As filed with the Securities and Exchange Commission on June 10, 1996
Registration No. 33-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SCI SYSTEMS, INC.
- -----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-0583436
- ------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o SCI Systems (Alabama), Inc., 2101 West Clinton Avenue, Huntsville, Alabama
35805, (302) 998-0592
- -------------------------------------------------------------------------------
(Address, including zip code, and telephone, including area code, of
registrant's principal executive offices)
Olin B. King, Chairman of the Board,
c/o SCI Systems (Alabama), Inc., 2101 West Clinton Avenue, Huntsville, Alabama
35805, (205) 882-4600
- -------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
G. WILLIAM SPEER, ESQ.
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 572-6600
(Approximate date of commencement of proposed sale to the public) At such time
or times after this Registration Statement becomes effective as the Selling
Holders may determine. If of the only securities being registered on this form
are to be offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
<PAGE>
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ] If this Form is filed to
register additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
- --------------------------------------------------------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(C) under
the Securities Act, check the following box and list the Securities Act
registration statement for the same offering. [ ]
- --------------------------------------------------------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of each maximum maximum
class of securities Amount to be offering price per aggregate offering Amount of
to be registered Registered unit price registration fee
(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(a) 5% Convertible
Subordinated Notes due 2006
$287,500,000 100% $287,500,000 $99,137.93
- ------------------------------------------------------------------------------------------------------------------------------------
(b) Common Stock, $.10
par value per share
N/A N/A N/A
5,897,435 (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of calculating registration fee pursuant to
Rule 457(I) under the Securities Act of 1933, as amended.
(2) Issuable upon conversion of the Notes registered hereby. Includes such
indeterminable number of shares of Common Stock as may be issued on conversion
of the Notes by reason of adjustment of the conversion rate in certain cases
outlined in the Prospectus. Such Common Stock will, if issued, be issued for no
additional consideration, and therefore no registration fee is required.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission acting pursuant to said Section
8(a) may determine.
<PAGE>
[Side bar]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such State. [End
of side bar]
SUBJECT TO COMPLETION DATED JUNE 10, 1996
SCI Systems, Inc.
5% Convertible Subordinated Debentures
Due 2006
This Prospectus relates to the 5% Convertible Subordinated Notes Due 2006 (the
"Notes") of SCI Systems, Inc. ("SCI") or (the "Company") and the shares of the
Company's Common Stock, par value $.10 per share ("Common Stock"), issuable upon
the conversion of the Notes. The Notes were issued and sold on April 23 and 26,
1996 (the "Original Offering") in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
to persons reasonably believed by Salomon Brothers Inc, Merrill Lynch & Co. and
Montgomery Securities, as the initial purchasers ("Initial Purchasers") of the
Notes, to be "qualified institutional buyers" (as defined by Rule 144A under the
Securities Act), other institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) or in transactions
complying with the provisions of Regulation S under the Securities Act. The
Notes and the Common Stock issuable upon the conversion thereof may be offered
and sold from time to time by holders named herein or by their transferees,
pledgees, donees or their successors (collectively, the "Selling Holders")
pursuant to this Prospectus. The Registration Statement of which this Prospectus
is a part has been filed with the Securities and Exchange Commission (the
"Commission")pursuant to a registration agreement dated as of April 23, 1996
(the "Registration Agreement") between the Company and the Initial Purchasers,
entered into in connection with the Original Offering.
The Notes will mature on May 1, 2006. Interest on the Notes will be paid
semi-annually on May 1 and November 1 of each year, commencing November 1, 1996.
The Notes are convertible at the option of the holder thereof, at any time after
90 days following the date of original issuance thereof and prior to maturity,
unless previously redeemed, into shares of Common Stock of the Company at a
conversion price of $48.75 per share, subject to adjustment in certain events.
On June 7, 1996, the last reported sale price of the Common Stock on the Nasdaq
Stock Market's National Market (Symbol SCIS) was $43.50 per share. The Notes are
redeemable, in whole or in part, at the option of the Company at any time after
May 1, 1999, at the redemption prices set forth herein, together with accrued
interest. The Notes do not provide for any sinking fund. Upon a Designated Event
(as defined), holders of the Notes will have the right, subject to certain
restrictions and conditions, to require the Company to purchase all or any part
of the Notes at a purchase price equal to 101% of the principal amount thereof,
together with accrued and unpaid interest to the date of purchase.
The Notes are unsecured obligations of the Company and will be
subordinate in right of payment to all existing and future Senior Indebtedness
(as defined) of the Company. The Notes will also be structurally subordinated to
all liabilities of the Company's subsidiaries. As of March 24, 1996, the Company
had approximately $217 million of indebtedness that would have constituted
Senior Indebtedness.
The Notes and the Common Stock issuable upon the conversion of the
Notes may be sold by the Selling Holders from time to time directly to
purchasers or through agents, underwriters or dealers. See "Plan of
Distribution." If required, the names of any such agents or underwriters
involved in the sale of the Notes and the Common Stock issuable upon the
conversion of the Notes in respect of which this Prospectus is being delivered
and the applicable agent's commission, dealer's purchase price or underwriter's
discount, if any, will be set forth in the accompanying supplement to this
Prospectus (the "Prospectus Supplement").
The Selling Holders will receive all of the net proceeds in the sale of
the Notes and the Common Stock issuable upon the conversion of the Notes and
will pay all underwriting discounts and selling commissions, if any, applicable
to the sale of the Notes and the Common Stock issuable upon the conversion of
the Notes.
The Selling Holders and any broker-dealers, agents or underwriters
which participate in the distribution of the Notes and the Common Stock issuable
upon the conversion of the Notes may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commission received by them and any
profit on the resale of the Notes and the Common Stock issuable upon the
conversion of the Notes purchased by them may be deemed to be underwriting
commissions and discounts under the Securities Act. See "Plan of Distribution"
for a description of indemnification arrangements.
Prospective investors should carefully consider the matters discussed
under the caption "Risk Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is June 10, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, NW, Washington, D.C. 20549, and at
the Commission's Regional Offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048; and at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, NW, Washington, D.C. 20549, at prescribed rates. The Company's Common
Stock is listed on the Nasdaq National Market System, 1735 K Street, N.W.,
Washington, D.C. 20006, and reports, proxy statements and other information
concerning the Company can be inspected at said exchange.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein together with all amendments and exhibits thereto, called the
"Registration Statement") under the Securities Act with respect to the
securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth or incorporated by reference in the Registration
Statement and the exhibits and schedule relating thereto, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered by this Prospectus, reference is made to the Registration
Statement and the exhibits filed or incorporated as a part thereof, which are on
file at the offices of the Commission and may be obtained upon payment of the
fee prescribed by the Commission, or may be examined without charge at the
offices of the Commission. Statements contained in this Prospectus as to the
contents of any documents referred to are not necessarily complete, and, in each
such instance, are qualified in all respects by reference to the applicable
documents filed with the Commission.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(I) The Company's Proxy Statement for its Annual Meeting of Shareholders
dated October 27, 1995;
(ii) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995 (including portions of the Company's 1995
Annual Report to Shareholders, incorporated therein by reference);
(iii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 24, 1995;
(iv) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 24, 1995;
(v) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 24, 1996; and
(vi) The Company's Current Reports on Form 8-K filed with the Commission
on August 22, 1995 and April 15, 1996.
In addition, all reports and other documents filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Notes shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing such documents. ANY statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits not specifically incorporated by
reference into such documents). Requests for such documents should be directed
to SCI Systems, Inc., Attn.: Investor Relations, 2000 Ringwood Avenue, San Jose,
California 95131 (408) 943-9000; or Ronald G. Sibold, Treasurer, SCI Systems,
Inc., c/o SCI Systems (Alabama), Inc., P.O. Box 1000, Huntsville, Alabama 35807,
(205) 882-4131.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and is subject to,
the detailed information, Consolidated Financial Statements and Notes thereto
contained elsewhere or incorporated by reference in this Prospectus.
Prospective investors should carefully consider the factors set forth under
the caption "Risk Factors." As used herein, "SCI" and the "Company" refer to
SCI Systems, Inc. and its subsidiaries, unless the context otherwise
requires.
The Company
SCI Systems is the largest global supplier of full-service contract
manufacturing to the electronics industry, providing a broad range of
manufacturing services to original equipment manufacturers (OEMs) in the
computer, telecommunications, medical, aerospace and defense, and
entertainment industries. SCI's strategically located plants in North
America, Western Europe and East Asia manufacture components, subassemblies,
and finished products for the Company's diversified and growing base of
commercial customers, including Hewlett-Packard, Tandem Computers, IBM, Apple
Computer, and Digital Equipment Corporation. The Company operates the largest
surface mount technology (SMT) capacity in the merchant market with 148
automated SMT lines and 42 automated pin-in-hole (PIH) assembly lines
installed in twenty plants in eight countries.
SCI has experienced rapid revenue growth in recent periods. In the fiscal
year ended June 30, 1995, revenues increased 44% to $2.67 billion from $1.85
billion a year earlier. For the nine months ended March 24, 1996, revenues
grew 74% to $3.19 billion from $1.83 billion in the prior fiscal year's
comparable period. The Company is benefiting from an ongoing shift to
outsourcing as OEMs seek solutions to rapidly changing manufacturing
technologies, new product proliferation, shorter product life cycles, intense
cost pressures and heightened user reliability and quality expectations.
The key elements of SCI's focus are quality products, competitive pricing
and customer responsiveness. The Company implements this philosophy through
the continuous upgrading of its technology and systems, geographic expansion
to remain close to customers, and management commitment to quality
improvement. The Company is committed to maintaining modern manufacturing
technologies, with current equipment additions focusing on evolving SMT
processes and a range of microelectronic assembly processes. The Company has
also expanded the number of production lines devoted to finished product
assembly, burn-in, and test to meet a growing number of customers'
requirements.
An essential element of the Company's infrastructure is a multitiered
configuration of information systems which utilize both standard and
customized software to implement advanced applications at mainframe, server,
and desktop levels. Significant upgrades and expansions of system hardware,
software, and communications elements have been implemented. These systems
are increasingly interlinked with counterpart customer systems to implement
order flow, production status information, billing, and material management
in a timely manner.
<PAGE>
The Company maintains a continuous program of manufacturing process,
system, and product development. Computer aided design centers are employed
at strategic regional plants in support of domestic and foreign customers.
Much of the Company's design automation emphasis is currently focused upon
surface mount technology and advanced manufacturing processes. New product
development is usually undertaken in support of customer requirements.
All of the Company's manufacturing facilities are registered to the quality
requirements of the International Organization for Standardization (ISO
9000), as is its purchasing organization. The Company has received numerous
quality awards from its customers which include many of the largest personal
computer and peripheral product OEMs.
Recent Developments
On May 31, 1996 the Company finalized an agreement with Apple Computer,
Inc. ("Apple") to purchase Apple's 360,000 square foot Fountain, Colorado
manufacturing plant (the "Fountain Facility"). The Fountain Facility provided
manufacturing services in support of Apple's product requirements for the
Americas. The Fountain Facility manufactures subassemblies and finished
computers for Apple, and employed approximately 1,000 employees. The cash
acquisition price aggregated $195 millions.
At closing of the Fountain Transaction, the Company entered into a related
three year manufacturing agreement with Apple. The manufacturing agreement
provides that the Company will manufacture agreed upon levels of designated
Apple products. The Company expects the Fountain Transaction to result in
significant volume of business. The Fountain Facility will also provide the
Company with manufacturing capacity for potential use by other customers.
There can be no assurance that the Company will successfully integrate the
operations of the Fountain Facility. See "Risk Factors--Fountain Transaction"
and "Business--Recent Developments."
<PAGE>
The Offering
Securities..............Offered......$287,500,000 aggregate principal amount of
5% Convertible Subordinated Notes due 2006.
Maturity................May 1, 2006, unless earlier redeemed, repurchased
or converted.
Interest................Payment Dates..May 1 and November 1 of each year,
commencing November 1,1996.
Conversion..............The Notes are convertible, unless previously redeemed
or repurchased, at the option of the holder, at any time
after 90 days following the date of original issuance
thereof and prior to maturity, into shares of Common
Stock at a conversion price of $48.75 per share, subject
to adjustments in certain events. See "Description of
Notes--Conversion."
Designated Events.......Upon a Designated Event (as defined), holders of the
Notes will have the right, subject to certain
restrictions and conditions, to require the Company to
purchase all or any part of their Notes at a purchase
price equal to 101% of the principal amount thereof
together with accrued and unpaid interest thereon to
the date of the purchase. See "Description of Notes--
Repurchase at the Option of Holders " and "Risk Factors-
-Limitations on Repurchase of Notes Upon Occurrence of
Designated Event."
Ranking.................The Notes offered hereby will be unsecured obligations
of the Company and will be subordinated in right of
payment to all existing and future Senior Indebtedness
of the Company. The Notes also will be structurally
subordinated to all existing and future indebtedness
and other liabilities of subsidiaries of the Company.
At March 24, 1996, the Company had approximately
$217 million of indebtedness outstanding that would
have constituted Senior Indebtedness. The Indenture
contains no limitation on the incurrence of Senior
Indebtedness or the incurrence of other indebtedness
and other liabilities by the Company or its
subsidiaries. See "Description of Notes."
<PAGE>
<TABLE>
Summary Consolidated Financial Data
<CAPTION>
Year Ended June 30,
Nine Months Ended
----------------------
----------------------------------------------------------------------------- March 26, March 24,
1991 1992 1993 1994 1995 1995 1996
--------------------------------------------------------------------------------------------------------
Consolidated Statement of (In thousands, except ratios and per share data)
Income Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 1,121,807 $ 1,038,454 $ 1,672,115 $ 1,852,478 $ 2,673,783 $ 1,831,431 $ 3,192,873
Income from 8,485 6,802 42,883 46,916 75,661 51,143 94,772
continuing
operations before taxes
and
extraordinary item
Income from 9,242 9,061 30,615 29,936 45,243 31,197 56,389
continuing
operations before
extraordinary item
Discontinued (5,783) (5,236) (4,056) (8,775) -0- -0- -0-
operations, net of
tax benefits
Gain on 9,161 -0- -0- -0- -0- -0- -0-
extraordinary
item--excess of
face value of debt
retired over cost,
net of taxes
Net income $12,620 $3,825 $26,559 $21,161 $45,243 $31,197 $56,389
Primary earnings per
share:
From continuing $0.44 $0.43 $1.24 $1.08 $1.63 $1.12 $1.88
operations
From discontinued (0.28) (0.25) (0.15) (0.32) -0- -0- -0-
operations
Extraordinary item $0.44 -0- -0- -0- -0- -0- -0-
-----------------------------------------------------------------------------------------------------------
$0.60 $0.18 $1.09 $0.76 $1.63 $1.12 $1.88
===========================================================================================================
Fully diluted earnings
per share:
From continuing $0.44 $0.43 $1.21 $1.08 $1.56 $1.12 $1.88
operations
From discontinued (0.28) (0.25) (0.14) (0.32) -0- -0- -0-
operations
Extraordinary item 0.44 -0- -0- -0- -0- -0- -0-
-----------------------------------------------------------------------------------------------------------
$0.60 $0.18 $1.07 $0.76 $1.56 $1.12 $1.88
===========================================================================================================
Weighted average
number of shares
of common stock
and common stock
equivalents
Primary 20,951,282 20,968,969 27,532,308 27,703,163 27,820,798 27,789,250 30,094,608
Fully diluted 20,951,282 20,968,969 29,418,899 27,703,163 29,824,571 27,789,250 30,094,608
Ratios of earnings 1.38x 1.44x 3.55x 4.04x 5.11x 4.84x 6.31x
to fixed charges
(1)
<PAGE>
June 30, March 24, 1996
1995
-----------------------------------------
Actual As Adjusted (2)
------------------ -------------------- ------------------
Consolidated Balance Sheet Data: (In thousands)
Working capital $280,124 $ 496,619 $ 777,587
Total assets 981,292 1,243,817 1,524,785
Long-term debt, less current maturities 156,370 285,320 566,288
Shareholders' equity 349,776 446,813 446,813
---------------
<FN>
(1) The ratios of earnings to fixed charges were calculated by dividing
interest expense and amortization of debt expenses into the sum of income
from continuing operations before income taxes and such fixed charges, and
extraordinary items.
(2) Adjusted to reflect the sale of $287,500,000 of the Notes which resulted in
net proceeds to the Company of $280,968,395. See "Use of Proceeds" and
"Capitalization."
</FN>
</TABLE>
<PAGE>
RISK FACTORS
This Prospectus contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ materially from those projected in the forward-looking
statements as a result of certain of the risk factors set forth below and
elsewhere in this Prospectus. An investment in the Notes involves the following
risks, which, together with other matters set forth in this Prospectus, should
be carefully considered by investors prior to any purchase of the Notes.
Customer Concentration and Dependence on the Electronics Industry
A majority of the Company's revenues are derived from direct sales to
original equipment manufacturers and the U.S. Government and its prime
contractors. Although the Company has several hundred customer accounts,
experience has indicated that a significant percentage of sales are attributed
to a limited group of customers in any particular period. Sales to individual
customers that exceeded 10% of annual consolidated sales for each of the last
three fiscal years were: Hewlett-Packard Company, $1,049 million in 1995 and
$436 million in 1994; International Business Machines Corporation, $326 million
in 1994; Conner Peripherals, Inc., $229 million in 1993; and Dell Computer
Corporation, $280 million in 1993. In the year ended June 30, 1995, the
Company's ten largest customers contributed more than 70% of revenues. The loss
of any major customer, without offsetting orders from other sources, could have
a material adverse effect on the Company.
The percentage of the Company's sales to its major customers may fluctuate
from period to period. Significant reductions in sales to any of these customers
could have a material adverse effect on the Company's results of operations.
Customer contracts can be canceled and volume levels can be changed or delayed.
The timely replacement of canceled, delayed, or reduced contracts with new
business cannot be assured. These risks are exacerbated because a majority of
the Company's sales are to customers in the electronics industry, which is
subject to rapid technological change and product obsolescence. The factors
affecting the electronics industry in general, or any of the Company's major
customers in particular, could have a materially adverse effect on the Company's
results of operations.
The majority of the Company's accounts receivable are from customers in the
high technology industry. Credit terms are extended to customers after
performing credit evaluations, which continue throughout a customer's contract
period. Letters of credit or other security are generally requested from
customers when the Company believes significant credit risks or financial
exposure may exist. However, credit losses have occurred in the past, and no
assurances can be given that credit losses, which could be material, will not
reoccur.
Growth Management
The Company has experienced substantial growth in recent years, with net
sales increasing from $1.12 billion in fiscal year 1991, to $2.67 billion in
fiscal 1995 and to $3.19 billion in the first nine months of fiscal year 1996.
In recent years, the Company has acquired facilities in several locations and
the Company may acquire or build additional facilities from time to time in the
future. There can be no assurance that the Company's historical revenue growth
will continue or that the Company will successfully manage other plants it may
acquire or build in the future. As the Company manages its existing operations
and expands geographically, it may experience certain inefficiencies as it
integrates new operations and manages geographically dispersed operations. In
addition, the Company's results of operations could be adversely affected if its
new facilities do not achieve growth sufficient to offset increased expenditures
associated with geographic expansion. Should the Company increase its
expenditures in anticipation of a future level of sales which does not
materialize, its profitability would be adversely affected. On occasion,
customers may require rapid increases in production which can stress the
Company's resources.
Seasonality
The Company has historically not considered its business to be consistently
seasonal, although seasonal demands for its customers' products sold to
consumers may impact quarterly revenues. In recent periods, however, the
proportion of the Company's customers' products ultimately sold to retail
consumers has significantly expanded, which has increased seasonality in the
Company's sales. The Company believes this trend may continue.
Global Business Considerations
The Company conducts its business on a multinational basis, with the
majority of its revenue generated in the United States but with significant
foreign activities. U.S. export and foreign sales from continuing operations
totaled approximately $1,187 million in 1995, $778 million in 1994, and $744
million in 1993, representing 44% of total sales in 1995, 42% in 1994, and 45%
in 1993. The Company sources material for much of its business, domestic
included, from international suppliers. The Company is subject to the risk of
currency fluctuations, possible restrictions on transfer of funds from time to
time, and the burden and cost of compliance with a variety of state and foreign
laws. While to date these factors have not had a material adverse impact on the
Company's results of operations, there can be no assurance that they will not
have such an impact in the future.
Competition and Other Factors
The Company competes in the electronics equipment industry against numerous
domestic and foreign companies. The Company also faces competition from current
and prospective customers, which evaluate the Company's capabilities against the
merits of manufacturing their products internally. The Company competes with
different companies depending on the type of service sought and the geographic
area of competition. Competition in the industry is intense and the Company
believes this condition will continue. A number of competitors are larger than
the Company and have significantly greater resources, while a number of
competitors are smaller with fewer resources. The Company could be adversely
affected if its competitors introduce superior or significantly lower priced
services or products.
To remain competitive, the Company will be required to continue to develop
and provide technologically advanced engineering and manufacturing services,
maintain quality levels, offer flexible delivery schedules, deliver finished
products on a reliable basis, and continue to compete favorably on the basis of
price. Further, the Company will be required to continuously update its internal
information and management systems. The Company believes that maintaining and
updating its internal systems is important to obtaining future, and maintaining
existing, contracts. Failure to satisfy any of the foregoing requirements could
materially affect the Company's competitive position.
Component Availability
The Company sources its materials on a global basis. Component availability
is periodically subject to constraints, shortages, and abundances. Although no
assurances can be given, the Company has generally been able to obtain adequate
components to maintain most production in periods of shortages, however,
shipment delays have occurred and may periodically reoccur. Significant
constraints on component availability could adversely affect the Company. When
shortages and excesses have occurred the Company has generally passed on
increased or reduced costs to its customers.
Possible Termination of Government Programs
The Company's contracts with the U.S. Government and its prime contractors
are subject to audit and termination at the election of the Government. On
January 7, 1991, the U.S. Government canceled the A-12 Aircraft program for
which the Company was a major subcontractor; in October 1991, one of the prime
contractors filed suit against the Company claiming default on certain
subcontracts with respect to which the Company has an inventory exposure of
approximately $22 million. (See Note G to the Company's 1995 Consolidated
Financial Statements, incorporated herein by reference.) The Company believes
that its ongoing principal government programs will continue to be funded, but
there can be no assurance to that effect. Although the termination of multiple
government related programs could adversely affect results, no current
government program accounts for more than 1% of consolidated revenue.
Dependence on Key Personnel
The Company's success depends to a large extent upon the efforts and
abilities of key managerial and technical employees. The loss of services of
certain key personnel could have a material adverse effect on the Company. The
Company's business also depends upon its ability to recruit and retain senior
managers and skilled professional and technical salaried personnel, for which
there is intense competition, and its ability to recruit, train, and retain
skilled and semiskilled hourly employees at competitive costs, and the failure
to do so could adversely affect the Company's results of operations.
Environmental Compliance
The Company is subject to a variety of environmental regulations relating
to the use, storage, discharge and disposal of hazardous chemicals used during
its manufacturing processes. ANY failure by the Company to comply with present
and future regulations could subject it to future liabilities or the suspension
of production. In addition, such regulations could restrict the Company's
ability to expand its facilities or could require the Company to acquire costly
equipment or to incur other significant expenses to comply with environmental
regulations.
Volatility of Market Price of Common Stock and Notes
The trading price of the Common Stock is subject to significant
fluctuations in response to variations in quarterly operating results, general
conditions in the electronics industry, and other factors. In addition, the
stock market is subject to price and volume fluctuations which affect the market
price for many high technology companies in particular, and which often are
unrelated to operating performance. Fluctuations in the trading price of the
Common Stock will affect the trading price of the Notes offered hereby.
Subordination
The Notes will be unsecured and subordinated in right of payment in full to
all existing and future Senior Indebtedness of the Company. As a result of such
subordination, in the event of any insolvency, liquidation or reorganization of
the Company or upon acceleration of the Notes due to an Event of Default, the
assets of the Company will be available to pay obligations on the Notes and any
other subordinated indebtedness of the Company only after all Senior
Indebtedness has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes and any other
subordinated indebtedness of the Company then outstanding. The Notes are
effectively subordinated to the liabilities, including trade payables, of the
Company's subsidiaries. The Indenture does not prohibit or limit the incurrence
of Senior Indebtedness or the incurrence of other indebtedness and other
liabilities by the Company or its subsidiaries. As of March 24, 1996, the
Company had approximately $217 million of indebtedness outstanding that would
have constituted Senior Indebtedness and the subsidiaries of the Company had
approximately $580 million of outstanding indebtedness and other liabilities.
The Company is a holding company. Consequently its ability to service its
debt, including the Notes offered hereby, is dependent upon the earnings from
the business conducted by the Company through its subsidiaries and the
distribution of those earnings, or upon loans or other payments of funds, by
those subsidiaries to the Company, all of which could be subject to statutory or
contractual restrictions, are contingent upon the subsidiaries' earnings and are
subject to various business considerations. See "Description of
Notes--Subordination of Notes."
Limitation on Repurchase of Notes Upon Designated Event
Upon the occurrence of a Designated Event, each holder of Notes may require
the Company to repurchase all or a portion of such holder's Notes. If a
Designated Event were to occur, there can be no assurance that the Company would
have sufficient financial resources, or would be able to arrange financing, to
pay the repurchase price for all Notes tendered by holders thereof. In addition,
the terms of certain of the Company's existing debt agreements prohibit the
Company from purchasing any Notes under certain conditions and also identify
certain events that would constitute a Change in Control, as well as certain
other events with respect to the Company or certain of its subsidiaries, that
would constitute an event of default under such debt agreements. ANY future
credit agreements or other agreements relating to other indebtedness (including
other Senior Indebtedness) to which the Company becomes a party may contain
similar restrictions and provisions. In the event a Change in Control occurs at
a time when the Company is prohibited from purchasing the Notes, the Company
could seek the consent of its lenders to the purchase of the Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such consent or repay such borrowings, the Company would
remain prohibited from purchasing Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of Default under the Indenture
which would, in turn, constitute a further default under certain of the
Company's existing debt agreements and may constitute a default under the terms
of other indebtedness that the Company may enter into from time to time. In such
circumstances, the subordination provisions in the Indenture would prohibit
payments to the holders of Notes. See "Description of Notes--Repurchase at
Option of Holders Upon Occurrence of Designated Event."
Absence of Trading Market for the Notes
The Notes were issued in April 1996 to a small number of institutional
buyers and non-U.S. persons. The Registration Statement of which this Prospectus
forms a part is filed pursuant to the Registration Agreement, which does not
obligate the Company to keep the Registration Statement effective after the
third anniversary of the date when the Registration Statement is declared
effective or, if earlier, the date when all the Notes and the Common Stock
issuable on conversion thereof covered by the Registration Statement have been
sold pursuant to the Registration Statement. The Company does not intend to
apply for listing of the Notes on any securities exchange or to seek approval
for quotation through any automated quotation system. Accordingly, there can be
no assurance as to the development or liquidity of any market for the Notes.
Fountain Transaction
The Fountain Transaction will increase the Company's expenses and working
capital requirements, and place burdens on the Company's management resources.
The Fountain Transaction entails a number of risks, including successfully
managing the transition of the Fountain Facility to the Company. In the event
the Company is unsuccessful in these efforts, the Company's results of
operations could be materially adversely affected. It is anticipated that a
portion of the manufacturing capacity of the Fountain Facility will be used to
manufacture products under contract for Apple; fluctuation in the demand for
Apple products could adversely affect the Company's results of operations.
<PAGE>
USE OF PROCEEDS
The Selling Holders will receive all of the net proceeds from the sale of Notes
and Common Stock pursuant to this Prospectus.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
There is no established trading market for the Notes. The Company's Common
Stock is included for trading on the Nasdaq National Market System under the
symbol "SCIS." The following table sets forth for the periods indicated the high
and low closing prices for the Company's Common Stock, as quoted on the Nasdaq
National Market System.
High Low
------------------------------
Fiscal year ended June 30, 1994
First Quarter $21 3/8 $14 3/8
Second Quarter 19 7/8 15 3/8
Third Quarter 21 5/8 15 1/4
Fourth Quarter 17 12 5/8
Fiscal year ended June 30, 1995
First Quarter 22 1/4 14 3/4
Second Quarter 22 16
Third Quarter 19 1/2 17
Fourth Quarter 26 17 1/2
Fiscal year ending June 30, 1996
First Quarter 38 28 5/8
Second Quarter 37 3/4 23 7/8
Third Quarter 43 3/8 25 3/4
Fourth Quarter (through June
7, 1996) 48 3/4 35 3/8
On June 7, 1996, the last sale price of the Common Stock as reported on the
Nasdaq National Market System was $43.50 per share.
The Company has not paid any cash dividends on its Common Stock and has no
plans to pay cash dividends on its Common Stock in the foreseeable future. The
payment of cash dividends is limited under the Company's credit facility, and
accordingly, $47 million of retained earnings, as of March 24, 1996, are
available for payment of cash dividends.
<TABLE>
CAPITALIZATION
The following table sets forth the Company's capitalization as of March 24,
1996, and as adjusted to give effect to the issuance and sale by the Company of
the Notes offered hereby.
<CAPTION>
March 24, 1996
-------------------------------------
Actual As Adjusted (1)
----------------- ------------------
(In thousands, except share data)
Current maturities of long-term debt $ 5,803 $ 5,803
<S> <C> <C>
----------------- ------------------
Long-term debt:
5% Convertible Subordinated Notes due 2006 -0- 280,968
Other long-term debt 285,320 285,320
----------------- ------------------
Total long-term debt 285,320 566,288
----------------- ------------------
Shareholders' equity:
Preferred Stock, 500,000 shares authorized; -0- -0-
none issued and outstanding
Common Stock, 100,000,000 shares authorized; 169,963 169,963
29,510,262 shares issued and outstanding (2)
Retained earnings 283,584 283,584
Cumulative translation adjustment (6,734) (6,734)
----------------- ------------------
Total shareholders' equity 446,813 446,813
----------------- ------------------
Total capitalization $ 737,936 $ 1,018,904
================= ==================
----------------
<FN>
(1) Does not include the impact of a possible offering of up to $100
million of senior unsecured notes, which is currently being evaluated
by the Company, and a possible $90 million increase in commitments
under current credit facilities to $410 million from $320 million. See
"Risk Factors -- Subordination" and Footnote B of the Financial
Statements of the Company included in its Annual Report on Form 10-K
for the year ended June 30, 1995.
(2) Outstanding Common Stock as of March 24, 1996, does not include (I)
2,093,100 shares of Common Stock available for issuance pursuant to
the Company's stock option plans, of which 1,265,000 shares were
subject to outstanding options, and (ii) 5,897,435 shares of Common
Stock reserved for issuance upon the conversion of the Notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected data presented under the captions "Consolidated Statements of
Income Data" and "Consolidated Balance Sheet Data" for, and as of the end of,
each of the years in the five year period ended June 30, 1995, are derived
from the consolidated financial statements of the Company audited by Ernst &
Young LLP, independent auditors. The selected data presented below for the
nine month periods ended March 26, 1995, and March 24, 1996, are derived from
the unaudited consolidated financial statements of the Company. These results
are not necessarily indicative of results to be expected for any future
period. The data should be read in conjunction with the consolidated financial
statements, related notes and other financial information incorporated by
reference herein.
<CAPTION>
Nine Months Ended
-----------------------------
Year Ended June 30, March 26, March 24,
1995 1996
------------------------------------------------------------------------------
1991 1992 1993 1994 1995
----------------------------------------------------------------------------------------------------------
(In thousands, except ratios and per share data)
Consolidated Statement of
Income Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ $ $ $ $ $ $
1,121,807 1,038,454 1,672,115 1,852,478 2,673,783 1,831,431 3,192,873
Cost and expense 1,097,446 1,019,868 1,614,096 1,791,770 2,582,739 1,769,881 3,081,393
----------------------------------------------------------------------------------------------------------
Operating income 24,361 18,586 58,019 60,708 91,044 61,550 111,480
Interest expense (22,400) (15,479) (16,793) (15,423) (18,400) (13,334) (17,861)
Other income, net 6,524 3,695 1,657 1,631 3,017 2,927 1,153
----------------------------------------------------------------------------------------------------------
Income from continuing 8,485 6,802 42,883 46,916 75,661 51,143 94,772
operations before
income taxes and
extraordinary item
Income taxes (credit) (757) (2,259) 12,268 16,980 30,418 19,946 38,383
----------------------------------------------------------------------------------------------------------
Income from continuing 9,242 9,061 30,615 29,936 45,243 31,197 56,389
operations before
extraordinary item
Discontinued operations (5,783) (5,236) (4,056) (8,775) -0- -0- -0-
(net of income tax
benefit of $323 in 1991,
$551 in 1992, $1,420 in
1993 and $5,838 in 1994)
Gain on extraordinary item 9,161 -0- -0- -0- -0- -0- -0-
- excess of face value of
debt retired over cost
(net of income taxes of
$4,720)
----------------------------------------------------------------------------------------------------------
Net income $ 12,620 $3,825 $26,559 $21,161 $45,243 $31,197 $56,389
==========================================================================================================
Primary earnings
per share:
From continuing $0.44 $0.43 $1.24 $1.08 $1.63 $1.12 $1.88
operations
From discontinued (0.28) (0.25) (0.15) (0.32) -0- -0- -0-
operations
Extraordinary item 0.44 -0- -0- -0- -0- -0- -0-
----------------------------------------------------------------------------------------------------------
$0.60 $0.18 $1.09 $0.76 $1.63 $1.12 $1.88
==========================================================================================================
Fully diluted earnings
per share:
From continuing $0.44 $0.43 $1.21 $1.08 $1.56 $1.12 $1.88
operations
From discontinued (0.28) (0.25) (0.14) (0.32) -0- -0- -0-
operations
Extraordinary item 0.44 -0- -0- -0- -0- -0- -0-
----------------------------------------------------------------------------------------------------------
$0.60 $0.18 $1.07 $0.76 $1.56 $1.12 $1.88
==========================================================================================================
Weighted average number
of shares of common
stock and common stock
equivalents
Primary 20,951,282 20,968,969 27,532,308 27,703,163 27,820,798 27,789,250 30,094,608
Fully diluted 20,951,282 20,968,969 29,418,899 27,703,163 29,824,517 27,789,250 30,094,608
Ratios of earnings to fixed 1.38x 1.44x 3.55x 4.04x 5.11x 4.84x 6.31x
charges (1)
</TABLE>
<TABLE>
<CAPTION>
June 30, March 24,
-----------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---------------------------------------------------------------------------------------------------------
Consolidated Balance
<S> <C> <C> <C> <C> <C> <C>
Sheet Data: (In thousands)
Working capital $ 253,677 $ 255,270 $336,516 $395,628 $280,124 $ 496,619
Total assets 550,935 612,962 780,339 920,212 981,292 1,243,817
Long-term debt 233,687 219,246 249,243 278,401 156,370 285,320
Shareholders' e 185,909 192,349 277,856 304,634 349,776 446,813
- -------------------
<FN>
(1) The ratios of earnings to fixed charges were calculated by dividing
interest expense and amortization of debt expenses into the sum of income
from continuing operations before income taxes and such fixed charges, and
extraordinary item.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and Results
of Operations contained in the Company's Annual Report on Form 10-K for the year
ended June 30, 1995, and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 24, 1996, which are incorporated herein by reference.
Additionally, see pages 2 and 3 of the Company's 1995 Annual Report to
Shareholders, which is incorporated herein by reference, for further fiscal year
1995 management discussion and analysis information.
BUSINESS
SCI Systems is the largest global supplier of full-service contract
manufacturing to the electronics industry, providing a broad range of
manufacturing services to original equipment manufacturers (OEMs) in the
computer, telecommunications, medical, aerospace and defense, and entertainment
industries. SCI's strategically located plants in North America, Western Europe
and East Asia manufacture components, subassemblies, and finished products for
the Company's diversified and growing base of commercial customers, including
Hewlett-Packard, Tandem Computers, IBM, Apple Computer, and Digital Equipment
Corporation. The Company operates the largest surface mount technology (SMT)
capacity in the merchant market with 148 automated SMT lines and 42 automated
pin-in-hole (PIH) assembly lines installed in twenty plants in eight countries.
Electronics Manufacturing Services (EMS) Industry
SCI was an early proponent of electronics manufacturing outsourcing by
large original equipment manufacturers (OEMs). Continued growth of such
outsourcing has led to the development of a sizable industry. The EMS industry
is believed by the Company to generate in excess of $30 billion dollars in
annual revenues (an estimated 8 to 12% of the total electronics equipment
market) and to be growing at an annual rate in excess of 25%. Factors driving
the growth of OEMs outsourcing include intense cost pressures, much shorter
product cycles, capital requirements, lean internal support structures,
increasingly dynamic market conditions, and rapid globalization. As outsourcing
has grown in volume, it has also grown in scope to include such areas as product
design, materials sourcing, product distribution, and after-sales support.
