Trustee) of the meeting, unless the meeting shall
have been called by the Company or by Holders of Securities as provided in
Section 9.2(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in aggregate
principal amount of the Outstanding Securities represented at the meeting.
(c) At any meeting, each Holder of a Security or proxy shall be entitled
to one vote for each U.S.$1,000 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant to Section
9.2 at which a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in
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aggregate principal amount of the Outstanding Securities represented at the
meeting, and the meeting may be held as so adjourned without further notice.
SECTION 9.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and punctually pay
the principal of and premium, if any, and interest (including Liquidated
Damages, if any) on the Securities in accordance with the terms of the
Securities and this Indenture. The Company will deposit or cause to be deposited
with the Trustee on or prior to the due date for any installment of interest
thereon or on the Stated Maturity of any Security all payments so due, which
payments shall be in immediately available funds on the date of such due date or
Stated Maturity, as the case may be.
SECTION 10.2. Maintenance of Offices or Agencies.
The Company hereby appoints the Corporate Trust Office of the Trustee in
Los Angeles, California and the office or agency of the Trustee in the Borough
of Manhattan, The City of New York, as places where Securities may be presented
or surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange, where Securities may be surrendered for conversion, and
where notices and demands to or upon the Company in respect of the Securities
and
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this Indenture may be served, and where Securities may be surrendered for
registration of transfer or exchange and where Securities may be surrendered for
conversion.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 10.3, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee, and
notice to the Holders in accordance with Section 1.6, of the appointment or
termination of any such agents and of the location and any change in the
location of any such office or agency.
If at any time the Company shall fail to maintain any such required
office or agency, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made and notices and demands may be served
on the office or agency of the Trustee in the Borough of Manhattan, the City of
New York.
SECTION 10.3. Money for Security Payments To Be Held in Trust.
If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and the Company will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or prior to each due date of the principal of, premium, if any, or interest on
any Securities, deposit with such Paying Agent a sum sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held for
the benefit of the Persons entitled to such principal, premium, if any, or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
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(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all
sums so held by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for the earlier of ten days
prior to the time such money would escheat to the state or two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease.
SECTION 10.4. Corporate Existence.
Subject to Article Seven, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence.
SECTION 10.5. Statement by Officers as to Default.
The Company will deliver to the Trustee within 120 days after the end of
each fiscal year of the Company an Officers' Certificate stating that in the
course of performance by the signers of their duties as such officers of the
Company they would normally obtain knowledge of whether any default exists in
the performance and observance of any of the terms, provisions and conditions of
this Indenture and whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture. Such Officers' Certificate shall
further state, as to each such officer signing such Certificate, to the best of
the knowledge of such officer, as of the date of such Officers' Certificate, (a)
whether any such default exists, (b) whether the Company (as applicable) during
the preceding fiscal year kept, observed, performed and fulfilled each and every
covenant and obligation of the Company under this Indenture and (c) whether
there was any default in the performance and observance of any of the terms,
provisions or conditions of this Indenture during such preceding fiscal year. If
the officer or officers signing the Officers' Certificate know of such a
default, whether then existing or occurring during such preceding fiscal year,
the Officers' Certificate shall describe such
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default and its status with particularity. The Company shall also promptly
notify the Trustee if the Company's fiscal year is changed so that the end
thereof is on any date other than the then current fiscal year end date.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.
Any notice required to be given under this Section 10.5 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 10.6. Delivery of Certain Information.
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, upon the request of a holder of a Restricted Security, the
Company will promptly furnish or cause to be furnished Rule 144A Information (as
defined below) to such holder of Restricted Securities, or to a prospective
purchaser of any such security designated by any such holder, as the case may
be, to the extent required to permit compliance by such holder with Rule 144A
under the Securities Act (or any successor provision thereto) in connection with
the resale of any such security; provided, however, that the Company shall not
be required to furnish such information in connection with any request made on
or after the date which is two years from the later of (i) the date such a
security (or any such predecessor security) was last acquired from the Company
or (ii) the date such a security (or any such predecessor security) was last
acquired from an "affiliate" of the Company within the meaning of Rule 144 under
the Securities Act (or any successor provision thereto). "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption.
The Securities may be redeemed in accordance with the provisions of the
form of Security set forth in Section 2.2.
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SECTION 11.2. Applicability of Article.
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article Eleven.
SECTION 11.3. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all of the Securities, the Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date.
SECTION 11.4. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee within seven Business
Days after it receives the notice described in 11.3, from the Outstanding
Securities not previously called for redemption, by such method as the Trustee
may deem fair and appropriate.
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.
The Trustee shall promptly notify the Company and each Note Registrar in
writing of the securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.5. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section
1.6 to the Holders of Securities to be redeemed not less than 20 nor more than
60 days prior to the Redemption Date, and such notice shall be irrevocable.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities are to be redeemed,
the aggregate principal amount of Securities to be redeemed and the
aggregate principal amount of Securities which will be outstanding after
such partial redemption,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to
be redeemed, and that interest thereon shall cease to accrue on and
after said date,
(5) the Conversion Price then in effect, the date on which the
right to convert the Securities to be redeemed will terminate and the
places where such Securities, may be surrendered for conversion, and
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued interest, if
any.
In case of a partial redemption, the notice shall specify the serial and
CUSIP numbers (if any) and the portions thereof called for redemption and that
transfers and exchanges may occur on or prior to the Redemption Date.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request, by
the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
SECTION 11.6. Deposit of Redemption Price.
By 10:00 a.m. (New York time) on any Redemption Date of the Securities,
the Company shall deposit with the Trustee or with the Paying Agent so directed
by the Trustee (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 10.3) an amount of money (which shall
be in immediately available funds on such Redemption Date) sufficient to pay the
Redemption Price of, and accrued interest on, all the Securities which are to be
redeemed on that date other than any Securities called for redemption on that
date which have been converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall
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(subject to any right of the Holder of such Security, if a Security, or any
Predecessor Security to receive interest as provided in the last paragraph of
Section 3.7) be paid to the Company on Company Request as soon as
administratively practicable after the Trustee receives such Company Request or,
if then held by the Company, shall be discharged from such trust.
SECTION 11.7. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice, such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest to, but excluding, the Redemption Date; provided, however, that
installments of interest on Securities whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Record Date
according to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of, premium, if any, and,
to the extent permitted by applicable law, accrued interest on such Security
shall, until paid, bear interest from the Redemption Date at a rate of 5 1/4%
per annum and such Security shall remain convertible into Common Stock until the
principal of such Security (or portion thereof, as the case may be) shall have
been paid or duly provided for.
SECTION 11.8. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (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 his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery 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 equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.
SECTION 11.9. 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 by an agreement with one or
more investment bankers or other purchasers (the "Purchasers") to purchase such
securities by paying to the Trustee in trust for the Holders, on or before the
Redemption Date, an amount not less than the applicable Redemption Price,
together with interest accrued to the Redemption Date, of such Securities.
Notwithstanding anything to the contrary contained in this Article Eleven, the
obligation of the Company to pay the Redemption
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Price, together with interest accrued to, but excluding, the Redemption Date,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such Purchasers. If such an agreement is entered into (a copy of which
shall be filed with the Trustee prior to the close of business on the Business
Day immediately prior to the Redemption Date), any Securities called for
redemption that are not duly surrendered for conversion by the Holders thereof
may, at the option of the Company, be deemed, to the fullest extent permitted by
law, and consistent with any agreement or agreements with such Purchasers, to be
acquired by such Purchasers from such Holders and (notwithstanding anything to
the contrary contained in Article Twelve) surrendered by such Purchasers for
conversion, all as of immediately prior to the close of business on the
Redemption Date (and the right to convert any such Securities shall be extended
though such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it to the Holders in the same manner as it would monies deposited with
it by the Company for the redemption of Securities. Without the Trustee's prior
written consent, no arrangement between the Company and such Purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such Purchasers, including the costs and
expenses, including reasonable legal fees, incurred by the Trustee in the
defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article
Twelve, at the option of the Holder thereof, the Holder of any Security is
entitled at his option, at any time prior to the close of business on November
1, 2004, to convert such Security into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100th of a share) of Common
Stock of the Company at the Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. Such conversion right shall be
subject, in the case of the conversion of any Global Security, to any applicable
book-entry procedures of the Depositary therefor and the following sentence. In
case a Security or portion thereof is called for redemption or is delivered for
repurchase, such conversion right in respect of the Security or portion so
called shall expire at the close of business on the Business Day prior to the
Redemption Date or the Repurchase Date (as defined in Article Fourteen), as the
case may be, unless the Company defaults in making the payment due upon
redemption or repurchase, as the case may be.
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The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially U.S.$64.50
per share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in this Article Twelve.
SECTION 12.2. Exercise of Conversion Privilege.