Benefits to OEMs of outsourcing include lower product, development, and support
costs; reduced capital requirements for both fixed assets and inventories;
availability of "capacity elastic" resources; enhanced geographic flexibility;
and ready availability of advanced manufacturing processes and information
systems. As the largest supplier of full service contract manufacturing to the
international electronics industry, SCI is benefiting from an ongoing shift to
outsourcing as OEMs seek solutions to increasing competitive pressures.
Company Focus Areas
The key elements of SCI's focus are quality products, competitive pricing
and customer responsiveness. The Company implements this philosophy through the
continuous upgrading of its technology and systems, geographic expansion to
remain close to customers and management commitment to quality improvement. The
Company is committed to maintaining modern manufacturing technologies, with
current equipment additions focusing on evolving SMT processes and a range of
microelectronic assembly processes. The Company has also expanded the number of
production lines devoted to finished product assembly, burn-in and test to meet
a growing number of customers' requirements.
An essential element of the Company's infrastructure is a multitiered
configuration of information systems which utilize both standard and customized
software to implement advanced applications at mainframe, server, and desktop
levels. Significant upgrades and expansions of system hardware, software and
communications elements have been implemented. These systems are increasingly
interlinked with counterpart customer systems to implement order flow,
production status information, billing, and material management in a timely
manner.
The Company maintains a continuous program of manufacturing process,
system, and product development. Computer aided design centers are employed at
strategic regional plants in support of domestic and foreign customers. Much of
the Company's design automation emphasis is currently focused upon surface mount
technology and advanced manufacturing processes. New product development is
usually undertaken in support of customer requirements.
All of the Company's manufacturing facilities are registered to the quality
requirements of the International Organization for Standardization (ISO 9000),
as is its purchasing organization. The Company has received numerous quality
awards from its customers which include many of the largest personal computer
and peripheral product OEMs.
Global Operations
Commercial Division
The Commercial Division is a multinational business organized for
management purposes into plant groups within five geographical regions: the
Central, Eastern, and Western Regions of North America, the Asian Region, and
the European Region. The Commercial Division performs computer aided design,
component procurement and test, subassembly and finished unit production,
product test, product distribution, after-sales service, and a full range of
engineering support for a sizable number of customers.
Central Region. The Central Region operates plants in Huntsville and Arab,
Alabama, and Guadalajara, Mexico. The plants serve customers throughout the
Southeastern and Southwestern U.S. and Latin America. A growing nonregional
customer base is resulting from the attractiveness of Mexico as a low cost
manufacturing location and the Region's expanding personal computer final
assembly and distribution capabilities.
One Huntsville plant provides electronic assemblies and a mix of finished
products to a diversified customer base. Certification to FDA standards is
important to its success as a supplier of medical devices and instruments. This
plant, the most diversified in the Central Region, also has active contracts in
the computer, telecommunications, and digital television arenas. Considerable
growth in finished product activities has resulted from production contracts for
video terminals and networked client computers, patient monitoring equipment,
modem products, and digital television reception units. This plant is also one
of SCI's primary technology development centers and an early production site for
advanced processes.
A second Huntsville plant provides a full range of design, engineering,
manufacturing, and distribution services. Much of SCI's success in the highly
competitive personal computer market results from this plant's innovative
products which are brought to market in minimum time, custom manufactured in
large volumes, and shipped directly to multiple market channels. Internally
developed systems that process orders electronically, track manufacturing
activities online, and support direct shipment to distribution have proved
important to the rapid growth of SCI's finished product business.
The Arab plant is a high-volume producer of computer assemblies and has
become a key supplier of subassemblies for finished products produced in other
company plants. The facility also has capabilities in manufacturing and
distributing finished products.
The plant in Guadalajara is experiencing growth as a result of demand from
both U.S. and Latin American customers and is being expanded through new
construction to accommodate increasing orders. Increased capital expenditures
have significantly increased the plant's capacity for surface mount electronic
assembly. The plant is benefiting from customer base expansion, adding camera
and printer electronics to an existing base of computer motherboard and disk
controller products.
Eastern Region. The Eastern Region, with established plants in Graham,
North Carolina; Hooksett, New Hampshire; and Dorval, Quebec, Canada; was
expanded during fiscal year 1995 with the addition of a plant in Augusta, Maine.
The Region serves customers in the Eastern United States and Canada.
In April 1995 the Company acquired Digital Equipment Corporation's contract
manufacturing business and its manufacturing facility in Augusta, Maine. SCI
also entered into a multiyear agreement to supply Digital with networking
electronics produced at that plant.
The North Carolina facility continues to focus on manufacturing Local Area
Network (LAN) and Wide Area Network (WAN) interfaces, routers, and bridges and
has expanded its activities to include sub-notebook computer assemblies for
several of a major customer's applications. The facility also has customers in
the office products and automotive electronics markets.
The New Hampshire plant serves the electronics community of the Boston area
as well as others throughout the Northeast. The markets for communication
products, computers and related peripheral devices, and medical instruments
offer significant opportunity for that plant.
The Canadian operation is positioned to satisfy requirements coming from an
expanding number of Canadian customers and multinationals requiring Canadian
content. Surface mount technology capacity has been added and final assembly,
packaging, and distribution activities have been expanded. The product mix has
expanded to include a variety of computer processors and interface devices and
several types of data and voice telecommunications electronics.
Western Region. The Western Region provides a range of contract
manufacturing services from plants in San Jose and Watsonville, California;
Colorado Springs, Colorado; and Rapid City, South Dakota. It serves a
diversified group of West Coast, Mountain, and Plains States customers.
The San Jose facility benefits from its strategic location in Silicon
Valley. Its diverse customer base is provided a broad range of services
including new product design and introduction support, prototype assembly and
early production, low and high volume production of a range of assemblies, and
finished product manufacturing. The facility often serves as a sister plant to
several other SCI plants as they exchange customer support functions with each
other.
The Watsonville plant, while retaining its focus upon supporting the growth
of its major customer, is following a conservative diversification strategy. The
plant provides requisite capacity, responsiveness, and flexibility while
positioning the operation for transition from a dedicated "feeder" plant to one
of full service, multiple customer manufacturing. The plant's proximity to
Silicon Valley positions it to expand its customer base from the Valley's
cluster of high technology companies.
The Colorado Springs plant experienced steady growth throughout fiscal year
1995 and is currently being expanded through new construction. It has
established itself as the largest contract manufacturing service provider to the
Rocky Mountain high technology marketplace and has considerable experience in
producing assemblies for computers, tape drives, disk array systems, and optical
disk products.
The Rapid City plant has migrated in recent years from primarily supplying
electronic assemblies for a single customer's mass storage devices to
manufacturing products which span a wide range of applications, complexities,
volumes, and selling prices. Significant growth has occurred in the production
of complex mainframe assemblies and personal computer electronics. Customer and
product diversification has resulted from the addition of multiple medical and
industrial automation products, as well as electronics for a major customer's
high performance video display units.
Asian Region. The Asian Region operates facilities in the Republic of
Singapore and Pathum Thani Province (a suburb of Bangkok), Thailand. These
plants support regional Asian customers as well as U.S. and European
multinationals that prefer Asian manufacturing sources. Substantial revenue
growth and market diversification has been generated by both facilities as the
Company retains its market leadership in the Region.
The Singaporean plant continues to experience demand from several of its
larger multinational computer and peripheral customers. New products introduced
for existing customers have included computer network management devices and
printer controllers. As contracts for substantial volumes of memory modules have
been received, the plant has dedicated a manufacturing module to that type
product. The plant has diversified beyond its historical strength in disk drive
electronics by adding customers for medical and tape drive electronics. The
plant's process efficiencies and quality yields have combined with new
technology and equipment additions to promote competitive performance in
Singapore's maturing economy.
The Thai plant's recent focus has been on management enhancement, systems
implementation, and capacity expansion in support of continuing growth through
new product introductions. The plant has received new contracts from a European
network products company and continues its role as a producer of controller
electronics for several leading mass storage device companies. Growth there has
been stimulated by a very competitive cost structure.
The Company believes opportunities for Asian volume growth and further
product and technology diversification are available. These considerations,
along with opportunities to serve a concentration of existing customers'
operations in an additional regional country, are the impetus for a third Asian
plant being constructed on a "green field" basis in Malaysia and scheduled for
completion in fiscal year 1997.
European Region. The European Region operates facilities in Irvine,
Scotland; Fermoy, County Cork, Ireland; and Grenoble, France. These plants serve
their respective in-country customers while collectively supporting large
multinational customers' European operations. They also serve an emerging market
for contract manufacturing services for local customers throughout Continental
Europe.
The Grenoble operation occupied a newly constructed building during fiscal
year 1995, approximately one year after the Company acquired Hewlett-Packard's
Grenoble Surface Mount Center. The new facility has installed additional
machinery to meet growing customer requirements. The plant is well positioned to
support its major customer's European growth and pursue a customer
diversification strategy as European companies increasingly adopt broader
manufacturing outsourcing strategies.
The Scottish plant continues to be a supplier of a wide range of electronic
assemblies to the computer industry. Diversification into mobile and fixed base
telecommunications has been initiated along with memory assemblies and high
performance video display electronics. The Irvine facility plays an increasing
role in supporting a number of the Company's global customers and is well
positioned for substantial future growth.
The Region operates a design center in the Scottish plant which provides
product development support and engineering services to the European market. The
computer, telecommunication, and automotive sectors are representative of those
that are benefiting from improved product functionality, manufacturability, and
lower cost through the use of the design center's services.
The Irish facility continues to support a number of local and multinational
customers with whom the Company has ongoing or potential multiplant business.
The plant is involved in a number of projects for two of the world's largest
telecommunications companies. The plant now has considerable finished product
assembly experience to balance its capabilities and is positioned to benefit
from the growth of major companies' established and developing Irish operations.
Government Division
The Government Division provides a wide range of high performance systems
and subsystems used by U.S. and foreign governments, defense and aerospace
companies, and others requiring high reliability and ruggedized equipment. Its
primary engineering and manufacturing operations are carried out in facilities
located in Huntsville and Lacey's Spring, Alabama. The Division designs and
manufactures electronic and electromechanical systems and subsystems for launch
vehicle, satellite, aircraft, and surface applications. Primary technology
emphasis includes instrumentation, voice and data communications, and computers.
Current production includes voice and communication control systems for the
F-15, F-16, F-18, and AV-8 aircraft; the FAA Rapid Development Voice System; and
the Advanced Airborne Test Instrumentation System. The first cesium atomic
clocks for a new block of Global Positioning System (GPS) satellites were
delivered in fiscal year 1995 and the Division continued production of the
Government's GPS User Equipment. Deliveries of Fiber Optic Terminal Equipment
for NASA started during fiscal year 1995. Production continues of a family of
gas cabinets for semiconductor manufacturing and for ruggedized electronics for
railroad locomotives.
The Advanced Lighting Control System for the C-130H aircraft has entered
production. The ARINC-629 Current Mode Coupler (CMC) and Standard Interface
Module (SIM) for the fly-by-wire Boeing 777 aircraft also are in early
production. Digital Audio Intercommunications Equipment for the V-22 and C-130J
aircraft has completed design and entered qualification testing. The Common
Airborne Instrumentation System has begun prototype production.
New contracts received include portable workstations for the U.S. Navy;
computers for the U.S. Army's Apache Longbow Helicopter; Non-Volatile Memory
Modules for the Japanese FSX Aircraft; Satellite Communication terminals for
tracking in the transportation industry; control systems for transportation
equipment; F-15 aircraft communications equipment for Israel; Advanced Interface
Blanker Units (AIBU) for the MH53J Helicopter; gunner's consoles, fiber optic
bobbins, and local area networks for the U.S. Army Enhanced Fiber Optic Guided
Missile (E-FOGM); solid state power controllers for the Space Station; and
proofing printers for the graphic arts industry.
Manufacturing Capabilities
The Company remains committed to modern manufacturing technologies. Surface
mount technology (SMT) is the electronics assembly technique of growing
preference. It offers smaller size, lower cost and higher reliability than
competing manufacturing processes. Ongoing equipment additions focus on evolving
SMT processes. Barriers to entry into SMT assembly are high, as it is process
sensitive, design critical and capital intensive. The Company currently operates
148 automated SMT assembly lines, making SCI one of the largest SMT producers in
the world and the leader in the merchant market.
The Company is also skilled in the automation of traditional pin-in-hole
(PIH) electronics assembly using printed circuit boards and leaded components.
Although conceptually several decades old, there remains a significant
continuing market for this technology. SCI operates a total of 42 automated PIH
assembly lines in various plants.
The Company has expanded its number of production lines for finished
product assembly, burn-in and test to meet growing demand and increased customer
requirements, including rapid shipment directly to distribution channels and end
users. The Company anticipates significant growth of, and wider deployment of,
these capabilities to support future growth.
The Company's manufacturing capabilities are supported by state-of-the-art
information systems and a continuing program of manufacturing process, system
and product development. The Company has implemented a multitiered configuration
of information systems which utilize both standard and customized software to
implement advanced applications at the mainframe, server, and desktop levels.
These systems are increasingly interlinked with counterpart customer systems to
implement order flow, production status information, billing, and material
management in a timely manner. Computer aided design centers are employed at
strategic regional plants in support of domestic and foreign customers. Much of
the Company's design automation emphasis is currently focused upon SMT and
advanced manufacturing processes.
All of the Company's plants are registered to the rigorous quality
requirements of the International Organization of Standardization (ISO 9000), as
is its purchasing organization.
Recent Developments
The following paragraph contains certain forward-looking statements and
potential investors should carefully review the "Risk Factors" section of this
Prospectus with respect to such forward-looking statements.
On May 31, 1996 the Company finalized an agreement with Apple to purchase
the 360,000 square foot Fountain Facility. The Fountain Facility currently
provides manufacturing services in support of Apple's product requirements for
the Americas. The Fountain Facility manufactures subassemblies and finished
computers for Apple, and employed approximately 1,000 employees. The cash
acquisition price aggregated $195 million.
Additionally, the Company entered into a related three year manufacturing
agreement with Apple. The manufacturing agreement provides that the Company will
manufacture agreed upon levels of designated Apple products. The Company expects
the Fountain Transaction to result in significant volume of business. The
Fountain Facility will also provide the Company with manufacturing capacity for
potential use by other customers.
<PAGE>
DESCRIPTION OF NOTES
General
The Notes were issued pursuant to an Indenture dated as of April 23, 1996
(the "Indenture"), between the Company and PNC Bank, Kentucky, Inc., as trustee
(the "Trustee"). The following summary of certain provisions of the Indenture
does not purport to be complete and is qualified in its entirety by reference to
the Indenture, including the definitions in the Indenture of certain terms used
in the following summary. The definitions of certain terms used in the following
summary are set forth below under "--Certain Definitions."
The Notes are the unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness of the Company
to the extent set forth in the Indenture. The Indenture does not limit the
amount of other Indebtedness or securities that may be issued by the Company or
any of its Subsidiaries.
The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Notes. As a result,
the Notes are effectively subordinated to all existing and future Indebtedness
and other liabilities and commitments of such Subsidiaries.
The Notes have been approved for trading in the PORTAL Market.
<PAGE>
Principal, Maturity and Interest
The Notes bear interest from April 23, 1996, at the rate per annum set
forth on the cover page of this Prospectus and will mature on May 1, 2006.
Interest on the Notes is semiannually on May 1 and November 1 of each year
(each an "Interest Payment Date"), commencing on November 1, 1996, to holders of
record at the close of business on the April 15 or October 15 (each a "Regular
Record Date") immediately preceding such Interest Payment Date. Interest is
computed on the basis of a 360-day year comprised of twelve 30-day months.
Interest on the Notes accrues from the most recent date to which interest
has been paid or, if no interest has been paid, from April 23, 1996.
The Notes are payable both as to principal and interest at the office or
agency of the Company maintained for such purpose within the City and State of
New York or, at the option of the Company, payment of interest may be made by
check mailed to the holders of the Notes at their respective addresses set forth
in the register of holders of Notes. Until otherwise designated by the Company,
the Company's office or agency in New York is the office of the Trustee
maintained for such purpose. The Notes are issued in registered form, without
coupons, and in denominations of $1,000 and integral multiples thereof.
Optional Redemption
The Notes are not subject to redemption prior to May 1, 1999 and will be
redeemable on such date and thereafter at the option of the Company, in whole or
in part (in any integral multiple of $1,000), upon not less than 30 nor more
than 60 days' prior notice by mail at the following redemption prices (expressed
as percentages of the principal amount), in each case together with accrued
interest to the redemption date (subject to the right of holders of record on
the relevant record date to receive interest due on an Interest Payment Date).
If redeemed during the 12-month period beginning May 1 of the years indicated,
such redemption price shall be as indicated:
Year Redemption Price
- ----------- ----------------------------
1999 103.5%
2000 103.0%
2001 102.5%
2002 102.0%
2003 101.5%
2004 101.0%
2005 100.5%
and at May 1, 2006, 100%. On or after the redemption date, interest will
cease to accrue on the Notes, or portion thereof, called for redemption.
<PAGE>
Mandatory Redemption
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes. Repurchase at the Option of Holders Upon the
occurrence of a Designated Event, each holder of Notes shall have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such holder's Notes pursuant to the offer
described below (the "Designated Event Offer") at a purchase price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest
thereon to the Designated Event Payment Date (the "Designated Event Payment").
Within 30 days following any Designated Event, the Company shall mail a notice
to each holder stating: (1) that the Designated Event Offer is being made
pursuant to the covenant described in this paragraph and that all Notes tendered
will be accepted for payment; (2) the purchase price and the purchase date,
which shall be no earlier than 30 days nor later than 40 days from the date such
notice is mailed (the "Designated Event Payment Date"); (3) that any Notes not
tendered will continue to accrue interest; (4) that, unless the Company defaults
in the payment of the Designated Event Payment, all Notes accepted for payment
pursuant to the Designated Event Offer shall cease to accrue interest after the
Designated Event Payment Date; (5) that holders electing to have any Notes
purchased pursuant to a Designated Event Offer will be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Designated Event Payment Date; (6) that holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Designated Event Payment Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
the holder, the principal amount of Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such Notes
purchased; and (7) that holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.
The Company will comply with the requirements of Rules 13e-4 and 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with a Designated Event.
On the Designated Event Payment Date, the Company will, to the extent
lawful, (1) accept for payment Notes or portions thereof duly tendered pursuant
to the Designated Event Offer, (2) deposit with the Paying Agent an amount equal
to the Designated Event Payment in respect of all Notes or portions thereof so
tendered and (3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate identifying the Notes or
portions thereof tendered to the Company. The Paying Agent shall promptly mail
to each holder of Notes so accepted payment in an amount equal to the purchase
price for such Notes, and the Trustee shall promptly authenticate and mail to
each holder a new certificate representing a Note equal in principal amount to
any unpurchased portion of the Notes surrendered, if any; provided, that each
such new certificate representing a Note shall be in a principal amount of
$1,000 or an integral multiple thereof. The Company will publicly announce the
results of the Designated Event Offer on or as soon as practicable after the
Designated Event Payment Date. Except as described above with respect to a
Designated Event, the Indenture does not contain any other provisions that
permit the holders of the Notes to require that the Company repurchase or redeem
the Notes in the event of a takeover, recapitalization or similar restructuring.
The Designated Event purchase feature of the Notes may in certain circumstances
make more difficult or discourage a takeover of the Company, and, thus, the
removal of incumbent management. The Designated Event purchase feature, however,
is not the result of management's knowledge of any specific effort to accumulate
the Company's stock or to obtain control of the Company by means of a merger,
tender offer, solicitation or otherwise, or part of a plan by management to
adopt a series of anti-takeover provisions. Instead, the Designated Event
purchase feature is a result of negotiations between the Company and the Initial
Purchasers. Management has no current intention to engage in a transaction
involving a Designated Event, although it is possible that the Company could
decide to do so in the future. Subject to the limitations on mergers,
consolidations and sales of assets described herein, the Company could, in the
future, enter into certain transactions, including acquisitions, refinancings or
other recapitalizations, that would not constitute a Designated Event under the
Indenture, but that could increase the amount of Indebtedness (including Senior
Indebtedness) outstanding at such time or otherwise affect the Company's capital
structure or credit ratings. The payment of the Designated Event Payment is
subordinated to the prior payment of Senior Indebtedness as described under
"--Subordination of Notes" below.
The Company's ability to repurchase Notes upon the occurrence of a
Designated Event is subject to limitations. If a Designated Event were to occur,
there can be no assurance that the Company would have sufficient financial
resources, or would be able to arrange financing, to pay the repurchase price
for all Notes tendered by holders thereof. In addition, the terms of certain of
the Company's existing debt agreements and lease facilities prohibit the Company
from purchasing any Notes under certain circumstances and also identify certain
events that would constitute a Change in Control, as well as certain other
events with respect to the Company or certain of its subsidiaries, which would
constitute an event of default under such debt agreements and lease agreements.
ANY future credit agreements or other agreements relating to Indebtedness of the
Company (including Senior Indebtedness) may contain similar prohibitions or
restrictions on the Company's ability to effect a Designated Event Payment. In
the event a Designated Event occurs at a time when such prohibitions or
restrictions are in effect, the Company could seek the consent of its lenders to
the purchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will be effectively prohibited from purchasing Notes. In
such case, the Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture whether or not such repurchase is permitted
by the subordination provisions of the Indenture. ANY such default may, in turn,
cause a default under Senior Indebtedness of the Company. Moreover, the
occurrence of a Change in Control may cause an event of default under Senior
Indebtedness of the Company. As a result, in each case, any repurchase of the
Notes would, absent a waiver, be prohibited under the subordination provisions
of the Indenture until the Senior Indebtedness is paid in full.
See"--Subordination of Notes" below and "Risk Factors--Subordination." A
"Designated Event" will be deemed to have occurred upon a Change of Control or a
Termination of Trading. A "Change of Control" will be deemed to have occurred
when: (I) any "person" or "group" (as such terms are used in Section 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more than
50% of the combined voting power of the then outstanding securities entitled to
vote generally in elections of directors of the Company ("Voting Stock"), (ii)
the Company consolidates with or merges into any other corporation, or any other
corporation merges into the Company, and, in the case of any such transaction,
the outstanding Common Stock of the Company is reclassified into or exchanged
for any other property or security, unless the stockholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting from such
transaction in substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction, (iii) the Company conveys,
transfers or leases all or substantially all of its assets (other than to one or
more wholly-owned subsidiaries of the Company) or (iv) any time the Continuing
Directors do not constitute a majority of the Board of Directors of the Company
(or, if applicable, a successor corporation to the Company); provided, that a
Change of Control shall not be deemed to have occurred if at least 90% of the
consideration (excluding cash payments for fractional shares) in the transaction
or transactions constituting the Change of Control consists of shares of common
stock 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 as a result of such
transaction or transactions the Notes become convertible solely into such common
stock. The definition of Change of Control includes a phrase relating to the
lease, transfer or conveyance of "all or substantially all" of the assets of the
Company. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of Notes to require
the Company to repurchase such Notes as a result of a lease, transfer or
conveyance of less than all of the assets of the Company to another person or
group may be uncertain. "Continuing Directors" means, as of any date of
determination, any member of the Board of Directors of the Company who (I) was a
member of such Board of Directors on the date of the Indenture or (ii) was
nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board at the
time of such nomination or election. A "Termination of Trading" will be deemed
to have occurred if the Common Stock (or other common stock into which the Notes
are then convertible) is neither listed for trading on a United States national
securities exchange nor approved for trading on an established automated
over-the-counter trading market in the United States. Selection and Notice If
less than all of the Notes are to be redeemed at any time, selection of Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate, provided that no
Notes of $1,000 or less shall be redeemed in part. Notice of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions thereof called for redemption.
Registration Rights In connection with the original offering, the Company
entered into the Registration Agreement. Pursuant to the Registration Agreement,
the Company agreed for the benefit of the holders of the Notes or Common Stock
issued upon conversion thereof that are, in either case, Registrable Securities,
that (I) it would, at its cost, within 60 days after the closing of the sale of
the Notes (the "Closing"), file a shelf registration statement (the "Shelf
Registration Statement") with the Commission with respect to resales of the
Notes and the Common Stock issuable upon conversion thereof, (ii) the Company
would cause such Shelf Registration Statement to be declared effective under the
Securities Act as soon as practicable but in any event, within 90 days after the
Closing and (iii) the Company would keep such Shelf Registration Statement
continuously effective under the Securities Act until the earlier of (a) the
third anniversary of the date of the Closing, (b) the date on which the Notes or
the Common Stock issuable upon conversion thereof may be sold by non-affiliates
of the Company pursuant to paragraph (k) of Rule 144 (or any successor
provision) promulgated by the Commission under the Securities Act and (C) the
date as of which all the Notes or the Common Stock issuable upon conversion
thereof have been sold pursuant to such Shelf Registration Statement (the "Shelf
Registration Period"). The Company shall have the right, however, to defer the
use of the prospectus which will be a part of the Shelf Registration Statement,
as more fully described below. The Company will provide or cause to be provided
to each holder of the Notes, or the Common Stock issuable upon conversion of the
Notes, copies of the prospectus, which will be a part of such Shelf Registration
Statement, notify or cause to be notified to each such holder when such Shelf
Registration Statement for the Notes or the Common Stock issuable upon
conversion of the Notes has become effective and take certain other actions as
are required to permit unrestricted resales of the Notes or the Common Stock
issuable upon conversion of the Notes. A holder of Notes or the Common Stock
issuable upon conversion of the Notes that sells such securities pursuant to a
Shelf Registration Statement will be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus to purchasers, will
be subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Agreement that are applicable to such holder (including certain
indemnification and contribution rights or obligations). The Company currently
intends to distribute a questionnaire to each beneficial holder of Notes as of a
specified date to obtain certain information regarding such selling security
holders for inclusion in the prospectus. At least three business days prior to
any intended resale of the Notes or the Common Stock issuable upon conversion
thereof, the holder thereof must notify the Company of such intention and
provide such information with respect to such holder and the specifics of the
intended resale as may be required to amend the Shelf Registration Statement or
supplement the related prospectus (a holder giving such notice, a "Notice
Holder"). Within two business days after the foregoing notice is provided by a
Notice Holder, the Company will either (I) notify such Notice Holder that
resales may proceed or file any amendment to the Shelf Registration Statement or
supplement to the related prospectus needed to ensure that those documents,
among other things, comply with the Securities Act, cause any such amendment to
be declared effective and notify such Notice Holder thereof or (ii) notify such
Notice Holder of the Company's election to defer resales until further notice (a
"Deferral Period") under certain circumstances relating to issuance of a stop
order by the Commission, suspension of qualification under state law, accuracy
of the prospectus which is a part of the Shelf Registration Statement, pending
corporate developments, public filings with the Commission and similar events.
If the Company elects the option described in clause (I) of the preceding
sentence, such Notice Holder may resell Notes or the Common Stock issuable upon
conversion thereof pursuant to the Shelf Registration Statement for a period of
45 days (with respect to such Notice Holder, a "Selling Period") from the date
notice of such election is given and, if the Company elects the option described
in clause (ii) of the preceding sentence, such Notice Holder may resell such
securities for a Selling Period that commences at the end of the Deferral
Period. The Company may also defer until further notice a Notice Holder's
existing Selling Period upon the occurrence of the events described in clause
(ii) of the second preceding sentence; provided that upon receipt of such
further notice, such Selling Period shall be extended by the number of days
elapsed prior to deferral. The Company may not defer Selling Periods more than
one time in any three month period or three times in any twelve month period and
no deferral shall exceed 30 days. The Company will pay all expenses of the Shelf
Registration Statement, provide to each registered holder of Notes copies of
such prospectus, notify each such registered holder when the Shelf Registration
Statement has become effective and take certain other actions as are required to
permit, subject to the foregoing, unrestricted resales of the Notes and the
Common Stock issuable upon conversion thereof.
In the event the Company fails to file the Shelf Registration Statement
within 60 days after Closing, the Shelf Registration Statement is not declared
effective under the Securities Act within 90 days after the Closing, a stop
order is issued by the Commission prior to the end of the Shelf Registration
Period or Selling Periods have been deferred more frequently or for longer
periods than are described above, the Company has agreed to pay liquidated
damages to all Notice Holders of Notes and of Common Stock issuable upon
conversion thereof until such event is cured. Further, if such event continues
for a period in excess of 30 days, the Company has agreed to pay liquidated
damages to all holders of Notes and Common Stock issued upon conversion thereof
which are, in either case, Registrable Securities, without regard to whether
such holder is a Notice Holder. Liquidated Damages shall be calculated, with
respect to Notes held by a holder, at a rate of one-half of one percent (50
basis points) per annum of the aggregate principal amount of such Notes and,
with respect to shares of Common Stock held by a holder and issued upon
conversion of Notes, the same percentage of the aggregate principal mount of
Notes that were converted into such shares. "Registrable Securities" means the
Securities and shares of Common Stock issued upon conversion thereof, excluding
any such securities that, and any such securities the predecessors of which,
were previously sold pursuant to a registration statement or Rule 144 under
the Securities Act. Conversion The holder of any Note will have the right,
exercisable at any time after 90 days following the date of original issuance
thereof and prior to the close of business on the Business Day immediately
preceding the maturity date of the Notes, to convert the principal amount
thereof (or any portion thereof that is an integral multiple of $1,000) into
shares of Common Stock at the conversion price set forth on the cover page of
this Prospectus, subject to adjustment as described below (the "Conversion
Price"), except that if a Note is called for redemption, the conversion right
will terminate at the close of business on the Business Day immediately
preceding the date fixed for redemption. Except as described below, no
adjustment will be made on conversion of any Notes for interest accrued thereon
or for dividends on any Common Stock issued. If Notes not called for redemption
are converted after a record date for the payment of interest and prior to the
next succeeding Interest Payment Date, such Notes must be accompanied by funds
equal to the interest payable on such succeeding Interest Payment Date on the
principal amount so converted. No fractional shares will be issued upon
conversion but a cash adjustment will be made for any fractional interest. The
Conversion Price is subject to adjustment upon the occurrence of certain events,
including: (I) the issuance of shares of Common Stock as a dividend or
distribution on the Common Stock; (ii) the subdivision or combination of the
outstanding Common Stock, (iii) the issuance to substantially all holders of
Common Stock of rights or warrants to subscribe for or purchase Common Stock or
securities convertible into Common Stock) at a price per share less than the
then Current Market Price per share, as defined; (iv) the distribution of shares
of capital stock of the Company (other than Common Stock), evidences of
indebtedness or other assets (excluding dividends in cash, except as described
in clause (v) below) to all holders of Common Stock; (v) the distribution, by
dividend or otherwise, of cash to all holders of Common Stock in an aggregate
amount that, together with the aggregate of any other distributions of cash that
did not trigger a Conversion Price adjustment to all holders of its Common Stock
within the 12 months preceding the date fixed for determining the stockholders
entitled to such distribution and all Excess Payments in respect of each tender
offer or other negotiated transaction by the Company or any of its Subsidiaries
for Common Stock concluded within the preceding 12 months not triggering a
Conversion Price adjustment, exceeds 15% of the product of the Current Market
Price per share (determined as set forth below) on the date fixed for the
determination of stockholders entitled to receive such distribution times the
number of shares of Common Stock outstanding on such date; (vi) payment of an
Excess Payment in respect of a tender offer or other negotiated transaction by
the Company or any of its Subsidiaries for Common Stock, if the aggregate amount
of such Excess Payment, together with the aggregate amount of cash distributions
made within the preceding 12 months not triggering a Conversion Price adjustment
and all Excess Payments in respect of each tender offer or other negotiated
transaction by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months not triggering a Conversion Price adjustment,
exceeds 15% of the product of the Current Market Price per share (determined as
set forth below) on the expiration of such tender offer or the date of payment
of such negotiated transaction consideration times the number of shares of
Common Stock outstanding on such date; and (vii) the distribution to
substantially all holders of Common Stock of rights or warrants to subscribe for
securities (other than those securities referred to in clause (iii) above). In
the event of a distribution to substantially all holders of Common Stock of
rights to subscribe for additional shares of the Company's capital stock (other
than those securities referred to in clause (iii) above), the Company may,
instead of making any adjustment in the Conversion Price, make proper provision
so that each holder of a Note who converts such Note after the record date for
such distribution and prior to the expiration or redemption of such rights shall
be entitled to receive upon such conversion, in addition to shares of Common
Stock, an appropriate number of such rights. No adjustment of the Conversion
Price will be made until cumulative adjustments amount to one percent or more of
the Conversion Price as last adjusted. If the Company reclassifies or changes
its outstanding Common Stock, or consolidates with or merges into any person or
transfers or leases all or substantially all its assets, or is a party to a
merger that reclassifies or changes its outstanding Common Stock, the Notes will
become convertible into the kind and amount of securities, cash or other assets
which the holders of the Notes would have owned immediately after the
transaction if the holders had converted the Notes immediately before the
effective date of the transaction. The Indenture also provides that if rights,
warrants or options expire unexercised the Conversion Price shall be readjusted
to take into account the actual number of such warrants, rights or options which
were exercised. In the Indenture, the "Current Market Price" per share of Common
Stock on any date shall be deemed to be the average of the Daily Market Prices
for the shorter of (I) 30 consecutive Business Days ending on the last full
trading day on the exchange or market referred to in determining such Daily
Market Prices prior to the time of determination (as defined in the Indenture)
or (ii) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full trading day prior to the time of determination. "Excess
Payment" means the excess of (A) the aggregate of the cash and fair market value
of other consideration paid by the Company or any of its Subsidiaries with
respect to the shares acquired in the tender offer or other negotiated
transaction over (B) the Daily Market Price on the Trading Day immediately
following the completion of the tender offer or other negotiated transaction
multiplied by the number of acquired shares. The Company from time to time may
to the extent permitted by law reduce the Conversion Price by any amount for any
period of at least 20 days (each such reduction, an "Induced Conversion
Adjustment"), in which case the Company shall give at least 15days' notice of
such reduction, if the Board of Directors has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in the
Conversion Price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes. See
"Certain Federal Income Tax Considerations". Subordination of Notes The Notes
will be subordinate in right of payment to all existing and future Senior
Indebtedness. The Indenture does not restrict the amount of Senior Indebtedness
or other Indebtedness of the Company or any Subsidiary of the Company. In
addition, the Notes will be structurally subordinated to all indebtedness and
other liabilities of the Company's subsidiaries. As of March 24, 1996, the
Company had approximately $217 million of indebtedness that would have
constituted Senior Indebtedness. The payment of the principal of, interest on or
any other amounts due on the Notes will be subordinated in right of payment to
the prior payment in full of all Senior Indebtedness of the Company. No payment
on account of principal of, redemption of, interest on or any other amounts due
on the Notes, including, without limitation, any payments on the Designated
Event Offer, and no redemption, purchase or other acquisition of the Notes may
be made unless (I) full payment of amounts then due on all Senior Indebtedness
have been made or duly provided for pursuant to the terms of the instrument
governing such Senior Indebtedness, and (ii) at the time for, or immediately
after giving effect to, any such payment, redemption, purchase or other
acquisition, there shall not exist under any Senior Indebtedness or any
agreement pursuant to which any Senior Indebtedness has been issued, any default
which shall not have been cured or waived and which shall have resulted in the
full amount of such Senior Indebtedness being declared due and payable. In
addition, the Indenture will provide that if any of the holders of any issue of
Designated Senior Indebtedness notify (the "Payment Blockage Notice") the
Company and the Trustee that a default has occurred giving the holders of such
Designated Senior Indebtedness the right to accelerate the maturity thereof, no
payment on account of principal, redemption, interest or any other amounts due
on the Notes and no purchase, redemption or other acquisition of the Notes will
be made for the period (the "Payment Blockage Period") commencing on the date
the Payment Blockage Notice is received and ending on the earlier of (A) the
date on which such event of default shall have been cured or waived or (B) 180
days from the date the Payment Blockage Notice is received. Notwithstanding the
foregoing (but subject to the provisions contained in the first sentence of this
Section), unless the holders of such Designated Senior Indebtedness or the
Representative of such holders shall have accelerated the maturity of such
Designated Senior Indebtedness, the Company may resume payments on the
Securities after the end of such Payment Blockage Period. Not more than one
Payment Blockage Notice may be given in any consecutive 365-day period,
irrespective of the number of defaults with respect to Senior Indebtedness
during such period. Upon any distribution of its assets in connection with any
dissolution, winding-up, liquidation or reorganization of the Company or
acceleration of the principal amount due on the Notes because of an Event of
Default, all Senior Indebtedness must be paid in full before the holders of the
Notes are entitled to any payments whatsoever. If payment of the Notes is
accelerated because of an Event of Default, the Company or the Trustee shall
promptly notify the holders of Senior Indebtedness or the trustee(s) for such
Senior Indebtedness of the acceleration. The Company may not pay the Notes until
five business days after such holders or trustee(s) of Senior Indebtedness
receive notice of such acceleration and, thereafter, may pay the Notes only if
the subordination provisions of the Indenture otherwise permit Payment at that
time. As a result of these subordination provisions, in the event of the
Company's insolvency, holders of the Notes may recover ratably less than general
creditors of the Company. Merger, Consolidation or Sale of Assets The Indenture
will provide that the Company may not consolidate or merge with or into any
Person (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets unless (I) (a) the Company is the surviving or
continuing corporation or (b) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made assumes all the Obligations of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Notes and
the Indenture; (iii) such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or assets
shall be as an entirety or virtually as an entirety to one Person and such
Person shall have assumed all the obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and the Indenture; (iv) immediately after such transaction no Default
or Event of Default exists; and (v) the Company or such Person shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such transaction and the supplemental indenture comply with
the Indenture and that all conditions precedent in the Indenture relating to
such transaction have been satisfied. Reports Whether or not required by the
rules and regulations of the Commission, so long as any Notes are outstanding,
the Company will file with the Commission and furnish to the holders of Notes
all quarterly and annual financial information required to be contained in a
filing with the Commission on Forms 10-Q and 10-K, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual consolidated financial statements only, a report
thereon by the Company's independent auditors. Events of Default and Remedies
The Indenture provides that each of the following constitutes an Event of
Default: (I) default for 30 days in the payment when due of interest on the
Notes; (ii) default in payment when due of principal on the Notes; (iii) failure
by the Company to comply with the provisions described under "Designated Event";
(iv) failure by the Company for 60 days after the receipt of written notice to
comply with certain other covenants and agreements contained in the Indenture or
the Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Material
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Material Subsidiaries), whether such Indebtedness or guarantee now exists or is
created after the date on which the Notes are first authenticated and issued,
which default (a) is caused by a failure to pay when due principal or interest
on such Indebtedness within the grace period provided in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity without such acceleration being rescinded or annulled and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates $50
million or more; (vi) failure by the Company or any Material Subsidiary of the
Company to pay final non-appealable judgments (other than any judgment as to
which a reputable insurance company has accepted full liability) aggregating in
excess of $50 million, which judgments are not stayed within 60 days after their
entry; and (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Material Subsidiaries. If any Event of Default occurs and
is continuing, the Trustee or the holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company or any Material Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. By notice to the Trustee, the holders of a majority in
aggregate principal amount of the Notes then outstanding may, on behalf of the
holders of all of the Notes, waive any existing Default or Event of Default and
its consequences under the Indenture except a continuing Default or Event of
Default in the payment of the Designated Event Payment or interest on, or the
principal of, the Notes. The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company is
required, upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default. Book-Entry;
Delivery and Form The certificates representing the Notes will be issued in
fully registered form, without coupons. Except as described in the next
paragraph, the Notes will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York ("D.C."), and registered in the name of Cede &
Co., as DTC's nominee in the form of a global Note certificate (the "Global
Certificate") or will remain in the custody of the Trustee pursuant to a FAST
Balance Certificate Agreement between DTC and the Trustee. The Global
Certificates Upon the issuance of the Global Certificate, DTC or its custodian
will credit, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global Certificate to the
accounts of persons who have accounts with such depositary. Such accounts
initially will be designated by or on behalf of the Initial Purchasers.
Ownership of beneficial interests in a Global Certificate will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Certificate will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants). CABBIES may hold their interests
in a Global Certificate directly through DTC if they are participants in such
system, or indirectly through organizations which are participants in such
system. So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Notes represented by such Global Certificate for
all purposes under the Indenture and the Notes. No beneficial owner of an
interest in a Global Certificate will be able to transfer the interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture. Payments of the principal of, and interest on, a Global
Certificate will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither the Company, the Trustee nor any Paying Agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a Global
Certificate or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. The Company expects that DTC or its
nominee, upon receipt of any payment of principal or interest in respect of a
Global Certificate, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Certificate as shown on the records of DTC or its nominee. The
Company also expects that payments by participants to owners of beneficial
interests in such Global Certificate held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants. Transfers between participants in DTC will be effected in the
ordinary way in accordance with DTC rules. If a holder requires physical
delivery of a certificated note for any reason, including to sell Notes to
persons in jurisdictions which require such delivery of such Notes or to pledge
such Notes, such holder must transfer its interest in a Global Certificate in
accordance with the normal procedures of DTC and the procedures set forth in the
Indenture. Once an interest in a Global Certificate is delivered as a
certificated note to an Institutional Accredited Investor, such certificated
note may not be exchanged for an interest in a Global Certificate. The Company
expects that DTC will take any action permitted to be taken by a holder of Notes
(including the presentation of Notes for exchange as described below) only at
the direction of one or more participants to whose account the DTC interests in
a Global Certificate is credited and only in respect of such portion of the
aggregate principal amount of the Notes as to which such participant or
participants has or have given such direction. However, if there is an Event of
Default (as defined below) under the Notes, DTC will exchange a Global
Certificate for certificated notes, which it will distribute to its participants
and which will be legended as set forth under "Notice to Investors." DTC has
advised the Company as follows: DTC is a limited purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the Uniform Commercial Code and a
"Clearing Agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations.
Indirect access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants"). Although the Company expects that DTC will agree to the
foregoing procedures in order to facilitate transfers of interests in a Global
Certificate among participants of DTC, DTC is under no obligation to perform or
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither the Company nor the Trustee will have any responsibility for
the performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations. If DTC is at any time unwilling or unable to continue as a
depositary for a Global Certificate and a successor depositary is not appointed
by the Company within 90 days, the Company will issue certificated notes in
exchange for a Global Certificate. Transfer and Exchange A holder may transfer
or exchange Notes in accordance with the Indenture. The Registrar and the
Trustee may require a holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company is
not required to exchange or register the transfer of any Note selected for
redemption. Also, the Company is not required to exchange or register the
transfer of any Note for a period of 15 days before a selection of Notes to
be redeemed. The registered holder of a Note will be treated as the owner of it
for all purposes. Amendment, Supplement and Waiver Except as provided in the
next succeeding paragraph, the Indenture or the Notes may be amended or
supplemented with the consent of the holders of at least a majority in principal
amount of the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes). Without the consent of each holder affected, an
amendment or waiver may not (with respect to any Notes held by a nonconsenting
holder of Notes) (I) reduce the amount of Notes whose holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes, (iii) reduce the rate of or change the time for payment
of interest on any Note, (iv) waive a default in the payment of principal of or
interest on any Notes (except a rescission of acceleration of the Notes by the
holders of at least a majority in aggregate principal amount of the Notes and a
waiver of the payment default that resulted from such acceleration), (v) make
any Note payable in money other than that stated in the Notes, (vi) make any
change in the provisions of the Indenture relating to waivers of past Defaults
or the rights of holders of Notes to receive payments of principal of or
interest on the Notes, (vii) waive a redemption payment with respect to any
Note, (viii) impair the right to convert the Notes into Common Stock, (ix)
modify the conversion or subordination provisions of the Indenture in a manner
adverse to the holders of the Notes or (x) make any change in the foregoing
amendment and waiver provisions. Notwithstanding the foregoing, without the
consent of any holder of Notes, the Company and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to holders of the Notes in the case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the holders of
the Notes or that does not adversely affect the legal rights under the Indenture
of any such holder, or to comply with requirements of the Commission in order to
qualify, or maintain the qualification of, the Indenture under the Trust
Indenture Act. Concerning the Trustee The Indenture contains certain limitations
on the rights of the Trustee, should it become a creditor of the Company, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The Trustee will
be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign. The holders of a majority
in principal amount of the then outstanding Notes will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy available to the Trustee, subject to certain exceptions. The Indenture
provides that, in case an Event of Default shall occur (which shall not be
cured), the Trustee will be required, in the exercise of its power, to use the
degree of care of a prudent man in the conduct of his own affairs. Subject to
such provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any holder of Notes,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense. Additional
Information Anyone who receives this Prospectus may obtain a copy of the
Indenture without charge by writing to SCI Systems, Inc., Investor Relations,
2000 Ringwood Avenue, San Jose, California 95131; or Ronald G. Sibold,
Treasurer, SCI Systems, Inc., c/o SCI Systems (Alabama), Inc., P.O. Box 1000,
Huntsville, Alabama 35807. Certain Definitions Set forth below are certain
defined terms used in the Indenture. Reference is made to the Indenture for a
full disclosure of all such terms, as well as any other capitalized terms used
herein for which no definition is provided. "Capital Stock" means any and all
shares, interests, participations, rights or other equivalents (however
designated) of equity interests in any entity, including, without limitation,
corporate stock and partnership interests. "Default" means any event that is or,
with the passage of time or the giving of notice or both, would be an Event of
Default. "Designated Senior Indebtedness" means (I) any Senior Indebtedness
which, as of the date of the Indenture, had an aggregate principal amount
outstanding of at least $15 million and (ii) any Senior Indebtedness which, at
the date of determination, had an aggregate principal amount outstanding of, or
commitments to lend up to, at least $15 million and was specifically designated
by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. "Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (I) (a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of such person which is (1) given to secure all or part
of the purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (C) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of deferred and
unpaid purchase price of any property or assets and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (I) or under
clause (iii) below assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"Material Subsidiary" means any Subsidiary of the Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act (as such Regulation
is in effect on the date hereof). "Obligations" means any principal, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness. "Person" means any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, limited liability company or
government or any agency or political subdivision thereof. "Representative"
means the trustee, agent or representative (if any) for an issue of Senior
Indebtedness. "Senior Indebtedness" means the principal of, interest on and
other amounts due on Indebtedness of the Company, whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or guaranteed by
the Company; unless, in the instrument creating or evidencing such Indebtedness
or pursuant to which such Indebtedness is outstanding, it is expressly provided
that such Indebtedness is not senior in right of payment to the Notes. Senior
Indebtedness includes, with respect to the obligations described above, interest
accruing, pursuant to the terms of such Senior Indebtedness, on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not post-filing interest is allowed in such proceeding, at
the rate specified in the instrument governing the relevant obligation.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include: (a) Indebtedness of or amounts owed by the Company for
compensation to employees, or for goods, services or materials purchased in the
ordinary course of business; (b) Indebtedness of the Company to a Subsidiary of
the Company other than such Indebtedness that would be subject to a prior claim
by the lenders under the Company's existing credit facilities; or (C) any
liability for Federal, state, local or other taxes owed or owing by the Company.
"Subsidiary" of a person means any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that person or one or more of the other
Subsidiaries of that person or a combination thereof.
DESCRIPTION OF CAPITAL STOCK
At March 31, 1996, the Company's authorized capital stock consisted of
100,000,000 shares of Common Stock, $.10 par value, and 500,000 shares of
Preferred Stock, no par value. At March 31, 1996, 29,539,945 shares of Common
Stock were issued with no shares of Preferred Stock outstanding.
Holders of the Common Stock are entitled to receive such dividends, if any,
as may be declared from time to time by the Board of Directors in its discretion
from funds legally available therefor, subject to certain financial covenants
contained in the Company's loan agreements. See "Price Range of Common Stock and
Dividend Policy." Holders of the Common Stock are entitled to one vote per share
on all matters voted upon by stockholders. Stockholders do not have cumulative
voting rights which means that the holders of a majority of the shares voting
for the election of directors can elect all the directors then standing for
election, if they choose to do so. On liquidation of the Company, the holders of
the Common Stock are entitled to share pro rata in any distribution of any
assets of the Company remaining after satisfaction of creditors and distribution
to the holders of any outstanding Preferred Stock of the liquidation preferences
of such stock and any unpaid dividends thereon. The holders of the Common Stock
have no preemptive or other subscription or conversion privileges and there are
no redemption provisions with respect to such shares. The shares of Common Stock
outstanding at the date of this Prospectus are, and the shares of Common Stock
to be issued upon the conversion of the Debentures will be, fully paid and
non-assessable.
The Preferred Stock has voting rights equal to the Common Stock of the
Company and (unless expressly required otherwise by law) votes with the Common
Stock as a single class, may be issued in one or more series, and has such
rights and preferences and is subject to such terms and conditions as may be
fixed by the Board of Directors prior to the issuance of any series.
The Certificate of Incorporation of the Company requires the affirmative
vote of the holders of 70% of the voting stock to approve certain mergers,
consolidations, reclassifications, dispositions of assets or liquidations,
involving or proposed by certain "Interested Stockholders," unless certain price
and procedural requirements are met or unless the transaction is approved by
two-thirds of the disinterested directors. Generally, "Interested Stockholders"
include any person who beneficially owns 20% or more of the Company's voting
stock and, in certain cases, any person who beneficially owned 20% or more of
the Company's voting stock at any time during the two years prior to the date in
question or an assignee or successor of such a person. In addition, the
Certificate of Incorporation provides: (I) for classification of the Board of
Directors into three separate classes, each elected for a term of three years;
(ii) that special meetings of the stockholders may be called only by two-thirds
of the directors, the Chairman of the Board, or holders of 70% of the voting
stock; and (iii) that action by the stockholders of the Company in lieu of a
meeting of the stockholders may be taken only with the written consent of
holders of 70% of the voting stock. Except for any amendment recommended by
two-thirds of the directors, these provisions of the Certificate of
Incorporation may be amended only by the affirmative vote of holders of 70% of
the voting stock of the Company. The overall effect of these provisions may be
to delay or prevent attempts by other corporations or groups to acquire control
of the Company without negotiation with the Board of Directors.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of the Notes
and the Common Stock into which Notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations relating thereto.
This summary is based on laws, regulations, rulings and decisions now in effect,
all of which are subject to change. This summary deals only with holders that
will hold Notes and Common Stock as capital assets and does not address tax
considerations applicable to investors that may be subject to special tax rules,
such as banks, tax-exempt organizations, insurance companies, dealers in
securities or currencies, persons that will hold the Notes or Common Stock as
part of a position in a "straddle" for tax purposes or holders of Notes that did
not acquire the Notes in the initial distribution thereof.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT WITH THEIR OWN
TAX ADVISORS REGARDING THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX
AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR FOREIGN TAXING
JURISDICTION, OR UNDER ANY APPLICABLE TAX TREATY.
<PAGE>
United States Holders
As used herein, the term "United States Holder" means a holder of a Note
that is a citizen or resident of the United States, or that is a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source, and the term "United States" means the United States of America
(including the States and Districts of Columbia).1
Payment of Interest
Interest on a Note generally will be includible in the income of a United
States Holder as ordinary income at the time such interest is received or
accrued, in accordance with such Holder's method of accounting for United States
federal income tax purposes.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange or redemption of a Note, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(I) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such amount
is attributable to accrued interest income, which is taxable as ordinary income)
and (ii) such Holder's adjusted basis in the Note. A United States Holder's
adjusted basis in a Note generally will equal the cost of the Note to such
holder. Such capital gain or loss will be long-term capital gain or loss if the
Note was held for more than one year at the time of sale, exchange or
redemption.
Conversion of the Notes
A United States Holder generally will not recognize any income, gain, or
loss upon conversion of a Note into Common Stock except with respect to cash
received in lieu of a fractional Share of Common Stock. Such Holder's basis in
the Common Stock received on conversion of a Note will be the same as such
Holder's adjusted basis in the Note at the time of conversion (reduced by any
basis allocable to a fractional share interest), and the holding period for the
Common Stock received on conversion will generally include the holding period of
the Note converted.
Cash received in lieu of a fractional share of Common Stock upon conversion
will be treated as a payment in exchange for the fractional share of Common
Stock. Accordingly, the receipt of cash in lieu of a fractional share of Common
Stock generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the United States
Holder's adjusted basis in the fractional share).
Adjustment of Conversion Price
The conversion price of the Notes is subject to adjustment in certain
circumstances. Under Section 305(C) of the United States Internal Revenue Code
of 1986 (the "Code"), adjustments that have the effect of increasing the
proportionate interest of holders of the Notes in the assets or earnings of the
Company (for example, an adjustment following a distribution of property by the
Company to its shareholders) may in some circumstances give rise to deemed
dividend income to United States Holders; similarly, a failure to adjust the
conversion price of the Notes to reflect a stock dividend or other event
increasing the proportionate interest of the holders of outstanding Company
Common Stock can in some circumstances give rise to deemed dividend income to
United States Holders of such Common Stock.
Dividends on the Common Stock
Dividends paid on the Common Stock generally will be includible in the
income of a United States Holder as ordinary income to the extent of the
Company's current or accumulated earnings and profits.
Sale or Other Disposition of Common Stock
United States Holders generally will be subject to taxation with respect to
any gain recognized on the sale, exchange, redemption or other disposition of
shares of Common Stock. Such gain will be capital gain, and will be long-term
capital gain if the shares of Common Stock were held for more than one year.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Note, payments of dividends on
Common Stock, and payments of the proceeds of the sale of a Note or Common Stock
to certain non-corporate United States Holders, and a 31% backup withholding tax
may apply to such payments if the United States Holder (I) fails to furnish or
certify his correct taxpayer identification number to the payor in the manner
required, (ii) is notified by the Internal Revenue Service (the "IRS") that he
has failed to report payments of interest and dividends properly, or (iii) under
certain circumstances, fails to certify that he has not been notified by the IRS
that he is subject to backup withholding for failure to report interest and
dividend payments. ANY amounts withheld under the backup withholding rules from
a payment to a United States Holder will be allowed as a credit against such
holder's United States federal income tax liability and may entitle the holder
to a refund.
Non-United States Holders
Subject to the discussion of backup withholding below, payments of
principal and interest on the Notes to, or on behalf of, any beneficial owner of
a Note that is not a United States Holder (a "Non-U.S. Holder") will not be
subject to U.S. federal withholding tax; provided, in the case of interest, that
(I) such Non-U.S. Holder does not actually or constructively own 10 percent or
more of the total combined voting power of all classes of stock of the Company,
(ii) such Non-U.S. Holder is not a controlled foreign corporation for U.S. tax
purposes that is related to the Company through stock ownership and (iii) either
(A) the Non-U.S. Holder certifies, under penalties of perjury, that it is not a
United States Holder and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and that holds the Note certifies, under penalties of perjury,
that such statement has been received from the Non-U.S. Holder by it or by
another financial institution and furnishes the payor with a copy thereof.
ANY capital gain realized on the sale, exchange, redemption or other
disposition of a Note or of shares of Common Stock (including the receipt of
cash in lieu of fractional shares upon conversion of a Note into shares of
Common Stock) by a Non-U.S. Holder will not be subject to United States federal
income or withholding taxes if (I) such gain is not effectively connected with a
U.S. trade or business of the holder and (ii) in the case of an individual, such
holder is not present in the United States for 183 days or more in the taxable
year of the sale, exchange, redemption, or other disposition or receipt.
Except as described in the previous paragraph above with respect to the
receipt of cash in lieu of fractional shares by certain holders upon conversion
of a Note, no United States federal income tax will be imposed upon the
conversion of a Note into shares of Common Stock.
Dividends paid (or deemed paid, as described under "United States
Holders--Adjustment of Conversion Price") on shares of Common Stock held by a
Non-U.S. Holder will be subject to withholding of United States federal income
tax at a 30 percent rate (or lower rate provided under any applicable tax
treaty, assuming the holder of the Common Stock satisfies any certification or
documentation requirements necessary to claim the benefits of such treaty),
unless the dividends are effectively connected with the conduct by the Non-U.S.
Holder of a trade or business in the United States, in which case such dividends
will be subject to United States federal income tax at regular rates and will be
exempt from the 30 percent withholding tax.
Payments made on a Note or shares of Common Stock and proceeds from the
sale of a Note or shares of Common Stock received by a Non-U.S. Holder will not
be subject to a backup withholding tax of 31% or to information reporting
requirements unless, in general, the holder fails to comply with certain
reporting procedures or otherwise fails to establish an exemption from such tax
or reporting requirements under applicable provisions of the Code.
<PAGE>
PLAN OF DISTRIBUTION
The Notes and Common Stock offered hereby may be sold from time to time to
purchasers directly by the Selling Holders. Alternatively, the Selling Holders
may from time to time offer the Notes and Common Stock to or through
underwriters, broker/dealers or agents, who may receive compensation in the form
of underwriting discounts, concessions or commissions from the Selling Holders
or the purchasers of Notes and Common Stock for whom they may act as agents. The
Selling Holders and any underwriters, broker/dealers or agents that participate
in the distribution of Notes and Common Stock may be deemed to be "underwriters"
within the meaning of the Securities Act and any profit on the sale of Notes and
Common Stock by them and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Notes and Common Stock issuable upon conversion thereof may be sold
from time to time in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. The sale of the Notes and the Common Stock
issuable upon conversion thereof may be effected in transactions (which may
involve crosses or block transactions) (I) on any national securities exchange
or quotation service on which the Notes or the Common Stock may be listed or
quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or in the over-the-counter market
or (iv) through the writing of options. At the time a particular offering of the
Notes or the Common Stock is made, a Prospectus Supplement, if required, will be
distributed which will set forth the aggregate amount and type of Notes and
Common Stock being offered and the terms of the offering, including the name or
names of any underwriters, broker/dealers or agents, any discounts, commissions
and other terms constituting compensation from the Selling Holders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Notes and Common Stock will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions, the Notes and Common Stock may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or an exemption
from registration or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Notes or the Common Stock may not
simultaneously engage in market-making activities with respect to such
securities for a two or nine business day period prior to the commencement of
such distribution. In addition to and without limiting the foregoing, each
Selling Holder and any other person participating in a distribution will be
subject to applicable provisions of the Exchange act and the rules and
regulations thereunder, including without limitation Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of any of the
securities by the Selling Holders or any such other person. All of the foregoing
may affect the marketability of the Notes and the Common Stock and the brokers'
and dealers' ability to engage in market-making activities with respect to these
securities.
Pursuant to the Registration Agreement, all expenses of the registration of
the Notes and Common Stock will be paid by the Company, including, without
limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company will be indemnified by the
Selling Holders against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith.
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Montgomery Securities
have provided services to the Company and to entities related to the Company and
may in the future provide services to the Company or such other entities, for
which they have received or expect to receive customary fees.
SELLING HOLDERS
The Notes were originally issued by the Company and sold by the Initial
Purchasers in a transaction exempt from the registration requirements of the
Securities Act, to persons reasonably believed by such Initial Purchasers to be
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), other institutional "accredited investors" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) or in transactions complying with the
provisions of Regulation S under the Securities Act. The Selling Holders (which
term includes their transferees, pledgees, donees or their successors) may from
time to time offer and sell pursuant to this Prospectus any or all of the Notes
and Common Stock issued upon conversion of the Notes.
The following table sets forth information with respect to the Selling
Holders and the respective principal amounts of Notes and shares of Common Stock
beneficially owned by each Selling Holder. Such information has been obtained
from the Selling Holders. Except as otherwise disclosed herein, none of the
Selling Holders has, or within the past three years has had, any position,
office or other material relationship with the Company or any of its
predecessors or affiliates. Because the Selling Holders may offer all or some
portion of the Notes or the Common Stock issuable upon conversion thereof
pursuant to this Prospectus, no estimate can be given as to the amount of the
Notes or the Common Stock issuable upon conversion thereof that will be held by
the Selling Holders upon termination of any such sales. In addition, the Selling
Holders identified below may have sold, transferred or otherwise disposed of all
or a portion of their Notes, since the date on which they provided the
information regarding their Notes, in transactions exempt from the registration
requirements of the Securities Act.
Selling Holder Principal Amount of Number of
Notes Beneficially Owned Shares of Common Stock
and Offered Hereby Beneficially Owned (1)
--------------- -------------------------- -------------------------
(1) Does not include shares of Common Stock issuable upon conversion of Notes.
LEGAL MATTERS
The validity of the Notes and the shares of Common Stock issuable upon
conversion thereof have been passed upon for the Company by Powell, Goldstein,
Frazer & Murphy, Atlanta, Georgia, counsel for the Company.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995,
incorporated by reference into this Prospectus and Registration Statement, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
Accounting and Auditing.
<PAGE>
[Back Cover Page of Prospectus]
[Left Column]
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Offering Memorandum in connection with the offer made by this Offering
Memorandum and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. Neither the delivery of
this Offering Memorandum nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date as of which information is given in this
Offering Memorandum. This Offering Memorandum does not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to any person to whom it is unlawful to make such
solicitation.
Table of Contents
Page
Available Information
Information Incorporated by Reference
Summary
Risk Factors
Use of Proceeds
Price Range of Common Stock and
Dividend Policy
Capitalization
Selected Consolidated Financial Data
Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Business
Description of Notes
Description of Capital Stock
Certain Federal Income Tax
Considerations
Selling Holders
Plan of Distribution
Legal Matters
Independent Auditors
[End of left column]
- --------------------------------------------------------------
[Right column]
$287,500,000
SCI Systems, Inc.
5% Convertible Subordinated Notes Due 2006
Salomon Brothers Inc
Merrill Lynch & Co.
Montgomery Securities
Prospectus
Dated June 10, 1996
[End of right column]
[End of Back Cover Page of Prospectus]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses to be paid by the
Company in connection with the sale and distribution of the securities being
registered, other than underwriting discounts and commissions. All of the
amounts shown are estimated except the Securities and Exchange Commission
registration fee and the Nasdaq additional listing fee.
SEC registration fee........................$ 99,137.93
Legal and accounting fees and expenses (1).. 50,000.00
---------
$149,137.93
==========
(1) Estimate of maximum amount of such expense.
Item 15. Indemnification of Directors and Officers.
The Company's Second Restated Certificate of Incorporation (the
"Certificate of Incorporation") requires that the Company indemnify every
director and officer, and his or hers heirs, executors and administrators,
against expenses reasonably incurred by him or her in connection with any
action, suit or proceeding to which he or she may be made a party by reason of
being or having been an officer of the Company, except with respect to matters
as to which he or she is finally adjudged in such action, suit or proceeding to
have been liable thereunder by reason of negligence or misconduct. The
Certificate of Incorporation further provides that in the event a claim against
a director or officer is settled, indemnification may only be provided in
connection with matters covered by the settlement as to which the Company is
advised by its counsel that the person to be indemnified did not commit a breach
of duty to the Company.
In accordance with Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), the Certificate of Incorporation of the Company
contains a provision to limit the personal liability of the directors of the
Company for violations of their fiduciary duties. This provision eliminates each
director's liability to the Company or its stockholders for monetary damages
except (I) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL providing for liability of directors for unlawful payment of dividends
or unlawful stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. The effect of this
provision is to eliminate the personal liability of directors for monetary
damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
The Company's Amended and Restated Bylaws (the "Bylaws") provide that,
subject to certain limited exceptions set forth therein, the Company may
indemnify any person, including officers and directors, who are, or are
threatened to be made, parties to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided that the Board of Directors,
independent legal counsel or a majority of shareholders, as the case may be,
determine that such officer, director, employee or agent acted in good faith and
in a manner he reasonably believed to be in or not opposed to the corporation's
best interests and, for criminal proceedings, had no reasonable cause to believe
that his conduct was unlawful (unless the individual in question has entered
into an agreement providing for a standard of care different than that set forth
above, in which case such standard would be controlling in determining any
rights to indemnification). The Bylaws further provide that the Company may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in defense of any action referred to above, the corporation
must indemnify him against the expenses which such officer or director actually
or reasonably incurred. In addition, the Bylaws further provide that the Company
may maintain officers' and directors' liability insurance which insures against
liabilities that officers and directors of the Company may incur in such
capacities.
<PAGE>
ITEM 16. EXHIBITS
Exhibit No. Description of Exhibit
4.1 Second Restated Certificate of Incorporation, as amended
4.2 Bylaws of the Company, as amended
4.3 Indenture dated as of April 23, 1996 between the Company and PNC
Bank, Kentucky, Inc., as trustee, relating to the Company's 5%
Convertible Subordinated Notes due 2006
4.4 Registration Agreement dated as of April 23, 1996 by and among
the Company, Salomon Brothers Inc, Merrill Lynch & Co., and
Montgomery Securities, as initial purchasers
5.1 Opinion of Powell, Goldstein, Frazer & Murphy
12 Statement regarding computation of ratio of earnings to fixed charges
23.1 Consent of Powell, Goldstein, Frazer & Murphy (included as part of
Exhibit 5.1 hereto)
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (see the signature pages hereto)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Huntsville, State of Alabama, on the 7 day of June,
1996.
SCI SYSTEMS, INC.
By: /s/ Olin B. King
----------------
Olin B. King
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of SCI Systems, Inc. do
hereby constitute and appoint Olin B. King and Michael M. Sullivan, and each of
them, our true and lawful attorneys and agents, to do any and all acts and
things in our names and on our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in our names in the
capacities indicated below, which said attorneys and agents, or either of them,
may deem necessary or advisable to enable said Company to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but without limitation, power and authority
to sign for us, or any of us, in our names in the capacities indicated below,
any and all amendments (including post-effective amendments) hereto; and we do
hereby ratify and confirm all that said attorneys and agents, or either of them,
shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Olin B. King
-----------------
Olin B. King Chairman of the Board
and
Chief Executive Officer
(Principal Executive, Accounting
And Financial Officer) June 7, 1996
/s/ A. Eugene Sapp, Jr.
------------------------
A. Eugene Sapp, Jr. Director, President and
Chief Operating Officer June 7, 1996
/s/Howard H. Callaway
-----------------------
Howard H. Callaway Director June 7, 1996
/s/ William E. Fruhan
---------------------
William E. Fruhan Director June 7, 1996
/s/Joseph C. Moquin
-------------------
Joseph C. Moquin Director June 7, 1996
/s/Wayne Shortridge
-------------------
Wayne Shortridge Director June 7, 1996
/s/G. Robert Tod
----------------
G. Robert Tod Director June 7, 1996
/s/Jackie M. Ward
-----------------
Jackie M. Ward Director June 7, 1996
<PAGE>
EXHIBIT 4.1
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF THE STATE OF DELAWARE, DO HEREBY CERTIFY
THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "SCI
SYSTEMS, INC.", FILED IN THIS OFFICE ON THE TWENTY-FIFTH DAY OF JANUARY, A. D.
1996, AT 9 O'CLOCK A. M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED
TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ Edward J. Freel
--------------------
Edward J. Freel, Secretary of State
AUTHENTIFICATION:
0568101 8100 DATE: 7805683
960023836 01-26-96
<PAGE>
- -------------------------------------------------------------------------------
STATE OF DELAWARE
- -------------------------------------------------------------------------------
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED, 09:00 AM 01/25/1996
960023836 - 568101
CERTIFICATE OF AMENDMENT OF THE
SECOND RESTATED CERTIFICATE OF INCORPORATION OF
SCI SYSTEMS, INC.
(FORMERLY SPACE CRAFT, INC.)
SCI SYSTEMS, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, does hereby certify:
FIRST: That at a meeting of the Board of Directors of SCI Systems, Inc., a
resolution was duly adopted setting forth a proposed amendment to the Second
Restated Certificate of Incorporation of SCI Systems, Inc. (formerly Space
Craft, Inc.), declaring said amendment to be advisable, and declaring that
approval of said amendment be considered at the next Annual Meeting of
Stockholders.
SECOND: The Board of Directors at said meeting of the Board of Directors
resolved that Article Fourth (a) of the Second Restated Certificate of
Incorporation of SCI Systems, Inc. should be amended by deleting Section (a) of
Article Fourth in its entirety and by substituting in lieu thereof the
following:
"FOURTH. (a) The aggregate number of shares which the corporation shall have
the authority to issue is One Hundred Million (100,000,000) shares of common
stock of the par value of ten cents ($.10) per share (hereinafter called the
Common Stock") and Five Hundred Thousand (500,000) shares of preferred stock
without par value (hereinafter called the "Preferred Stock"). At every meeting
of the stockholders, every holder of stock of the corporation, be it Common
Stock or Preferred Stock shall be entitled to one vote, in person or by proxy,
for each share of Common Stock or Preferred Stock standing in his name on the
books of the corporation. The Common Stock and the Preferred Stock shall vote
together as one class unless otherwise expressly required bylaw.
THIRD: That thereafter pursuant to resolution of its Board of Directors, and
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, a meeting was held at which meeting the necessary number of
shares as required by statute were voted in favor of said amendment.
FOURTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, SCI Systems, Inc. has caused this Certificate to be
signed by A. Eugene Sapp, Jr., its President and authorized officer, and
attested by Michael M. Sullivan, its Secretary, this 18th day of January, 1996.
SCI SYSTEMS, INC.
By: /s/ A. Eugene Sapp, Jr.
-----------------------
A. Eugene Sapp, Jr., President
Attested:
By: /s/ Michael M. Sullivan
-----------------------
Michael M. Sullivan, Secretary
<PAGE>
State of Delaware,
} ss.
New Castle County
I, William M. Honey Recorder of Deeds for New Castle County, Delaware, do
hereby certify that Certified Copy of SECOND RESTATED CERTIFICATE OF
INCORPORATION OF "SCI Systems, Inc."
was received for record in this office on March 11, 1987 and the same appears of
record in the Recorder's Office for said County.
Witness my hand and Official Seal, this Eleventh day of March A.D. 1987
/s/ William M. Honey
- ---------------------
Recorder.
<PAGE>
State of Delaware
Office of Secretary of State
I, MICHAEL HARKINS, SECRETARY OF STATE OF DELAWARE DO HEREBY CERTIFY
THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF RESTATED
CERTIFICATE OF INCORPORATION OF SCI SYSTEMS, INC. FILED IN THIS OFFICE ON THE
TWENTY-SIXTH DAY OF FEBRUARY, A.D. 1987, AT 10 O'CLOCK A.M.
/s/ Michael Harkins
--------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :1157935
877057057
DATE: 03/09/1987
<PAGE>
SECOND RESTATED CERTIFICATE OF INCORPORATION
OF
SCI SYSTEMS, INC.
(FORMERLY SPACE CRAFT, INC.)