Beneficial owners of interests in a Global Security may exercise their
right of conversion by delivering to the Depositary the appropriate instruction
form for conversion pursuant to the Depositary's conversion program and, in the
case of conversions through Euroclear or Cedel, in accordance with Euroclear's
or Cedel's normal operating procedures. To convert a definitive Security into
shares of Common Stock, a Holder must (i) complete and manually sign the
conversion notice in the form set forth in Section 2.4 on the back of the
definitive Security (or complete and manually sign a facsimile thereof) and
deliver such notice to the Trustee at the Corporate Trust Office of the Trustee
or the office or agency of State Street Bank and Trust Company of California,
N.A., in New York, New York or the office of any Conversion Agent, (ii)
surrender the definitive Security to the Trustee at the Corporate Trust Office
of the Trustee or the office or agency of the State Street Bank and Trust
Company of California, N.A., in New York, New York or the office of any
Conversion Agent, (iii) if required, furnish appropriate endorsements and
transfer documents, (iv) if required, pay all transfer or similar taxes, and (v)
if required, pay funds equal to interest payable on the next Interest Payment
Date. The date on which all of the foregoing requirements have been satisfied is
the date of surrender for conversion. The Trustee shall promptly deliver to the
Company and the Company's Common Stock transfer agent notification of such
notice of conversion at the address described in Section 1.5. Each Security
surrendered for conversion will be converted into Common Stock in registered
form. Each Security surrendered for conversion (in whole or in part) during the
period from the close of business on any Regular Record Date to the opening of
business on the next succeeding Interest Payment Date (except Securities called
for redemption on a Redemption Date or to be repurchased on a Repurchase Date
during, in each case, such period) shall be accompanied by payment in New York
Clearing House funds or other funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount of
such Security (or part thereof, as the case may be) being surrendered for
conversion. The interest so payable on such Interest Payment Date with respect
to any Security (or portion thereof, if applicable) which has been called for
redemption on a Redemption Date, or is repurchasable on a Repurchase Date,
occurring, in either case, during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date, which Security (or portion thereof, if
applicable) is surrendered for conversion during such period, shall be paid to
the Holder of such Security being converted in an amount equal to the interest
that would have been payable on such Security if such Security had been
converted as of the close of business on such Interest Payment Date. The
interest so payable on such Interest Payment Date in respect of any Security (or
portion thereof, as the case may be) which has not been called for redemption on
a Redemption Date, or is not eligible for repurchase on a Repurchase Date,
occurring, in either case, during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date, which Security (or
portion thereof, as the case may be) is surrendered for conversion during such
period, shall be paid to the Holder of such Security as of
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such Regular Record Date. Except as provided in this paragraph and subject to
the last paragraph of Section 3.7, no cash payment or adjustment shall be made
upon any conversion on account of, if the date of conversion is not an Interest
Payment Date, any interest accrued from the Interest Payment Date next preceding
the conversion date, in respect of any Security (or part thereof, as the case
may be) surrendered for conversion, or on account of any dividends on the shares
of Common Stock issued upon conversion. The Company's delivery to the Holder of
the number of shares of Common Stock (and cash in lieu of fractions thereof, as
provided in this Indenture) into which a Security is convertible will be deemed
to satisfy the Company's obligation to pay the principal amount of the Security.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion,
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the conversion date, the
Company shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in Section 12.3.
All shares of Common Stock delivered upon such conversion of Securities
that are Restricted Securities shall, if required, bear restrictive legends set
forth in Section 3.4(e) and shall be subject to the restrictions on transfer
provided in such legends. Neither the Trustee nor any agent maintained for the
purpose of such conversion shall have any responsibility for the inclusion or
content of any such restrictive legends on such shares of Common Stock;
provided, however, that the Trustee or Conversion Agent shall have provided, to
the Company or to the Note Registrar for such shares of Common Stock, prior to
or concurrently with a request to the Company to deliver such shares of Common
Stock, written notice that the Securities delivered for conversion are
Restricted Securities.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in an aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. A Security may
be converted in part, but only if the principal amount of such Security to be
converted is any integral multiple of U.S.$1,000 and the principal amount of
such security to remain Outstanding after such conversion is equal to U.S.$1,000
or any integral multiple thereof.
SECTION 12.3. Fractions of Shares.
No fractional shares of Common Stock shall be issued upon conversion of
any Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered.
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Instead of any fractional share of Common Stock which would otherwise be
issuable upon conversion of any Securities (or specified portions thereof), the
Company shall calculate and pay a cash adjustment in respect of such fraction
(calculated to the nearest 1/100th of a share) in an amount equal to the same
fraction of the Current Market Price per share of Common Stock (calculated in
accordance with Section 12.4(8) below) at the close of business on the day of
conversion.
SECTION 12.4. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustments from time to time
as follows:
(1) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
If any dividend or distribution of the type described in this Section 12.4(1) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(2) In case the Company shall issue rights or warrants to all holders of
its outstanding Common Stock entitling them (for a period expiring within 45
days after the date fixed for determination of stockholders entitled to receive
such rights or warrants) to subscribe for or purchase Common Stock at a price
per share less than the Current Market Price (as defined in Section 12.4(8)(b))
on the date fixed for determination of stockholders entitled to receive such
rights or warrants, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date fixed for determination of shareholders entitled
to receive such rights or warrants by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding at the close of business on
the date fixed for determination of stockholders entitled to receive such rights
and warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Current Market Price,
and the denominator of which shall be the number of shares of Common Stock
outstanding on the date fixed for determination of stockholders entitled to
receive such rights and warrants plus the total number of additional shares of
Common Stock offered for subscription or purchase. Such adjustment shall be
successively made whenever any such rights and warrants are issued, and shall
become effective immediately after the opening of business on the day following
the date fixed for determination of stockholders entitled to receive such rights
or warrants. To the extent that shares of Common Stock are not delivered after
the expiration of such rights or warrants, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of
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only the number of shares of Common Stock actually delivered. In the event that
such rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors.
(3) In case outstanding Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately increased.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 12.4(1)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 12.4(2), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 12.4(1) (any of the foregoing hereinafter in this Section 12.4(4) called
the "Distribution Securities")), then, in each such case, the Conversion Price
shall be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect on the Distribution Record Date with
respect to such distribution by a fraction the numerator of which shall be the
Current Market Price per share of Common Stock on such Distribution Record Date
less the fair market value (as determined by the Board of Directors whose
determination shall be conclusive, and described in a resolution of the Board of
Directors) on the Distribution Record Date of the portion of the Distribution
Securities so distributed applicable to one share of Common Stock and the
denominator of which shall be the Current Market Price per share of Common
Stock, such reduction to become effective immediately prior to the opening of
business on the day following such Distribution Record Date; provided, however,
that in the event the then fair market value (as so determined) of the portion
of the Distribution Securities so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price per share of the
Common Stock on the Distribution Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion the amount of Distribution Securities such
Holder would have received had such Holder converted each Security on the
Distribution Record Date. In the event that such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If the Company's Board of Directors determines the fair
market value of any distribution for purposes of this Section 12.4(4) by
reference to the actual or when issued trading market for any securities, it
must in doing so consider the prices in such market over the same period used in
computing the Current Market Price of the Common Stock.
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Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of shares of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 12.4 (and no adjustment to the
Conversion Price under this Section 12.4 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to have been distributed and an appropriate adjustment (if any is
required) to the Conversion Price shall be made under this Section 12.4(4). If
any such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets or different
amounts of any of the foregoing, or both, then the date of the occurrence of any
and each such event shall be deemed to be the date of distribution and record
date with respect to new rights or warrants with such rights (and a termination
or expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 12.4 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of shares of Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights or warrants), made to all holders of shares of
Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants which shall have expired or been terminated
without exercise by any holders thereof, the Conversion Price shall be
readjusted as if such rights and warrants had not been issued.
Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants to subscribe for additional shares of the Common
Stock (other than rights or warrants described in Section 12.4(2)), pro rata to
substantially all holders of Common Stock, the Company may, in lieu of making
any adjustment pursuant to this Section 12.4(4), make proper provision so that
each holder of a Security who converts such Security (or any portion thereof)
after the Distribution Record Date for such distribution shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock issuable
upon such conversion (the "Conversion Shares"), a number of rights or warrants
to be determined as follows: (i) if such conversion occurs on or prior to the
date for the distribution to the holders of such rights or warrants of separate
certificates evidencing such rights or warrants (the "Distribution Date"), the
same number of rights or warrants to which a holder of a number of shares of
Common Stock equal to the number of Conversion Shares is entitled at the time of
such conversion in accordance with the terms and provisions of and applicable to
such rights or warrants; and (ii) if such conversion occurs after the
Distribution Date, the same number of rights or warrants to which a holder of
the number of shares of Common Stock into which the principal
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amount of the Security so converted was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of, and applicable to such rights or
warrants.
For purposes of this Section 12.4(4) and Sections 12.4(1) and (2), any
dividend or distribution to which this Section 12.4(4) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 12.4(4) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by Sections
12.4(1) and (2) with respect to such dividend or distribution shall then be
made), except (A) the Distribution Record Date of such dividend or distribution
shall be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution" and "the date fixed for
such determination" within the meaning of Sections 12.4(1) and (2) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 12.4(1).
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash dividend
on the Common Stock to the extent the aggregate cash dividend per share of
Common Stock in any quarterly period does not exceed the greater of (A) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Price pursuant to this Section 12.4(5)
(as adjusted to reflect subdivisions or combinations of the Common Stock), and
(B) 3.75% of the arithmetic average of the Closing Prices (determined as set
forth in Section 12.4(8)) during the ten Trading Days immediately prior to the
date of declaration of such dividend, (y) any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary and (z) any cash that is distributed as part of
a distribution requiring a Conversion Price adjustment pursuant to Section
12.4(4)), then, in such case, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such Distribution Record
Date by a fraction of which the numerator shall be the Current Market Price of
the Common Stock on the Distribution Record Date less the amount of cash so
distributed (and not excluded as provided above) applicable to one share of
Common Stock and the denominator shall be such Current Market Price of the
Common Stock, such reduction to be effective immediately prior to the opening of
business on the day following the Distribution Record Date; provided, however,
that in the event the portion of the cash so distributed applicable to one share
of Common Stock is equal to or greater than the Current Market Price of the
Common Stock on the Distribution Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion the amount of cash such Holder would have
received had such Holder converted each Security on the Distribution Record
Date. In the event that such dividend or distribution is not so paid or made,
the Conversion Price
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shall again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared. If any adjustment is
required to be made as set forth in this Section 12.4(5) as a result of a
distribution that is a quarterly dividend, such adjustment shall be based upon
the amount by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant hereto. If an adjustment is required
to be made as set forth in this Section 12.4(5) above as a result of a
distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution.
(6) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per share of
Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that as of the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended) exceeds the Current Market Price of the Common Stock on the Trading Day
next succeeding the Expiration Time, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction of which
the numerator shall be the number of Common Stock outstanding (including any
tendered or exchanged shares) on the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of Common Stock outstanding (less any Purchased Shares) on
the Expiration Time and the Current Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time. In the event that the Company is obligated to purchase shares
pursuant to any such tender or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender or exchange offer
had not been made.