SCI Systems, Inc., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows: 1. The name of the
corporation is SCI Systems, Inc. The date of filing its original Certificate of
Incorporation with the Secretary of State was June 5, 1961. 2. This Restated
Certificate of Incorporation only restates and integrates and does not further
amend the provisions of the Restated Certificate of Incorporation of this
corporation as heretofore amended or supplemented and there is no discrepancy
between those provisions and the provisions of this Second Restated Certificate
of Incorporation. This Second Restated Certificate of Incorporation was duly
adopted by the board of directors in accordance with Section 245 of the General
Corporation Law of Delaware. 3. The text of the Restated Certificate of
Incorporation as amended or supplemented heretofore is hereby restated without
further amendments or changes to read as herein set forth in full: FIRST. The
name of the corporation is SCI Systems, Inc. SECOND. Its registered office in
the State of Delaware is located at 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name and address of its registered agent
is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware
19801. THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are: To design, develop, manufacture and test
all types of parts for guided and ballistic missiles, earth satellites and space
craft, including the development of the structure, power supply, networks and
associated electronic and frequency equipment, as well as to design, develop,
manufacture and test all types of instrumentation equipment for guided and
ballistic missiles, earth satellites and space craft, such equipment including
transducers, measuring apparatus, signal conditioning equipment, telemetry
equipment and radio frequency equipment for data transmission, command
functions, tracing and propagation studies. To design, develop, manufacture and
service all types of electronic and data processing systems and equipment and to
provide all types of technical advice, goods and services for military,
industrial and commercial use. To manufacture, purchase or otherwise acquire,
invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose
of, trade, deal in and deal with goods, wares and merchandise and personal
property of every class and description. To acquire, and pay for in cash, stock
or bonds of this corporation, or otherwise, the good will, rights, assets and
property and to undertake or assume the whole or any part of the obligations or
liabilities of any person, firm, association or corporation. To acquire, hold,
use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise
dispose of letters patent of the United States or any foreign country, patent
rights, licenses and privileges, inventions, improvements and processes,
copyrights, trademarks and trade names, relating to or useful in connection with
any business of this corporation. To acquire by purchase, subscription or
otherwise, and to receive, hold, own, guarantee, sell, assign, exchange,
transfer, mortgage, pledge or otherwise dispose of or deal in and with any of
the shares of the capital stock, or any voting trust certificates in respect of
the shares of capital stock, script, warrants, rights, bonds, debentures, notes,
trust receipts, and other securities, obligations, choses in action and
evidences of indebtedness or interest issued or created by any corporations,
joint stock companies, syndicates, associations, firms, trusts or persons,
public or private, or by the government of the United States of America, or by
any foreign government, or by any state, territory, province, municipality or
other political subdivision or by any governmental agency, and as owner thereof
to possess and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon, and to do any and all
acts and things necessary or advisable for the preservation, protection,
improvement and enhancement in value thereof. To borrow or raise moneys for any
of the purposes of the corporation and, from time to time without limit as to
amount, to draw, make, accept, endorse, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other negotiable or
nonnegotiable instruments and evidences of indebtedness, and to secure the
payment of any thereof and of the interest thereon by mortgage upon or pledge,
conveyance or assignment in trust of the whole or any part of the property of
the corporation. Whether at the time owned or thereafter acquired, and to sell,
pledge or otherwise dispose of such bonds or other obligations of the
corporation for its corporate purposes. To loan to any person, film or
corporation any of its surplus funds either with or without security. To
purchase, hold, sell and transfer the shares of its own capital stock; provided
it shall not use its funds or property for the purchase of its own shares of
capital stock when such use would cause any impairment of its capital except as
otherwise permitted by law, and provided further that shares of its own capital
stock belonging to it shall not be voted upon directly or indirectly. To have
one or more offices, to carry on all or any of its operations and business
without restriction or limit as to amount to purchase or otherwise acquire,
hold, own, mortgage, sell, convey or otherwise dispose of, real or personal
property of every class and description in any of the states, districts,
territories or colonies of the United States, and in any and all foreign
countries subject to the laws of such state, district, territory, colony or
country. In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the State
of Delaware, and to do any or all of the things hereinbefore set forth to the
same extent as natural person might or could do. The objects and purposes
specified in the foregoing clauses shall, except where otherwise expressed, be
in no-wise limited or restricted by reference to, or inference from, the terms
of any other clause in this certificate of incorporation, but the objects and
purposes specified in each of the foregoing clauses of this article shall be
regarded as independent objects and purposes. FOURTH. "(a) The aggregate number
of shares which the corporation shall have authority to issue is Fifty Million
(50,000,000) shares of common stock of the par value of ten cents ($. 10) per
share (hereinafter called the "Common Stock") and Five Hundred Thousand
(500,000) shares of preferred stock without par value (hereinafter called the
"Preferred Stock"). At every meeting of the stockholders, every holder of stock
of the corporation, be it Common Stock or Preferred Stock, shall be entitled to
one vote, in person or by proxy, for each share of Common Stock or Preferred
Stock standing in his name on the books of the corporation. The Common Stock and
the Preferred Stock shall vote together as one class unless otherwise expressly
required by law. (b) Any unissued or treasury shares of the Preferred Stock may
be issued from time to time in one or more series. All shares of Preferred Stock
shall be of equal rank and shares be identical, except in respect of the
particulars that may be fixed by the Board of Directors as hereinafter provided
pursuant to authority which is hereby expressly vested in the Board of
Directors; and each share of the series shall be identical in all respects with
the other shares of such series, except, if dividends thereon are cumulative, as
to the date from which dividends thereon shall be cumulative. Different series
of the same class of shares shall not be construed to constitute different
classes of shares for the purpose of voting by classes, except when such voting
by classes is expressly required by law. Before any shares of Preferred Stock of
any particular series shall be issued, the Board of Directors shall fix and
determine, and is hereby expressly empowered to fix and determine, in the manner
provided by law, the following provisions of the shares of such series: (1) the
distinctive designation of such series and the number of shares which shall
constitute such series, which number may be increased (except where otherwise
provided by the Board of Directors in creating such series) or decreased (but
not below the number of shares thereof then outstanding) from time to time by
like action of the Board of Directors; (ii) the annual rate of dividends payable
on shares of such series, whether dividends shall be cumulative, the conditions
upon which and the date when such dividends shall be cumulative on all shares of
such series issued prior to the record date for the first dividend of such
series; (iii) the time or times when and the price or prices at which shares of
such series shall be redeemable and the sinking fund provisions, if any, for the
purchase or redemption of such shares; (iv) the amount payable on shares of such
series in the event of any liquidation, dissolution or winding up of the affairs
of the corporation; and (v) the rights, if any, of the holders of shares of such
series to convert such shares into or exchange such shares for, shares of Common
Stock or shares of any other series of Preferred Stock and the terms and
conditions of such conversion or exchange. Any action by the Board of Directors
in authorizing the issuance of Preferred Stock and fixing and determining the
provisions thereof, conditional upon approval of the amendment to this Article
Fourth, is hereby ratified and approved. (c) The holders of the Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors,
but only from funds legally available for the payment of dividends, cash
dividends at the annual rate for each particular series as theretofore fixed and
determined by the Board of Directors as hereinbefore authorized, and no more,
such dividends to be payable before any dividend on the Common Stock shall be
paid or set apart for payment. Arrearages in the payment of dividends shall not
bear interest. Dividends may be determined to be cumulative or non- cumulative.
(d) In the event of any dissolution, liquidation or winding up of the affairs of
the corporation, after payment or provision for payment of the debts and other
liabilities of the corporation, the holders of each series of Preferred Stock
shall be entitled to receive, out of the net assets of the corporation, an
amount in cash for each share equal to the amount fixed and determined by the
Board of Directors in any resolution providing for the issue of any particular
series of Preferred Stock, plus an amount equal to any dividends payable to such
holder which are then unpaid either under the provisions of the resolution of
the Board of Directors providing for the issue of such series of Preferred
Stock, or by declaration of the Board of Directors, on each such share up to the
date fixed for distribution, and no more, before any distribution shall be made
to the holders of the Common Stock. Neither the merger or consolidation of the
corporation, nor the sale, lease or conveyance of all or a part of its assets,
shall be deemed to be a liquidation, dissolution or winding up of the affairs of
the corporation. (e) The authorized but unissued shares of Common Stock may be
issued for such consideration, not less than the par value thereof, as may be
fixed from time to time by the Board of Directors, and the authorized but
unissued shares of Preferred Stock may be issued for such consideration, not
less than the stated value thereof, as may be fixed from time to time by the
Board of Directors. (f) No holder of any of the shares of the Preferred Stock or
of the Common Stock of the Corporation shall be entitled as of right as such
holder to purchase or to subscribe for any unissued stock of any class, or any
additional shares of any class, to be issued by reason of any increase in the
authorized capital stock of the corporation of any class, or bonds, certificates
of indebtedness, debentures, or other securities convertible into stock of the
corporation or carrying any right to purchase stock of any class, but any such
unissued stock, or such additional authorized issue of any stock or of other
securities convertible into stock or carrying any right to purchase stock, may
be issued and disposed of pursuant to resolutions of the Board of Directors, to
such persons, firms corporations, or associations and upon such terms as may be
deemed advisable by the Board of Directors in the exercise of its discretion.
(g) The corporation, acting by its Board of Directors, within action by the
shareholders, may from time to time create and issue, whether or not in
connection with the issue and sale of any shares of stock or of any other
securities of the corporation, rights or options entitling the bearer or
registered owner or holder of each such right or option to purchase from the
corporation shares of any class or series of its capital stock, such rights or
options to be evidenced by or ID such warrant or warrants or purchase
certificate or purchase certificates, or such other instrument or instruments as
shall be approved by the Board of Directors. The terms upon which, the time or
times (which may be limited or unlimited in duration) at or within which, and
the price or prices at which, or the other consideration or considerations for
which such shares may be purchased from the corporation upon the exercise of any
right or option shall be as fixed, stated or provided in a resolution or
resolutions adopted by the Board of Directors providing for the creation and
issuance of such rights or options, and in every case shall be set forth in or
incorporated by reference in the warrant or warrants, or purchase certificate or
purchase certificates, or other instrument or instruments evidencing such rights
or options; provided, however, that the price or prices to be received upon the
exercise of such rights or options shall be not less than the par value or
stated value thereof. The Board of Directors shall be privileged to issue, sell
or grant rights or options for the subscription to or purchase of any or all of
the authorized Common Stock or Preferred Stock, or any series thereof, of the
corporation not then issued or which may have been issued and reacquired as
treasury stock by the corporation and any or all of any increase in stock of any
class or series that may hereafter be authorized. The Board of Directors shall
be privileged to reserve from issuance such portion of the corporation s
authorized but unissued stock of any class or series as shall be necessary to
provide stock for issuance pursuant to the exercise of such rights or options.
(h) The Board of Directors may from time to time authorize the corporation to
issue scrip for fractional shares of stock of any class or series. Such scrip
shall not confer upon the holder any voting or any other rights of a shareholder
of the corporation, but the corporation shall from time to tune, within such
tune as the Board of Directors may determine, issue one whole share of stock
upon the surrender of scrip for fractional shares aggregating one whole share
and upon compliance with such conditions as the Board of Directors shall fix for
such transfer. (i) Upon adoption and filing of this amendment as provided by
law, the provisions thereof shall be binding upon the holders of each share of
Common Stock of the corporation then outstanding to the same extent as though
the provisions thereof had been included in the Certificate of Incorporation of
the corporation prior to the issuance of each share of stock of any class or
series. FIFTH. The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00). SIXTH. The corporation is
to have perpetual existence. SEVENTH. The private property of the stockholders
shall not be subject to the payment of corporate debts to any extent whatever.
EIGHTH. In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized: To make, alter or repeal the
by-laws of the corporation. Toauthorize and cause to be executed mortgages and
liens upon the real and personal property of the corporation. To set apart out
of any of the funds of the corporation available for dividends a reserve or
reserves for any proper purpose and to abolish any such reserve in the manner in
which it was created. By resolution passed by a majority of the whole board, to
designate one or more committees, each committee to consist of two or more of
the directors of the corporation, which, to the extent provided in the
resolution or in the bylaws of the corporation, shall have and may, exercise the
powers of the Board of Directors in the management of the business and affairs
of the corporation, and may authorize the sea of the corporation to be affixed
to all papers which may require it. Such committee or committees shall have such
name or names as may, be stated in the by-laws of the corporation or as may be
determined from tune to time by resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the holders of a majority of
the stock issued and outstanding having voting power giver at a stockholders
meeting duly called for that purpose, or when authorized by a written consent of
the holders of a majority of the voting stock issued and outstanding, to sell,
lease or exchange all of the property and assets of the corporation, including
its good will and its corporate franchises, upon such terms and conditions and
for such consideration, which may be in whole or in part shares of stock in,
and/or other securities of, any other corporation or corporations, as its Board
of Directors shall deem expedient and for the best interest of the corporation.
NINTH. Meetings of stockholders may be held outside the State of Delaware, if
the by-laws so provide. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from tune to time by the Board of Directors or in
the by-laws of the corporation. Elections of directors need not be by ballot
unless the by-law of the corporation shall so provide. TENTH. The corporation
shall indemnify every Director and officer, his heirs, executors and
administrators, against expenses reasonably incurred by him in connection with
any action, suit or proceeding to which he may be made a party by reason of
being or having been an officer of the corporation, except in relation to
matters as to which he shall be finally adjudged in such action suit or
proceeding to have beer liable thereunder by reason of negligence or misconduct;
in the event of a settlement, indemnification shall be provided only in
connection with such matters covered by the settlement as to which the
corporation is advised by its counsel that the person to be indemnified did no
commit a breach of duty to the corporation. The corporation shall be privileged
to enter into such agreements of indemnifiation with its Directors, officers,
agents or underwriters or other persons with whom it may deal as shall be
provided by the By-Laws of the corporation or by resolutions of the Board of
Directors. ELEVENTH. The corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute and all rights conferred upon
stockholders herein are granted subject to this reservation. TWELFTH. (a) The
business and affairs of the corporation shall be managed by, or under the
direction of, a Board of Director comprised as follows: (i) The number of
directors shall be fixed from time to time in accordance with the by-laws of the
corporation. (ii) At the 1987 annual meeting of stockholders, the board of
directors shall be divided into three classes, designated as Class I Class II
and Class III. Each class shall consist, as nearly as may be possible, of
one-third of the total number of directors constituting the entire board of
directors. At the 1987 annual meeting of stockholders, Class I directors shall
be elected for an initial term of three years Class II directors for an initial
term of two years, and Class III directors for an initial term of three years.
Upon expiration of the initial term successor to the Class of directors whose
term expires at that annual meeting of stockholders shall be elected for a
three-year term. If the number of directors fixed in accordance with the by-laws
of the corporation changes at any time, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional director of any Class
elected to fill a vacancy resulting from an increase in such a Class shall hold
office for a term that shall coincide with the remaining term of that Class,
unless otherwise required by law, but in no case shall a decrease in the number
of directors in a Class shorten the term of an incumbent director. A director
shall hold office until the date of the annual meeting of stockholders upon
which his term expires and until his successor shall be elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. (iii) Any vacancy on the Board of Directors that results
from an increase in the number of directors or from prior death, resignation
retirement, disqualification from office of a director shall be filled by a
majority of the Board of Directors then in office, though less than a quorum, or
by the sole remaining director. Any director elected to fill a vacancy resulting
from prior death, resignation, retirement, disqualification or removal from
office of a director shall have the same remaining term as that of his
predecessor. (iv) Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of Preferred Stock issued by the corporation shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be governed by the
terms of this Restated Certificate or the resolutions of the Board of Directors
creating such class or series, as the case may be, applicable thereto, and such
directors so elected shall not be divided into Classes pursuant to this Section
(a) unless expressly provided by such terms. (b) Except as may be prohibited by
law, by the by-laws of the corporation, or by this Restated Certificate, the
Board of Directors shall have the right to make, alter, amend, change, add to,
or repeal the by-laws of the corporation, and have the right (which, to the
extent exercised, shall be exclusive) to establish the rights powers, duties,
rules and procedures that from time to tune shall govern the Board of Directors,
including without limitation, the vote required for any action and the election
of officers of the corporation by the Board of Directors, and that from time to
time shall affect the directors' powers to manage the business and affairs of
the corporation. (c) Notwithstanding any other provisions of this Restated
Certificate or the by-laws of this corporation (and notwithstanding the fact
that a lesser percentage or separate class vote for certain actions may be
permitted by law, by this Restated Certificate or by the by-laws of this
corporation), the affirmative vote of the holders of not less than 70% of the
shares then entitled to vote at an election of directors, voting together as a
single class, shall be required to make, alter, amend, change, add to or repeal
any provision of this Restated Certificate or the by-laws of this corporation
which is or which is proposed to be inconsistent with the terms or purposes of
this Article 12; provided, however, that this Section (c) shall not apply to,
and such 70% vote shall not be required to alter, amend, change, add to or
repeal this Article 12 or any provisions of the by-laws relating to this Article
12, recommended by not less than two-thirds of the members of the Board of
Directors. (d) The invalidity or unenforceability of this Article 12 or any
portion hereof, or of any action taken pursuant to this Article 12 shall not
affect the validity or enforceability of any other provision of this Restated
Certificate, any action taken pursuant to such other provision, or any action
taken pursuant to this Article 12. THIRTEENTH. (a) Notwithstanding any
affirmative vote required by law, this Restated Certificate or the by-laws of
this corporation and except as otherwise expressly provided in Section (b) of
this Article 13, a Business Combination (as hereinafter defined) shall require
the affirmative vote of the holders of not less than 70% of the Voting Stock (as
hereinafter defined), voting together as a single class. Such affirmative vote
shall be required notwithstanding that no vote may be required or that a lesser
percentage or separate class vote may be allowed by law, any agreement with any
national securities exchange or the National Association of Securities Dealers,
Inc. (the "NASD"), or otherwise. (b) The provisions of Section (a) of this
Article 13 shall not be applicable to any particular Business Combination, and
such Business Combination shall require only such affirmative vote, if any, as
is required by law, by any other provision of this Restated Certificate or the
by-laws of this corporation, or by any agreement with any national securities
exchange or the NASD, if all of the conditions specified in either of the
following Paragraphs (i) or (ii) are met: (i) The Business Combination shall
have been approved by two-thirds of the Continuing Directors (as hereinafter
defined), whether such approval is made prior or subsequent to the acquisition
of beneficial ownership of the Voting Stock that caused the Interested
Stockholder (as hereinafter defined) to become an Interested Stockholder; or
(ii) All of the following price and procedural conditions shall have been met:
A. The aggregate amount of cash and the Fair Market Value (as hereinafter
defined), as of the date of the consummation of the Business Combination (the
"Consummation Date"), of the consideration other than cash to be received per
share by the holders of Common Stock pursuant to such Business Combination shall
be at least equal to the higher amount determined under the following clauses
(1) and (2): 1. (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Stockholder for any share of Common Stock acquired by it (a) within
the two-year period immediately prior to the first public announcement of the
proposal of the Business Combination (the "Announcement Date"), or (b) in the
transaction in which the interested Stockholder became an Interested
Stockholder, whichever is higher; or 2. (if applicable) the Fair Market Value
per share of the Common Stock on the Announcement Date or on the date on which
the Interested Stockholder became an Interested Stockholder (the "Determination
Date"), whichever is higher. B. The aggregate amount of the cash and the Fair
Market Value as of the Consummation Date of the consideration other than cash to
be received per share by the holders of shares of any class or series of
outstanding Capital Stock (as hereinafter defined), other than Common Stock, in
such Business Combination shall be at least equal to the highest amount
determined under clauses (1), (2) and (3) below (it being intended that the
requirements of this paragraph (ii)(B) of this Section (b) shall be required to
be met with respect to every such class or series of outstanding Capital Stock,
whether or not the Interested Stockholder has previously acquired any shares of
a particular class or series of Capital Stock): 1. (if applicable) the highest
per share price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any share of
such class or series of Capital Stock acquired by it (a) within the two-year
period immediately prior to the Announcement Date, or (b) the transaction in
which the Interested Stockholder became an Interested Stockholder, whichever is
higher; or 2.(if applicable) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the Determination Date,
whichever is higher; or 3. (if applicable) the highest preferential amount per
share to which the holders of shares of such class or series of Capital Stock
would be enticed in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of this corporation, regardless of
whether the consummation of the Business Combination would constitute such an
event. C. The consideration to be received by holders of-a particular class or
series of outstanding Capital Stock in such Business Combination shall be in
cash or in the same form as previously has been paid by or on behalf of the
Interested Stockholder in connection with its direct or indirect acquisition of
beneficial ownership of shares of such class or series Capital Stock. If the
consideration so paid for shares of a class or series of Capital Stock varied as
to form, the form of consideration for such class or series of Capital Stock
shall either be cash or the form used to acquire beneficial ownership of the
largest number of shares of such class or series of Capital Stock previously
acquired by the Interested Stockholder; provided that if the Interested
Stockholder acquired equal portions of such shares by forms of consideration
other than cash, the form of consideration to be paid to the holders of a class
or series of Capital Stock shall be the form last paid by the Interested
Stockholder for previously acquired shares. D. 1 he holders of all outstanding
shares of Capital Stock not beneficially owned by the Interested Stockholder
prior to the consummation of such Business Combination shall be entitled to
receive in such Business Combination cash or other consideration for their
shares in compliance with Paragraphs (ii)(A), (ii)(B) and (ii)(C) of this
Section (b)(provided, however, that the failure of any such holders who are
exercising their statutory rights to dissent from such Business Combination and
receive payment of the fair value of their shares to exchange their shares in
such Business Combination shall not be deemed to have prevented the condition
set forth in this Paragraph (ii)(D) of Section (b) from being satisfied). E.
After the Determination Date and prior to the Consummation Date: 1. there shall
have been no failure to declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) payable in accordance with the
terms of any outstanding Capital Stock, except as approved by a majority of the
Continuing Directors; 2. there shall have been no reduction in the annual rate
of dividends paid on the Capital Stock (other than as necessary to reflect any
stock split, stock dividend or subdivision of the Capital Stock), except as
approved by a majority of the Continuing Directors; 3. there shall have been an
increase in the annual rate of dividends paid on the Common Stock as necessary
to reflect any reclassification (including any reverse stock split),
recapitalization, reorganization, or any similar transaction that has the effect
of reducing the number of outstanding shares of Common Stock, except as approved
by a majority of the Continuing Directors; and 4. such Interested Stockholder
shall not have become the beneficial owner of any additional shares of Capital
Stock except as part of the transaction that resulted in such Interested
Stockholder becoming an Interested Stockholder. F. After the Determination Date,
the Interested Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder of this corporation), of any
loans, advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by or through this corporation, whether
in anticipation of or in connection with such Business Combination or otherwise.
G. A proxy or information statement describing the proposed Business Combination
and complying with the requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (collectively, the
"Exchange Act"), shall be mailed to all stockholders of this corporation at
least thirty days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required to be mailed
under the provisions of the Exchange Act). The proxy or information statement
shall contain on the first page thereof, in a prominent place (or, if required,
as near as practicable to the first page thereof and in a prominent place), any
statement regarding the advisability (or inadvisability) of the Business
Combination that a majority of the Continuing Directors choose to make, and if
deemed advisable by a majority of the Continuing Directors, the proxy or
information statement shall contain the opinion of an investment banking firm
selected by a majority of the Continuing Directors concerning the fairness (or
unfairness) of the terms of the Business Combination from a financial viewpoint
to the holders of the outstanding shares of Capital Stock other than the
Interested Stockholder and its Affiliates or Associates (as hereinafter
defined), such investment banking firm to be paid a reasonable fee for its
services by this corporation. (c) For the purpose of this Article 13, the
following terms shall have the respective meanings set forth below: (i)
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 promulgated
under the Exchange Act as in existence on the date this Article 13 was approved
by stockholders of this corporation. (The term "registrant" as used in Rule
12b-2 shall mean, in this case, the corporation.) (ii) "Associate" shall have
the meaning ascribed to it in Rule 12b-2 promulgated under the Exchange Act as
in existence on the date this Article 13 was approved by stockholders of this
corporation. (The term "registrant" as used in Rule 12b-2 shall mean, in this
case, the corporation.) (iii) A "beneficial owner" shall mean a person who, by
itself or through any of its Affiliates or associates, directly or indirectly,
through any contract, arrangement, understanding, relationship, or otherwise,
has or shares: A. voting power which includes the power to vote or to direct the
voting of, any Capital Stock or investment power which includes the power to
dispose or to direct the disposition of, any Capital Stock; B. the right to
acquire (whether such right is exercisable immediately or subject only to the
passage of time) any Capital Stock pursuant to any agreement, arrangement or
understanding or upon the exercise of any conversion rights, exchange rights,
warrants, options or otherwise; or C. rights pursuant to any agreements,
arrangements or understandings for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of determining
whether a Person is an Interested Stockholder pursuant to Paragraph (viii) of
this Section (c), the number of shares of Capital Stock deemed to be outstanding
shall include shares deemed beneficially owned by such Person through
application of this Paragraph (iii) of this Section (c), but shall not include
any other shares of Capital Stock that may be issuable by this corporation
pursuant to any agreement, arrangement or understanding, or upon the exercise of
any conversion rights.
(iv) "Business Combination" shall mean: A. any merger or consolidation of
this corporation or any Subsidiary (as hereinafter defined) with (1) any
Interested Stockholder, or (2) any Person (whether or not itself an Interested
Stockholder) that is or after such merger or consolidation would be, an
Affiliate or Associate of an Interested Stockholder; B. any sale, lease,
exchange, mortgage, transfer or other disposition (in one transaction or a
series of transactions) with any Interested Stockholder or any Affiliate or
Associate of an Interested Stockholder involving any assets or securities of
this corporation or any Subsidiary having an aggregate Fair Market Value equal
to or in excess of 25 % of the total assets of this corporation as shown on the
balance sheet of this corporation contained in the most recent annual report to
stockholders of this corporation; C. the adoption of any plan or proposal for
the liquidation or dissolution of this corporation proposed by or on behalf of
an Interested Stockholder or any Affiliate or Associate of an Interested
Stockholder; D. any reclassification of securities (including any reverse stock
split), recapitalization of this corporation, merger or consolidation of this
corporation with any of its Subsidiaries, or any other transaction (whether or
not with or otherwise involving an Interested Stockholder) that has the effect,
either directly or indirectly, of increasing the proportionate share of any
class or series of Capital Stock or any securities convertible into Capital
Stock, or into equity securities of any Subsidiary that is beneficially owned by
any Interested Stockholder or an Affiliate or Associate of an interested
Stockholder; or E. any agreement, contract or other arrangement providing for
any one or more of the actions specified in Paragraphs A through D of this
Section (c)(iv). (v) "Capital Stock" shall mean all Capital Stock of this
corporation authorized to be issued from time to time pursuant to Article 4 of
the Restated Certificate. (vi) "Continuing Director" shall mean: A. any member
of the Board of Directors of this corporation who, while such person is a member
of the Board of Directors, is not an Interested Stockholder and was a member of
the Board of Directors prior to the time that the Interested Stockholder became
an Interested Stockholder; and B. any successor of a Continuing Director who,
while such successor is a member of the Board of Directors, is not an Interested
Stockholder and is recommended or elected by a majority of Continuing Directors
to succeed the Continuing Directors. (vii) "Fair Market Value', shall mean: A.
in the case of cash, the amount of such cash; B. in the case of stock, the
highest closing sale price during the thirty-day period immediately preceding
the date in question of a share of such stock listed on any national securities
exchange registered under the Exchange Act or, if such stock is not listed on
any such exchange, the highest closing sale quotation during the 30-day period
immediately preceding the date in question of a share of such stock as reported
by the NASD Automated Quotation system ("NASDAQ"), or if there is no closing
sale quotation, then the average between the high bid and asked prices with
respect to a share of such stock as quoted by NASDAQ during the 30 day period
preceding the date in question, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as determined in
good faith by a majority of the Continuing Directors; and C. in the case of
property other than cash or stock, the Fair Market Value of such property on the
date in question as determined in good faith by a majority of the Continuing
Directors. In the event of any Business Combination in which this corporation is
the surviving entity, either or both the shares of Common Stock or the shares of
any other class or series of Capital Stock retained by the holders of such
shares shall be deemed consideration other than cash received for purposes of
Paragraphs (ii)(A) and (ii)(B) of Section (b) and Paragraph (iv) of Section (d)
of this Article 13. (viii) "Interested Stockholder" shall mean any Person (other
than this corporation, any Subsidiary, or any profit-sharing employee stock
ownership or other employee benefit plan established by this corporation, by an
Subsidiary, or by any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who A. is the beneficial owner of Voting Stock
representing 20% or more of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock; B. is an Affiliate or Associate of this
corporation and at any time within the two-year period immediately prior to the
date in question was the beneficial owner of Voting Stock representing 20% or
more of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock; or C. is an assignee of or has otherwise succeeded to
any shares of Capital Stock that were at any time within the two-year period
immediately prior to the date in question beneficially owned by any other
Interested Stockholder if such assignment or succession shall have occurred in
the course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933, as amended. (ix)
"Person" shall mean any individual, firm, corporation or other entity and shall
include any group comprised of any Person and any other Person with whom such
Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding, either directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of Capital Stock. (x) "Subsidiary" shall
mean any corporation of which a majority of any class of its equity securities
is beneficially owned by this corporation; provided, however, for the purposes
of the definition of Interested Stockholder as set forth in Paragraph (viii) of
this Section (c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of its equity securities is beneficially owned by this
corporation. (xi) "Voting Stock" shall mean all Capital Stock which, under the
terms of the Restated Certificate, by-laws of this corporation or applicable law
may be voted on the particular matter submitted to stockholders of this
corporation (d) When it appears that a particular Person may be an Interested
Stockholder and that the provisions of this Article 13 must be applied or
interpreted, then a majority of the total number of those directors of the
corporation who would qualify as Continuing Directors (assuming, for purpose of
determining Continuing Directors, that such particular person is in fact an
Interested Stockholder) shall have the power and the duty to interpret all of
the terms and provisions of this Article 13, and to determine on the basis of
information known to them after reasonable inquiry all facts necessary to
ascertain compliance with this Article 13, including without limitation: (i)
whether a Person is an Interested Stockholder; (ii) the number of shares of
Capital Stock or other securities beneficially owned by such Person; (iii)
whether a Person is an Affiliate or Associate of another; and (iv) whether the
assets that are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities of this
corporation or any Subsidiary in any Business Combination has, in the aggregate
a Fair Market Value equal to or in excess of 25% of the total assets of this
corporation as shown on the balance sheet of this corporation contained in the
most recent annual report to stockholders of this corporation. Any such
determination shall be made in good faith and shall be binding and conclusive on
all parties. (e) Nothing contained in this Article 13 shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
(f) The fact that any Business Combination does or does not comply with the
provisions of Section (b) of this Article 13 shall not be construed to impose
any fiduciary duty, obligation or responsibility on the Board of Directors or on
any member thereof to approve such Business Combination or recommend its
adoption or approval to the stockholders of this corporation, nor shall such
compliance limit, prohibit or other vise restrict in any manner the Board of
Directors, or any member thereof, with respect to its or his evaluations of, or
actions and responses taken toward such Business Combination. (g)
Notwithstanding any other provisions of this Restated Certificate or the by-laws
of this corporation (and notwithstanding that a lesser percentage or separate
class vote may be permitted by law, this Restated Certificate or the by-laws of
this corporation), the affirmative vote of the holders of not less than 70% of
the vote entitled to be cast by the holders of all then outstanding shares of
Voting Stock, voting together as a single class, shall be required to make,
alter, amend, change, add to or repeal any provisions inconsistent with the
terms or purposes of this Article 13; provided, however, that this Section (g)
shall not apply to, and such 70% vote shall not be required to alter, amend,
change, add to or repeal this Article 13 or any provisions of the by-laws
relating to this Article 13, recommended by not less than two-thirds of the
members of the Board of Directors of this corporation. FOURTEENTH. (a) Special
meetings of the stockholders may be called only by the affirmative vote of
two-thirds of the members of the corporation's Board of Directors, the Chairman
of the Board, or stockholders holding not less than 70% of the outstanding
voting stock of the corporation. (b) Any action required or permitted to be
taken at a meeting of the stockholders of the corporation may be taken without a
meeting if written consent, seeing forth the action so taken, shall be signed by
stockholders holding not less than 70% percent of the outstanding shares of the
Company's stock entitled to vote with respect to the subject matter thereof. (c)
Notwithstanding any other provisions of this Restated Certificate of the by-laws
of this corporation (and notwithstanding that a lesser percentage or separate
class vote may be permitted by law, this Restated Certificate or the by-laws of
this corporation), the affirmative vote of the holders of not less than 70% of
the votes entitled to be cast by the holders of all then outstanding shares of
Voting Stock, voting together as a single class, shall be required to make,
alter, amend, change, add to or repeal any provisions inconsistent with this
Article 14; provided, however, that this Section (c) shall not apply to, and
such 70% vote shall not be required to alter, amend, change, add to or repeal
this Article 14 or any provisions of the by-laws relating to this Article 14,
recommended by not less than two-thirds of the members of the Board of Directors
of this corporation. FIFTEENTH. (a) No director of the corporation shall be
liable to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability: (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived an
improper personal benefit. (b) Notwithstanding any other provisions of this
Restated Certificate or the by-laws of this corporation (and notwithstanding
that a lesser percentage or separate class vote may be permitted by law, this
Restated Certificate or the by-laws of this corporation), the affirmative vote
of the holders of not less than 70% of the votes entitled to be cast by the
holders of all then outstanding shares of Voting Stock, voting together as a
single class, shall be required to make, alter, amend, change, add to or repeal
any provisions inconsistent with this Article 15; provided, however, that this
Section (b) shall not apply to, and such 70% vote shall not be required to
alter, amend, change, add to or repeal this Article IS or any provisions of the
by-laws relating to this Article 15, recommended by not less than two-thirds of
the members of the Board of Directors of this corporation.
<PAGE>
IN WITNESS WHEREOF, said SCI Systems, Inc. has caused its corporate seal to be
hereunto affixed and this certificate to be signed by A. Eugene Sapp, Jr., its
President, and attested by D. Lynn Cox , its Secretary, this 20th day of
February, 1987.
SCI SYSTEMS, INC.
By:/s/A. Eugene Sapp, Jr.
----------------------
President
Attest: By:/s/D. Lynn Cox
--------------
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT OF THE
SECOND RESTATED CERTIFICATE OF INCORPORATION OF
SCI SYSTEMS, INC.
(FORMERLY SPACE CRAFT, INC.)
SCI Systems, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, does hereby certify:
FIRST: That at a meeting of the Board of Directors of SCI Systems, Inc. a
resolution was duly adopted setting forth a proposed amendment to the Second
Restated Certificate of Incorporation of SCI Systems, Inc. (formerly Space
Craft, Inc.), declaring said amendment to be advisable, and declaring that
approve 1 of said amendment should be considered at the next Annual Meeting of
Shareholders .
SECOND: The Board of Directors at said meeting of the Board of Directors
resolved that Article Twelfth (a )(ii) of the Second Restated Certificate of
Incorporation of SCI Systems, Inc. should be amended by deleting the words
"three years" the first time those words appear in the third sentence of Article
Twelfth (a)(ii) and replacing them with the words "one year" so that the third
sentence of Article Twelfth (a)(ii) will read:
"At the 1987 Annual Meeting of Stockholders, Class I directors shall be elected
for an initial term of one year, Class II directors for an initial term of two
years, and Class III directors for an initial term of three years."
THIRD : That thereafter, pursuant to resolution of its Board of Directors,
and upon notice in accordance with Section 222 of the General Corporation Law of
the State of Delaware, a meeting was held at which meeting the necessary number
of shares as required by statute were voted in favor of said amendment.
FOURTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware. FIFTH: That the capital of SCI Systems, Inc. shall not be reduced, nor
the capital stock of SCI Genera1 Corporation be increased, under or by reason of
said amendment.
<PAGE>
IN WITNESS WHEREOF, SCI SYSTEMS, INC. has caused this Certificate to be
signed by A.Eugene Sapp, Jr., its President, and attested by D. Lynn Cox, Esq.,
its Secretary, this 17th day of March, 1988.
SCI SYSTEMS, INC.
By:/s/A.Eugene Sapp, Jr.
---------------------
A. Eugene Sapp, President
ATTESTED:
/s/ D. Lynn Cox
- ---------------
D. Lynn Cox, Esq.
END OF EXHIBIT 4.1
<PAGE>
- -------------------------------------------------------------------------------
EXHIBIT 4.2
- -------------------------------------------------------------------------------
SCI SYSTEMS, INC.
AMENDED AND RESTATED
BY-LAWS
ARTICLE 1.
OFFICES
The Corporation shall at all times maintain a registered office in the
State of Delaware and a registered agent at that address but may have other
offices located in or outside of the State of Delaware as the Board of Directors
may from time to time determine.
ARTICLE 2.
STOCKHOLDERS' MEETINGS
2.1. Places of Meetings. All meetings of stockholders shall be held at
such place or places in or outside of the State of Delaware as the Board of
Directors may from time to time determine or as may be designated in the notice
of meeting or waiver of notice thereof, subject to any provisions of the laws of
the State of Delaware.
2.2. Annual Meetings. The annual meeting of stockholders for the
election of directors and the transaction of such other business as may properly
come before the meeting shall be held on the fourth Friday in October or on such
other date and at such other time as may be designated by the Board of
Directors. If the annual meeting is not held on the date designated, it may be
held as soon thereafter as convenient and shall be called the annual meeting.
Advance written notice of the time and place of the annual meeting shall be
given by mail to each stockholder entitled to vote thereat at the address of
such stockholder as it appears on the records of the Corporation within the time
frame prescribed by the laws of the State of Delaware (if any), unless such
notice is waived as provided by Article IX of these By-laws.
2.3. Special Meetings. Unless otherwise prescribed by the Certificate
of Incorporation, special meetings of stockholders may be called at any time by
the affirmative vote of at least two-thirds (2/3) of the Board of Directors, the
Chairman of the Board of Directors or stockholders holding not less than seventy
percent (70%) of the outstanding stock of the Corporation, stating the specific
purpose or purposes thereof. Advance written notice of the time, place and
specific purposes of such meeting shall be given by mail to each stockholder
entitled to vote thereat at the address of such stockholder as it appears on the
records of the Corporation within the time frame prescribed by the laws of the
State of Delaware (if any), unless such notice is waived as provided in Article
IX of these By-laws. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in such notice.
2.4. Quorum. At any meeting of stockholders, a majority of the number
of shares of stock outstanding and entitled to vote thereat, present in person
or by proxy, shall constitute a quorum, but a smaller interest may adjourn any
meeting from time to time, and the meeting may be held as adjourned without
further notice, subject to such limitation as may be imposed under the laws of
the State of Delaware. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
originally scheduled meeting.
2.5. Voting. At all meetings of stockholders, each stockholder entitled
to vote on the record date as determined under Article VI, Section 6.3 of these
By-laws or, if not so determined, as prescribed under the laws of the State of
Delaware, shall be entitled to one vote for each share of stock standing of
record in his or her name, subject to any restrictions or qualifications set
forth in the Certificate of Incorporation or and amendment thereto. When a
quorum is present at any meeting, a majority of the number of shares of stock
entitled to vote present thereat shall decide any question brought before such
meeting, unless the question is one upon which a different vote is required by
express provision of the laws of the State of Delaware, the Certificate of
Incorporation or these By-laws, in which case such express provision shall
govern.
2.6. List of Stockholders. Prior to every meeting and within the time
frame prescribed by the laws of the State of Delaware (if any), a complete list
of the stockholders entitled to vote at the meeting, arranged in alphabetical
order and showing the address of and the number of shares registered in the name
of each stockholder, shall be prepared by the Secretary or the transfer agent in
charge of the stock ledger of the Corporation. Such list shall be open for
examination by any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for at least the minimum period of time as may be
prescribed by the laws of the State of Delaware, at such place or places as may
be prescribed by the laws of the State of Delaware. The stock ledger shall be
the only evidence as to who are the stockholders entitled to examine such list
or the books of the Corporation or to vote in person or by proxy at such
meeting.
2.7. Action Without Meeting. Unless otherwise prescribed by the Certificate
of Incorporation, any action required by the laws of the State of Delaware to be
taken at any annual or special meeting of stockholders, or any action which may
be taken at any annual or special meeting of stockholders, may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by stockholders holding not
less than seventy percent (70%) of the outstanding stock entitled to vote at
such meeting with respect to the subject matter thereof.
ARTICLE 3.
BOARD OF DIRECTORS
3.1. Powers. The business and affairs of the Corporation shall be
carried on by or under the direction of the Board of Directors, which shall have
all the powers authorized by the laws of the State of Delaware, subject to such
limitations as may be provided by the Certificate of Incorporation or these
By-laws.
3.2. Number, Election and Qualification. The number of directors shall
be not less than three (3) and not more than eleven (11), the exact number
within such minimum and maximum limits to be fixed and determined from time to
time by resolution of a majority of the Board of Directors. Unless otherwise
prescribed by the Certificate of Incorporation, at the annual meeting of
stockholders, directors shall be elected by a plurality of the shares of stock
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Each director shall serve until the election and
qualification of his or her successor or until his or her earlier death,
resignation, retirement, disqualification or removal as provided in the
Certificate of Incorporation or these By-laws. In case of an increase in the
number of directors between elections by the stockholders, the additional
directorships shall be considered vacancies and shall be filled in the manner
prescribed in Article V of these By-laws. Directors need not be stockholders.
3.3. Compensation. The Board of Directors, or a committee thereof, may
from time to time by resolution authorize the payment of fees or other
compensation to the directors for services as such to the Corporation,
including, but not limited to, fees for attendance at all meetings of the Board
of Directors or any committee thereof, and determine the amount of such fees and
compensation. No compensation shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
3.4. Notices, Meetings and Quorum. Except as otherwise expressly
provided in these By-laws, the Certificate of Incorporation or the laws of the
State of Delaware, meetings of the Board of Directors, both regular and special,
may be held either in or outside of the State of Delaware. At all meetings of
the Board of Directors, a majority of the fixed number of directors shall
constitute a quorum for the transaction of business. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting, without notice other than an announcement at such
meeting, until a quorum shall be present.
The Board of Directors shall, at the close of each annual meeting of
stockholders and without further notice other than these By-laws, if a quorum of
directors is then present or as soon thereafter as may be convenient, hold a
regular meeting for the election of officers and the transaction of any other
business.
The Board of Directors may from time to time provide for the holding of
regular meetings with or without notice and may fix the times and places at
which such meetings are to be held. Meetings other than regular meetings may be
called at any time by the Chairman of the Board of Directors, the Chief
Executive Officer or the President, and may and must be called by the Secretary
or an Assistant Secretary upon the written request of at least one-half (1/2) of
the members of the Board of Directors.
Notice of each meeting, other than a regular meeting (unless required
by the Board of Directors), shall be given to each director (I) by mailing the
same to each director at his or her residence or business address at least five
(5) days before the meeting; (ii) by sending the same by overnight courier to
each director at his or her residence or business address at least three (3)
days before the meeting; (iii) by facsimile transmission at his or her business
facsimile number and telephonic confirmation of receipt at least two (2) days
before the meeting; or (iv) by delivering the same personally or by telephone or
telegraph at least two (2) days before the meeting. Notwithstanding the
preceding sentence, in case of exigency, the Chairman of the Board of Directors,
the Chief Executive Officer, the President or the Secretary shall be authorized
to prescribe a shorter notice to be given personally or by telephone, telegraph,
cable, facsimile transmission or wireless to all or and one or more of the
directors at their respective residences or places of business.
Notice of any meeting shall state the time and place of such meeting,
but need not state the purposes thereof unless otherwise required by the laws of
the State of Delaware, the Certificate of Incorporation or the Board of
Directors.
3.5. Committees.
3.51. General Provisions. The Board of Directors may, by
resolution adopted by a majority of the whole Board of Directors,
designate one or more committees. Each committee shall consist of
two or more directors and the Board of Directors shall elect the
members thereof to serve at the pleasure of the Board of
Directors and may designate one of such members to act as
chairperson. The Board of Directors may at any time change the
membership of any such committee, fill vacancies in it, designate
alternate members to replace any absent or disqualified members
at any meeting of any such committee, or dissolve it. Each such
committee shall have the powers and perform such duties, not
inconsistent with law, as may be assigned to it by the Board of
Directors, and shall keep regular minutes of its meetings and
report the same to the Board of Directors when required. Each
committee may determine its rules of procedure and the notice to
be given of its meeting. A majority of the members of each
committee shall constitute a quorum.
3.52. Executive Committee. The Board of Directors shall, by
resolution adopted by a majority of the whole Board of Directors,
provide for an Executive Committee. Subject to such limitations
as may be imposed by the laws of the State of Delaware, during
the intervals between the meetings of the Board of Directors, the
Executive Committee shall possess and may exercise any or all of
the powers of the Board of Directors in the management or
direction of the business and affairs of the Corporation,
including the full power and authority to declare dividends, of
any kind whatsoever, to authorize the issuance of capital stock,
of any class or series, of the Corporation and to adopt a
certificate of ownership and merger pursuant to Section 253 of
the General Corporation Law of the State of Delaware, as it may
be amended from time to time.
3.6. Conference Telephone Meetings. Except as may be otherwise
prescribed by the laws of the State of Delaware, the Certificate of
Incorporation or these By-laws, any one or more members of the Board of
Directors or any committee thereof may participate in a meeting by means of a
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting.
3.7. Action Without Meeting. Except as may be otherwise prescribed by
the laws of the State of Delaware, the Certificate of Incorporation or these
By-laws, any action required or permitted to be taken at any meeting of the
Board of Directors or any committee thereof may be taken without a meeting if
all members of the Board of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
3.8. Directors Elected by Preferred Stockholders. Notwithstanding
anything in these By-laws to the contrary, whenever the holders of any one or
more classes or series of preferred stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of the Certificate of Incorporation or the resolutions of the Board of
Directors creating such class or series, as the case may be, applicable thereto.
ARTICLE 4.
OFFICERS
4.1. Titles and Election. The officers of the Corporation shall be the
Chairman of the Board of Directors, the Chief Executive Officer, the President,
the Treasurer, one or more Vice Presidents and the Secretary. The officers of
the Corporation, in the absence of earlier resignations or removals, shall be
elected at the first meeting of the Board of Directors following each annual
meeting of stockholders. Each officer shall hold office at the pleasure of the
Board of Directors except as may otherwise be approved by the Board of
Directors, or until his or her earlier resignation, removal under these By-laws
or other termination of his employment. ANY person may hold more than one office
if the duties can be consistently performed by the same person.
The Board of Directors, in its discretion, may also at any time elect
or appoint Assistant Secretaries and Assistant Treasurers and such other
officers as it may deem advisable, each of whom shall hold office at the
pleasure of the Board of Directors, except as may otherwise be approved by the
Board of Directors, or until his or her earlier resignation, removal or other
termination of employment, and shall have such authority and shall perform such
duties as may be prescribed or determined from time to time by the Board of
Directors or, in case of officers other than the Chairman of the Board of
Directors, if not prescribed or determined by the Board of Directors, as the
Chairman of Board, the Chief Executive Officer, the President or the then senior
executive officer may prescribe or determine.
4.2. Duties. Subject to such extension, limitations, and other
provisions as the Board of Directors may from time to time prescribe or
determine, the following officers shall have the following powers and duties:
4.21. Chairman of the Board of Directors. The Chairman of the
Board of Directors shall be a director and, when present, shall
preside at all meetings of the stockholders and of the Board of
Directors and shall be charged with general supervision of the
management and policy of the Corporation and shall have such
other powers and perform such other duties as the Board of
Directors may prescribe from time to time.
4.22. Chief Executive Officer. The Chief Executive Officer
shall exercise the powers and authority and perform all of the
duties commonly incident to such office, shall in the absence of
the Chairman of the Board of Directors preside at all meetings of
the stockholders and of the Board of Directors if he or she is a
director, and shall perform such other duties as the Board of
Directors shall specify from time to time. The Chief Executive
Officer, the President or the Treasurer, or any officer
specifically authorized by the Board of Directors, shall sign all
certificates for shares, bonds, debentures, promissory notes,
deeds and contracts of the Corporation. Either the Chairman of
the Board of Directors or the President may be Chief Executive
Officer. The Chairman of the Board of Directors shall be the
Chief Executive Officer, unless the Board of Directors shall
determine that the President shall be the Chief Executive
Officer.
4.23. President. The President shall have general and active
management power and authority over the business of the
Corporation, shall see that all orders and resolutions of the
Board of Directors are carried into effect and shall perform any
and all other duties prescribed by the Board of Directors.
4.24. Treasurer. The Treasurer shall have the care and
custody of the monies, funds, and securities of the Corporation
(other than his own bond, if any, which shall be in the custody
of the President), shall maintain the general accounting
books/accounting records and forms of the Corporation and shall
have and perform, under the supervision of the Board of
Directors, all the powers and duties commonly incident to such
office. In addition to the foregoing, the Treasurer shall have
such duties as may be prescribed or determined from time to time
by the Board of Directors or by the Chief Executive Officer or
the President if the Board of Directors does not do so.
4.25. Vice Presidents. The Vice President or Vice Presidents
shall perform such duties and have such powers as may be assigned
to them from time to time by the Board of Directors or by the
Chief Executive Officer or the President if the Board of
Directors does not do so.
4.26. Secretary. The Secretary, or in his or her absence an
Assistant Secretary, shall keep the minutes of all meetings of
stockholders and of the Board of Directors and any committee
thereof, give and serve all notices, attend to such
correspondence as may be assigned to the Secretary, keep in safe
custody the seal of the Corporation, and affix such seal to all
such instruments properly executed as may require it, attest to
the signatures of officers of the Company and shall perform all
of the duties commonly incident to such office and shall have
such other duties and powers as may be prescribed or determined
from time to time by the Board of Directors or by the Chief
Executive Officer or the President if the Board of Directors does
not do so.
4.3. Delegation of Authority. The Board of Directors may at any time
delegate the powers and duties of any officer for the time being to any other
officer, director or employee.
4.4. Compensation. The compensation of the officers of the Corporation
shall be fixed by the Board of Directors or a committee thereof, and the fact
that any officer is a director shall not preclude him or her from receiving
compensation or from voting upon the resolution providing the same. No such
compensation shall preclude any officer from serving the Corporation as a
director or in any other capacity and receiving compensation therefor.
ARTICLE 5.
RESIGNATIONS, VACANCIES AND REMOVALS
5.1. Resignations. ANY director or officer may resign at any time by
giving written notice thereof to the Board of Directors, the Chief Executive
Officer, the President or the Secretary. ANY such resignation shall take effect
at the time specified therein or, if the time be not specified, upon receipt
thereof; and unless otherwise specified therein, the acceptance of any
resignation shall not be necessary to make it effective.
5.2. Vacancies.
5.21. Directors. Except as may otherwise be provided by the
Certificate of Incorporation, any vacancy in the Board of
Directors caused by reason of death, incapacity, resignation,
removal, increase in the authorized number of directors or
otherwise, shall be filled by a majority vote of the remaining
directors though less than a quorum, or by the sole remaining
director. ANY director so elected by the Board of Directors shall
serve until the next annual meeting of stockholders at which
directors of the class in which such director serves are to be
elected and until the election and qualification of his successor
or until his earlier death, resignation, retirement,
disqualification or removal as provided in the Certificate of
Incorporation or these By-laws. The Board of Directors also may
reduce their authorized number by the number of vacancies in the
Board, provided such reduction does not reduce the Board to less
than the minimum authorized by the laws of the State of Delaware
or to less than the number of directors then in office.
5.22. Officers. The Board of Directors may at any time or
from time to time fill any vacancy among the officers of the
Corporation.
5.3. Removals.
5.31. Directors. The entire Board of Directors, or any
individual member thereof, may be removed in the manner
prescribed by the laws of the State of Delaware and the
Certificate of Incorporation.
5.32. Officers. Subject to the provisions of any validly
existing agreement, the Board of Directors may at any meeting
remove from office any officer, with or without cause, and may
appoint a successor.
ARTICLE 6.
CAPITAL STOCK
6.1. Certificates of Stock. Every stockholder shall be entitled to a
certificate or certificates for shares of the capital stock of the Corporation
in such form as may be prescribed or authorized by the Board of Directors, duly
numbered and setting forth the number and kind of shares represented thereby.
Such certificates shall be signed by the Chairman of the Board of Directors, or
by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or by the Secretary or an Assistant Secretary. ANY or all of such
signatures may be in facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed on a certificate has
ceased to be such officer, transfer agent or registrar before the certificate
has been issued, such certificate may nevertheless be issued and delivered by
the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
6.2. Transfer of Stock. Shares of the capital stock of the Corporation
shall be transferable only upon the books of the Corporation upon the surrender
of the certificate or certificates properly assigned and endorsed for transfer.
If the Corporation has a transfer agent or registrar acting on its behalf, the
signature of any officer or representative thereof may be in facsimile.
The Board of Directors may appoint a transfer agent and one or more
co-transfer agents and a registrar and one or more co-registrars and may make or
authorize such agents to make all such rules and regulations deemed expedient
concerning the issuance, transfer and registration of shares of stock.
6.3. Record Dates. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix in advance a record date in
any manner not prohibited by the laws of the State of Delaware. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
6.4. Lost Certificates. In case of loss or mutilation or
destruction of a stock certificate, a duplicate certificate may be issued upon
such terms as may be determined or authorized by the Board of Directors or by
the Chief Executive Officer or the President if the Board of Directors does not
do so.
ARTICLE 7.
FISCAL YEAR, BANK DEPOSITS AND CHECKS
7.1. Fiscal Year. The fiscal year of the Corporation shall be a
year ending June 30 unless otherwise fixed by resolution of the Board of
Directors.
7.2. Bank Deposits, Checks and Other Orders. The funds of the
Corporation shall be deposited in the name of the Corporation or of any division
thereof in such banks, trust companies or other financial institutions in the
United States or elsewhere as may be designated from time to time by the Board
of Directors, or by such officer or officers as the Board of Directors may
authorize to make such designations.
All checks, drafts or other orders for the withdrawal of funds from any
such account shall be signed by such person or persons as may be designated from
time to time by the Board of Directors. The signatures on checks, drafts or
other orders for the withdrawal of funds may be in facsimile if authorized in
the designation.
ARTICLE 8.
BOOKS AND RECORDS
8.1. Place of Keeping Books. The books and records of the
Corporation may be kept in the State of Alabama or at such other place or places
in or outside of the State of Delaware as the Board of Directors may from time
to time determine.
8.2. Examination of Books. Except as may otherwise be provided by the
laws of the State of Delaware, the Certificate of Incorporation or these
By-laws, the Board of Directors shall have the power to determine from time to
time whether and to what extent and at what times and places and under what
conditions any of the accounts, records and books of the Corporation are to be
open to the inspection of any stockholder. No stockholder shall have any right
to inspect any account or book or document of the Corporation except as
prescribed by law or authorized by express resolution of the Board of Directors.
ARTICLE 9.
NOTICES
9.1. Requirements of Notice. Whenever notice is required to be given by
statute, the Certificate of Incorporation or these By-laws, it shall not mean
personal notice unless so specified, but such notice may be given in writing by
depositing the same in a post office, letter box, or mail chute postage prepaid
and addressed to the person to whom such notice is directed at the address of
such person on the records of the Corporation, and such notice shall be deemed
given at the time when the same shall be thus mailed.
9.2. Waivers. ANY stockholder, director or officer may, in writing or
by telegram or cable, at any time waive any notice or other formality required
by statute, the Certificate of Incorporation or these By-laws. Such waiver of
notice, whether given before or after any meeting or action, shall be deemed
equivalent to notice. Except as may otherwise be prescribed by the laws of the
State of Delaware, the Certificate of Incorporation or these By-laws, presence
of a stockholder either in person or by proxy at any meeting of stockholders and
presence of any director at any meeting of the Board of Directors shall
constitute a waiver of such notice as may be required by any statute, the
Certificate of Incorporation or these By-laws.
ARTICLE 10.
SEAL
The corporate seal of the Corporation shall be in such form as the
Board of Directors shall determine from time to time and may consist of a
facsimile thereof or the words "Corporate Seal" or "Seal" enclosed in
parentheses.
In the absence of the Secretary, any other officer of the Corporation
may affix and attest the seal of the Corporation to any instrument requiring it,
unless otherwise provided by resolution of the Board of Directors.
ARTICLE 11.
POWERS OF ATTORNEY
The Board of Directors may authorize one or more of the officers of the
Corporation to execute powers of attorney delegating to named representatives or
agents power to represent or act on behalf of the Corporation, with or without
power of substitution.
In the absence of any action by the Board of Directors, any officer of
the Corporation may execute for and on behalf of the Corporation waivers of
notice of meetings of stockholders and proxies for such meetings of any company
in which the Corporation may hold voting securities.
ARTICLE 12.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
12.1. Action Other Than by or in Right of Corporation. Subject to
Section 12.3 hereof and such limitations as may be provided by the Certificate
of Incorporation, the Corporation shall indemnify and hold harmless any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, including appeals, and whether external or
internal to the Corporation (all such claims, actions, suits and proceedings
being referred to hereafter as a "Proceeding") (other than a judicial action or
suit brought by or in the right of the Corporation), by reason of the fact that
the person is or was a director, officer, employee or agent (unless such agent
has entered into a written agreement with the Corporation which sets forth a
standard of care other than the ones articulated in this Section) of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, fiduciary, employee or agent (unless such
agent has entered into a written agreement with the Corporation which sets forth
a standard of care other than the ones articulated in this Section) of another
foreign or domestic corporation, partnership, joint venture, trust, or other
enterprise (all such persons being referred to hereafter as an "Agent", except
that the term Agent shall not include trustees, fiduciaries or agents who are
serving at the request of the Corporation with respect to an employee benefit
plan (I) who are not employees, officers or directors of the Corporation but who
are compensated by the Corporation for their services, or (ii) who have entered
into a written agreement with the Corporation which sets forth a standard of
care other than the ones set forth in this Section), against expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by the person in connection with such
Proceeding if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any Proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
(a) the person did not act in good faith, (b) the person did not act in a manner
which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, (C) with respect to any criminal action or
proceeding, that the person had reasonable cause to believe that his or her
conduct was unlawful.
12.2. Action by or in Right of the Corporation. Subject to Section 12.3
hereof and such limitations as may be provided by the Certificate of
Incorporation, the Corporation shall indemnify and hold harmless any person who
was or is a party or is threatened to be made a party to any Proceeding by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that the person is or was an Agent against expenses (including attorneys'
fees) actually and reasonably incurred by the person in connection with the
defense or settlement of such Proceeding if the person acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation, unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
12.3. Determination of Right of Indemnification. Unless ordered by a
court or otherwise prescribed by the Certificate of Incorporation, any
indemnification under Sections 12.1 and 12.2 hereof shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the person is proper in the circumstances because such person
has met the applicable standard of conduct set forth in Sections 12.1 and 12.2
hereof. Such a determination shall be made (a) by the Board of Directors by a
majority vote of a quorum consisting of directors who are or were not parties to
such Proceeding, or (b) if such a quorum is not obtainable, or, if obtainable, a
quorum of disinterested directors so directs, by the firm of independent legal
counsel then employed by the Corporation, in a written opinion, or (C) by the
affirmative vote of the holders of a majority of the shares entitled to vote
thereon.
12.4. Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article XII, to the extent that an
Agent of the Corporation has been successful on the merits or otherwise
including the dismissal of an action without prejudice or the settlement of a
Proceeding without admission of liability in defense of any Proceeding referred
to in Sections 12.1 and 12.2 hereof, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
12.5. Indemnification Against Expenses of Witnesses. The Corporation
shall indemnify and hold harmless any person who is or was an Agent against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the appearance of such person as a witness in any
Proceeding as a result of such person having occupied such office or position,
or undertaken such service when such person is not a party to such Proceeding.
12.6. Advances of Expenses. Expenses (including attorneys' fees)
incurred by an Agent in defending any Proceeding, shall be paid by the
Corporation in advance of the final disposition of such Proceeding upon receipt
of an undertaking by or on behalf of such Agent to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
Corporation as authorized in this Article XII. Such expenses incurred by other
employees and agents may be so paid upon terms and conditions, if any, as the
Board of Directors deems appropriate.
12.7. Other Rights and Remedies. The indemnification and advancement of
expenses provided by or granted pursuant to this Article XII shall be a contract
right, shall not be deemed exclusive of any other rights, in respect of
indemnification or otherwise, to which an Agent seeking indemnification or
advancement of expenses may be entitled under any statute, rule of law,
provisions of articles of incorporation, by-law, resolution, agreement or
otherwise either specifically or in general terms, both as to action by an Agent
in his or her official capacity and as to action in another capacity while
holding such office or position, and shall continue as to a person who has
ceased to be an Agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
12.8. Insurance. The Corporation may purchase and maintain insurance on
behalf of an Agent against any liability asserted against such person and
incurred by him or her in any such capacity, or arising out of his or her status
as such, whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Article XII.
12.9. Certain Definitions. For purposes of this Article XII, references
to the "Corporation" shall include, in addition to the resulting or surviving
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power to indemnify its directors,
officers, employees and agent, (unless such agent has entered into a written
agreement with the Corporation which sets forth a standard of care other than
the ones articulated in this Section), so that any person who is or was a
director, officer, employee or agent (unless such agent has entered into a
written agreement with the corporation which sets forth a standard of care other
than the ones articulated in this Section) of such constituent corporation, or
is or was serving at the request of such constituent corporation as a director,
officer, partner, trustee, fiduciary, employee or agent (unless such agent has
entered into a written agreement with the corporation which sets forth a
standard of care other than the ones articulated in this Section) of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this Article XII with respect
to the resulting or surviving corporation as he or she would have with respect
to such constituent corporation if its separate existence had continued;
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director or officer employee
or agent (unless such agent has entered into a written agreement with the
Corporation which sets forth a standard of care other than the ones articulated
in this Section) of the Corporation which imposes duties on, or involves
services by, such director, officer, employee or agent (unless such agent has
entered into a written agreement with the corporation which sets forth a
standard of care other than the ones articulated in this Section) of the
Corporation with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
XII. ANY indemnification under this Article XII with regard to any employee
benefit plan shall apply notwithstanding any provisions of any employee benefit
plan. Notwithstanding anything contained herein to the contrary, trustees,
fiduciaries or agents who are serving at the request of the Corporation with
respect to an employee benefit plan (I) who are not employees, officers or
directors of the Corporation but are compensated by the Corporation for their
services, or (ii) who have entered into a written agreement with the Corporation
which sets forth a standard of care other than the ones set forth in this
Section, shall not be indemnified pursuant to this Section.
12.10. Indemnification and Insurance of Other Persons. The provisions
of this Article XII shall not be deemed to preclude the Corporation from either
indemnifying or purchasing and maintaining insurance on behalf of, or both, any
person who is not an Agent but whom the Corporation has the power or obligation
to indemnify or insure under the provisions of the General Corporation Law of
the State of Delaware or otherwise. The Corporation may, in its sole discretion,
indemnify or insure, or both, an employee, trustee or other agent as permitted
by the General Corporation Law of the State of Delaware. The Corporation shall
indemnify or insure any employee, trustee or other agent where required by law.
12.11. Savings Clause. If for any reason, any provision of this Article
XII is held invalid, in whole or in part, such invalidity shall not affect any
other provision or part of this Article XII not held so invalid, and each such
other provision or part shall to the full extent consistent with law continue in
full force and effect.
12.12. Indemnification Agreements. The Corporation shall be privileged
to enter into such agreements of indemnification with its directors, officers,
agents or underwriters or other persons with whom it may deal with respect to
liability under any federal or state law or regulation or under common law, to
the extent permitted by law; provided that no agreement shall be entered into
which violates the Securities Act of 1933, as amended, or any regulation adopted
thereunder.
ARTICLE 13.
AMENDMENTS
Except as otherwise provided by the laws of the State of Delaware, the
Certificate of Incorporation or these By-laws, these By-laws may be amended or
repealed either:
13.12.1. at any meeting of stockholders at which a quorum is
present, by vote of a majority of the number of shares of stock
entitled to vote present in person or by proxy at such meeting,
as provided in Article II, Sections 2.4 and 2.5 of these By-laws,
or
13.12.2. at any meeting of the Board of Directors at which a
quorum is present by a majority vote of the directors present at
such meeting;
provided that the notice of such meeting of stockholders or directors or waiver
of notice thereof contains a statement of the substance of the proposed
amendment or repeal.
END OF EXHIBIT 4.2
<PAGE>
EXHIBIT 4.3
SCI SYSTEMS, INC.
to
PNC BANK, KENTUCKY, INC.
Trustee
-----------
Indenture
Dated as of April 23, 1996
5% Convertible Subordinated Notes Due 2006
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitions 7
SECTION 1.03. Incorporation by Reference of Trust Indenture Act 8
SECTION 1.04. Rules of Construction 8
ARTICLE II
The Securities
SECTION 2.01. Form and Dating 8
SECTION 2.02. Execution and Authentication 10
SECTION 2.03. Registrar, Paying Agent and Conversion Agent 10
SECTION 2.04. Paying Agent to Hold Money in Trust 11
SECTION 2.05. Noteholder Lists 11
SECTION 2.06. Transfer and Exchange 11
SECTION 2.07. Replacement Securities 14
SECTION 2.08. Outstanding Securities 14
SECTION 2.09. Treasury Securities 15
SECTION 2.10. Temporary Securities; Exchange of Global Security
for Certificated Securities 15
SECTION 2.11. Cancellation 16
SECTION 2.12. Defaulted Interest or Liquidated Damages 16
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee 16
SECTION 3.02. Selection of Securities to be Redeemed 16
SECTION 3.03. Notice of Redemption 17
SECTION 3.04. Effect of Notice of Redemption 18
SECTION 3.05. Deposit of Redemption Price 18
SECTION 3.06. Securities Redeemed in Part 18
SECTION 3.07. Optional Redemption 18
SECTION 3.08. Designated Event Offer 18
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities 20
SECTION 4.02. SEC Reports 21
SECTION 4.03. Compliance Certificate 21
SECTION 4.04. Stay, Extension and Usury Law 22
SECTION 4.05. Corporate Existence 22
SECTION 4.06. Taxes 22
SECTION 4.07. Designated Event 22
ARTICLE V
Conversion
SECTION 5.01. Conversion Privilege 23
SECTION 5.02. Conversion Procedure 23
SECTION 5.03. Fractional Shares 24
SECTION 5.04. Taxes on Conversion. 24
SECTION 5.05. Company to Provide Stock 24
SECTION 5.06. Adjustment of Conversion Price 25
SECTION 5.07. No Adjustment 28
SECTION 5.08. Other Adjustments 28
SECTION 5.09. Adjustments for Tax Purposes 28
SECTION 5.10. Adjustments by the Company 29
SECTION 5.11. Notice of Adjustment 29
SECTION 5.12. Notice of Certain Transactions 29
SECTION 5.13. Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion Privilege 29
SECTION 5.14. Trustee's Disclaimer 30
ARTICLE VI
Subordination
SECTION 6.01. Agreement to Subordinate 31
SECTION 6.02. No Payment on Securities if Senior Debt in Default 31
SECTION 6.03. Distribution on Acceleration of Securities;
Dissolution and Reorganization; Subrogation of
Securities 32
SECTION 6.04. Reliance by Senior Debt on Subordination
Provisions 35
SECTION 6.05. No Waiver of Subordination Provisions 35
SECTION 6.06. Trustee's Relation to Senior Debt 36
SECTION 6.07. Other Provisions Subject Hereto 36
ARTICLE VII
Successors
SECTION 7.01. Merger, Consolidation or Sale of Assets 37
SECTION 7.02. Successor Corporation Substituted 37
ARTICLE VIII
Defaults and Remedies
SECTION 8.01. Events of Default 38
SECTION 8.02. Acceleration 39
SECTION 8.03. Other Remedies 39
SECTION 8.04. Waiver of Past Defaults 40
SECTION 8.05. Control by Majority 40
SECTION 8.06. Limitation on Suits 40
SECTION 8.07. Rights of Noteholders to Receive Payment 40
SECTION 8.08. Collection Suit by Trustee 41
SECTION 8.09. Trustee May File Proofs of Claim 41
SECTION 8.10. Priorities 41
SECTION 8.11. Undertaking for Costs 41
ARTICLE IX
Trustee
SECTION 9.01. Duties of Trustee 42
SECTION 9.02. Rights of Trustee 42
SECTION 9.03. Individual Rights of Trustee 43
SECTION 9.04. Trustee's Disclaimer 43
SECTION 9.05. Notice of Defaults 43
SECTION 9.06. Reports by Trustee to Noteholders 43
SECTION 9.07. Compensation and Indemnity 44
SECTION 9.08. Replacement of Trustee 44
SECTION 9.09. Successor Trustee by Merger, Etc. 45
SECTION 9.10. Eligibility; Disqualification 45
SECTION 9.11. Preferential Collection of Claims Against Company 45
ARTICLE X
Discharge of Indenture
SECTION 10.01. Termination of Company's Obligations 46
SECTION 10.02. Repayment to Company 46
ARTICLE XI
Amendments, Supplements and Waivers
SECTION 11.01. Without Consent of Noteholders 46
SECTION 11.02. With Consent of Noteholders 47
SECTION 11.03. Compliance with Trust Indenture Act 48
SECTION 11.04. Revocation and Effect of Consents. 48
SECTION 11.05. Notation on or Exchange of Securities 48
SECTION 11.06. Trustee Protected 49
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls 49
SECTION 12.02. Notices 49
SECTION 12.03. Communication by Noteholders with Other
Noteholders 49
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent 50
SECTION 12.05. Statements Required in Certificate or Opinion 50
SECTION 12.06. Rules by Trustee and Agents 50
SECTION 12.07. Legal Holidays 50
SECTION 12.08. No Recourse Against Others 51
SECTION 12.09. Counterparts 51
SECTION 12.10. Variable Provisions 51
SECTION 11.11. GOVERNING LAW 52
SECTION 12.12. No Adverse Interpretation of Other Agreements 52
SECTION 12.13. Successors 52
SECTION 12.14. Severability 52
SECTION 12.15. Table of Contents, Headings, Etc. 52
EXHIBIT A FORM OF CONVERTIBLE SUBORDINATED NOTE A-1
EXHIBIT B FORM OF TRANSFER CERTIFICATE B-1
EXHIBIT C FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE C-1
EXHIBIT D FORM OF REGISTRATION AGREEMENT D-1
INDENTURE dated as of April 23, 1996 between SCI Systems, Inc., a
Delaware corporation (the "Company") and PNC Bank, Kentucky, Inc., a Kentucky
banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Noteholders of the Company's 5%
Convertible Subordinated Notes
Due 2006 (the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions. "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" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities or by agreement or
otherwise; provided, however, that beneficial ownership of 10% or more of the
voting securities of a person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent, Conversion
Agent or co-registrar.
"Bank Agreement" means the credit facility agreement dated August 3,
1995 among SCI System, Inc., Citibank, N.A., as agent, ABN AMRO Bank N.V.,
Atlanta Agency, as co-agent, and the lenders named therein, as the same may be
amended, renewed, extended, refinanced, substituted or replaced from time to
time.
"Board of Directors" means the Board of Directors of
the Company or any authorized committee of the Board.
"Board Resolution" means a copy of a resolution of the Board of
Directors certified by the Secretary or an Assistant Secretary of the Company to
be in full force and effect on the date of such certification and delivery to
the Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of equity interests in any
entity, including, without limitation, corporate stock and partnership
interests.
"Change of Control" means any event where: (I) any "person" or "group"
(as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) of shares representing more than 50% of the combined voting power
of the then-outstanding securities entitled to vote generally in elections of
directors of the Company ("Voting Stock"), (ii) the Company consolidates with or
merges into any other corporation, or any other person merges into the Company,
and, in the case of any such transaction, the outstanding Common Stock of the
Company is reclassified into or exchanged for any other property or security,
unless the stockholders of the Company immediately before such transaction own,
directly or indirectly immediately following such transaction, at least a
majority of the combined voting power of the outstanding voting securities of
the corporation resulting from such transaction in substantially the same
proportion as their ownership of the Voting Stock immediately before such
transaction, (iii) the Company conveys, transfers or leases all or substantially
all of its assets to any person (other than to one or more wholly-owned
subsidiaries of the Company) or (iv) any time the Continuing Directors do not
constitute a majority of the Board of Directors of the Company (or, if
applicable, a successor corporation to the Company); provided, that a Change of
Control shall not be deemed to have occurred if at least 90% of the
consideration (excluding cash payments for fractional shares) in the transaction
or transactions constituting the Change of Control consists of shares of common
stock 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 as a result of such
transaction or transactions the Securities become convertible solely into such
common stock.
"Common Stock" means the common stock of the Company as the same
exists at the date of the execution of this Indenture or as such stock may be
constituted from time to time.
"Company" means the party named as such above until a successor
replaces it in accordance with Article VI and thereafter means the successor.
"Continuing Directors" means as of any date of determination, any
member of the Board of Directors of the Company who (I) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such board at the time of such
nomination or election.
"Daily Market Price" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the Nasdaq Stock Market's
National Market (the "NNM"), or if the Common Stock is not then listed on the
NNM, as reported on such national securities exchange upon which the Common
Stock is listed, or (b) if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
regular way as so reported, or (C) if the Common Stock is not listed on the NNM
or on any national securities exchange, on the basis of the average of the high
bid and low asked quotations regular way on the day in question in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, or if not so quoted, as reported by National
Quotation Bureau, Incorporated, or a similar organization.
"Default" means any event that is, or with the passage of time or the
giving of notice or both, would be an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Designated Event" means the occurrence of a Change of
Control or a Termination of Trading.
"Designated Senior Debt" means (I) any Senior Debt which, as of the
date of this Indenture, has an aggregate principal amount outstanding of at
least $15 million, and (ii) any Senior Debt which, at the date of determination,
has an aggregate principal amount outstanding of, or commitments to lend up to,
at least $15 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Debt as "Designated Senior Debt"
for purposes of this Indenture (provided, that such instrument may place
limitations and conditions on the right of such Senior Debt to exercise the
rights of Designated Senior Debt).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession in the United States, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (I)(a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of such person which is (1) given to secure all or part
of the purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or written
instrument, (C) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) which provides that such person is contractually obligated
to purchase or to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances (including
reimbursement obligations with respect to any of the foregoing), (e) with
respect to Indebtedness secured by a mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance to which the
property or assets of such person are subject, whether or not the obligation
secured thereby shall have been assumed or Guaranteed by or shall otherwise be
such person's legal liability, (f) in respect of the balance of the deferred and
unpaid purchase price of any property or assets, and (g) under interest rate or
currency swap agreements, cap, floor and collar agreements, spot and forward
contracts and similar agreements and arrangements; (ii) with respect to any
obligation of others of the type described in the preceding clause (I) or under
clause (iii) below assumed by or guaranteed in any manner by such person or in
effect guaranteed by such person through an agreement to purchase (including,
without limitation, "take or pay" and similar arrangements), contingent or
otherwise (and the obligations of such person under any such assumptions,
guarantees or other such arrangements); and (iii) any and all deferrals,
renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.
"Indenture" means this Indenture as amended from time to time.
"Initial Purchasers" means Salomon Brothers Inc, Merrill Lynch,
Pierce, Fenner & Smith and Montgomery Securities.
"Issuance Date" means the date on which the Securities
are first authenticated and issued.
"Liquidated Damages" means any liquidated damages
payable pursuant to the Registration Agreement.
"Material Subsidiary" means any Subsidiary of the Company which at the
date of determination is a "significant subsidiary" as defined in Rule 1-02(w)
of Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is in effect on the date hereof).
"Noteholder" or "holder" means a person in whose name a
Security is registered.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum relating to the
Securities dated April 17, 1996.
"Officers' Certificate" means a certificate signed by two Officers,
one of whom must be the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer or a Vice- President of the Company. See
Sections 12.04 and 12.05 hereof.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee. See
Sections 12.04 and 12.05 hereof.
"person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"principal" of a debt security means the principal of the security
plus the premium, if any, on the security.