(7) In case of a tender or exchange offer made by a Person other than
the Company or any Subsidiary of the Company for an amount which increases the
offeror's ownership of Common Stock to more than 25% of the Common Stock
outstanding and shall involve the payment by such Person of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board) at the last time (the "Tender Expiration Time") tenders
or exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds the Current Market Price per share of the Common
Stock on the Trading Day next succeeding the Tender Expiration Time, and in
which, as of the Tender Expiration Time the Board of Directors is not
recommending rejection of the offer, the Conversion Price shall be reduced so
that the same shall equal the price
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determined by multiplying the Conversion Price in effect immediately prior to
the Tender Expiration Time by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Tender Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Tender Expiration Time (the shares deemed so accepted,
up to any such maximum, being referred to as the "Accepted Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Accepted Purchased Shares) on the Tender Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Tender Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such Person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 12.4(7)
shall not be made if, as of the Tender Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article Seven.
(8) For purposes of this Section 12.4, the following terms shall have
the meaning indicated:
(a) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported closing
bid and asked prices, regular way, in each case on the New York Stock
Exchange, or, if such security is not listed or admitted to trading on
such Exchange, on the principal security exchange or quotation system in
the United States on which such security is quoted or listed or admitted
to trading, or, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as
reported by the Nasdaq National Market or a similar generally accepted
reporting service, or if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time to time by
the Board of Directors for that purpose, or a price determined in good
faith by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose determination
shall be conclusive.
(b) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question; provided, however, that
(1) if the "ex" date (as hereinafter defined) for any event (other than
the issuance or distribution or Fundamental Change requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 12.4(1), (2), (3), (4), (5), (6) or (7) occurs
during such ten consecutive Trading Days, the Closing Price for each
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Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which
the Conversion Price is so required to be adjusted as a result of such
other event, (2) if the "ex" date for any event (other than the
issuance, distribution or Fundamental Change requiring such computation)
that requires an adjustment to the Conversion Price pursuant to Section
12.4(1), (2), (3), (4), (5), (6) or (7) occurs on or after the "ex" date
for the issuance or distribution requiring such computation and prior to
the day in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event, and
(3) if the "ex" date for the issuance, distribution or Fundamental
Change requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or
(2) of this proviso, the Closing Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value (as determined by the Board of Directors
in a manner consistent with any determination of such value for purposes
of Section 12.4(4), (6) or (7) whose determination shall be conclusive
and described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date. For purposes of any
computation under Section 12.4(6) or (7), the Current Market Price of
the Common Stock on any date shall be deemed to be the average of the
daily Closing Prices per share of Common Stock for such day and the next
two succeeding Trading Days; provided, however, that if the "ex" date
for any event (other than the tender or exchange offer requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 12.4(1), (2), (3), (4), (5), (6) or (7) occurs on or
after the Expiration Time or Tender Expiration Time, as the case may be,
for the tender or exchange offer requiring such computation and prior to
the day in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date, (1) when used with
respect to any issuance or distribution, means the first date on which
the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such subdivision
or combination becomes effective, and (3) when used with respect to any
tender or exchange offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the
Expiration Time or Tender Expiration Time, as the case may be, of such
offer.
(c) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
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(d) "Distribution Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the
holders of Common Stock have the right to receive any cash, securities
or other property or in which the Common Stock (or other applicable
security) is exchanged for or converted into any combination of cash,
securities or other property, the date fixed for determination of
stockholders entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
(e) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national security exchange, a day on which the New York Stock Exchange
or another national security exchange is open for business or (y) if the
applicable security is quoted on the Nasdaq National Market, a day on
which trades may be made on thereon or (z) if the applicable security is
not so listed, admitted for trading or quoted, any day other than a
Saturday or Sunday or a day on which banking institutions in the State
of New York are authorized or obligated by law or executive order to
close.
(9) No adjustment in the Conversion Price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such
price; provided, however, that any adjustments which by reason of this paragraph
(9) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Article shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
(10) The Company may, at its option, make such reductions in the
Conversion Price as the Board deems advisable, in addition to those required by
paragraphs (1), (2), (3), (4), (5), (6) or (7) of this Section 12.4 in order to
avoid or diminish any income tax to any holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution on Common
Stock (or rights to acquire such shares) or from any event treated as such for
income tax purposes, resulting from any dividend or distribution of shares or
issuance of rights or warrants to purchase or subscribe for shares or from any
event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is (i) at least twenty (20) days, (ii) the reduction is irrevocable
during the period and (iii) the Board shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall give notice of the reduction to the
Holders of Securities in the manner provided in Section 1.6 at least fifteen
(15) days prior to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period during which it
will be in effect.
(11) No adjustment of the Conversion Price will result in zero or a
negative number.
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SECTION 12.5. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Price in
accordance with Section 12.4 and shall prepare a certificate signed by
the President, Treasurer, Chief Financial Officer or Vice President of
Finance of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall promptly be filed with the Trustee and
with each Conversion Agent; and
(2) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall promptly be
prepared and as soon as practicable thereafter, such notice shall be
provided by the Company to all Holders in accordance with Section 1.6.
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours. Unless and until the Trustee shall receive such certificate, it may
assume without inquiry that the Conversion Price has not been adjusted.
SECTION 12.6. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on all or substantially all of its Common Stock payable
(i) otherwise than exclusively in cash or (ii) exclusively in cash in an
amount that would require any adjustment pursuant to Section 12.4; or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights
that would require any adjustment pursuant to Section 12.4; or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common
Stock), or of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
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(e) the Company or any Subsidiary of the Company shall commence a
tender offer for all or a portion of the Company's outstanding Common
Stock (or shall amend any such tender offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record, expiration or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, options or warrants are to be
determined, (y) the date on which the right to make tenders under such tender
offer expires or (z) the date on which such reclassification, consolidation,
merger, share exchange, conveyance, transfer, sale, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share exchange,
conveyance, transfer, sale, lease, dissolution, liquidation or winding up. If at
the time the Trustee shall not be the Conversion Agent, a copy of such notice
and any notice referred to in the following paragraph shall also forthwith be
filed by the Company with the Trustee.
The preceding paragraph to the contrary notwithstanding, the Company
shall cause to be filed at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 10.2, and shall cause to be
provided to all Holders in accordance with Section 1.6, notice of any tender
offer by the Company or any subsidiary of the Company for all or any portion of
the Common Stock at or about the time that such notice of tender offer is
provided to the public generally (such notice to be sent to all Holders within
five days after receipt of such notice by the Trustee or Conversion Agent from
the Company).
SECTION 12.7. Company to Provide Common Stock.
The Company shall ensure that the Company has, free from preemptive
rights, out of its authorized but unissued Common Stock, the full number of
shares of Common Stock for the purpose of effecting the conversion of
Securities.
SECTION 12.8. Taxes on Conversions.
The Company will pay any and all taxes and duties that may be payable in
respect of the issue or delivery of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax or
duty which may be payable in respect of any transfer involved in the issue and
delivery of Common Stock in a name other than that of the Holder of the Security
or Securities to be converted, and no such issue or delivery shall be made
unless and until the Person
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requesting such issue has paid to the Company the amount of any such tax or
duty, or has established to the satisfaction of the Company that such tax or
duty has been paid.
SECTION 12.9. Company Covenant as to Common Stock.
The Company covenants that all Common Stock which may be delivered upon
conversion of Securities, upon such delivery, will have been duly authorized and
validly issued and will be fully paid and nonassessable and, except as provided
in Section 12.8, the Company will pay all taxes, liens and charges with respect
to the issue thereof.
SECTION 12.10. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee or its agent to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.
SECTION 12.11. Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification
or change of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 12.4(3) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Security shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by a holder of a
number of shares of Common Stock issuable upon conversion of such Securities
(assuming, for such purposes, a sufficient number of authorized shares of Common
Stock available to convert all such Securities) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or conveyance
assuming such holder of Common Stock is (i) not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person, and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash or
other property receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised
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("Non-electing Share")), then for the purposes of this Section 12.11 the kind
and amount of securities, cash or other property receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each Non-electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares. Such
supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section 12.11 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales or conveyances. Notice of the execution of such a supplemental indenture
shall be given by the Company to the Holder of each Security as provided in
Section 1.6 promptly upon such execution.
Neither the Trustee, any Paying Agent nor any Conversion Agent shall be
under any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property or cash receivable by
Holders of Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, combination, sale or conveyance
or to any such adjustment, but may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, an
Opinion of Counsel with respect thereto, which the Company shall cause to be
furnished to the Trustee.
SECTION 12.12. Responsibility of Trustee for Conversion Provisions.
The Trustee and any Conversion Agent shall not at any time be under any
duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same, or whether a supplemental indenture
need be entered into. Neither the Trustee nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind or amount) of any
Common Stock, or of any other securities or property or cash, which may at any
time be issued or delivered upon the conversion of any Security; and it or they
do not make any representation with respect thereto. Neither the Trustee,
subject to the provisions of Section 6.1, nor any Conversion Agent shall be
responsible for any failure of the Company to make or calculate any cash payment
or to issue, transfer or deliver any Common Stock or share certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion; and the Trustee and any Conversion Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
of the Company contained in this Article.
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ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. Agreement of Subordination.
The Company covenants and agrees, and each Holder of Securities issued
hereunder by his acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Thirteen;
and each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees to be bound by such
provisions.
The payment of the principal of, premium, if any, and interest on all
Securities (including, but not limited to, the Redemption Price with respect to
the Securities called for redemption in accordance with Article Eleven, or the
Repurchase Price with respect to Securities submitted for repurchase in
accordance with Article Fourteen, as the case may be, as provided in this
Indenture and Liquidated Damages, if any) issued hereunder shall, to the extent
and in the manner hereinafter set forth, be subordinated and subject in right of
payment to the prior payment in full in cash of all Senior Indebtedness of the
Company, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article Thirteen shall prevent the occurrence of
any default or Event of Default hereunder.
SECTION 13.2. Payments to Holders.