"Registration Agreement" means the Registration Agreement relating to
the Securities dated April 23, 1996, between the Company and the Initial
Purchasers, a form of which is attached as Exhibit D hereto.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Debt.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described in the preamble above that
are issued, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of, interest on and other amounts
due on Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or Guaranteed by the Company;
unless, in the instrument creating or evidencing or pursuant to which
Indebtedness is outstanding, it is expressly provided that such Indebtedness is
not senior in right of payment to the Securities. Senior Debt includes, with
respect to the obligations described above, interest accruing, pursuant to the
terms of such Senior Debt, on or after the filing of any petition in bankruptcy
or for reorganization relating to the Company, whether or not postfiling
interest is allowed in such proceeding, at the rate specified in the instrument
governing the relevant obligation. Notwithstanding anything to the contrary in
the foregoing, Senior Debt shall not include: (a) Indebtedness of or amounts
owned by the Company for compensation to employees, or for goods, services or
materials purchased in the ordinary course of business; (b) Indebtedness of the
Company to a Subsidiary of the Company except to the extent any such
Indebtedness is pledged to or otherwise subject to a prior claim by the lenders
under the Bank Agreement; or (C) any liability for Federal, state, local or
other taxes owed or owing by the Company.
"Shelf Registration Statement" shall have the meaning
set forth in the Registration Agreement.
"Subsidiary" means any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Termination of Trading" means an event where the Common Stock (or
other securities into which the Securities are then convertible) is neither
listed for trading on a United States national securities exchange nor approved
for trading on an established automated over-the-counter trading market in the
United States.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trading Day" shall mean (A) if the applicable security is listed or
admitted for trading on the New York Stock Exchange or another national
securities exchange, a day on which the New York Stock Exchange or such other
national securities exchange is open for business, (B) if the applicable
security is quoted on The Nasdaq National Market, a day on which trades may be
made thereon or (C) 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.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture.
SECTION 1.02. Other Definitions.
Defined in
Term Section
"Agent Members" 2.01
"Bankruptcy Law" 8.01
"Cedel" 2.01
"Commencement Date" 3.08
"Conversion Agent" 2.03
"Conversion Date" 5.02
"Conversion Price" 5.01
"Conversion Shares" 5.06
"Current Market Price" 5.06
"Custodian" 8.01
"Designated Event Offer" 4.07
"Designated Event Payment" 4.07
"Designated Event Payment Date" 3.08
"Distribution Date" 5.06
"Distribution Record Date" 5.06
"Excess Payment" 5.06
"Euroclear" 2.01
"Event of Default" 8.01
"Global Security" 2.01
"Legal Holiday" 12.07
"Non-Global Purchasers" 2.01
"Offer Amount" 3.08
"Officer" 12.10
"Paying Agent" 2.03
"Payment Blockage Notice" 6.02
"Payment Blockage Period" 6.02
"Payment Default" 8.01
"Purchase Agreement" 2.01
"Purchase Date" 5.06
"QIBs" 2.01
"Registrar" 2.03
"Regulation S" 2.01
"Restricted Securities" 2.01
"Rights" 5.06
"Rule 144A" 2.01
"Tender Period" 3.08
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company or any other obligor on
the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. Rules of Construction. Unless the
context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and
words in the plural include the singular; and
(e) provisions apply to successive events and
transactions.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
which is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). The Company shall furnish any such legend not
contained in Exhibit A to the Trustee in writing. Each Security shall be dated
the date of its authentication. The terms and provisions of the Securities set
forth in Exhibit A are part of the terms of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
(a) Global Securities. The Securities are being offered and sold by
the Company pursuant to a Purchase Agreement relating to the Securities, dated
April 23, 1996, among the Company and the Initial Purchasers (the "Purchase
Agreement").
Securities offered and sold either (i) in reliance on Regulation S
under the Securities Act ("Regulation S") or (ii) to Qualified Institutional
Buyers ("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A"),
each as provided in the Purchase Agreement, shall be issued in the form of one
or more permanent global Securities in definitive, fully registered form without
interest coupons with the Global Securities Legend and Restricted Securities
Legend set forth in Exhibit A hereto (each, a "Global Security"), which shall be
deposited on behalf of the purchasers of the Securities represented thereby with
the Trustee as custodian for the Depositary, and registered in the name of the
Depositary or a nominee of the Depositary (and, in the case of Regulation S, for
the accounts of designated agents holding on behalf of the Euroclear System
("Euroclear") or Cedel Bank, societe anonyme ("Cedel")), duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b) and the written order of the Company, authenticate and
deliver initially one or more Global Securities that (i) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary pursuant to
a FAST Balance Certificate Agreement between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in Section 2.10,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities. Purchasers of Securities
who are not QIBs and did not purchase Securities sold in reliance on Regulation
S under the Securities Act (referred to herein as the "Non-Global Purchasers")
will receive certificated Securities bearing the Restricted Securities Legend
set forth in Exhibit A hereto ("Restricted Securities"). Restricted Securities
will bear the Restricted Securities Legend set forth on Exhibit A unless removed
in accordance with Section 2.06(b) hereof and may not be exchanged for a Global
Security, or interest therein, at any time.
After a transfer of any Securities during the period of the
effectiveness of a Shelf Registration Statement with respect to the Securities,
all requirements pertaining to legends on such Security will cease to apply, the
requirements requiring any such Security issued to certain holders to be issued
in global form will cease to apply, and a certificated Security without legends
will be available to the holder of such Securities.
SECTION 2.02. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers, the
Trustee shall authenticate the Securities for original issue up to an aggregate
principal amount of $287,500,000. The aggregate principal amount of Securities
outstanding at any time shall not exceed such amount except as provided in
Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
SECTION 2.03. Registrar, Paying Agent and Conversion Agent. The
Company shall maintain in the Borough of Manhattan, City of New York, State of
New York (i) an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), (ii) an office or agency
where Securities may be presented for payment ("Paying Agent") and (iii) an
office or agency where Securities may be presented for conversion ("Conversion
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint the Registrar, the Paying Agent
and the Conversion Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any additional
conversion agent. The Company may change any Paying Agent, Registrar,
co-registrar or Conversion Agent without prior notice to any Noteholder. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar, Paying Agent or Conversion Agent, the Trustee shall act as
such. The Company or any of its Affiliates may act as Paying Agent, Registrar,
co-registrar or Conversion Agent.
SECTION 2.04. Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Noteholders or the Trustee
all money held by the Paying Agent for the payment of principal, interest or
Liquidated Damages on the Securities, and will notify the Trustee of any default
by the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee and to account for any money disbursed by it. Upon payment over
to the Trustee, the Paying Agent (if other than the Company or an Affiliate of
the Company) shall have no further liability for the money. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Noteholders all money held by it as
Paying Agent.
SECTION 2.05. Noteholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Noteholders. If the Trustee is not the Registrar,
the Company shall furnish to the Trustee on or before each interest payment date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of Noteholders.
SECTION 2.06. Transfer and Exchange. Where Securities are presented to
the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Securities at the Registrar's request. No service charge shall be
made for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.10, 3.06, 3.08, 5.02 or 11.05
hereof).
The Company shall not be required (i) to issue, register the transfer
of, or exchange Securities during a period beginning at the opening of business
15 days before the day of any selection of Securities for redemption under
Section 3.02 hereof and ending at the close of business on the day of selection,
or (ii) to exchange or register the transfer of any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Section
2.01(b) and this Section 2.06(a); provided, however, that beneficial interests
in a Global Security may be transferred to persons who take delivery thereof in
the form of a beneficial interest in the same Global Security in accordance with
the transfer restrictions set forth in the Restricted Securities Legend and
under the heading "Notice to Investors" in the Offering Memorandum.
(i) Except for transfers or exchanges made in accordance with any of
clauses (ii) through (iv) of this Section 2.06(a), transfers of a Global
Security shall be limited to transfers of such Global Security in whole,
but not in part, to nominees of the Depositary or to a successor of the
Depositary or such successor's nominee.
(ii) Global Security to Restricted Security. If an owner of a
beneficial interest in a Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary wishes at any time to
transfer its interest in such Global Security to a person who is required
to take delivery thereof in the form of a Restricted Security, such owner
may, subject to the rules and procedures of Euroclear or Cedel, if
applicable, and the Depositary, cause the exchange of such interest for one
or more Restricted Securities of any authorized denomination or
denominations and of the same aggregate principal amount at maturity. Upon
receipt by the Trustee, as Registrar, of (1) instructions from Euroclear or
Cedel, if applicable, and the Depositary directing the Trustee, as
Registrar, to authenticate and deliver one or more Restricted Securities of
the same aggregate principal amount at maturity as the beneficial interest
in the Global Security to be exchanged, such instructions to contain the
name or names of the designated transferee or transferees, the authorized
denomination or denominations of the Restricted Securities to be so issued
and appropriate delivery instructions, (2) a certificate substantially in
the form of Exhibit B attached hereto given by the owner of such beneficial
interest and stating that the person transferring such interest in such
Global Security reasonably believes that the person acquiring the
Restricted Securities for which such interest is being exchanged is an
institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act) and is acquiring such
Restricted Securities having an aggregate principal amount of not less than
$250,000 for its own account or for one or more accounts as to which the
transferee exercises sole investment discretion, (3) a certificate in the
form of Exhibit C attached hereto given by the person acquiring the
Restricted Securities for which such interest is being exchanged, to the
effect set forth therein, and (4) such other certifications, legal opinions
or other information as the Company 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, then Euroclear or Cedel, if applicable, or the Trustee, as Registrar,
as the case may be, will instruct the Depositary to reduce or cause to be
reduced such Global Security by the aggregate principal amount at maturity
of the beneficial interest therein to be exchanged and to debit or cause to
be debited from the account of the person making such transfer the
beneficial interest in the Global Security that is being transferred, and
concurrently with such reduction and debit the Company shall execute, and
the Trustee shall authenticate and deliver, one or more Restricted
Securities of the same aggregate principal amount at maturity in accordance
with the instructions referred to above.
(iii) Restricted Security to Restricted Security. If a holder of a
Restricted Security wishes at any time to transfer such Restricted Security
to a person who is required to take delivery thereof in the form of a
Restricted Security, such holder may, subject to the restrictions on
transfer set forth herein and in such Restricted Security, cause the
exchange of such Restricted Security for one or more Restricted Securities
of any authorized denomination or denominations and of the same aggregate
principal amount at maturity. Upon receipt by the Trustee, as Registrar, of
(1) such Restricted Security, duly endorsed as provided herein, (2)
instructions from such holder directing the Trustee, as Registrar, to
authenticate and deliver one or more Restricted Securities of the same
aggregate principal amount at maturity as the Restricted Security to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of
the Restricted Securities to be so issued and appropriate delivery
instructions, (3) a certificate from the holder of the Restricted Security
to be exchanged in the form of Exhibit B attached hereto, (4) a certificate
in the form of Exhibit C attached hereto given by the person acquiring the
Restricted Securities for which such interest is being exchanged, to the
effect set forth therein, and (5) such other certifications, legal opinions
or other information as the Company 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, then the Trustee, as Registrar, shall cancel or cause to be canceled
such Restricted Security and concurrently therewith, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Restricted Securities of the same aggregate principal amount at maturity,
in accordance with the instructions referred to above.
(iv) Other Exchanges. In the event that a Global Security is exchanged
for Securities in definitive registered form pursuant to Section 2.10,
prior to the effectiveness of a Shelf Registration Statement with respect
to such Securities, such Securities may be exchanged only in accordance
with such procedures as are substantially consistent with the provisions of
clauses (ii) and (iii) above (including the certification requirements
intended to ensure that such transfers comply with Rule 144A or Regulation
S under the Securities Act, as the case may be) and such other procedures
as may from time to time be adopted by the Company.
(b) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Agreement,
if Securities are issued upon the registration of transfer, exchange or
replacement of Securities bearing the Restricted Securities Legend set forth in
Exhibit A hereto, or if a request is made to remove such Restricted Securities
Legend on Securities, the Securities so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be removed, as
the case may be, unless there is delivered to the Company such satisfactory
evidence, which may include an opinion of counsel licensed to practice law in
the State of New York, as may be reasonably required by the Company, that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of Rule
144A, Rule 144 or Regulation S under the Securities Act or, with respect to
Restricted Securities, that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision to the Company of
such satisfactory evidence, the Trustee, at the written direction of the
Company, shall authenticate and deliver Securities that do not bear the legend.
(c) The Trustee shall have no responsibility for any actions taken or
not taken by the Depositary.
SECTION 2.07. Replacement Securities. If the holder of a Security
claims that the Security has been lost, destroyed or wrongfully taken or if such
Security is mutilated and is surrendered to the Trustee, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's and
the Company's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be sufficient in the judgment of both to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article III hereof or converted into shares
of Common Stock pursuant to Article V hereof, the Company in its discretion may,
instead of issuing a new Security, pay, redeem or convert such Security, as the
case may be.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities. The Securities outstanding at
any time are all the Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Security is replaced, paid, redeemed or converted pursuant to
Section 2.07 hereof, it ceases to be outstanding unless, in the case of a
replaced Security, the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01 hereof, they
cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
SECTION 2.09. Treasury Securities. In determining whether the
Noteholders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which a Trust
Officer knows are so owned shall be so disregarded.
SECTION 2.10. Temporary Securities; Exchange of Global Security for
Certificated Securities. (a) Until definitive Securities are ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
(b) A Global Security deposited with the Depositary or with the
Trustee as custodian for the Depositary pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof in the form of certificated
securities only if such transfer complies with Section 2.06 and (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time such Depositary ceases to
be a "clearing agency" registered under the Exchange Act and a successor
Depositary is not appointed by the Company within 90 days of such notice, or
(ii) an Event of Default has occurred and is continuing.
(c) Any Global Security that is transferable to the beneficial owners
thereof in the form of certificated Securities pursuant to this Section 2.10
shall be surrendered by the Depositary to the Trustee to be so transferred, in
whole or from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount at maturity of Securities of
authorized denominations in the form of certificated Securities. Any portion of
a Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any Securities in the form of certificated Securities delivered in exchange for
an interest in the Global Security shall, except as otherwise provided by
Section 2.06(b), bear the Restricted Securities Legend set forth in Exhibit A
hereto.
(d) Prior to any transfer pursuant to Section 2.10(b), the registered
holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Securities.
(e) In the event of the occurrence of either of the events specified
in Section 2.10(b), the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive form without interest
coupons.
SECTION 2.11. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, redemption, conversion, exchange or payment. The
Trustee shall promptly cancel all Securities surrendered for registration of
transfer, redemption, conversion, exchange, payment, replacement or cancellation
and shall destroy all canceled Securities unless the Company otherwise directs.
The Company may not issue new Securities to replace Securities that it has paid
or that have been delivered to the Trustee for cancellation or that any holder
has converted.
SECTION 2.12. Defaulted Interest or Liquidated Damages. If the Company
fails to make a payment of interest or Liquidated Damages on the Securities, it
shall pay such defaulted interest or Liquidated Damages plus any interest
payable on the defaulted interest or Liquidated Damages, in any lawful manner.
It may pay such defaulted interest or Liquidated Damages, plus any such interest
payable on them, to the persons who are Noteholders on a subsequent special
record date. The Company shall fix any such record date and payment date. At
least 15 days before any such record date, the Company shall mail to Noteholders
a notice that states the record date, payment date, and amount of such interest
or Liquidated Damages to be paid.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to Section 3.07 hereof, it shall notify the Trustee of the
redemption date and the principal amount of Securities to be redeemed. The
Company shall give each notice provided for in this Section 3.01 at least 35
days before the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee).
SECTION 3.02. Selection of Securities to be Redeemed. If less than all
the Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed by a method that complies with the requirements of the principal
national securities exchange, if any, on which the Securities are listed, or, if
the Securities are not so listed, on a pro rata basis, by lot or by such other
method as the Trustee considers fair and appropriate. The Trustee shall make the
selection not more than 60 days and not less than 30 days before the redemption
date from Securities outstanding not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them it
selects shall be in amounts of $1,000 or integral multiples of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be called
for redemption.
If any Security selected for partial redemption is converted in part
after such selection, the converted portion of such Security shall be deemed (so
far as may be) to be the portion to be selected for redemption. The Securities
(or portions thereof) so selected shall be deemed duly selected for redemption
for all purposes hereof, notwithstanding that any such Security is converted in
whole or in part before the mailing of the notice of redemption. Upon any
redemption of less than all the Securities, the Company and the Trustee may
treat as outstanding any Securities surrendered for conversion during the period
15 days next preceding the mailing of a notice of redemption and need not treat
as outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.
SECTION 3.03. Notice of Redemption. At least 30 days but not more than
60 days before a redemption date, the Company shall mail a notice of redemption
to each holder whose Securities are to be redeemed at such holder's registered
address.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon cancellation of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued in the name of the holder thereof;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest and
Liquidated Damages, if any;
(f) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, by law or otherwise, interest and
Liquidated Damages on Securities called for redemption ceases to accrue on
and after the redemption date; and
(g) the paragraph of the Securities pursuant to which
the Securities called for redemption are being redeemed.
Such notice shall also state the current Conversion Price and the date
on which the right to convert such Securities or portions thereof into Common
Stock of the Company will expire.
At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at its expense.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date at the price set forth in the Security.
SECTION 3.05. Deposit of Redemption Price. On or before the redemption
date, the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest and Liquidated
Damages, if any, up to but not including the redemption date on all Securities
to be redeemed on that date (subject to the right of holders of record on the
relevant record date to receive interest and Liquidated Damages due on an
interest payment date) unless theretofore converted into Common Stock pursuant
to the provisions hereof. The Trustee or the Paying Agent shall return to the
Company any money not required for that purpose.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the holder at the expense of the Company a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Optional Redemption. The Company may redeem all or any
portion of the Securities, upon the terms and at the redemption prices set forth
in each of the Securities. Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. Designated Event Offer. (a) In the event that,
pursuant to Section 4.07 hereof, the Company shall commence a Designated Event
Offer, the Company shall follow the procedures in this Section 3.08.
(b) The Designated Event Offer shall remain open for a period
specified by the Company which shall be no less than 30 calendar days and no
more than 40 calendar days following its commencement on the date of the mailing
of notice in accordance with Section 4.07(b) hereof (the "Commencement Date"),
except to the extent that a longer period is required by applicable law (the
"Tender Period"). Upon the expiration of the Tender Period (the "Designated
Event Payment Date"), the Company shall purchase the principal amount of
Securities required to be purchased pursuant to Section 4.07 hereof (the "Offer
Amount").
(c) If the Designated Event Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest and Liquidated Damages to the related interest payment date
will be paid to the person in whose name a Security is registered at the close
of business on such record date, and no additional interest or Liquidated
Damages will be payable to Noteholders who tender Securities pursuant to the
Designated Event Offer.
(d) The Company shall provide the Trustee with written notice of the
Designated Event Offer at least 10 Business Days before the Commencement Date.
(e) Subject to Section 4.07(b), on or before the Commencement Date,
the Company or the Trustee (at the request and expense of the Company) shall
send, by first class mail, a notice to each of the Noteholders, which shall
govern the terms of the Designated Event Offer and shall state:
(i) that the Designated Event Offer is being made pursuant to this
Section 3.08 and Section 4.07 hereof and that all Securities tendered will
be accepted for payment;
(ii) the Offer Amount, the purchase price (as determined in accordance
with Section 4.07 hereof), the length of time the Designated Event Offer
will remain open and the Designated Event Payment Date;
(iii) that any Security or portion thereof not tendered or accepted
for payment will continue to accrue interest and, if applicable, Liquidated
Damages;
(iv) that, unless the Company defaults in the payment of the
Designated Event Payment, any Security or portion thereof accepted for
payment pursuant to the Designated Event Offer shall cease to accrue
interest or Liquidated Damages after the Designated Event Payment Date;
(v) that Noteholders electing to have a Security or portion thereof
purchased pursuant to any Designated Event Offer will be required to
surrender the Security, with the form entitled "Option of Noteholder To
Elect Purchase" on the reverse of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Designated Event Payment Date;
(vi) that Noteholders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Designated Event Payment Date, or such
longer period as may be required by law, a letter or a telegram, telex,
facsimile transmission (receipt of which is confirmed and promptly followed
by a letter) setting forth the name of the Noteholder, the principal amount
of the Security or portion thereof the Noteholder delivered for purchase
and a statement that such Noteholder is withdrawing his election to have
the Security or portion thereof purchased; and
(vii) that Noteholders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof.
In addition, the notice shall contain all instructions and materials
that the Company shall reasonably deem necessary to enable such Noteholders to
tender Securities pursuant to the Designated Event Offer.
(f) At least one Business Day prior to the Designated Event Payment
Date, the Company shall irrevocably deposit with the Trustee or a Paying Agent
in immediately available funds an amount equal to the Offer Amount to be held
for payment in accordance with the terms of this Section 3.08. On the Designated
Event Payment Date, the Company shall, to the extent lawful, (i) accept for
payment the Securities or portions thereof tendered pursuant to the Designated
Event Offer, (ii) deliver or cause to be delivered to the Trustee Securities so
accepted and (iii) deliver to the Trustee an Officers' Certificate stating such
Securities or portions thereof have been accepted for payment by the Company in
accordance with the terms of this Section 3.08. The Paying Agent shall promptly
(but in any case not later than five calendar days after the Designated Event
Payment Date) mail or deliver to each tendering Noteholder an amount equal to
the purchase price of the Securities tendered by such Noteholder, and the
Trustee shall promptly authenticate and mail or deliver to such Noteholders a
new Security equal in principal amount to any unpurchased portion of the
Security surrendered, if any; provided, that each new Security shall be in a
principal amount of $1,000 or an integral multiple thereof. Any Securities not
so accepted shall be promptly mailed or delivered by or on behalf of the Company
to the holder thereof. The Company will publicly announce the results of the
Designated Event Offer on, or as soon as practicable after, the Designated Event
Payment Date.
(g) The Designated Event Offer shall be made by the Company in
compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials that the Company shall reasonably deem necessary to
enable such Noteholders to tender their Securities.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall pay the
principal of and interest and Liquidated Damages on the Securities on the dates
and in the manner provided in the Securities. Principal, interest and Liquidated
Damages shall be considered paid on the date due if the Paying Agent (other than
the Company or an Affiliate of the Company) holds on that date money designated
for and sufficient to pay all principal, interest and Liquidated Damages then
due and such Paying Agent is not prohibited from paying such money to the
Noteholders on that date pursuant to the terms of this Indenture. To the extent
lawful, the Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the rate
borne by the Securities, compounded semiannually. The Company shall also pay all
Liquidated Damages, if any, in the manner, on the dates and in the amounts set
forth in the Registration Agreement.
SECTION 4.02. SEC Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Securities are outstanding, the Company
will file with the SEC and furnish to the Trustee and to the holders of
Securities all quarterly and annual financial information required to be
contained in a filing with the SEC on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" and, with respect to annual information only, a report thereon by
the Company's certified independent accountants.
SECTION 4.03. Compliance Certificate. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under, and
complied with the covenants and conditions contained in, this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of such Officer's knowledge the Company has kept, observed, performed and
fulfilled each and every covenant, and complied with the covenants and
conditions contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such Defaults or
Events of Default of which such Officer may have knowledge) and that to the best
of such Officer's knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal or of interest or
Liquidated Damages, if any, on the Securities are prohibited.
One of the Officers signing such Officers' Certificate shall be either
the Company's principal executive officer, principal financial officer or
principal accounting officer.
The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon becoming aware of:
(a) any Default, Event of Default or default in the
performance of any covenant, agreement or condition
contained in this Indenture; or
(b) any event of default under any other mortgage,
indenture or instrument as that term is used in Section
8.01(e),
an Officers' Certificate specifying such Default, Event of
Default or default.
SECTION 4.04. Stay, Extension and Usury Law. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law 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, by
resort to any such law, 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 has been enacted.
SECTION 4.05. Corporate Existence. Except as provided in Article VII
hereof, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate,
partnership or other existence of each Subsidiary of the Company in accordance
with the respective organizational documents of each Subsidiary and the rights
(charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Noteholders.
SECTION 4.06. Taxes. The Company shall, and shall cause each of its
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
SECTION 4.07. Designated Event. (a) Upon the occurrence of a
Designated Event, each holder of Securities shall have the right, in accordance
with this Section 4.07 and Section 3.08 hereof, to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Securities pursuant to the terms of Section 3.08 (the "Designated
Event Offer") at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages thereon to the
Designated Event Payment Date (the "Designated Event Payment").
(b) Within 30 days following any Designated Event, the Company shall
mail to each holder the notice provided by Section 3.08(e).
ARTICLE V
Conversion
SECTION 5.01. Conversion Privilege. A holder of a Security may convert
the principal amount thereof (or any portion thereof that is an integral
multiple of $1,000) into fully paid and nonassessable shares of Common Stock of
the Company at any time after 90 days following the Issuance Date and prior to
the close of business (New York time) on the Business Day immediately preceding
the maturity date of the Security at the Conversion Price then in effect, except
that, with respect to any Security called for redemption, such conversion right
shall terminate at the close of business (New York time) on the Business Day
immediately preceding the redemption date (unless the Company shall default in
making the redemption payment when it becomes due, in which case the conversion
right shall terminate on the date such default is cured). The number of shares
of Common Stock issuable upon conversion of a Security is determined by dividing
the principal amount of the Security converted by the conversion price in effect
on the Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 10 of the
Securities and is subject to adjustment as provided in this Article V.
Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of it. A holder of Securities is
not entitled to any rights of a holder of Common Stock until such holder of
Securities has converted such Securities into Common Stock, and only to the
extent that such Securities are deemed to have been converted into Common Stock
under this Article 5.
SECTION 5.02. Conversion Procedure. To convert a Security, a holder
must satisfy the requirements in paragraph 10 of the Securities. The date on
which the holder satisfies all of those requirements is the conversion date (the
"Conversion Date"). As soon as practicable after the Conversion Date, the
Company shall deliver to the holder through the Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion and
a check for any fractional share determined pursuant to Section 5.03. The person
in whose name the certificate is registered shall become the stockholder of
record on the Conversion Date and, as of such date, such person's rights as a
Noteholder with respect to the converted Security shall cease; provided,
however, that no surrender of a Security on any date when the stock transfer
books of the Company shall be closed shall be effective to constitute the person
entitled to receive the shares of Common Stock upon such conversion as the
stockholder of record of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the person entitled to receive such
shares of Common Stock as the stockholder of record thereof for all purposes at
the close of business on the next succeeding day on which such stock transfer
books are open; provided further, however, that such conversion shall be at the
Conversion Price in effect on the date that such Security shall have been
surrendered for conversion, as if the stock transfer books of the Company had
not been closed.
No payment or adjustment will be made for accrued and unpaid interest
and Liquidated Damages on a converted Security or for dividends or distributions
on shares of Common Stock issued upon conversion of a Security, but if any
holder surrenders a Security for conversion after the close of business on the
record date for the payment of an installment of interest and Liquidated Damages
and prior to the opening of business on the next interest and Liquidated Damages
payment date, then, notwithstanding such conversion, the interest and Liquidated
Damages payable on such interest and Liquidated Damages payment date shall be
paid to the holder of such Security on such record date. In such event, unless
such Security has been called for redemption on or prior to such interest
payment date, such Security, when surrendered for conversion, must be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest and Liquidated Damages payable on such interest and Liquidated
Damages payment date on the portion so converted.
If a holder converts more than one Security at the same time, the
number of whole shares of Common Stock issuable upon the conversion shall be
based on the total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Trustee
shall authenticate for the holder a new Security equal in principal amount to
the unconverted portion of the Security surrendered.
SECTION 5.03. Fractional Shares. The Company will not issue fractional
shares of Common Stock upon conversion of a Security. In lieu thereof, the
Company will pay an amount in cash based upon the Daily Market Price of the
Common Stock on the trading day prior to the date of conversion.
SECTION 5.04. Taxes on Conversion. The issuance of certificates for
shares of Common Stock upon the conversion of any Security shall be made without
charge to the converting Noteholder for such certificates or for any tax in
respect of the issuance of such certificates, and such certificates shall be
issued in the respective names of, or in such names as may be directed by, the
holder or holders of the converted Security; provided, however, that in the
event that certificates for shares of Common Stock are to be issued in a name
other than the name of the holder of the Security converted, such Security, when
surrendered for conversion, shall be accompanied by an instrument of transfer,
in form satisfactory to the Company, duly executed by the registered holder
thereof or his duly authorized attorney; and provided further, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Security, and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid or is not applicable.
SECTION 5.05. Company to Provide Stock. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock, solely for the purpose of issuance upon conversion of
Securities as herein provided, a sufficient number of shares of Common Stock to
permit the conversion of all outstanding Securities for shares of Common Stock.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
nonassessable when so issued.
SECTION 5.06. Adjustment of Conversion Price. The Conversion Price
shall be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common
Stock to holders of Common Stock, (2) make a distribution in shares of Common
Stock to holders of Common Stock, (3) subdivide its outstanding shares of Common
Stock into a greater number of shares of Common Stock or (4) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Securities
been converted immediately prior thereto. Any adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of holders of
Common Stock entitled to receive such rights or warrants and expiring not more
than 45 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
less than the Current Market Price (as determined pursuant to subsection (f)
below) of the Common Stock on such record date, 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 such record date by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
on such record date, plus the number of shares of Common Stock which the
aggregate offering price of the offered shares of Common Stock (or the aggregate
conversion price of the convertible securities so offered) would purchase at
such Current Market Price, and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered (or into which the convertible
securities so offered are convertible). Such adjustments shall become effective
immediately after such record date.
(c) In case the Company shall distribute to all holders of Common
Stock shares of any class of Capital Stock of the Company other than Common
Stock, evidences of indebtedness or other assets (other than cash dividends out
of current or retained earnings), or shall distribute to substantially all
holders of Common Stock rights or warrants to subscribe for securities (other
than those Securities referred to in subsection (b) above), then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the Current Market Price (determined as provided in subsection (f) below) of the
Common Stock on the record date mentioned below less the then fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value and described in a Board
Resolution) of the portion of the assets so distributed or of such subscription
rights or warrants applicable to one share of Common Stock, and of which the
denominator shall be such Current Market Price of the Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of the holders of Common Stock entitled to receive such
distribution. Notwithstanding the foregoing, in case the Company shall issue
rights or warrants to subscribe for additional shares of the Company's capital
stock (other than those referred to in subsection (b) above) ("Rights") to
substantially all holders of Common Stock, the Company may, in lieu of making
any adjustment pursuant to this Section 5.06, make proper provision so that each
holder of a Security who converts such Security (or any portion thereof) after
the record date for such distribution and prior to the expiration or redemption
of the Rights 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 to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of Rights of
separate certificates evidencing such Rights (the "Distribution Date"), the same
number of Rights to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights; and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal 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 the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company but excluding any
cash that is distributed as part of a distribution requiring a Conversion Price
adjustment pursuant to paragraph (c) of this Section) in an aggregate amount
that, together with the sum of (x) the aggregate amount of any other
distributions to all holders of its Common Stock made in cash plus (y) all
Excess Payments, in each case made within the 12 months preceding the date fixed
for determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion Price
adjustment pursuant to paragraphs (c) or (e) of this Section or this paragraph
(d) has been made, exceeds 15% of the product of the Current Market Price per
share (determined as provided in paragraph (f) of this Section) of the Common
Stock on the Distribution Record Date multiplied by the number of shares of
Common Stock outstanding on the Distribution Record Date (excluding shares held
in the treasury of the Company), the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying such Conversion Price
in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this paragraph (d) by a fraction of which the
numerator shall be the Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Common Stock on the Distribution Record
Date less the amount of such cash and other consideration (including any Excess
Payments) so distributed applicable to one share of Common Stock (equal to the
aggregate amount of such cash and other consideration (including any Excess
Payments) divided by the number of shares of Common Stock outstanding on the
Distribution Record Date) and the denominator shall be such Current Market Price
per share (determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date, such reduction to become effective
immediately prior to the opening of business on the day following the
Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by the
Company or any Subsidiary of the Company for all or any portion of the Common
Stock shall be consummated, if an Excess Payment is made in respect of such
tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders of
the Common Stock made in cash (including any distributions of cash out of
current or retained earnings of the Company), in each case made within the 12
months preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender offer, as the case may be
(the "Purchase Date"), and as to which no adjustment pursuant to paragraph (c)
or paragraph (d) of this Section or this paragraph (e) has been made, exceeds
15% of the product of the Current Market Price per share (determined as provided
in paragraph (f) of this Section) of the Common Stock on the Purchase Date
multiplied by the number of shares of Common Stock outstanding (including any
tendered shares but excluding any shares held in the treasury of the Company or
any Subsidiary of the Company) on the Purchase Date, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying such
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this paragraph (e) by a fraction of
which the numerator shall be the Current Market Price per share (determined as
provided in paragraph (f) of this Section) of the Common Stock on the Purchase
Date less the amount of such Excess Payments and such cash distributions, if
any, applicable to one share of Common Stock (equal to the aggregate amount of
such Excess Payments and such cash distributions divided by the number of shares
of Common Stock outstanding on the Purchase Date) and the denominator shall be
such Current Market Price per share (determined as provided in paragraph (f) of
this Section) of the Common Stock on the Purchase Date, such reduction to become
effective immediately prior to the opening of business on the day following the
Purchase Date.
(f) The "Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the Daily Market Prices for the shorter of
(i) 30 consecutive Business Days ending on the last full Trading Day on the
exchange or market referred to in determining such Daily Market Prices prior to
the time of determination or (ii) the period commencing on the date next
succeeding the first public announcement of the issuance of such rights or such
warrants or such other distribution or such negotiated transaction through such
last full trading day on the exchange or market referred to in determining such
Daily Market Prices prior to the time of determination.
(g) "Excess Payment" means the excess of (A) the aggregate of the cash
and fair market value of other consideration paid by the Company or any of its
Subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (B) the Daily Market Price on the Trading Day
immediately following the completion of such tender offer or other negotiated
transaction multiplied by the number of acquired shares.
(h) In any case in which this Section 5.06 shall require that an
adjustment be made immediately following a record date for an event, the Company
may elect to defer, until such event, issuing to the holder of any Security
converted after such record date the shares of Common Stock and other Capital
Stock of the Company issuable upon such conversion over and above the shares of
Common Stock and other Capital Stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence of the right to receive such shares.
SECTION 5.07. No Adjustment. No adjustment in the Conversion Price
shall be required until cumulative adjustments amount to 1% or more of the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 5.07 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article V shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No adjustment need be made for
rights to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par value
or no par value of the Common Stock.
SECTION 5.08. Other Adjustments. (a) In the event that, as a result of
an adjustment made pursuant to Section 5.06 above, the holder of any Security
thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than shares of its Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any Securities shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in this Article V.
(b) In the event that shares of Common Stock are not delivered after
the expiration of any of the rights or warrants referred to in Section 5.06(b)
and Section 5.06(c) hereof, the Conversion Price shall be readjusted to the
Conversion Price which would otherwise be in effect had the adjustment made upon
the issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of Common Stock actually delivered.
SECTION 5.09. Adjustments for Tax Purposes. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those
required by Section 5.06 above, as it determines to be advisable in order that
any stock dividend, subdivision of shares, distribution of rights to purchase
stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company to its stockholders will not be
taxable to the recipients thereof.
SECTION 5.10. Adjustments by the Company. The Company from time to
time may, to the extent permitted by law, reduce the Conversion Price by any
amount for any period of at least 20 days, in which case the Company shall give
at least 15 days' notice of such reduction in accordance with Section 5.11, if
the Board of Directors has made a determination that such reduction would be in
the best interests of the Company, which determination shall be conclusive.
SECTION 5.11. Notice of Adjustment. Whenever the Conversion Price is
adjusted, the Company shall promptly mail to Noteholders at the addresses
appearing on the Registrar's books a notice of the adjustment and file with the
Trustee an Officers' Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence of the correctness of such adjustment.
SECTION 5.12. Notice of Certain Transactions. In the event that:
(1) the Company takes any action which would require an adjustment
in the Conversion Price;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 5.13; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, securities or assets which a holder of
shares of Common Stock on that date may receive. Therefore, the Company shall
mail to Noteholders at the addresses appearing on the Registrar's books and the
Trustee a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 15 days before such date;
however, failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (1), (2) or (3) of this
Section 5.12.
SECTION 5.13. Effect of Reclassifications, Consolidations, Mergers or
Sales on Conversion Privilege. If any of the following shall occur, namely: (i)
any reclassification or change of outstanding shares of Common Stock issuable
upon conversion of Securities (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), (ii) any consolidation or merger to which the
Company is a party other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification of, or change
(other than a change in name, or par value, or from par value to no par value,
or from no par value to par value or as a result of a subdivision or
combination) in, outstanding shares of Common Stock or (iii) any sale or
conveyance of all or substantially all of the property or business of the
Company as an entirety, then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture in form satisfactory to the
Trustee providing that the holder of each Security then outstanding shall have
the right to convert such Security into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article V. The foregoing, however, shall not in any way affect the right a
holder of a Security may otherwise have, pursuant to clause (ii) of the last
sentence of subsection (c) of Section 5.06, to receive Rights upon conversion of
a Security. If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities and property of a corporation other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger, sale
or conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the holders of the Securities as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing. The
provision of this Section 5.13 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 5.13, the Company shall promptly file with the Trustee
an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or securities or property (including cash) receivable
by holders of the Securities upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance and any
adjustment to be made with respect thereto.
SECTION 5.14. Trustee's Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article V should be made, how it should
be made or what such adjustment should be, but may accept as conclusive evidence
of the correctness of any such adjustment, and shall be protected in relying
upon the Officers' Certificate with respect thereto which the Company is
obligated to file with the Trustee pursuant to Section 5.11. The Trustee makes
no representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article V.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.13, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.13.
ARTICLE VI
Subordination
SECTION 6.01. Agreement to Subordinate. The Company, for itself and
its successors, and each Noteholder, by his acceptance of Securities, agree that
the payment of the principal of or interest or Liquidated Damages on or any
other amounts due on the Securities is subordinated in right of payment, to the
extent and in the manner stated in this Article VI, to the prior payment in full
of all existing and future Senior Debt.
SECTION 6.02. No Payment on Securities if Senior Debt in Default.
Anything in this Indenture to the contrary notwithstanding, no payment on
account of principal of or redemption of, interest or Liquidated Damages on or
other amounts due on the Securities, and no redemption, purchase, or other
acquisition of the Securities, shall be made by or on behalf of the Company (i)
unless full payment of amounts then due for principal and interest and of all
other amounts then due on all Senior Debt has been made or duly provided for
pursuant to the terms of the instrument governing such Senior Debt, (ii) if, at
the time of such payment, redemption, purchase or other acquisition, or
immediately after giving effect thereto, there shall exist under any Senior
Debt, or any agreement pursuant to which any Senior Debt is issued, any default,
which default shall not have been cured or waived and which default shall have
resulted in the full amount of such Senior Debt being declared due and payable
or (iii) if, at the time of such payment, redemption, purchase or other
acquisition, the Trustee shall have received written notice from the
Representative of the holders of Designated Senior Debt (a "Payment Blockage
Notice") that there exists under such Designated Senior Debt, or any agreement
pursuant to which such Designated Senior Debt is issued, any default, which
default shall not have been cured or waived, permitting the holders thereof to
declare any amounts of such Designated Senior Debt due and payable, but only for
the period (the "Payment Blockage Period") commencing on the date of receipt of
the Payment Blockage Notice and ending (unless earlier terminated by notice
given to the Trustee by the Representative of the holders of such Designated
Senior Debt) on the earlier of (a) the date on which such event of default shall
have been cured or waived or (b) 180 days from the receipt of the Payment
Blockage Notice. Notwithstanding the provisions described in the immediately
preceding sentence (other than in clauses (i) and (ii)), unless the holders of
such Designated Senior Debt or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Debt, the Company may resume
payments on the Securities after the end of such Payment Blockage Period. Not
more than one Payment Blockage Notice may be given in any consecutive 365-day
period, irrespective of the number of defaults with respect to Senior Debt
during such period.
In the event that, notwithstanding the provisions of this Section
6.02, payments are made by or on behalf of the Company in contravention of the
provisions of this Section 6.02, such payments shall be held by the Trustee, any
Paying Agent or the holders, as applicable, in trust for the benefit of, and
shall be paid over to and delivered to, the Representative of the holders of
Senior Debt or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
The Company shall give prompt written notice to the Trustee and any
Paying Agent of any default or event of default under any Senior Debt or under
any agreement pursuant to which any Senior Debt may have been issued.
SECTION 6.03. Distribution on Acceleration of Securities; Dissolution
and Reorganization; Subrogation of Securities. (a) If the Securities are
declared due and payable because of the occurrence of an Event of Default, the
Company shall give prompt written notice to the holders of all Senior Debt or to
the trustee(s) for such Senior Debt of such acceleration. The Company may not
pay the principal of or interest or Liquidated Damages on or any other amounts
due on the Securities until five Business Days after such holders or trustee(s)
of Senior Debt receive such notice and, thereafter, the Company may pay the
principal of or interest or Liquidated Damages on or any other amounts due on
the Securities only if the provisions of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the
Securities because of an Event of Default or (ii) any direct or indirect
distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other dissolution, winding up, liquidation or reorganization of the
Company):
(1) the holders of all Senior Debt shall first be entitled to receive
payment in full of the principal thereof, the interest thereon and any other
amounts due thereon before the holders are entitled to receive payment on
account of the principal of or interest and Liquidated Damages on or any other
amounts due on the Securities;
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than securities 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 subordinate, at least to the extent provided in this Article
with respect to the Securities, to the payment in full without diminution or
modification by such plan of all Senior Debt), to which the holders or the
Trustee would be entitled except for the provisions of this Article, shall be
paid by the liquidating trustee or agent or other person making such a payment
or distribution, directly to the holders of Senior Debt (or their
representative(s) or trustee(s) acting on their behalf), ratably according to
the aggregate amounts remaining unpaid on account of the principal of or
interest on and other amounts due on the Senior Debt held or represented by
each, to the extent necessary to make payment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than securities 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 subordinate,
at least to the extent provided in this Article with respect to the Securities,
to the payment in full without diminution or modification by such plan of Senior
Debt), shall be received by the Trustee or the holders before all Senior Debt is
paid in full, such payment or distribution shall be held in trust for the
benefit of, and be paid over to upon request by a holder of the Senior Debt, the
holders of the Senior Debt remaining unpaid (or their representatives) or
trustee(s) acting on their behalf, ratably as aforesaid, for application to the
payment of such Senior Debt until all such Senior Debt shall have been paid in
full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the holders shall
be subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the principal of and interest and Liquidated Damages on the
Securities shall be paid in full and, for purposes of such subrogation, no such
payments or distributions to the holders of Senior Debt of cash, property or
securities which otherwise would have been payable or distributable to holders
shall, as between the Company, its creditors other than the holders of Senior
Debt, and the holders, be deemed to be a payment by the Company to or on account
of the Senior Debt, it being understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
holders, on the one hand, and the holders of Senior Debt, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall (i) impair, as between the Company and
its creditors other than the holders of Senior Debt, the obligation of the
Company, which is absolute and unconditional, to pay to the holders the
principal of, and interest and Liquidated Damages on, the Securities as and when
the same shall become due and payable in accordance with the terms of the
Securities, (ii) affect the relative rights of the holders and creditors of the
Company other than holders of Senior Debt or, as between the Company and the
Trustee, the obligations of the Company to the Trustee, or (iii) prevent the
Trustee or the holders from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Debt in respect of cash, property
and securities of the Company received upon the exercise of any such remedy.
Upon distribution of assets of the Company referred to in this
Article, the Trustee, subject to the provisions of Section 9.01 hereof, and the
holders shall be entitled to rely upon a certificate of the liquidating trustee
or agent or other person making any distribution to the Trustee or to the
holders for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt. Nothing contained in this Article or elsewhere in this
Indenture, or in any of the Securities, shall prevent the good faith application
by the Trustee of any moneys which were deposited with it hereunder, prior to
its receipt of written notice of facts which would prohibit such application,
for the purpose of the payment of or on account of the principal of, or interest
and Liquidated Damages on, the Securities unless, prior to the date on which
such application is made by the Trustee, the Trustee shall be charged with
actual notice under Section 6.03(d) hereof of the facts which would prohibit the
making of such application.
(c) The provisions of this Article shall not be applicable to any
cash, properties or securities received by the Trustee or by any holder when
received as a holder of Senior Debt and nothing in Section 9.11 hereof or
elsewhere in this Indenture shall deprive the Trustee or such holder of any of
its rights as such holder.
(d) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment of
money to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article. The Trustee, subject to the provisions of Section
9.01 hereof, shall be entitled to assume that no such fact exists unless the
Company or any holder of Senior Debt or any trustee therefor has given notice
thereof to the Trustee. Notwithstanding the provisions of this Article or any
other provisions of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any fact which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Securities pursuant to
the provisions in this Article, unless, and until three Business Days after, the
Trustee shall have received written notice thereof from the Company or any
holder or holders of Senior Debt or from any trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 9.01 hereof, shall be entitled in all respects conclusively to assume
that no such facts exist; provided that if on a date not less than three
Business Days immediately preceding the date upon which, by the terms hereof,
any such moneys may become payable for any purpose (including, without
limitation, the principal of or interest and Liquidated Damages on any
Security), the Trustee shall not have received with respect to such moneys the
notice provided for in this Section 6.03(d), then anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority to
receive such moneys 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.
The Trustee shall be entitled to conclusively rely on the delivery to
it of a written notice by a person representing himself to be a holder of Senior
Debt (or a trustee on behalf of such holder) to establish that such notice has
been given by a holder of Senior Debt (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 Debt to participate in any payment or distribution pursuant to this
Article, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt 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, 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; nor shall the Trustee be charged
with knowledge or the curing or waiving of any default of the character
specified in Section 6.02 hereof or that any event or any condition preventing
any payment in respect of the Securities shall have ceased to exist, unless and
until the Trustee shall have received written notice to such effect.
(e) The provisions of this Section 6.03 applicable to the Trustee
shall (unless the context requires otherwise) also apply to any Paying Agent for
the Company.
SECTION 6.04. Reliance by Senior Debt on Subordination Provisions.
Each holder of any Security by his acceptance thereof acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration for each holder of any Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Debt, and such holder of Senior Debt shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Debt. Notice of any default in the payment of
any Senior Debt, except as expressly stated in this Article, and notice of
acceptance of the provisions hereof are hereby expressly waived. Except as
otherwise expressly provided herein, no waiver, forbearance or release by any
holder of Senior Debt under such Senior Debt or under this Article shall
constitute a release of any of the obligations or liabilities of the Trustee or
holders of the Securities provided in this Article.
SECTION 6.05. No Waiver of Subordination Provisions. Except as
otherwise expressly provided herein, no right of any present or future holder of
any Senior Debt 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 any such holder may have
or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of, or notice to, the Trustee or the holders of the Securities, without
incurring responsibility to the holders of the Securities and without impairing
or releasing the subordination provided in this Article VI or the obligations
hereunder of the holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
of, or renew or alter, Senior Debt, or otherwise amend or supplement in any
manner Senior Debt or any instrument evidencing the same or any agreement under
which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing Senior Debt;
(iii) release any person liable in any manner for the collection of Senior Debt;
and (iv) exercise or refrain from exercising any rights against the Company or
any other person.
SECTION 6.06. Trustee's Relation to Senior Debt. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article in respect of any Senior Debt at any time held by it, to the same extent
as any holder of Senior Debt, and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations, as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not owe any fiduciary duty to the holders
of Senior Debt but shall have only such obligations to such holders as are
expressly set forth in this Article.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding up or liquidation or
reorganization under any applicable bankruptcy law of the Company (whether in
bankruptcy, insolvency or receivership proceedings or otherwise), the timely
filing of a claim for the unpaid balance of such holder's Securities in the form
required in such proceedings and the causing of such claim to be approved. If
the Trustee does not file a claim or proof of debt in the form required in such
proceedings prior to 30 days before the expiration of the time to file such
claims or proofs, then any holder or holders of Senior Debt or their
representative or representatives shall have the right to demand, sue for,
collect, receive and receipt for the payments and distributions in respect of
the Securities which are required to be paid or delivered to the holders of
Senior Debt as provided in this Article and to file and prove all claims
therefor and to take all such other action in the name of the holders or
otherwise, as such holders of Senior Debt or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article.
SECTION 6.07. Other Provisions Subject Hereto. Except as expressly
stated in this Article, notwithstanding anything contained in this Indenture to
the contrary, all the provisions of this Indenture and the Securities are
subject to the provisions of this Article. However, nothing in this Article
shall apply to or adversely affect the claims of, or payment to, the Trustee
pursuant to Section 9.07. Notwithstanding the foregoing, the failure to make a
payment on account of principal of or interest or Liquidated Damages on the
Securities by reason of any provision of this Article VI shall not be construed
as preventing the occurrence of an Event of Default under Section 8.01.
ARTICLE VII
Successors
SECTION 7.01. Merger, Consolidation or Sale of Assets. The Company may
not consolidate or merge with or into any person (whether or not the Company is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets
unless:
(a) the Company is the surviving corporation or the Person formed by
or surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(b) the corporation formed by or surviving any such consolidation or
merger (if other than the Company) or the corporation to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been
made assumes all the Obligations of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the
Securities and the Indenture;
(c) any such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or
assets shall be as an entirety or virtually as an entirety to one
corporation;
(d) immediately after such transaction no Default or
Event of Default exists; and
(e) the Company or such corporation shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such transaction and the supplemental indenture comply with the
Indenture and that all conditions precedent in the Indenture relating to
such transaction have been satisfied.
SECTION 7.02. Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 7.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or the corporation to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor person has been named as the Company herein; provided, however, that
the predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest and Liquidated Damages on the Securities.
ARTICLE VIII
Defaults and Remedies
SECTION 8.01. Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest or Liquidated
Damages on any Security when the same becomes due and payable, and the
Default continues for a period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the
principal of any Security when the same becomes due and
payable at maturity, upon redemption or otherwise;
(c) the Company fails to observe or perform any
covenant or agreement contained in Section 4.07 hereof;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Securities, required by it to
be performed and the Default continues for a period of 60 days after the
receipt of written notice from the Trustee to the Company or from the
holders of 25% in aggregate principal amount of the then outstanding
Securities to the Company and the Trustee stating that such notice is a
"Notice of Default";
(e) there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any
Material Subsidiary of the Company (or the payment of which is guaranteed
by the Company or any Material Subsidiary of the Company), whether such
Indebtedness or guarantee now exists or is created after the Issuance Date,
which default (i) is caused by a failure to pay when due principal of or
interest or Liquidated Damages on such Indebtedness within the grace period
provided for in such Indebtedness (which failure continues beyond any
applicable grace period) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity (without
such acceleration being rescinded or annulled) and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $50
million or more;
(f) a final, non-appealable judgment or final non-appealable judgments
(other than any judgment as to which a reputable insurance company has
accepted full liability) for the payment of money are entered by a court or
courts of competent jurisdiction against the Company or any Material
Subsidiary of the Company and remain undischarged for a period (during
which execution shall not be effectively stayed) of 60 days, provided that
the aggregate of all such judgments exceeds $50 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary
case in which it is the debtor, (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (iv) makes
a general assignment for the benefit of its creditors, or (v) makes the
admission in writing that it generally is unable to pay its debts as the
same become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company or any
Material Subsidiary of the Company in an involuntary case, (ii) appoints a
Custodian of the Company or any Material Subsidiary of the Company or for
all or substantially all of its property, and the order or decree remains
unstayed and in effect for 60 days or (iii) orders the liquidation of the
Company or any Material Subsidiary of the Company, and the order or decree
remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
SECTION 8.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clauses (g) and (h) of Section 8.01 hereof) occurs
and is continuing, the Trustee by notice to the Company, or the Noteholders of
at least 25% in principal amount of the then-outstanding Securities by notice to
the Company and the Trustee, may declare all the Securities to be due and
payable. Upon such declaration, the principal of, premium, if any, and accrued
and unpaid interest and Liquidated Damages on the Securities shall be due and
payable immediately. If an Event of Default specified in clause (g) or (h) of
Section 8.01 hereof occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholder. The Noteholders of a majority in aggregate
principal amount of the then-outstanding Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree, if all amounts payable to the Trustee
pursuant to Section 9.07 hereof have been paid and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest and
Liquidated Damages that has become due solely because of the acceleration.
SECTION 8.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest and Liquidated Damages on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 8.04. Waiver of Past Defaults. The Noteholders of a majority
in aggregate principal amount of the then-outstanding Securities by notice to
the Trustee may waive an existing Default or Event of Default and its
consequences except a continuing Default or Event of Default in the payment of
the Designated Event Payment or the principal of, or interest or Liquidated
Damages on, any Security. When a Default or Event of Default is waived, it is
cured and ceases; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 8.05. Control by Majority. The Noteholders of a majority in
principal amount of the then-outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, is
unduly prejudicial to the rights of other Noteholders, or would involve the
Trustee in personal liability.
SECTION 8.06. Limitation on Suits. A Noteholder may pursue a remedy
with respect to this Indenture or the Securities only if:
(a) the Noteholder gives to the Trustee notice of a
continuing Event of Default;
(b) the Noteholders of at least 25% in principal
amount of the then-outstanding Securities make a request to
the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer to the
Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of
indemnity; and
(e) during such 60-day period the Noteholders of a majority in
principal amount of the then-outstanding Securities do not give the Trustee
a direction inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
SECTION 8.07. Rights of Noteholders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Noteholder of a Security to receive payment of principal and interest and
Liquidated Damages on the Security, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Noteholder made pursuant to this Section.
SECTION 8.08. Collection Suit by Trustee. If an Event of Default
specified in Section 8.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal and interest and Liquidated Damages
remaining unpaid on the Securities and interest on overdue principal and
interest and Liquidated Damages and such further amount as shall be sufficient
to cover the costs and, to the extent lawful, expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 8.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Noteholders allowed
in any judicial proceedings relative to the Company, its creditors or its
property. Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Noteholder thereof, or to authorize the Trustee
to vote in respect of the claim of any Noteholder in any such proceeding.
SECTION 8.10. Priorities. If the Trustee collects any
money pursuant to this Article, it shall pay out the money in the
following order:
First: to the Trustee for amounts due under Section
9.07 hereof;
Second: to the holders of Senior Debt to the extent
required by Article VI;
Third: to the Noteholders, for amounts due and unpaid
on the Securities for principal and interest and Liquidated
Damages, ratably, according to the amounts due and payable
on the Securities for principal and interest and Liquidated
Damages, respectively; and
Fourth: to the Company.
Except as otherwise provided in Section 2.12 hereof, the Trustee may
fix a record date and payment date for any payment to Noteholders made pursuant
to this Section.
SECTION 8.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a holder pursuant to Section 8.07 hereof, or a suit by
Noteholders of more than 10% in principal amount of the then-outstanding
Securities.
ARTICLE IX
Trustee
SECTION 9.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others and (ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and, if required by the terms hereof, conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that: (i) this paragraph does not limit the effect of
paragraph (b) of this Section 9.01; (ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts and (iii) the
Trustee shall not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section
8.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 9.01.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 9.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be charged with knowledge of any Event of
Default under subsection (c), (d), (e), (f), (g) or (h) of Section 8.01 unless
either (1) a Trust Officer assigned to its Corporate Trust Department shall have
actual knowledge thereof, or (2) the Trustee shall have received notice thereof
in accordance with Section 12.02 hereof from the Company or any holder.
SECTION 9.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or an Affiliate with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 9.10 and 9.11 hereof.
SECTION 9.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in the Indenture or any statement in the Securities (other than its
authentication) or for compliance by the Company with the Registration
Agreement.
SECTION 9.05. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to Noteholders a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
on any Security, the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Noteholders.
SECTION 9.06. Reports by Trustee to Noteholders. Within 60 days after
the reporting date stated in Section 12.10, the Trustee shall mail to
Noteholders a brief report dated as of such reporting date that complies with
TIA 313(a) if and to the extent required by such 313(a). The Trustee also shall
comply with TIA 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA 313(c).
A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
SECTION 9.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services hereunder.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such disbursements and expenses may include the reasonable disbursements,
compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees, disbursements and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except money or property held in trust to pay
principal and interest and Liquidated Damages on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 9.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Noteholders of
a majority in principal amount of the then-outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the
Noteholders of a majority in principal amount of the then-outstanding Securities
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Noteholders of at least 10% in principal amount of the then-outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA 310(b), any Noteholder who
has been a bona fide holder of a Security for at least six months may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 9.07 hereof. Notwithstanding the resignation or
replacement of the Trustee pursuant to this Section 9.08, the Company's
obligations under Section 9.07 hereof shall continue for the benefit of the
retiring trustee with respect to expenses and liabilities incurred by it prior
to such resignation or replacement.
SECTION 9.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 9.10. Eligibility; Disqualification. This Indenture shall
always have a Trustee who satisfies the requirements of TIA 310(a)(1) and (5).
The Trustee shall always have a combined capital and surplus as stated in
Section 12.10 hereof. The Trustee is subject to TIA 310(b).
SECTION 9.11. Preferential Collection of Claims Against Company. The
Trustee is subject to TIA 311(a), excluding any creditor relationship listed in
TIA 311(b). A Trustee who has resigned or been removed shall be subject to TIA
311(a) to the extent indicated therein.
ARTICLE X
Discharge of Indenture
SECTION 10.01. Termination of Company's Obligations. This Indenture
shall cease to be of further effect (except that the Company's obligations under
Sections 9.07 and 10.02 hereof shall survive) when all outstanding Securities
theretofore authenticated and issued have been delivered to the Trustee for
cancellation and the Company has paid all sums payable hereunder.
Thereupon, the Trustee upon request of the Company, shall acknowledge
in writing the discharge of the Company's obligations under this Indenture,
except for those surviving obligations specified above.
SECTION 10.02. Repayment to Company. The Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess money or securities
held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest or Liquidated
Damages that remains unclaimed for two years after the date upon which such
payment shall have become due; provided, however, that the Company shall have
first caused notice of such payment to the Company to be mailed to each
Noteholder entitled thereto no less than 30 days prior to such payment. After
payment to the Company, the Trustee and the Paying Agent shall have no further
liability with respect to such money and Noteholders entitled to the money must
look to the Company for payment as general creditors unless any applicable
abandoned property law designates another person.
ARTICLE XI
Amendments, Supplements and Waivers
SECTION 11.01. Without Consent of Noteholders. The Company and the
Trustee may amend or supplement this Indenture or the Securities without the
consent of any Noteholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Sections 5.13 and 7.01 hereof;
(c) to provide for uncertificated Securities in
addition to certificated Securities;
(d) to make any change that does not adversely affect
the legal rights hereunder of any Noteholder;
(e) to qualify this Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification
of the Indenture under the TIA; or
(f) to make any change that provides any additional
rights or benefits to the holders of Securities.
An amendment under this Section may not make any change that adversely
affects the rights under Article VI of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
SECTION 11.02. With Consent of Noteholders. Subject to Section 8.07
hereof, the Company and the Trustee may amend or supplement this Indenture or
the Securities with the written consent (including consents obtained in
connection with any tender or exchange offer for Securities) of the Noteholders
of at least a majority in principal amount of the then-outstanding Securities.
Subject to Sections 8.04 and 8.07 hereof, the Noteholders of a majority in
principal amount of the Securities then outstanding may also by their written
consent (including consents obtained in connection with any tender offer or
exchange offer for Securities) waive any existing Default as provided in Section
8.04 or waive compliance in a particular instance by the Company with any
provision of this Indenture or the Securities. However, without the consent of
each Noteholder affected, an amendment, supplement or waiver under this Section
may not (with respect to any Securities held by a nonconsenting Noteholder):
(a) reduce the amount of Securities whose Noteholders
must consent to an amendment, supplement or waiver;
(b) reduce the rate of or change the time for payment
of interest on any Security;
(c) reduce the principal of or change the fixed
maturity of any Security or alter the redemption provisions
with respect thereto;
(d) make any Security payable in money other than that
stated in the Security;
(e) make any change in Section 8.04, 8.07 or 11.02
hereof (this sentence);
(f) waive a default in the payment of the Designated Event Payment or
principal of, or interest or Liquidated Damages on, any Security
(other than as provided in Section 8.04);
(g) waive a redemption payment payable on any
Security; or
(h) make any change that adversely affects the right of Noteholders
to convert Securities into Common Stock of the Company.
To secure a consent of the Noteholders under this Section 11.02, it
shall not be necessary for the Noteholders to approve the particular form of any
proposed amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Noteholders a notice briefly describing the
amendment or waiver.
SECTION 11.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall be set forth in a supplemental indenture
that complies with the TIA as then in effect.
SECTION 11.04. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Noteholder of a
Security is a continuing consent by the Noteholder and every subsequent
Noteholder of a Security or portion of a Security that evidences the same debt
as the consenting Noteholder's Security, even if notation of the consent is not
made on any Security. However, any such Noteholder or subsequent Noteholder may
revoke the consent as to such Noteholder's Security or portion of a Security if
the Trustee receives the notice of revocation before the date on which the
Trustee receives an Officers' Certificate certifying that the Noteholders of the
requisite principal amount of Securities have consented to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Noteholders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Noteholders of the principal amount of Securities required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked
within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall
bind every Noteholder, unless it is of the type described in any of clauses (a)
through (i) of Section 11.02 hereof. In such case, the amendment or waiver shall
bind each Noteholder who has consented to it and every subsequent Noteholder
that evidences the same debt as the consenting Noteholder's Security.
SECTION 11.05. Notation on or Exchange of Securities. The Trustee may
place an appropriate notation about an amendment or waiver on any Security
thereafter authenticated. The Company in exchange for all Securities may issue
and the Trustee shall authenticate new Securities that reflect the amendment or
waiver.
SECTION 11.06. Trustee Protected. The Trustee shall sign all
supplemental indentures, except that the Trustee may, but need not, sign any
supplemental indenture that adversely affects its rights. As a condition to
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trust
created by this Indenture, the Trustee shall be entitled to receive (in addition
to those documents required by Section 12.04), and (subject to Section 315 of
the TIA) 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.
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is
automatically deemed to be incorporated in this Indenture by the TIA, the
incorporated provision shall control.
SECTION 12.02. Notices. Any notice or communication by the Company or
the Trustee to the other is duly given if in writing and delivered in person or
mailed by first-class mail to the other's address stated in Section 12.10
hereof. The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect in it
shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Noteholders, it
shall mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by the Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
SECTION 12.03. Communication by Noteholders with Other Noteholders.
Noteholders may communicate pursuant to TIA 312(b) with other Noteholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 4.03) shall
include:
(a) a statement that the person signing such
certificate or rendering such opinion has read such covenant
or condition;
(b) 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;
(c) a statement that, in the opinion of such person, such person has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
SECTION 12.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by, or a meeting of, Noteholders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
SECTION 12.07. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions in the State of New York are not
required to be open. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest or Liquidated Damages shall accrue for the intervening
period. If any other operative date for purposes of this Indenture shall occur
on a Legal Holiday then for all purposes the next succeeding day that is not a
Legal Holiday shall be such operative date.
SECTION 12.08. No Recourse Against Others. A director, Officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
SECTION 12.09. Counterparts. This Indenture 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.
SECTION 12.10. Variable Provisions. "Officer" means the Chairman of
the Board, the President, any Vice-President, the Chief Financial Officer, the
Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of
the Company.
The Company initially appoints the Trustee as Paying Agent, Registrar
and Conversion Agent, and the Trustee hereby accepts such appointments.
The first certificate pursuant to Section 4.03 hereof shall be for the
fiscal year ending on June 30, 1996.
The reporting date for Section 9.06 hereof is April 15 of each year.
The first reporting date is April 15, 1997.
The Trustee shall always have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition.
The Company's address for purposes of the Indenture is:
SCI Systems, Inc.
c/o SCI Systems (Alabama), Inc.
P.O. Box 1000
Huntsville, Alabama 35807
The Trustee's address is:
PNC Bank, Kentucky, Inc.
Attn: Corporate Trust Department
500 West Jefferson Street
Louisville, Kentucky 40202
The Company or the Trustee may change its address for purposes of this
Indenture by written notice to the other.
SECTION 12.11. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 12.12. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or an Affiliate. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
SECTION 12.13. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 12.14. Severability. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 12.15. Table of Contents, Headings, Etc. The Table of Contents
and headings of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
SCI Systems, Inc., as Company,
by_________________________
Name: Ronald G. Sibold, Jr.
Title: Treasurer
PNC Bank, Kentucky, Inc., as
Trustee,
by_________________________
Name: David G. Metcalf
Title: Vice President
STATE OF ALABAMA )
) ss.:
COUNTY OF )
Personally appeared before me, the undersigned authority in and for
the said county and state, on this day of April, 1996, within my jurisdiction,
the within named ____________________, who acknowledged that he is a
__________________ of SCI Systems, Inc., a Delaware corporation, and that for
and on behalf of the said corporation, and as its act and deed he executed the
above and foregoing instrument, after first having been duly authorized by said
corporation so to do.
-------------------------
----
NOTARY PUBLIC
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Personally appeared before me, the undersigned authority in and for
the said county and state, on this day of April, 1996, within my jurisdiction,
the within named____________________, who acknowledged that he is a
__________________ of PNC Bank, Kentucky, Inc., and that for and on behalf of
the said corporation, and as its act and deed he executed the above and
foregoing instrument, after first having been duly authorized by said
corporation so to do.
-------------------------
----
NOTARY PUBLIC
[Notarial Seal]
EXHIBIT A
FORM OF CONVERTIBLE SUBORDINATED NOTE
[FORM OF FACE OF NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, 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
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER
THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER
IS BEING EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED
BELOW) PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE
MEANING OF RULE 903(C)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR TRUSTEE IS DELIVERED BY
THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN
THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN THE INDENTURE MAY
NOT TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION
OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(C)(3) OF
REGULATION S UNDER THE SECURITIES ACT)), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR
HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE
SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
<PAGE>
No. _________ Cusip No.
SCI SYSTEMS, INC.
5% CONVERTIBLE SUBORDINATED NOTE
DUE 2006
SCI SYSTEMS, INC.
SCI Systems, Inc., a Delaware corporation (the "Company") promises to
pay to
- -----------------------------------------------------------------
or registered assigns, the principal sum [indicated on Schedule A hereof]*
[of _________Dollars]** on May 1, 2006.
Interest Payment Dates: May 1 and November 1, commencing November 1, 1996.
Record Dates: April 15 and October 15.
Reference is hereby made to the further provisions of this Convertible
Note set forth on the reverse hereof which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, SCI Systems, Inc. has caused this Convertible
Note to be signed manually or by facsimile by its duly authorized Officers and a
facsimile of its corporate seal to be affixed hereto or imprinted hereon.
Dated:__________________
SCI SYSTEMS, INC.,
by
by
[Seal]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the
5% Convertible Subordinated Notes Due 2006
described in the within-
mentioned Indenture.
PNC Bank, Kentucky, Inc., as Trustee,
by
Authorized Officer
<PAGE>
SCI SYSTEMS, INC.
5% Convertible Subordinated Note Due 2006
1. Interest. SCI SYSTEMS, INC., a Delaware corporation (the
"Company"), is the issuer of the 5% Convertible Subordinated Notes Due 2006 (the
"Convertible Notes"), of which this Convertible Note is a part. The Company
promises to pay interest on the Convertible Notes in cash semiannually on each
May 1 and November 1, commencing on November 1, 1996, to holders of record on
the immediately preceding April 15 and October 15.
Interest on the Convertible Notes will accrue from the most recent
date to which interest has been paid, or if no interest has been paid, from
April 23, 1996. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. To the extent lawful, the Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest or Liquidated Damages (without regard to any
applicable grace period) at the rate borne by the Convertible Notes, compounded
annually.
2. Method of Payment. The Company will pay interest and Liquidated
Damages on the Convertible Notes (except defaulted interest) to the persons who
are registered holders of the Convertible Notes at the close of business on the
record date for the next interest payment date even though Convertible Notes are
canceled after the record date and on or before the interest payment date. The
Noteholder hereof must surrender Convertible Notes to a Paying Agent to collect
principal payments. The Company will pay principal and interest and Liquidated
Damages in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal and interest and Liquidated Damages by check payable in such money. It
may mail a check for interest or Liquidated Damages to a holders' registered
address.
3. Paying Agent and Registrar. The Trustee will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, co-registrar or Conversion Agent without prior notice. The Company
or any of its Affiliates may act in any such capacity.
4. Indenture. The Company issued the Convertible Notes under an
indenture, dated as of April 23, 1996 (the "Indenture"), between the Company and
PNC Bank, Kentucky, Inc., as Trustee. The terms of the Convertible Notes include
those stated in the Indenture and those made part of the Indenture by the Trust
Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) as in effect on the date of
the Indenture. The Convertible Notes are subject to, and qualified by, all such
terms, certain of which are summarized hereon, and Noteholders are referred to
the Indenture and such Act for a statement of such terms. The Convertible Notes
are general unsecured obligations of the Company limited to an aggregate
principal amount of $287,500,000. The Indenture does not limit the ability of
the Company or any of its Subsidiaries to incur indebtedness or to grant
security interests or liens in respect of their assets.
5. Optional Redemption. The Convertible Notes are not redeemable at
the Company's option prior to May 1, 1999. Thereafter, the Convertible Notes
will be subject to redemption at the option of the Company, in whole or in part
(in any integral multiple of $1,000), at the following redemption prices
(expressed as percentages of the principal amount), if redeemed during the
12-month period beginning May 1 of the years indicated:
Redemption
Year Price
1999
103.5%
2000
103.0%
2001
102.5%
2002
102.0%
2003
101.5%
2004
101.0%
2005
100.5%
and at 100% at May 1, 2006, in each case together with accrued interest and
Liquidated Damages to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest and Liquidated Damages
due on an interest payment date). On or after the redemption date, interest and
Liquidated Damages will cease to accrue on the Convertible Notes, or portion
thereof, called for redemption.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each holder of
the Convertible Notes to be redeemed at his address of record. The Convertible
Notes in denominations larger than $1,000 may be redeemed in part but only in
integral multiples of $1,000. In the event of a redemption of less than all of
the Convertible Notes, the Convertible Notes will be chosen for redemption by
the Trustee in accordance with the Indenture. Unless the Company defaults in
making such redemption payment, or the Paying Agent is prohibited from making
such payment pursuant to the Indenture, by law or otherwise, interest and
Liquidated Damages cease to accrue on the Convertible Notes or portions of them
called for redemption on and after the redemption date.
If this Convertible Note is redeemed subsequent to a record date with
respect to any interest payment date specified above and on or prior to such
interest payment date, then any accrued interest or Liquidated Damages will be
paid to the person in whose name this Convertible Note is registered at the
close of business on such record date.
7. Mandatory Redemption. The Company will not be required to make
mandatory redemption payments with respect to the Convertible Notes. There are
no sinking fund payments with respect to the Convertible Notes.
8. Repurchase at Option of Holder. If there is a Designated Event, the
Company shall be required to offer to purchase on the Designated Event Payment
Date all outstanding Convertible Notes at a purchase price equal to 101% of the
principal amount thereof on the date of purchase, plus accrued and unpaid
interest and Liquidated Damages to the Designated Event Payment Date. Holders of
Convertible Notes that are subject to an offer to purchase will receive a
Designated Event Offer from the Company prior to any related Designated Event
Payment Date and may elect to have such Convertible Notes or portions thereof in
authorized denominations purchased by completing the form entitled "Option of
Noteholder To Elect Purchase" appearing below. Noteholders have the right to
withdraw their election by delivering a written notice of withdrawal to the
Company or the Paying Agent in accordance with the terms of the Indenture.
9. Subordination. The payment of the principal of, interest and
Liquidated Damages on or any other amounts due on the Convertible Notes is
subordinated in right of payment to all existing and future Senior Debt of the
Company, as described in the Indenture. Each Noteholder, by accepting a
Convertible Note, agrees to such subordination and authorizes and directs the
Trustee on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee as its
attorney-in-fact for such purpose.
10. Conversion. The holder of any Convertible Note has the right,
exercisable at any time after 90 days following the Issuance Date and prior to
the close of business (New York time) on the Business Day immediately preceding
the date of the Convertible Note's maturity, to convert the principal amount
thereof (or any portion thereof that is an integral multiple of $1,000) into
shares of Common Stock at the initial Conversion Price of $48.75 per share,
subject to adjustment under certain circumstances, except that if a Convertible
Note is called for redemption, the conversion right will terminate at the close
of business (New York time) on the business day immediately preceding the date
fixed for redemption.
To convert a Convertible Note, a holder must (1) complete and sign a
notice of election to convert substantially in the form set forth below, (2)
surrender the Convertible Note to a Conversion Agent, (3) furnish appropriate
endorsements or transfer documents if required by the Registrar or Conversion
Agent and (4) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for interest, Liquidated Damages or
dividends, but if any Noteholder surrenders a Convertible Note for conversion
after the close of business on the record date for the payment of an installment
of interest and Liquidated Damages and prior to the opening of business on the
next interest payment date, then, notwithstanding such conversion, the interest
and Liquidated Damages payable on such interest payment date will be paid to the
registered holder of such Convertible Note on such record date. In such event,
such Convertible Note, when surrendered for conversion, must be accompanied by
payment in funds acceptable to the Company of an amount equal to the interest
and Liquidated Damages payable on such interest payment date on the portion so
converted. The number of shares of Common Stock issuable upon conversion of a
Convertible Note is determined by dividing the principal amount of the
Convertible Note converted by the Conversion Price in effect on the Conversion
Date. No fractional shares will be issued upon conversion but a cash adjustment
will be made for any fractional interest.
A Convertible Note in respect of which a holder has delivered an
"Option of Noteholder to Elect Purchase" form appearing below exercising the
option of such holder to require the Company to purchase such Convertible Note
may be converted only if the notice of exercise is withdrawn as provided above
and in accordance with the terms of the Indenture. The above description of
conversion of the Convertible Notes is qualified by reference to, and is subject
in its entirety by, the more complete description thereof contained in the
Indenture.