No payment shall be made with respect to the principal of, or premium,
if any, or interest on the Securities by the Company (including, but not limited
to, the Redemption Price with respect to the Securities to be called for
redemption in accordance with Article Eleven or the Repurchase Price with
respect to Securities submitted for repurchase in accordance with Article
Fourteen, as the case may be, as provided in this Indenture and Liquidated
Damages, if any), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 13.5, if:
(i) a default in the payment of principal, premium, interest,
rent or other obligations due on any Senior Indebtedness of the Company
has occurred and is continuing (or, in the case of Senior Indebtedness
of the Company for which there is a period of grace, in the event of
such a default that continues beyond the period of grace, if any,
specified in the instrument or lease evidencing such Senior Indebtedness
of the Company), unless and until such default shall have been cured or
waived or shall have ceased to exist; or
(ii) a default (other than a payment default) on Designated
Senior Indebtedness occurs and is continuing that then permits holders
of such Designated Senior Indebtedness to accelerate its maturity and
the Trustee receives a notice of the default (a "Payment
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Blockage Notice") from a Representative of Designated Senior
Indebtedness or a holder of Designated Senior Indebtedness or the
Company.
If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until at least 365 days shall have elapsed
since the initial effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee (unless such default was
waived, cured or otherwise ceased to exist and thereafter subsequently
reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of:
(1) in the case of a payment default, the date upon which
the default is cured or waived or ceases to exist, or
(2) in the case of a default referred to in clause (ii)
above, the earlier of the date on which such default is cured or waived or
ceases to exist or 179 days after the date on which the applicable Payment
Blockage Notice is received if the maturity of the applicable Designated Senior
Indebtedness has not been accelerated,
unless this Article Thirteen otherwise prohibits the payment or distribution at
the time of such payment or distribution (including without limitation, in the
case of default referred to in clause (ii) above, as a result of a payment
default with respect to the applicable Senior Indebtedness as a consequence of
the acceleration of the maturity thereof or otherwise).
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, moratorium of
payments, insolvency, receivership or other proceedings, all amounts due or to
become due upon all Senior Indebtedness of the Company shall first be paid in
full in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company, or payment thereof in accordance with its terms
provided for in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company before any payment is made on account of the
principal of, premium, if any, or interest (including Liquidated Damages, if
any) on the Securities by the Company (except payments by the Company made
pursuant to Article Four from monies deposited with the Trustee pursuant thereto
prior to commencement of proceedings for such dissolution, winding-up,
liquidation or reorganization); and upon any such dissolution or winding-up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee would be entitled, except for
the provision of this Article Thirteen, shall (except as aforesaid) be paid by
the Company or by any
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receiver, trustee in bankruptcy, moratorium of payments, liquidating trustee,
agent or other Person making such payment or distribution, or by the Holders or
by the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness of the Company held by
such holders, or as otherwise required by law or a court order) or their
Representative or Representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
of the Company may have been issued, as their respective interests may appear,
to the extent necessary to pay all Senior Indebtedness of the Company in full,
in cash or other payment satisfactory to the holders of such Senior Indebtedness
of the Company, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness of the Company, before any payment or
distribution is made to the Holders or to the Trustee.
For purposes of this Article Thirteen, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Thirteen with
respect to the Securities to the payment of all Senior Indebtedness of the
Company which may at the time be outstanding; provided that (i) the Senior
Indebtedness of the Company is assumed by the new corporation, if any, resulting
from any reorganization or readjustment, and (ii) the rights of the holders of
Senior Indebtedness of the Company (other than leases which are not assumed by
the Company or the new corporation, as the case may be) are not, without the
consent of such holders, altered by such reorganization or readjustment. The
merger of the Company into another corporation or the liquidation or dissolution
of the Company following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided for in Article Seven shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 13.2
if such other corporation shall, as a part of such merger, conveyance or
transfer, comply with the conditions stated in Article Seven.
In the event of the acceleration of the Securities because of an Event
of Default, no payment or distribution shall be made to the Trustee or any
Holder of Securities in respect of the principal of, premium, if any, or
interest on the Securities by the Company (including, but not limited to, the
Redemption Price with respect to the Securities called for redemption in
accordance with Article Eleven or the Repurchase Price with respect to
Securities submitted for repurchase in accordance with Article Fourteen, as the
case may be, as provided in this Indenture and Liquidated Damages, if any),
except payments and distributions made by the Trustee as permitted by the first
or second paragraph of Section 13.5, until all Senior Indebtedness of the
Company has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness of the Company or such acceleration is rescinded
in accordance with the terms of this Indenture. If payment of the Securities is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the Company of the acceleration.
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In the event that, notwithstanding the foregoing provisions, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
Holders of the Securities before all Senior Indebtedness of the Company is paid
in full in cash or other payment satisfactory to the holders of such Senior
Indebtedness of the Company, or provision is made for such payment thereof in
accordance with its terms in cash or other payment satisfactory to the holders
of such Senior Indebtedness of the Company, such payment or distribution shall
be held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness of the Company or their Representative or
Representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness of the Company may have
been issued, as their respective interests may appear, as calculated by the
Company, for application to the payment of all Senior Indebtedness of the
Company remaining unpaid to the extent necessary to pay all Senior Indebtedness
of the Company in full in cash or other payment satisfactory to the holders of
such Senior Indebtedness of the Company, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders of such
Senior Indebtedness of the Company.
Nothing in this Article Thirteen shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.7. This Section 13.2 shall be
subject to the further provisions of Section 13.5.
SECTION 13.3. Subrogation of Securities.
Subject to the payment in full in cash of all Senior Indebtedness of the
Company, the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness of the
Company pursuant to the provisions of this Article Thirteen (equally and ratably
with the holders of all indebtedness of the Company which by its express terms
is subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness of the Company
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness of the Company until the
principal, premium, if any, and interest on the Securities shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of the Company of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article Thirteen, and no payment over
pursuant to the provisions of this Article Thirteen, to or for the benefit of
the holders of Senior Indebtedness of the Company by Holders of the Securities
or the Trustee, shall, as between the Company, its creditors other than holders
of Senior Indebtedness of the Company, and the Holders of the Securities, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness of the Company. It is understood that the provisions of this
Article Thirteen are and are intended solely for the purposes of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of the Senior Indebtedness of the Company, on the other hand.
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Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of the Securities
and creditors of the Company other than the holders of the Senior Indebtedness
of the Company, nor shall anything herein or therein prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article Thirteen of the holders of Senior Indebtedness of the Company
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article Thirteen, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof or payable thereon and all other facts pertinent thereto or to this
Article Thirteen.
SECTION 13.4. Authorization to Effect Subordination.
Each Holder of a Security by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article Thirteen and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 5.4 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Indebtedness of the Company
or their Representatives are hereby authorized to file an appropriate claim for
and on behalf of the Holders of the Securities.
SECTION 13.5. Notice to Trustee.
The Company shall give prompt written notice in the form of an Officers'
Certificate to a Responsible Officer of the Trustee and to any Paying Agent of
any fact known to the Company which would prohibit the making of any payment of
monies deposited by the Company to or by the Trustee or any Paying Agent in
respect of the Securities pursuant to the provisions of this Article Thirteen.
Notwithstanding the provisions of this Article Thirteen or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the
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making of any payment of monies deposited by the Company to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article Thirteen,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative of Senior Indebtedness or
of a holder or holders of Senior Indebtedness of the Company or from any trustee
thereof; and before the receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such facts exist; provided that if on
a date not fewer than two Business Days prior to the date upon which by the
terms hereof any such monies may become payable for any purpose (including,
without limitation, the payment of the principal of, or premium, if any, or
interest on any Security) the Trustee shall not have received, with respect to
such monies, the notice provided for in this Section 13.5, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such monies deposited by the Company and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Notwithstanding anything in this Article Thirteen to the contrary,
nothing shall prevent any payment by the Trustee to the Holders of monies
deposited with it pursuant to Section 4.1, and any such payment shall not be
subject to the provisions of Section 13.1 or 13.2.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Representative or a Person representing himself to be a holder of
Senior Indebtedness of the Company (or a trustee on behalf of such holder) to
establish that such notice has been given by a Representative or a holder of
Senior Indebtedness of the Company or a trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness of the Company held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article Thirteen,
and if such evidence is not furnished the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
SECTION 13.6. Trustee's Relation to Senior Indebtedness of the Company.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Thirteen in respect of any Senior Indebtedness
of the Company at any time held by it, to the same extent as any other holder of
Senior Indebtedness of the Company, and nothing in this Indenture shall deprive
the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Thirteen, and no
implied covenants or obligations with respect to the holders of Senior
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Indebtedness of the Company shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and the Trustee shall not be
liable to any holder of Senior Indebtedness of the Company if it shall pay over
or deliver to Holders of Securities, the Company or any other Person money or
assets to which any holder of Senior Indebtedness of the Company shall be
entitled by virtue of this Article Thirteen or otherwise.
SECTION 13.7. No Impairment of Subordination.
No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
SECTION 13.8. Article Applicable to Paying Agents.
If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that the first
paragraph of Section 13.5 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.
SECTION 13.9. Senior Indebtedness of the Company Entitled to Rely.
The holders of Senior Indebtedness of the Company (including, without
limitation, Designated Senior Indebtedness) shall have the right to rely upon
this Article Thirteen, and no amendment or modification of the provisions
contained herein shall diminish the rights of such holders unless such holders
shall have agreed in writing thereto.
SECTION 13.10. Certain Conversions Deemed Payment.
For the purposes of this Article Thirteen only, (1) the issuance and
delivery of junior securities upon conversion of Securities in accordance with
Article Twelve shall not be deemed to constitute a payment or distribution on
account of the principal of (or premium, if any) or interest on Securities or on
account of the purchase or other acquisition of Securities, and (2) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 12.2), property or securities (other than junior securities)
upon conversion of a Security shall be deemed to constitute payment on account
of the principal of such Security. For the purposes of this Section 13.10, the
term "junior securities" means (a) shares of any stock of any class of the
Company (including, without limitation, the Common Stock of the Company), or (b)
securities of the Company which are
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subordinated in right of payment to all Senior Indebtedness of the Company which
may be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article Thirteen or elsewhere in this Indenture or in the Securities is intended
to or shall impair, as among the Company, its creditors other than holders of
Senior Indebtedness of the Company and the Holders, the right, which is absolute
and unconditional, of the Holder of any Security to convert such Security in
accordance with Article Twelve.
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION
OF THE HOLDER UPON A FUNDAMENTAL CHANGE
SECTION 14.1. Right to Require Repurchase.
In the event that a Fundamental Change shall occur, then each Holder
shall have the right, at the Holder's option, to require the Company to
repurchase, and upon the exercise of such right the Company shall repurchase,
all of such Holder's Securities, or any portion of the principal amount thereof
that is equal to U.S.$1,000 or any integral multiple thereof (provided that no
single Security may be repurchased in part unless the portion of the principal
amount of such Security to be Outstanding after such repurchase is equal to
U.S.$1,000 or integral multiples of U.S.$1,000 in excess thereof), on the date
(the "Repurchase Date") that is 45 days after the date of the Company Notice (as
defined in Section 14.2) at the Repurchase Price; provided, however, that
installments of interest on Securities whose Stated Maturity is on or prior to
the Repurchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the Regular Record Date
according to their terms and the provisions of Section 3.7. Such right to
require the repurchase of the Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities in accordance
with Article Four, unless a Fundamental Change shall have occurred prior to such
discharge. Whenever in this Indenture (including Sections 2.2, 3.1, 5.1(1) and
5.8) there is a reference, in any context, to the principal of any Security as
of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made.
SECTION 14.2. Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for
redemption all of the Outstanding Securities, on or before the 30th day after
the occurrence of a Fundamental Change, the Company or, at the request and
expense of the Company, the Trustee, shall give to all Holders of Securities, in
the manner provided in Section 1.6, notice (the "Company Notice") of the
occurrence
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of the Fundamental Change and of the repurchase right set forth herein arising
as a result thereof. The Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be
exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must
follow to exercise a repurchase right, and the place or places where such
Securities maturing after the Repurchase Date, are to be surrendered for payment
of the Repurchase Price and accrued interest, if any,
(5) that on the Repurchase Date the Repurchase Price, and
accrued interest, if any, will become due and payable upon each such Security
designated by the Holder to be repurchased, and that interest thereon shall
cease to accrue on and after said date, and
(6) the Conversion Price then in effect, the date on which
the right to convert the principal amount of the Securities to be repurchased
will terminate and the place or places where such Securities may be surrendered
for conversion.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or before the 30th day after the date of the
Company Notice (i) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Securities to be repurchased (and, if any Security is to be repurchased in part,
the serial number thereof, the portion of the principal amount thereof to be
repurchased and the name of the Person in which the portion thereof to remain
Outstanding after such repurchase is to be registered) and a statement that an
election to exercise the repurchase right is being made thereby, and (ii) the
Securities with respect to which the repurchase right is being exercised. Such
written notice shall be irrevocable, except that the right of the Holder to
convert the Securities with respect to which the repurchase right is being
exercised shall continue until the close of business on the Business Day prior
to the Repurchase Date.
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(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid to
the Trustee or the Paying Agent the Repurchase Price in cash, as provided above,
for payment to the Holder on the Repurchase Date together with accrued and
unpaid interest to the Repurchase Date payable with respect to the Securities as
to which their purchase right has been exercised; provided, however, that
installments of interest that mature on or prior to the Repurchase Date shall be
payable in cash, in the case of Securities, to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Regular Record Date.
(d) If any Security (or portion thereof) surrendered for
repurchase shall not be so paid on the Repurchase Date, the principal amount of
such Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 5 1/4% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (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 his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(f) All securities delivered for repurchase shall be delivered to
the Trustee, the Paying Agent or any other agents (as shall be set forth in the
Company Notice) to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.
SECTION 14.3. Merger, Consolidation, etc.
In the case of any merger, consolidation, sale or transfer of all or
substantially all of the assets of the Company to which Section 12.11 applies,
in which the Common Stock of the Company is changed or exchanged as a result
into the right to receive shares of stock and other securities or property or
assets (including cash) which includes Common Stock of the Company or common
stock of another Person that are, or upon issuance will be, traded on a United
States national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States and such shares
constitute at the time such change or exchange becomes effective in excess of
50% of the aggregate fair market value of such shares of stock and other
securities, property and assets (including cash) (as determined by the Company,
which determination shall be conclusive and binding), then the Company and the
Person resulting from such merger or consolidation or which acquires the
properties or assets (including cash) of the Company, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture (which shall comply
with
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the Trust Indenture Act as in force at the date of execution of such
supplemental indenture) modifying the provisions of this Indenture relating to
the right of Holders to cause the Company to repurchase the Securities following
a Fundamental Change, including without limitation the applicable provisions of
this Article Fourteen and the definitions of the Common Stock and Fundamental
Change, as appropriate, and such other related definitions set forth herein as
determined in good faith by the Company and the Company (which determination
shall be conclusive and binding), to make such provisions apply in the event of
a subsequent Fundamental Change to the common stock and the issuer thereof if
different from the Company and the Common Stock of the Company (in lieu of the
Company and Common Stock of the Company).
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of Securities as of such Regular Record Date, and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that no such list need be furnished so long as the Trustee is
acting as Note Registrar.
SECTION 15.2. Trustee to Furnish Company Names and Addresses of Holders.
The Trustee will furnish or cause to be furnished to the Company, or to
Company's counsel:
(a) within 10 days from the date of this Indenture, an updated
Note Register,
(b) semi-annually, not more than 15 days after the Regular Record
Date, an updated Note Register, in such form as the Company may reasonably
require, of the names and addresses of the Holders of Securities as of such
Regular Record Date,
(c) During the preparation, pendency and effectiveness of the
Shelf Registration Statement (described in the Registration Rights Agreement)
beginning thirty days after the date of this Indenture and until such time as
the Company is no longer required to maintain the effectiveness
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of such Shelf Registration Statement, the Trustee shall provide the Company on
the first and fifteenth date of every month (unless such date is a weekend or
holiday, and then on the preceding Business Day) during such period with an
updated copy of the Note Register detailing the holders of the Securities for
the preceding week, and
(d) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that no such list need be furnished so long as the Trustee is
not acting as Note Registrar.
SECTION 15.3. Preservation of Information.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 15.1, if any, and
the names and addresses of Holders received by the Trustee in its capacity as
Note Registrar. The Trustee may destroy any list furnished to it pursuant to
Section 15.1 upon receipt of a new list so furnished.
(b) If and when this Indenture has become qualified under the
Trust Indenture Act, the rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
hereunder.
SECTION 15.4. Reports by Trustee.
(a) If and when this Indenture becomes qualified under the Trust
Indenture Act, the Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) If and when this Indenture becomes qualified under the Trust
Indenture Act, a copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
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SECTION 15.5. Reports by Company.
If and when this Indenture becomes qualified under the Trust Indenture
Act, the Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with
the Trustee within 15 days after the same is so required to be filed with the
Commission.
SECTION 15.6. Reports with Respect to Registration of Securities.
The Company shall provide to the Trustee a form of Selling
Securityholder Questionnaire, within forty-five (45) days of the date of this
Indenture. Within ten (10) Business Days following the receipt of such Selling
Securityholder Questionnaire, the Trustee shall deliver to each Holder of
Securities at such time a copy of the Selling Securityholder Questionnaire in
the form provided to the Trustee by the Company. Thereafter, and until such time
as the Company is no longer required to maintain the effectiveness of the Shelf
Registration Statement (as defined in the Registration Rights Agreement), the
Trustee shall deliver, upon request of any Holder of Securities, a Selling
Securityholder Questionnaire in the form provided to the Trustee by the Company.
---------------------
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
VERITAS SOFTWARE CORPORATION
By /s/ KEN LONCHAR
---------------------------------
Name: Ken Lonchar
Title: Vice President, Finance & CFO
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., Trustee
By
---------------------------------
Name:
Title:
<PAGE> 116
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
VERITAS SOFTWARE CORPORATION
By
---------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., Trustee
By /s/ JEANIE MAR
---------------------------------
Name: JEANIE MAR
Title: ASSISTANT VICE PRESIDENT
<PAGE> 117
EXHIBIT A
VERITAS Software Corporation
1600 Plymouth Street
Mountain View, California 94043
State Street Bank and Trust Company of California, N.A.
725 South Figueroa Street, Suite 3100
Los Angeles, California 90017
Gentlemen:
We are delivering this letter in connection with an offering of 5 1/4%
Convertible Subordinated Notes due 2004 (the "Notes") which are convertible into
shares of Common Stock, $.001 par value (the "Common Stock"), of VERITAS
Software Corporation (the "Company").
We hereby confirm that:
1. we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933 (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:
2. (A) any purchase of Notes by us will be 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 (such trusts, together with accredited
investors within the meaning of Rule 501(a)(1), (2) or (3) under the
Securities Act, an "Institutional Accredited Investor") 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(l)(5)(a) of the Securities Act that is acquiring Notes as fiduciary
for the account of one or more institutions for which we exercise sole
investment discretion;
3. in the event that we purchase any Notes, we will acquire
Notes having a minimum principal amount of not less than $250,000 for
our own account or for any separate account for which we are acting;
4. we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing the Notes; and
5. we are not acquiring Notes with a view to distribution
thereof or with any present intention of offering or selling Notes or
the Common Stock issuable upon conversion
<PAGE> 118
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 Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the shares of Common Stock 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
Notes, that if in the future we decide to resell or otherwise transfer such
Notes or the Common Stock issuable upon conversion thereof, such Notes or Common
Stock may be resold or otherwise transferred only (i) to the Company or any
subsidiary thereof, or (ii) inside the United States to a person who is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, or (iii) inside the
United States to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the Trustee or transfer agent for such securities a
signed letter containing certain representations and agreements relating to the
restrictions on transfer of such securities (the form of which letter can be
obtained from such Trustee or transfer agent), or (iv) outside the United States
in a transaction meeting the requirements of Rule 904 under the Securities Act,
or (v) pursuant to the exemption from registration provided by Rule 144 under
the Securities Art (if applicable), or (vi) pursuant to a registration statement
which has been declared effective under the Securities Act (and which continues
to be effective at the time of such transfer), 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 Notes or the Common Stock issuable upon conversion thereof, as the case may
be. We further agree to provide any person purchasing any of the Notes or the
Common Stock issuable upon conversion thereof other than pursuant to clause (vi)
above from us a notice advising such purchaser that resales of such securities
are restricted as stated herein. We understand that the Trustee for the Notes
and/or the transfer agent for the Common Stock will not be required to accept
for registration of transfer any Notes or any shares of Common Stock issued upon
conversion of the Notes except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with. We
further understand that any Notes and any certificates representing Common Stock
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 Common Stock transferred pursuant to clause (vi)
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.
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<PAGE> 119
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
------------------------------
(Name of Purchaser)
By:
---------------------------
Name:
Title:
Address:
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<PAGE> 1
EXHIBIT 4.07
VERITAS SOFTWARE CORPORATION
REGISTRATION RIGHTS AGREEMENT
Dated as of
October 1, 1997
UBS Securities LLC
555 California Street, Suite 4650
San Francisco, CA 94104
Ladies and Gentlemen:
VERITAS Software Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to UBS Securities LLC (the "Initial Purchaser") upon
the terms set forth in a purchase agreement dated October 9, 1997 (the
"Purchase Agreement") between the Initial Purchaser and the Company, its 5 1/4%
Convertible Subordinated Notes due 2004. As an inducement to the Initial
Purchaser to enter into the Purchase Agreement and in satisfaction of a
condition to the obligations of the Initial Purchaser thereunder, the Company
agrees with the Initial Purchaser, (i) for the benefit of the Initial Purchaser
and (ii) for the benefit of the Holders (as defined below) from time to time of
the Registrable Securities (as defined below), including the Initial Purchaser,
as follows:
1. DEFINITIONS. Capitalized terms used herein without definition
shall have their respective meanings set forth in or pursuant to the Purchase
Agreement or the Offering Memorandum, dated October 10, 1997, in respect of the
Securities. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified Person. For purposes of this definition, control
of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall mean this Registration Rights Agreement as the same
may be amended, supplemented or modified from time to time in accordance with
the terms hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock, $0.001 par value, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture.
<PAGE> 2
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section 2(b)
hereof.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean any person that is the record owner of Registrable
Securities (and includes any person that has a beneficial interest in any
Registrable Security in book-entry form).
"Indenture" shall mean the Indenture, dated as of October 1, 1997,
between the Company and the Trustee thereunder, pursuant to which the
Securities are being issued, as amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Issue Date" means October 14, 1997.
"Liquidated Damages" has the meaning set forth in Section 2(c).
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering,
if any, as set forth in Section 6 hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities.
"Registration Default" has the meaning set forth in Section 2(c)
hereof.
"Registrable Security" shall mean any Restricted Security and any
share of Common Stock issuable upon conversion thereof except any such
Restricted Security or share of Common Stock which (i) has been effectively
registered under the Securities Act and sold in a manner contemplated by the
Registration Statement, (ii) has been transferred in compliance with Rule 144
under the Securities Act (or any successor provision thereto), or is
transferable pursuant to paragraph (k) of such Rule 144 (or any successor
provision thereto), or (iii) has otherwise been transferred and a new Security
or share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company in accordance
with the Indenture.
"Registration Default" has the meaning set forth in Section 2(c).
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<PAGE> 3
"Restricted Securities" shall mean Securities required pursuant to the
Indenture to bear the restrictive legend set forth in Section 3.4(d) of the
Indenture.
"Rule 144" shall mean Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation.
"Rule 144A" shall mean Rule 144A promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any successor rule or regulation.
"Rule 415" shall mean Rule 415 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
successor rule or regulation.
"Rule 430A" shall mean Rule 430A promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any successor rule or regulation.
"Securities" shall mean the $100,000,000 aggregate principal amount of
5 1/4% Convertible Subordinated Notes due 2004 of the Company being issued
pursuant to the Indenture (together with up to $15,000,000 aggregate principal
amount of 5 1/4% Convertible Subordinated Notes due 2004 if, and to the extent,
the Initial Purchaser's over-allotment option is exercised).
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Shelf Registration" means a registration effected pursuant to Section
2 hereof.
"Shelf Registration Statement" means a shelf registration statement of
the Company pursuant to the provisions of Section 2 hereof filed with the
Commission, which covers some or all of the Registrable Securities, as
applicable, on Form S-3 or other appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the Commission,
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Special Counsel" means any special counsel to the Holders, determined
as provided in Section 4 hereof.
"Trust Indenture Act" has the meaning set forth in Section 1.1 of the
Indenture.
"Trustee" means the Trustee under the Indenture.
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<PAGE> 4
"underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION.
(a) The Company shall, within 120 calendar days following
the Issue Date, file with the Commission a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the Holders
from time to time in accordance with the methods of distribution elected by
such Holders and set forth in such Shelf Registration Statement and,
thereafter, shall use its reasonable efforts to cause such Shelf Registration
Statement to be declared effective under the Securities Act within 180 calendar
days after the Issue Date.
(b) The Company shall use its reasonable efforts:
(i) Subject to Section 3(t), to keep the Shelf
Registration Statement continuously effective in order to
permit the Prospectus forming part thereof to be usable by
Holders for a period of two years from the later of (a) the
Issue Date or (b) the last date of original issuance of the
Securities or such shorter period that will terminate upon the
earliest of the following: (A) when all the Securities covered
by the Shelf Registration Statement have been sold pursuant to
the Shelf Registration Statement, (B) when all shares of
Common Stock issued upon conversion of any such Securities
that had not been sold pursuant to the Shelf Registration
Statement have been sold pursuant to the Shelf Registration
Statement and (C) when there shall cease to be outstanding
Registrable Securities (in any such case, such period being
called the "Effectiveness Period"); and
(ii) After the effectiveness of the Shelf
Registration Statement, promptly upon the request of any
Holder, to take any action reasonably necessary to register
the sale of any Registrable Securities of such Holder and to
identify such Holder as a selling securityholder.
The Company shall be deemed not to have used its reasonable efforts to keep the
Shelf Registration Statement effective during the requisite period if the
Company voluntarily takes any action that would result in Holders of
Registrable Securities covered thereby not being able to offer and sell any
such Registrable Securities during that period, unless (i) such action is
required by applicable law, (ii) the continued effectiveness of the Shelf
Registration Statement would require the Company to disclose a material
financing, acquisition or other corporate transaction, and the Board of
Directors shall have determined in good faith that such disclosure is not in
the best interests of the Company and the holders of its outstanding Common
Stock, or (iii) the Board of Directors shall have determined in good faith that
there is a valid business purpose or reason for such suspension, and (x), in
the case of clause (i) above, the Company thereafter promptly complies with the
requirements of paragraph 3(i) below and (y) the Company complies with its
obligations, if any, to pay Liquidated Damages (as defined below).
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<PAGE> 5
(c) (1) If (i) on or prior to 120 days
following the Issue Date a Shelf Registration Statement has not been
filed with the Commission or (ii) on or prior to the 180th day
following the Issue Date, such Shelf Registration Statement is not
declared effective (each, a "Registration Default"), additional
interest ("Liquidated Damages") will accrue on the Restricted
Securities from and including the date following such Registration
Default until such time as such Shelf Registration Statement is filed
or such Shelf Registration Statement is declared effective, as the
case may be. Liquidated Damages will be paid semi-annually in
arrears, with the first semi-annual payment due on the first Interest
Payment Date under the Indenture following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per
annum equal to an additional one-quarter of one percent (0.25%) of the
principal amount, to and including the 90th day following such
Registration Default and one-half of one percent (0.50%) thereof from
and after the 91st day following such Registration Default. In the
event that Shelf Registration Statement ceases to be effective for
more than 90 days or the Company suspends the use of the prospectus
which is a part thereof for more than 90 days, whether or not
consecutive, during any 12-month period, then the interest rate borne
by Restricted Securities will increase by an additional one-half of
one percent (0.50%) per annum from the 91st day of the applicable
12-month period such Shelf Registration Statement ceases to be
effective or the Company suspends the use of the prospectus which is a
part thereof, as the case may be, until the earlier of such time as
(i) the Shelf Registration Statement again becomes effective, (ii) the
use of the related prospectus ceases to be suspended or (iii) the
Effectiveness Period expires. Following the cure of all Registration
Defaults relating to any Restricted Securities, the accrual of
Liquidated Damages with respect to such Restricted Securities will
cease (without in any way limiting the effect of any subsequent
Registration Default). In no event shall the Company be required to
pay Liquidated Damages in excess of the applicable maximum amount of
one-half of one percent (0.50%) set forth above, regardless of whether
one or multiple Registration Defaults exist.
(2) Liquidated Damages on the Restricted
Securities shall be paid by the Company to the holders of record of such
Restricted Securities on each Interest Payment Date (as defined in the
Indenture) in the same manner as for interest on such Restricted Securities as
provided in the form of Securities set forth in Section 2.2 of the Indenture.
(3) All of the Company's obligations set forth in
this Section 2(c) which are unsatisfied to any extent with respect to any
Restricted Security at the time such security ceases to be a Restricted
Security shall survive until such time as all such obligations with respect to
such security have been satisfied in full (notwithstanding the earlier
termination of this Agreement).
(4) Any payments due and payable pursuant to this
Section 2(c) shall be subordinated to Senior Indebtedness (as defined in the
Indenture) to the extent and in the manner set forth in the Indenture.
(5) The parties hereto agree that the Liquidated
Damages provided for in this Section 2(c) constitute a reasonable estimate of
the damages that may be incurred by
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<PAGE> 6
holders of record of Restricted Securities (other than the Initial Purchaser)
by reason of the failure of the Shelf Registration Statement to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Restricted Securities, as the case may be, in accordance
with the provisions hereof. The Trustee under the Indenture shall be entitled,
on behalf of the holders of Restricted Securities, to seek any available remedy
for the enforcement of this Agreement, including for the payment of such
Liquidated Damages. Notwithstanding the foregoing, the parties agree that the
sole contractual 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 holder of Restricted Securities
from pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement.
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to the Special Counsel and
Holders (if requested), prior to the filing thereof with the
Commission, a copy of any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein and shall use its reasonable efforts to
reflect in each such document, when so filed with the Commission, such
comments as the Special Counsel and Holders reasonably may propose.
(b) The Company shall take such reasonable action as may
be necessary so that from and after the effective date of the Shelf
Registration Statement (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all
material respects with the Securities Act and the Exchange Act, (ii)
any Shelf Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading, in each case
subject to Section 3(t).
(c) (1) The Company shall advise the Initial
Purchaser and, in the case of clause (i), the Holders and, if
requested by the Initial Purchaser or any such Holder, confirm such
advice in writing:
(i) when a Shelf Registration Statement
and any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement
or any post effective amendment thereto has become
effective; and
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<PAGE> 7
(ii) of any request by the Commission for
amendments or supplements to the Shelf Registration
Statement or the Prospectus included therein or for
additional information.
(2) The Company shall advise the Holders and, if
requested by any such Holder, confirm such advice in writing
of:
(i) the issuance by the Commission of
any stop order suspending effectiveness of the Shelf
Registration Statement or the initiation of any
proceedings for that purpose;
(ii) the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included therein for
sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(iii) the happening of any event that
requires the making of any changes in the Shelf
Registration Statement or the Prospectus so that, as
of such date, the Shelf Registration Statement and
the Prospectus do not contain an untrue statement of
a material fact and do not omit to state a material
fact required to be stated therein or necessary to
make the statements therein (in the case of the
Prospectus, in light of the circumstances under which
they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been
made).
(d) The Company shall use its reasonable efforts to
prevent the issuance, and if issued to obtain the withdrawal, of any
order suspending the effectiveness of any Shelf Registration Statement
at the earliest possible time.
(e) The Company shall furnish to the Special Counsel and
each Holder (if requested) with respect to a Shelf Registration
Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so
requests in writing, all reports, other documents and exhibits
(including those incorporated by reference).
(f) The Company shall, during the Effectiveness Period,
deliver to each Holder with respect to a Shelf Registration Statement,
without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement
and any amendment or supplement thereto as such Holder may reasonably
request, and the Company consents (except during the continuance of
any event described in Section 3(c)(2)(iii)) to the use of the
Prospectus or any amendment or supplement thereto by each of the
Holders in connection with the offering and sale of the Registrable
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<PAGE> 8
Securities covered by the Prospectus or any amendment or supplement
thereto during the Effectiveness Period.
(g) Prior to any offering of Registrable Securities
pursuant to any Shelf Registration Statement, the Company shall
register or qualify or cooperate with the Special Counsel and Holders
in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holders reasonably request
in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the
Registrable Securities covered by such Shelf Registration Statement;
provided, however, that in no event shall the Company be obligated to
(i) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to so
qualify but for this Section 3(g), (ii) file any general consent to
service of process in any jurisdiction where it is not as of the date
hereof then so subject or (iii) subject itself to taxation in any
jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in
book-entry only form, the Company shall cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such
permitted denominations and registered in such names as Holders may
request in connection with the sale of Registrable Securities pursuant
to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, and subject to Section 3(t), the Company
shall promptly prepare a post-effective amendment to any Shelf
Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities included
therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If the Company notifies the Holders of the
occurrence of any event contemplated by paragraph 3(c)(2)(iii) above
or Section 3(t), the Holders shall suspend the use of the Prospectus
until the requisite changes to the Prospectus have been made.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company shall provide a CUSIP
number for the Securities registered under such Shelf Registration
Statement.
(k) The Company shall use its reasonable efforts to
comply with all applicable rules and regulations of the Commission and
shall make generally available to their securityholders or otherwise
provide in accordance with Section 11(a) of the Securities Act as soon
as practicable after the effective date of the applicable Shelf
Registration Statement an earnings statement satisfying the provisions
of Section 11(a) of the Securities Act.
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<PAGE> 9
(l) The Company shall cause the Indenture and the
Securities to be qualified under the Trust Indenture Act in a timely
manner; and in connection with such qualification, the Company shall
cooperate with the Trustee under the Indenture and the Holders (as
defined in the Indenture) to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance
with the terms of the Trust Indenture Act; and the Company shall
execute and use all reasonable efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and
all other forms and documents required to be filed with the Commission
to enable such Indenture to be so qualified in a timely manner.
(m) The Company may require each Holder with respect to a
Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of Registrable
Securities held by such Holder as may be required by applicable law or
regulation for inclusion in such Shelf Registration Statement
(including, without limitation, the information required by Item 507
of Regulation S-K of the Securities Act), and the Company may exclude
from such registration the Registrable Securities of any Holder that
fails to furnish such information within a reasonable time after
receiving such request unless, and until such time as, such
information is furnished by such Holder.
(n) The Company shall enter into such customary
agreements (including underwriting agreements in customary form) to
take all other appropriate actions in order to expedite or facilitate
the registration or the disposition of the Registrable Securities, and
in connection therewith, if an underwriting agreement is entered into
pursuant to an underwritten offering in accordance with the provisions
of Section 6, cause the same to contain indemnification provisions and
procedures substantially identical to those set forth in Section 5 (or
such other provisions and procedures acceptable to the Managing
Underwriters, if any) with respect to all parties to be indemnified
pursuant to Section 5.
(o) The Company shall make reasonably available for
inspection by one representative of the Holders designated in writing
by the Holders of a majority of the Registrable Securities to be
registered thereunder, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any
attorney, accountant or other agent retained by such representative or
any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries; 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, 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
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<PAGE> 10
information becomes available to any such person from a source other
than the Company and such source is not bound by a confidentiality
agreement.
(p) The Company shall cause the Company's officers,
directors and employees to make reasonably available for inspection
all relevant information reasonably requested by such representative
or any such underwriter, attorney, accountant or agent in connection
with any such Shelf Registration Statement, in each case, as is
customary for similar due diligence examinations; provided, however,
that such persons 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, 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.
(q) The Company will use its reasonable efforts to cause
the Common Stock issuable upon conversion of the Securities to be
admitted for quotation on the Nasdaq National Market or other stock
exchange or trading system on which the Common Stock primarily trades
on or prior to the effective date of any Shelf Registration Statement
hereunder.
(r) In the event that any broker-dealer registered under
the Exchange Act shall underwrite any Registrable Securities or
participate as a member of an underwriting syndicate or selling group
or "assist in the distribution" (within the meaning of the Rules of
Fair Practice and the By-Laws of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of
such Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise, assist
such broker-dealer in complying with the requirements of such Rules
and By-Laws, including, without limitation, by (A) such Rules or
By-Laws, including Schedule E thereto, shall so require, engaging a
"qualified independent underwriter" (as defined in Schedule E) to
participate in the preparation of the Shelf Registration Statement
relating to such Registrable Securities and to exercise usual
standards of due diligence in respect thereto, (B) indemnifying any
such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 5 hereof and (C)
providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the
Rules of Fair Practice of the NASD.
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<PAGE> 11
(s) The Company shall use its reasonable efforts to take
all other steps necessary to effect the registration, offering and
sale of the Registrable Securities covered by the Shelf Registration
Statement contemplated hereby.
(t) Notwithstanding any provision of this Section 3 to
the contrary, the Company shall not be required to amend or supplement
the Shelf Registration Statement or the related Prospectus pursuant to
the requirements of Sections 3(b), 3(c), 3(i) or 3(s) hereof if (i)
such amendment or supplement would require the Company to disclose a
material financing, acquisition or corporate transaction or
development and the Board of Directors shall have determined that such
disclosure is not in the best interests of the Company and the holders
of its outstanding Common Stock or (ii) the Board of Directors shall
have determined in good faith that there is a valid business purpose
or reason for suspending the use of the Prospectus included in such
Shelf Registration Statement in accordance with Section 3(i) hereof
instead of making such amendment or supplement, provided, that, in
each such case the Company complies with its obligations, if any, to
pay Liquidated Damages. If the Company notifies the Holders of the
occurrence of any event contemplated by paragraph 3(c)(2)(iii) or this
Section 3(t), the Holders shall suspend the use of the Prospectus
until the requisite changes to the Prospectus have been made.
(u) The Company shall file, within five Business Days of
the receipt from any Holder that includes such information regarding
the distribution of such Holder's Registrable Securities with respect
to such Holder as is required by law to be disclosed in the applicable
Registration Statement (the "Requisite Information"), a Prospectus
supplement pursuant to Rule 424 to amend or supplement such
Registration Statement to include in the Registration Statement the
Requisite Information as to such Holder (and the Registrable
Securities held by such Holder), and the Company shall provide such
Holder and the Special Counsel within five Business Days of such
notice with a copy of such Prospectus as so amended or supplemented
containing the Requisite Information in order to permit such Holder to
comply with the Prospectus delivery requirements of the Securities Act
in a timely manner with respect to any proposed disposition of such
Holder's Registrable Securities. Each Holder agrees, by acquisition
of the Registrable Securities, that no Holder of Registrable
Securities shall be entitled to sell such Registrable Securities
pursuant to the Shelf Registration Statement unless such Holder has
furnished the Company with the Requisite Information.
4. REGISTRATION EXPENSES. Except as otherwise provided in
Section 6, the Company shall bear all fees and expenses incurred in connection
with the performance of its obligations under Sections 2 and 3 hereof and shall
bear or reimburse the Holders for the reasonable fees and disbursements of a
Special Counsel designated by the Company. For purposes of this Agreement, the
Company initially appoints Wilson Sonsini Goodrich & Rosati, P.C. as Special
Counsel; provided, that, the Holders of a majority of the Registrable
Securities covered by the Shelf Registration Statement have the right pursuant
to this Agreement to substitute another firm of counsel as Special Counsel
under this Agreement.
-11-
<PAGE> 12
5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any
Shelf Registration Statement, the Company shall indemnify and hold harmless
each Holder, the Initial Purchaser, each underwriter who participates in an
offering of Registrable Securities, each person, if any, who controls any of
such parties within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act and each of their respective directors, officers,
employees, trustees and agents, as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, including any amounts paid in settlement of
any investigation, litigation, proceeding or claim, joint or several,
as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration
Statement (or any amendment thereto) covering Registrable Securities,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, that, the Company shall not be liable under
this clause (i) for any settlement of any action effected without its
written consent, which consent shall not be unreasonably withheld; and
(ii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of counsel chosen by the Holders,
such Holder or any underwriter (except to the extent otherwise
expressly provided in Section 5(c) hereof)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under subparagraph (i) of this Section 5(a);
provided, that, this indemnity shall not apply to any loss, liability, claim,
damage or expense (A) to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by such Holder or
any underwriter in writing expressly for use in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) or (B) such untrue statement or omission or alleged untrue
statement or omission is corrected in an amendment or supplement to the
Prospectus and 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 loss, liability,
claim, damages or expense results. Any amounts advanced by the Company to an
indemnified party pursuant to this Section 5 as a result of such losses shall
be returned to the Company if it shall be finally determined by such a court in
a judgment not subject to appeal or final review that such indemnified party
was not entitled to indemnification by the Company.
-12-
<PAGE> 13
(b) Each Holder shall agree, severally and not jointly, to
indemnify and hold harmless the Company, each underwriter who participates in
an offering of Registrable Securities and the other Holders and each of their
respective directors, officers (including each officer of the Company who
signed the Shelf Registration Statement), employees, trustees and agents and
each Person, if any, who controls the Company, any underwriter or any other
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all loss, liability, claim, damage
and expense whatsoever described in the indemnity contained in Section 5(a)(i)
and (ii) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Holder expressly for use
in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto); provided, however, that,
no such Holder shall be liable for any claims hereunder in excess of the amount
of net proceeds received by such Holder from the sale of Registrable Securities
pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers served on
such indemnified party, but failure to so notify an indemnifying party shall
not relieve it of any liability which it may have to the indemnified party
otherwise than on account of this indemnity agreement. An indemnifying party
may participate at its own expense in the defense of any such action. If an
indemnifying party so elects within a reasonable time after receipt of such
notice, such indemnifying party, jointly with any other indemnifying party, may
assume the defense of such action with counsel chosen by it and approved by the
indemnified party or parties defendant in such action, provided, that, if any
such indemnified party reasonably determines that there may be legal defenses
available to such indemnified party which are different from or in addition to
those available to such indemnifying party or that representation of such
indemnifying party and any indemnified party by the same counsel would present
a conflict of interest, then such indemnifying party or parties shall not be
entitled to assume such defense. If an indemnifying party is not entitled to
assume the defense of such action as a result of the proviso to the preceding
sentence, counsel for such indemnifying party shall be entitled to conduct the
defense of such indemnifying party and counsel for each indemnified party or
parties shall be entitled to conduct the defense of such indemnified party or
parties. If an indemnifying party assumes the defense of an action in
accordance with and as permitted by the provisions of this paragraph, such
indemnifying party shall not be liable for any fees and expenses of counsel for
the indemnified parties incurred thereafter in connection with such action. In
no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from its own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. 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
-13-
<PAGE> 14
and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than forty-five (45) days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity provision agreement provided for in this
Section 5 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company and the Holders
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Holders, as incurred; provided, that, 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 that was not
guilty of such fraudulent misrepresentation. As between the Company, on the
one hand, and the Holders, on the other hand, such parties shall contribute to
such aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company, on the one hand, and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Holders, 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 Company, on the one hand, or by or on behalf of the Holders, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Each of the Company and the Initial Purchaser agrees, and the Holders
shall agree, that it would not be just and equitable if contribution pursuant
to this Section 5 were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 5(d), each director, officer,
employee, trustee, agent and Person, if any, who controls a Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Holder, and each director,
officer, employee, trustee and agent of the Company, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
the Company. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent.
(e) The Company may require, as a condition to including any
Registrable Securities in any Registration Statement filed and to entering into
any underwriting agreement with respect
-14-
<PAGE> 15
thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from the Holder of such Registrable Securities and from each
underwriter named in any such underwriting agreement, severally and not
jointly, to comply with the provisions of paragraphs (a) through (d) of this
Section 5.
6. UNDERWRITTEN OFFERING. The Holders who desire to do so may
sell Registrable Securities in an underwritten offering. In any such
underwritten offering, the investment banker or bankers and manager or managers
that will administer the offering will be selected by, and the underwriting
arrangements with respect thereto will be approved by the Holders of a majority
of the Registrable Securities to be included in such offering; provided,
however, that (i) such investment bankers and managers and underwriting
arrangements must be reasonably satisfactory to the Company and (ii) the
Company shall not be obligated to arrange for more than one underwritten
offering during the Effectiveness Period. No Holder may participate in any
underwritten offering contemplated hereby unless such Holder (a) agrees to sell
such Holder's Registrable Securities in accordance with any approved
underwriting arrangements, (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such approved
underwriting arrangements and (c) at least 20% of the outstanding Registrable
Securities are included in such underwritten offering. The Holders
participating in any underwritten offering shall be responsible for any
expenses customarily borne by selling securityholders, including underwriting
discounts and commissions and fees and expenses of counsel to the selling
securityholders and shall reimburse the Company for the fees and disbursements
of their counsel, their independent public accountants and any printing
expenses incurred in connection with such underwritten offerings.
Notwithstanding the foregoing or the provisions of Section 6(a) hereof, upon
receipt of a request from the Managing Underwriter or a representative of
Holders of a majority of the Registrable Securities outstanding to prepare and
file an amendment or supplement to the Shelf Registration Statement and
Prospectus in connection with an underwritten offering, the Company may delay
the filing of any such amendment or supplement for up to 90 days if the Company
in good faith has a valid business reason for such delay.
The Company shall in connection with an underwritten offering in
accordance with the provisions of this Section:
(a) The Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to
a Shelf Registration Statement, such information as the Managing
Underwriters administering an underwritten offering of Registrable
Securities registered thereunder reasonably request to be included
therein and to which the Company does not reasonably object and shall
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after they are
notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment;
(b) make such representations and warranties to the
Holders and the underwriters in form, substance and scope as are
customarily made by the Company to
-15-
<PAGE> 16
underwriters in primary underwritten offerings and covering matters,
including, but not limited to, those set forth in the Purchase
Agreement;
(c) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the Managing Underwriters)
addressed to each Holder and the underwriters covering such matters as
are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
such Holders and underwriters (it being agreed that the matters to be
covered by such opinion or written statement by such counsel delivered
in connection with such opinions shall include in customary form,
without limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from
such Shelf Registration Statement and the prospectus included therein,
as then amended or supplemented, including the documents incorporated
by reference therein, of an untrue statement of a material fact or the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading);
(d) obtain "cold comfort" letters and updates thereof
from the independent public accountants of the Company (and, if
necessary, any other independent public accountants of any subsidiary
of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be,
included in the Shelf Registration Statement), addressed to the
underwriters in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
primary underwritten offerings; and
(e) deliver such documents and certificates as may be
reasonably requested by any such Holders and the Managing
Underwriters, including those to evidence compliance with Section 3(i)
and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
7. MISCELLANEOUS.
(a) Other Registration Rights. The Company may grant
registration rights that would permit any Person that is a third party the
right to include securities held by such Person on any Shelf Registration
Statement, provided, that, if the Managing Underwriter, if any, of such
offering delivers an opinion to the Holders that the total amount of securities
which they and the holders of such registration rights intend to include in any
Shelf Registration Statement is so large as to materially adversely affect the
success of such offering (including the price at which such securities can be
sold), then only the amount, the number or kind of securities to be offered for
the account of holders of such registration rights will be reduced to the
extent necessary to reduce the total amount of securities to be included in
such offering to the amount, number or kind recommended by the Managing
Underwriter prior to any reduction in the amount of Registrable Securities to
be included.
-16-
<PAGE> 17
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
express prior written consent of UBS Securities LLC.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand- delivery,
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address
given by such Holder to the Company in accordance with the
provisions of this Section 7(c);
(2) if to the Initial Purchaser, initially at the
address set forth in the Purchase Agreement;
(3) if to the Company, initially at its address
set forth in the Purchase Agreement; and
(4) if to the Special Counsel, the address given
by such Special Counsel to the Company in accordance with the
provisions of this Section 7(c).
All such notices and communications shall be deemed to have been duly given
when received.
The Initial Purchaser, the Company and the Special Counsel by notice
to the others may designate additional or different addresses for subsequent
notices or communications.
(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties and the Holders, including, without the need for an express assignment
or any consent by the Company thereto, subsequent Holders of Registrable
Securities. The Company hereby agrees to extend the benefits of this Agreement
to any Holder of Registrable Securities and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of New York, United
States of America, without giving effect to any provisions relating to
conflicts of laws.
-17-
<PAGE> 18
(h) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected thereby, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
-18-
<PAGE> 19
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
VERITAS SOFTWARE CORPORATION
By: /s/ KEN LONCHAR
--------------------------
Name: Ken Lonchar
Title: Vice President, Finance
CFO
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
By: UBS Securities LLC
By:
--------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 20
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
VERITAS SOFTWARE CORPORATION
By:
--------------------------
Name: Ken Lonchar
Title: Vice President, Finance
CFO
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
By: UBS Securities LLC
By: SIGNATURE ILLEGIBLE
--------------------------------
Name: NAME ILLEGIBLE
-----------------------------
Title: Managing Director
----------------------------
<PAGE> 1
EXHIBIT 11.1
VERITAS SOFTWARE CORPORATION
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
------- ------ ------- -------
<S> <C> <C> <C> <C>
Net income............................... $6,734 $3,250 $10,471 $7,660
====== ====== ======= ======
Weighted average common shares
outstanding............................ 30,497 29,796 30,342 28,087
Common equivalent shares from stock
options (treasury stock method)........ 2,938 1,931 2,451 2,644
------ ------ ------- ------
Total shares for primary and fully
diluted net income per share........... 33,435 31,727 32,793 30,731
====== ====== ======= ======
Net income per share..................... $ 0.20 $ 0.10 $ 0.32 $ 0.25
====== ====== ======= ======
</TABLE>
All share and per share amounts for prior periods have been adjusted to reflect
a 3 for 2 stock split effective September 15, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,838
<SECURITIES> 57,146
<RECEIVABLES> 32,328
<ALLOWANCES> 1,776
<INVENTORY> 0
<CURRENT-ASSETS> 109,407
<PP&E> 21,086
<DEPRECIATION> 11,845
<TOTAL-ASSETS> 119,318
<CURRENT-LIABILITIES> 28,634
<BONDS> 0
0
0
<COMMON> 183,620
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 119,318
<SALES> 67,719
<TOTAL-REVENUES> 85,365
<CGS> 2,819
<TOTAL-COSTS> 74,151
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,786
<INCOME-TAX> 3,315
<INCOME-CONTINUING> 10,471
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,471
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