11. Registration Agreement. The holder of the Convertible Notes is
entitled to the benefits of the Registration Agreement, dated April 23, 1996,
among the Company and the Initial Purchasers (the "Registration Agreement"),
which agreement is attached to the Indenture as an Exhibit thereto. Such
benefits include the right of the holder to receive Liquidated Damages in the
event of a failure on the part of the Company to comply with certain covenants
pertaining to registration and availability of a prospectus for resale, as
provided in the Registration Agreement.
12. Denominations, Transfer, Exchange. The Convertible Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. The transfer of Convertible Notes may be registered, and
Convertible Notes may be exchanged, as provided in the Indenture. The Registrar
may require a Noteholder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Convertible Note or portion of a Convertible Note selected
for redemption (except the unredeemed portion of any Convertible Note being
redeemed in part). Also, it need not exchange or register the transfer of any
Convertible Note for a period of 15 days before a selection of Convertible Notes
to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 3 of this
Convertible Note, the registered Noteholder of a Convertible Note may be treated
as its owner for all purposes.
14. Unclaimed Money. If money for the payment of principal or interest
and Liquidated Damages remains unclaimed for two years, the Trustee and the
Paying Agent shall pay the money back to the Company at its request. After that,
Noteholders of Convertible Notes entitled to the money must look to the Company
for payment, unless an abandoned property law designates another person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
15. Defaults and Remedies. The Convertible Notes shall have the Events
of Default as set forth in Section 8.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Noteholders of at least 25% in
aggregate principal amount of the then-outstanding Convertible Notes by notice
to the Company and the Trustee may declare all the Convertible Notes to be due
and payable immediately, except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all unpaid principal and
interest and Liquidated Damages accrued on the Convertible Notes shall become
due and payable immediately without further action or notice. Upon acceleration
as described in either of the preceding sentences, the subordination provisions
of the Indenture preclude any payment being made to Noteholders for at least 5
Business Days except as otherwise provided in the Indenture.
The Noteholders of a majority in principal amount of the Convertible
Notes then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest or Liquidated Damages that has
become due solely because of the acceleration. Noteholders may not enforce the
Indenture or the Convertible Notes except as provided in the Indenture. Subject
to certain limitations, Noteholders of a majority in principal amount of the
then-outstanding Convertible Notes issued under the Indenture may direct the
Trustee in its exercise of any trust or power. The Company must furnish
compliance certificates to the Trustee annually. The above description of Events
of Default and remedies is qualified by reference to, and subject in its
entirety by, the more complete description thereof contained in the Indenture.
16. Amendments, Supplements and Waivers. Subject to certain
exceptions, the Indenture or the Convertible Notes may be amended or
supplemented with the consent of the Noteholders of at least a majority in
principal amount of the then-outstanding Convertible Notes (including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes), and any existing default may be waived with the consent of the
Noteholders of a majority in principal amount of the then-outstanding
Convertible Notes, including consents obtained in connection with a tender offer
or exchange offer for Convertible Notes. Without the consent of any Noteholder,
the Indenture or the Convertible Notes may be amended, among other things, to
cure any ambiguity, defect or inconsistency, to provide for assumption of the
Company's obligations to Noteholders, to make any change that does not adversely
affect the rights of any Noteholder, to qualify the Indenture under the TIA, or
to comply with the requirements of the SEC in order to maintain the
qualification of the Indenture under the TIA.
17. Trustee Dealings with the Company. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of the Convertible Notes
and may otherwise deal with the Company or an Affiliate with the same rights it
would have, as if it were not Trustee, subject to certain limitations provided
for in the Indenture and in the TIA. Any Agent may do the same with like rights.
18. No Recourse Against others. A director, Officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Noteholder, by accepting a Convertible Note, waives and releases
all such liability. The waiver and release are part of the consideration for the
issue of the Convertible Notes.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE CONVERTIBLE NOTES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
20. Authentication. The Convertible Notes shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee
or an authenticating agent.
21. Abbreviations. Customary abbreviations may be used in the name of
a Noteholder or an assignee, such as: TEN COM (for tenants in common), TEN ENT
(for tenants by the entireties), JT TEN (for joint tenants with right of
survivorship and not as tenants in common), CUST (for Custodian), and U/G/M/A
(for Uniform Gifts to Minors Act).
22. Definitions. Capitalized terms not defined in this Convertible
Note have the meaning given to them in the Indenture.
The Company will furnish to any Noteholder of the Convertible Notes
upon written request and without charge a copy of the Indenture and the
Registration Agreement. Request may be made to:
Ronald G. Sibold, Treasurer
SCI Systems, Inc.
c/o SCI Systems (Alabama), Inc.
P.O. Box 1000,
Huntsville, Alabama 35807
(205) 882-4131
<PAGE>
ASSIGNMENT FORM
To assign this Convertible Note, fill in the form below:
(I) or (we) assign and transfer this Convertible Note
to
- -----------------------------------------------------------------
- ------------
(Insert assignee's social security or tax I.D. no.)
- -----------------------------------------------------------------
- ------------
- -----------------------------------------------------------------
- ------------
- -----------------------------------------------------------------
- ------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________. agent to transfer
this Convertible Note on the books of the Company. The agent may
substitute another to act for him.
Your Signature:
- ---------------------------------------------------
(Sign exactly as your name appears on the
other side of this Convertible Note)
Date: ___________________
Signature Guarantee:*** _____________________________
In connection with any transfer of any of the Convertible Notes
evidenced by this certificate occurring prior to the date that is three years
after the later of the date of original issuance of such Convertible Notes and
the last date, if any, on which such
Convertible Notes were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Convertible Notes are being
transferred:
CHECK ONE BOX BELOW
(1) to the Company; or
(2) pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(5) pursuant to an exemption from registration under the Securities Act
of 1933 provided by Rule 144 thereunder.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Convertible Notes evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if
box (3), (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Convertible Notes such legal opinions,
certifications and other information as the Company has reasonably
requested 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 of 1933.
-------------------------
-
Signature
Signature Guarantee:*
- ------------------------
- --------------------------
Signature
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Convertible Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:____________________
- ---------------------------
NOTICE: To be executed
by
an executive
officer
- -----------------------------
*Signature must be guaranteed by a commercial bank, trust company or member firm
of the New York Stock Exchange.
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount at maturity of this Global Security shall be $
. The following increases or decreases in the principal amount of this Global
Security have been made:
Amount of
increase in
Principal Amount of Principal Signature
Amount of decrease in Amount of of
Date this Global Principal this Global authorized
Made Security Amount of Security officer of
including this Global following Trustee or
upon Security such Securities
exercise of decrease or Custodian
over- increase
allotment
option
<PAGE>
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have this Convertible Note or a portion
thereof repurchased by the Company pursuant to Section 3.08 or 4.07 of the
Indenture, check the box:
If the purchase is in part, indicate the portion ($1,000 or any
integral multiple thereof) to be purchased:
- ------------
Your Signature:
- ------------------------------------------------
(Sign exactly as your name appears on the
other side of this Convertible Note)
Date: ____________
Signature Guarantee: * _______________________
ELECTION TO CONVERT
To SCI Systems, Inc.:
The undersigned owner of this Convertible Note hereby irrevocably
exercises the option to convert this Convertible Note, or the portion below
designated, into Common Stock of SCI SYSTEMS, INC. in accordance with the terms
of the Indenture referred to in this Convertible Note, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
The undersigned agrees to be bound by the terms of the Registration
Agreement relating to the Common Stock issuable upon conversion of the
Convertible Notes.
Date:
In whole____ or Portion of
Convertible Note to be
converted ($1,000 or any
integral multiple
thereof):
$--------------
Your Signature:
---------------------------------------
(Sign exactly as your name
appears on the other
side of this Convertible
Note.)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or other Identifying
Number
Signature Guarantee:*
-------------------
<PAGE>
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL SECURITY OR RESTRICTED SECURITY
TO RESTRICTED SECURITY
(Transfers pursuant to 2.06(a)(ii) or 2.06(a)(iii) of the
Indenture)
PNC Bank, Kentucky, Inc., as Trustee
Attn: Corporate Trust Department
Re: SCI Systems, Inc. 5% Convertible Subordinated
Notes
Due 2006 (the "Convertible Notes")
Reference is hereby made to the Indenture dated as of April 23, 1996
(the "Indenture") between SCI Systems, Inc., as Issuer, and PNC Bank, Kentucky,
Inc., as Trustee. Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to U.S. $
aggregate principal amount of Convertible Notes which are held
[in the form of the [Restricted] [Global] Security (CUSIP No.
) with the Depositary]* in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Securities.
In connection with such request, and in respect of such Convertible
Notes, the Transferor does hereby certify that such Convertible Notes are being
transferred in accordance with (i) the transfer restrictions set forth in the
Convertible Notes and (ii) to a transferee that the Transferor reasonably
believes is an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933) and
is acquiring at least $250,000 principal amount of Convertible Notes for its own
account or for one or more accounts as to which the transferee exercises sole
investment discretion and (iii) in accordance with applicable securities laws of
any state of the United States.
[Name of Transferor],
by ________________________________
Name:
Title:
Dated:
cc: SCI Systems, Inc.
Attn: Secretary
<PAGE>
EXHIBIT C
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to 2.06(a)(ii) and 2.06(a)(iii))
PNC Bank, Kentucky, Inc., as Trustee
Attn: Corporate Trust Department
Re: SCI Systems, Inc.
5% Convertible Subordinated Notes
Due 2006 (the "Convertible Notes")
Reference is hereby made to the Indenture dated as of April 23, 1996
(the "Indenture") between SCI Systems, Inc., as Issuer, and PNC Bank, Kentucky,
Inc., as Trustee. Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to U.S. $ aggregate principal amount of
Convertible Notes which are held in the form of the Restricted Global Security
(CUSIP No._________) with the Depositary in the name of [name of transferor]
(the "Transferor") to effect the transfer of the Convertible Notes to the
undersigned.
In connection with such request, and in respect of such Convertible
Notes we confirm that:
We understand that the Convertible Notes have not been and will
not be registered under the U.S. Securities Act of 1933 (the "Securities
Act"), and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.
We are a corporation, partnership or other entity having such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Convertible Notes, and we are (or any
account for which we are purchasing under paragraph 4 below is) an institutional
accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, able to bear the economic risk of our proposed investment in the
Convertible Notes.
We are acquiring the Convertible Notes for our own account (or for accounts
as to which we exercise sole investment discretion and have authority to make,
and do make, the statements contained in this letter) and not with a view to any
distribution of the Convertible Notes, subject, nevertheless, to the
understanding that the disposition of our property shall at all times be and
remain within our control.
We are, and each account (if any) for which we are purchasing Convertible
Notes is, purchasing Convertible Notes having an aggregate principal amount of
not less than $250,000.
We understand that (a) the Convertible Notes will be delivered to us in
registered form only and that the certificate delivered to us with respect to
the Convertible Notes will bear a legend substantially to the following effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER
THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER
IS BEING EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED
BELOW) PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE
MEANING OF RULE 903(C)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED
BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT IS
AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN
THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN THE INDENTURE MAY
NOT TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION
OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(C)(3) OF
REGULATION S UNDER THE SECURITIES ACT)), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR
HOLDING THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
We agree that in the event that at some future time we wish to
dispose of any of the Convertible Notes, we will not do so unless the
Convertible Notes are being transferred:
(a) to the Company or any Subsidiary thereof;
(b) pursuant to and in compliance with Rule 144A
under the Securities Act;
(c) pursuant to and in compliance with Regulation
S under the Securities Act;
(d) to an institution that is an "accredited investor" as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, that is
acquiring at least $250,000 principal amount of the Convertible Notes
for investment purposes and not for distribution and that, prior to
such transfer, furnishes to the Trustee a signed letter containing
certain representations and agreements relating to the restrictions on
transfer of the Convertible Notes (the form of which letter can be
obtained from such Trustee);
(e) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 under the
Securities Act; or
(f) pursuant to an effective registration
statement under the Securities Act.
Very truly yours
[PURCHASER]
by __________________________
Name:
Title:
Dated:
cc: Ronald G. Sibold, Treasurer
SCI Systems, Inc.
c/o SCI Systems (Alabama), Inc.
P.O. Box 1000
Huntsville, Alabama 35807
<PAGE>
EXHIBIT D
FORM OF REGISTRATION AGREEMENT
- -------------------------------
* Applicable to Global Securities only.
** Applicable to certificated Securities only.
*** Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
* Insert, if appropriate.
END OF EXHIBIT 4.3
<PAGE>
EXHIBIT 4.4
SCI SYSTEMS, INC.
5% Convertible Subordinated Notes Due 2006
REGISTRATION AGREEMENT
New York, New York
April 23, 1996
Salomon Brothers Inc
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Montgomery Securities
As Representatives of the Initial Purchasers Named in
Schedule I to the Purchase Agreement (as defined below)
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
SCI Systems, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell (such issuance and sale, the "Initial Placement") to you (the
"Initial Purchasers"), upon the terms set forth in a purchase agreement dated
April 17, 1996 (the "Purchase Agreement"), $250,000,000 principal amount (plus
an additional $37,500,000 principal amount to cover over-allotments, if any) of
its 5% Convertible Subordinated Notes Due 2006 (the "Securities"). The
Securities will be convertible into shares of Common Stock, par value $0.10 per
share (the "Common Stock"), of the Company at the conversion price set forth in
the Final Memorandum. As an inducement to you to enter into the Purchase
Agreement and in satisfaction of a condition to your obligations thereunder, the
Company agrees with you, (i) for your benefit and (ii) for the benefit of the
holders from time to time of the Securities or the Common Stock issuable upon
conversion of the Securities (including you) (each of the foregoing, a "Holder"
and together, the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings set forth in the Purchase Agreement. As used
in this Agreement, the following capitalized terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person that,
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.
"Business Day" means any day that is neither a Saturday or a Sunday
nor a day on which banking institutions in The City of New York are authorized
or obligated by law or executive order to close.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Accrual Period" has the meaning set forth in Section 2(c)
hereof.
"Damages Payment Date" has the meaning set forth in Section 2(c)
hereof.
"Event" has the meaning set forth in Section 2(c) hereof.
"Event Date" has the meaning set forth in Section 2(c) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated
thereunder.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities dated as of
April 23, 1996, between the Company and PNC Bank, Kentucky, Inc., as trustee, as
the same may be amended from time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Liquidated Damages" has the meaning set forth in Section 2(c) hereof.
"Majority Holders" means the Holders of a majority of the then
outstanding aggregate principal amount of Securities registered under a Shelf
Registration Statement; provided, that Holders of Common Stock issued upon
conversion of Securities shall be deemed to be Holders of the aggregate
principal amount of Securities from which such Common Stock was converted.
"Managing Underwriters" means the Underwriter or Underwriters that
shall administer an Underwritten Offering.
"Notice Holder" has the meaning set forth in Section 2(b) hereof.
"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 Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or Common Stock issuable upon
conversion thereof, covered by such Shelf Registration Statement, and all
amendments and supplements to such prospectus, including post-effective
amendments.
"Record Date" has the meaning set forth in Section 2(c) hereof.
"Record Holder" has the meaning set forth in Section 2(c) hereof.
"Registrable Securities" shall mean the Securities and shares of
Common Stock issued upon conversion thereof, excluding any such securities that,
and any such securities the predecessors of which, were previously sold pursuant
to a registration statement of the Company filed under the Act or pursuant to
Rule 144 promulgated under the Act.
"Securities" has the meaning set forth in the preamble hereto.
"Selling Confirmation" means, with respect to a Notice Holder and a
Selling Notice given by such Notice Holder, a written notice given by the
Company to such Notice Holder instructing and notifying such Notice Holder that
the Shelf Registration Statement and Prospectus may be used during the
applicable Selling Period to effect the transactions described in such Selling
Notice, that the Company is then-currently in compliance with Section 3(b) and
that the Company reaffirms the consent granted pursuant to Section 3(f).
"Selling Notice" has the meaning set forth in Section 2(b) hereof.
"Selling Period" means, with respect to a Notice Holder and a Selling
Notice given by such Notice Holder, a period of forty-five calendar days
commencing on the date such Notice Holder receives a Selling Confirmation in
respect of the transactions described in such Selling Notice; provided, that the
Company may defer existing Selling Periods in accordance with Section 3(c)(2).
"Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
"Shelf Registration Period" has the meaning set forth in Section 2
(a) hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 2 hereof (including
additional registration statements filed pursuant to Section 3(d)) which covers
some or all of the Securities and the Common Stock issuable upon conversion
thereof, as applicable, on an appropriate form under Rule 415 promulgated under
the Act, or any similar rule that may be adopted by the Commission, and all
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.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
"Underwriter" means any underwriter of Securities or Common Stock
issuable upon conversion thereof in connection with an offering thereof under a
Shelf Registration Statement.
"Underwritten Offering" means an offering in which the Securities or
Common Stock are sold to an Underwriter or with the assistance of an Underwriter
for reoffering to the public.
2. Shelf Registration; Suspension of Use of Prospectus; Liquidated
Damages.
(a) The Company shall prepare and file with the Commission, as soon as
practicable but in any event on or prior to the date sixty days following the
Closing Date, a Shelf Registration Statement under the Act registering the
resale from time to time by Holders thereof of all of the Registrable
Securities. The Shelf Registration Statement shall permit resales of Registered
Securities by Holders in the manner or manners designated by them (including,
without limitation, one or more Underwritten Offerings) from time to time, which
shall be set forth in such Shelf Registration Statement. The Company shall cause
the Shelf Registration Statement to be declared effective under the Act as soon
as practicable but in any event on or prior to the date ninety days following
the Closing Date and to keep the Shelf Registration Statement continuously
effective under the Act until the earlier of (i) the third anniversary of the
Closing Date, (ii) the date on which the Securities or Common Stock issuable
upon conversion thereof may be sold by non-affiliates of the Company pursuant to
paragraph (k) of Rule 144 (or any successor provision) promulgated by the
Commission and (iii) such date as of which all the Securities or the Common
Stock issuable upon conversion thereof have been sold pursuant to the Shelf
Registration Statement (the period ending at such earlier date, the "Shelf
Registration Period").
(b) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell its Registrable Securities pursuant to the Shelf Registration
Statement and the Prospectus, it will do so only in accordance with this Section
2(b). Each Holder of Registrable Securities agrees to give written notice to the
Company at least three Business Days prior to any intended resale of Registrable
Securities under the Shelf Registration Statement, which notice shall specify
the date on which such Holder intends to begin such distribution and such
information with respect to such Holder and the intended distribution as may be
reasonably required to amend the Shelf Registration Statement or supplement the
Prospectus with respect to such intended distribution (each Holder providing the
notice described in this sentence and with respect to which the related Selling
Period is continuing or has been deferred, a "Notice Holder"; each such notice,
a "Selling Notice"). As soon as practicable after the date a Selling Notice is
received by the Company, and in any event within two Business Days after such
date, the Company shall either:
(i) (A) provide a Selling Confirmation to such Notice Holder or
(B) file a supplement to the Prospectus or a post-effective amendment to
the Shelf Registration Statement as required by Section 3(b), cause any
such amendment to become effective and immediately provide a Selling
Confirmation to such Notice Holder; or
(ii) in the event of the happening of any event of the kind
described in Section 3(c)(2)(i), 3(c)(2)(ii), 3(c)(2)(iii) (y) or
3(c)(2)(iv) hereof, the Company shall deliver to such Notice Holder the
notice required by Section 3(c)(2) and notify the holder that the consent
granted pursuant to Section 3(f) is suspended until further notice.
Each such Notice Holder may sell all or any Registrable Securities
pursuant to the Shelf Registration Statement and the Prospectus only during the
Selling Period commencing with the earlier of (x) the date on which such Notice
Holder receives a Selling Confirmation and (y) the third Business Day after the
related Selling Notice has been received by the Company; provided that in the
event the Company elects to take the actions permitted by Section 2(b)(ii), the
commencement of the Selling Period shall be deferred until such later date as
the Company delivers a Selling Confirmation. A Notice Holder shall not sell any
Registrable Securities pursuant to the Shelf Registration Statement or the
Prospectus after the expiration of the applicable Selling Period without giving
a new Selling Notice pursuant to Section 2(b) hereof and receiving new Selling
Confirmation. Notwithstanding the foregoing, the Company shall not under any
circumstances be entitled to exercise its right under this paragraph to defer
the commencement of a Selling Period or its right under Section 3(c)(2) to defer
existing Selling Periods, in the aggregate, more than one time in any three
month period or three times in any twelve month period, and the period in which
a Selling Period is deferred shall not exceed thirty days. In no event shall the
Company be permitted to extend the period during which the commencement of any
such Selling Period is deferred (whether pursuant to this paragraph or Section
3(c)(2) from and after the date a Notice Holder provides a Selling Notice to the
Company in accordance with this Section 2(c) (a "Deferral Period") beyond such
thirty day period.
In the event the Company elects to take the actions described in
Section 2(b)(ii), the Company will, at such time as it is in compliance with
Section 3(b) and as use of the Prospectus may be resumed, immediately provide
Selling Confirmations to all Notice Holders.
(d) The parties hereto agree that the Holders of the Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Shelf Registration
statement has not been filed on or prior to the date sixty days following the
Closing Date, (ii) the Shelf Registration Statement has not been declared
effective under the Securities Act on or before the date ninety days following
the Closing Date, (iii) prior to the end of the Shelf Registration Period, the
Commission shall have issued a stop order suspending the effectiveness of the
Shelf Registration Statement or proceedings have been initiated with respect to
the Shelf Registration Statement under Section 8(d) or 8(e) of the Act, (iv) the
aggregate number of days in any one Deferral Period exceeds the periods
permitted pursuant to Section 2(c) hereof or (v) the number of Deferral Periods
exceeds the number permitted pursuant to Section 2(c) hereof (each of the events
of a type described in any of the foregoing clauses (i) through (v) are
individually referred to herein as an "Event"; and the date sixty days following
the Closing Date in the case of clause (i), the date ninety days following the
Closing Date in the case of clause (ii), the date on which the effectiveness of
the Shelf Registration Statement has been suspended or proceedings with respect
to the Shelf Registration Statement under Section 8(d) or 8(e) of the Act have
been commenced in the case of clause (iii), the date on which the duration of a
Deferral Period exceeds the periods permitted by Section 2(c) hereof in the case
of clause (iv), and the date of the commencement of a Deferral Period that
causes the limit on the number of Deferral Periods under Section 2(c) hereof to
be exceeded in the case of clause (v), are referred to herein as an "Event
Date"). Events shall be deemed to continue until the date of the termination of
such Event, which shall be the following date with respect to the respective
types of Events: the date the Registration Statement is filed in the case of an
Event of the type described in clause (i), the date the Registration Statement
is declared effective under the Act in the case of an Event described in clause
(ii), the date that all stop orders suspending effectiveness of the Shelf
Registration Statement have been removed and the proceedings initiated with
respect to the Shelf Registration Statement under Section 8(d) or 8(e) of the
Act have terminated, as the case may be, in the case of Events of the types
described in clause (iii), termination of the Deferral Period which caused the
aggregate number of days in any one Deferral Period to exceed the number
permitted by Section 2(c) to be exceeded in the case of Events of the type
described in clause (iv), and termination of the Deferral Period the
commencement of which caused the number of Deferral Periods permitted by Section
2(c)(ii) to be exceeded in the case of Events of the type described in clause
(v).
Accordingly, upon the occurrence of any Event and until such time as
there are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): (A) to each Holder of
Registrable Securities that is a Notice Holder, accruing at a rate equal to
one-half of one percent per annum (50 basis points) on (s) where such
Registrable Securities are Securities, the aggregate principal amount of such
Securities held by such Notice Holder and (t) where such Registrable Securities
are shares of Common Stock issued upon conversion of Securities, the aggregate
principal amount of Securities that were converted into such shares and (B) if
the Damages Accrual Period continues for a period in excess of thirty days from
the Event Date, from and after the end of such thirty day period until such time
as there are no Events which have occurred and are continuing, to each Holder of
Registrable Securities (whether or not a Notice Holder), accruing at a rate
equal to one-half of one percent per annum (50 basis points) on (u) where such
Registrable Securities are Securities, the aggregate principal amount of such
Securities held by such Holder and (v) where such Registrable Securities are
shares of Common Stock issued upon conversion of Securities, the aggregate
principal amount of Securities that were converted into such shares.
Notwithstanding the foregoing, no Liquidated Damages shall accrue under clause
(A) of the preceding sentence during any period for which Liquidated Damages
accrue under clause (B) of the preceding sentence or as to any Securities or
shares of Common Stock from and after the earlier of (x) the date such
securities are no longer Registrable Securities, and (y) the expiration of the
Shelf Registration Period. The rate of accrual of the Liquidated Damages with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events.
Liquidated Damages due on any Securities or Common Stock shall be
payable on each Interest Payment Date on the Securities occurring (or if there
are no Securities outstanding, which would have occurred) during the Damages
Accrual Period and on the Interest Payment Date immediately following (or which
would have followed) the termination of such Period (a "Damages Payment Date").
The Company shall pay the Liquidated Damages due on any Securities by depositing
with the Trustee under the Indenture, in trust, for the benefit of the Holders
of Securities or Common Stock or Notice Holders, as the case may be, entitled
thereto, at least one Business Day prior to the applicable Damages Payment Date,
sums sufficient to pay the Liquidated Damages accrued or accruing since the last
preceding Damages Payment Date to such Damages Payment Date. The Liquidated
Damages shall be paid on each Damages Payment Date to the Holders of record of
the Registrable Securities (the "Record Holders") on the 15th day of April or
15th day of October (each a "Record Date") immediately preceding such Damages
Payment Date by wire transfer of immediately available funds to the accounts
specified by them or by mailing checks to their registered addresses as they
appear in the Securities register or stock transfer books of the Company, if no
such accounts have been specified on or before the applicable Regular Record
Date. The Trustee shall be entitled, on behalf of the Holders of Securities,
Common Stock and Notice Holders, to seek any available remedy for the
enforcement of this Agreement, including for the payment of such Liquidated
Damages. Notwithstanding the foregoing, the parties agree that the sole remedy
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Notice Holder or Holder of Registrable Securities from
pursuing or obtaining specific performance or other equitable relief with
respect to any violation of this Agreement for which liquidated damages are not
expressly provided by this Agreement.
All of the Company's obligations set forth in this Section 2(d) which
are outstanding with respect to any Registrable Securities at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement).
The parties hereto agree that the Liquidated Damages provided for in
this Section 2(d) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities (other than the Initial
Purchasers) 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 Registrable Securities, as the case may be, in
accordance with the provisions hereof.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, 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 best efforts to reflect in each such document, when so
filed with the Commission, such comments as Salomon Brothers Inc reasonably may
propose.
(b) The Company shall ensure that (i) any Shelf Registration Statement
and any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto comply in all material respects with the Act and
the rules and regulations thereunder, (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 therein, in light of the circumstances under which they were
made, not misleading; provided that no representation or agreement is made
hereby with respect to information with respect to you or any Holder required to
be included in any Shelf Registration or Prospectus pursuant to the Act or the
rules and regulations thereunder or provided by you, any Holder, or any Managing
Underwriter specifically for inclusion in any Shelf Registration Statement or
Prospectus.
(c) (1) The Company shall advise you and the Holders and, if requested
by you 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
(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) During any Selling Period, during the deferral of any Selling
Period and within two Business Days of receipt by the Company of any
Selling Notice, the Company shall notify you and the Notice Holders and, if
requested by you or any such Notice Holder, confirm such notification in
writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement
or the initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities
included in any Shelf Registration Statement for sale in any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(iii) of (x) the suspension of the use of the Prospectus
pursuant to Section 2(b) hereof or (y) of 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 statements
therein are not misleading 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; and
(iv) of the determination by the Company, in its judgment, that
it is advisable to suspend use of the Prospectus for valid business
reasons (not including avoidance of the Company's obligations
hereunder) including, among other things, the acquisition or
divestiture of assets, public filings with the Commission, pending
corporate developments and similar events;
which notice shall be accompanied by an instruction to defer the use of the
Prospectus until the Company delivers a Selling Confirmation whereupon any
existing Selling Period shall be deferred and shall recommence upon
delivery of the aforementioned Selling Confirmation; provided, that such
Selling Period shall be extended by the number of days elapsed in such
period prior to such deferral.
(d) The Company shall use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of any Shelf Registration Statement at
the earliest possible time, and in any event shall within thirty days of any
such order amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of such order, or file an additional Shelf
Registration Statement covering all of the Registrable Securities (whereupon
references herein to the Shelf Registration Statement shall be deemed to include
reference to such additional filing).
(e) The Company shall furnish to each Holder of Securities or the
Common Stock issued upon conversion thereof included within the coverage of any
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 exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities or the Common Stock issued upon conversion thereof
included within the coverage of any 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, except during such periods
as the Company shall have suspended the use of the Prospectus pursuant to
Section 2(b) or 3(c)(2), the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Securities or the Common Stock issued upon
conversion thereof covered by the Prospectus or any amendment or supplement
thereto.
(g) Prior to any offering of Securities or the Common Stock issued
upon conversion thereof pursuant to any Shelf Registration Statement, the
Company shall register or qualify or cooperate with the Holders of Securities or
the Common Stock issued upon conversion thereof included therein and their
respective counsel in connection with the registration or qualification of such
Securities or Common Stock 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 Securities and the Common Stock issued
upon conversion thereof covered by such Shelf Registration Statement; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Securities or the
Common Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request prior to sales of Securities
or the Common Stock issued upon conversion thereof pursuant to such Shelf
Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall promptly prepare a post-effective amendment
to any Shelf Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter delivered
(when and as permitted pursuant to Section 2(c)) to purchasers of the Securities
or the Common Stock issued upon conversion thereof 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.
(j) The Company shall use its best efforts to cause The Depository
Trust Company ("DTC") on the first Business Day following the effective date of
any Shelf Registration Statement hereunder or as soon as possible thereafter to
remove (i) from any existing CUSIP number assigned to the Securities any
designation indicating that the Securities are "restricted securities", which
efforts shall include delivery to DTC of a letter executed by the Company
substantially in the form of Exhibit A hereto and (ii) any other stop or
restriction on DTC's system with respect to the Securities. In the event the
Company is unable to cause DTC to take the actions described in the immediately
preceding sentence, the Company shall take such actions as Salomon Brothers Inc
may reasonably request to provide, as soon as practicable, a CUSIP number for
the Securities registered under such Shelf Registration Statement and to cause
such CUSIP number to be assigned to the Securities (or to the maximum aggregate
principal amount of the Securities to which such number may be assigned). Upon
compliance with the foregoing requirements of this Section 3(j), the Company
shall provide the Trustee with printed certificates for such Securities, in a
form eligible for deposit with The Depository Trust Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders 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 Act and Rule 158 promulgated
by the Commission thereunder.
(l) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act in a timely manner.
(m) The Company may require each Holder of Securities or the Common
Stock issued upon conversion thereof to be sold pursuant to any Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Securities or Common Stock as may, from time
to time, be required by the Act and the rules and regulations promulgated
thereunder, and the obligations of the Company to any Holder hereunder shall be
expressly conditioned on the compliance of such Holder with such request.
(n) The Company shall, if requested, use its best efforts to promptly
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement (i) such information as the Majority Holders or, if the
Securities or Common Stock are being sold in an Underwritten Offering, as the
Managing Underwriters and the Majority Holders reasonably agree should be
included therein and provide to the Company in writing for inclusion in the
Shelf Registration Statement or Prospectus, and (ii) such information as a
Holder may provide from time to time to the Company in writing for inclusion in
a Prospectus or any Shelf Registration Statement concerning such Holder and the
distribution of such Holder's Securities and Common Stock and, in either case,
shall make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(o) The Company shall enter into such agreements (including
underwriting agreements) and take all other appropriate actions in order to
expedite or facilitate the registration or the disposition of the Securities or
the Common Stock issuable upon conversion thereof, and in connection therewith,
if an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable to the Holders than
those set forth in Section 5 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any, with respect to
all parties to be indemnified pursuant to Section 5 from Holders of Securities
or the Common Stock issuable upon conversion thereof to the Company).
(p) The Company shall (i) make reasonably available for inspection by
the Holders of Securities or the Common Stock issued upon conversion thereof to
be registered under a Shelf Registration Statement, any Underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
and any attorney, accountant or other agent retained by the Holders or any such
Underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; (ii) cause the
Company's officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such Underwriter, attorney,
accountant or agent in connection with any such Shelf Registration Statement as
is customary for similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in its sole
discretion, as confidential at the time of delivery of such information shall be
kept confidential by the Holders or any such Underwriter, attorney, accountant
or agent, unless disclosure thereof is made in connection with a court
proceeding or required by law, or such information has become available to the
public generally or through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties to the Holders
of Securities or the Common Stock issued upon conversion thereof registered
thereunder and the Underwriters, if any, in form, substance and scope as are
customarily made by issuers to Underwriters and covering matters including, but
not limited to, those set forth in the Purchase Agreement; (iv) 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, if any) addressed to each selling Holder and the Underwriters, if
any, 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; (v) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other independent certified 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 each selling Holder of
Securities or the Common Stock issued upon conversion thereof registered
thereunder (provided such Holder furnishes the accountants with such
representations as the accountants customarily require in similar situations)
and the Underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and (vi) deliver such documents and certificates as may
be reasonably requested by the Majority Holders and the Managing Underwriters,
if any, 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. The foregoing actions set forth in clauses (iii),
(iv), (v) and (vi) of this Section 3 (p) shall be performed at (A) the
effectiveness of such Shelf Registration Statement and each post-effective
amendment thereto and (B) each closing under any underwriting or similar
agreement as and to the extent required thereunder.
4. Registration Expenses. The Company shall bear all expenses incurred
in connection with the performance of its obligations under Sections 2 and 3
hereof and shall reimburse the Holders for the reasonable fees and disbursements
of one firm or counsel designated by the Majority Holders to act as counsel for
the Holders in connection therewith.
5. Indemnification and Contribution.
(a) (i) In connection with any Shelf Registration Statement, the
Company agrees to indemnify and hold harmless each Holder of Securities or
Common Stock issued upon conversion thereof covered thereby (including the
Initial Purchasers), the directors, officers, employees and agents of each such
Holder and each person who controls any such Holder within the meaning of either
the Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based upon (A) any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder or any Initial
Purchaser specifically for inclusion therein, (B) use of a Shelf Registration
Statement or the related Prospectus during a period when a stop order has been
issued in respect of such Shelf Registration or any proceedings for that purpose
have been initiated or use of a Prospectus when use of such Prospectus has been
deferred pursuant to Section 2(c); provided, further, in each case, that the
Company delivered prior notice, and the Holders have received such prior notice,
in accordance with Section 6(c) hereof of such stop order, initiation of
proceedings or deferral or (C) if the Holder fails to deliver a Prospectus or
the then current Prospectus. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(ii) The Company also agrees to indemnify or contribute to Losses,
as provided in Section 5(d), of any Underwriters of Securities or the Common
Stock issued upon conversion thereof registered under a Shelf Registration
Statement, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Initial Purchasers and the selling Holders provided in this Section 5(a) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 3(o) hereof.
(b) Each Holder of Securities or Common Stock issued upon conversion
thereof covered by a Shelf Registration Statement (including the Initial
Purchasers) severally agrees to indemnify and hold harmless (i) the Company,
(ii) each of its directors, (iii) each of its officers who signs such Shelf
Registration Statement and (iv) each person who controls the Company within the
meaning of either the Act or the Exchange Act to the same extent as the
foregoing indemnity from the Company to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
5 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party; provided
further, that the indemnifying party shall not be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) representing all the indemnified parties under paragraph (a)(i),
paragraph (a)(ii) or paragraph (b) above. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of this
Section 5 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Shelf Registration Statement which resulted in such Losses; provided, however,
that in no case shall the Initial Purchasers be responsible, in the aggregate,
for any amount in excess of the purchase discount or commission applicable to
such Security, as set forth on the cover page of the Final Memorandum (unless
such Initial Purchaser shall also be an Underwriter, in which case, such Initial
Purchaser shall also be responsible for amounts pursuant to the remaining of
this sentence), nor shall any Underwriter be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
and Common Stock issued upon conversion thereof purchased by such Underwriter
under the Shelf Registration Statement which resulted in such Losses. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Memorandum and
(y) the total amount of additional interest which the Company was not required
to pay as a result of registering the Securities and Common Stock issued upon
conversion thereof covered by the Shelf Registration Statement which resulted in
such Losses. Benefits received by the Initial Purchasers shall be deemed to be
equal to the total purchase discounts and commissions as set forth on the cover
page of the Final Memorandum, and benefits received by any other Holders shall
be deemed to be equal to the value of receiving Securities or the Common Stock
issuable upon conversion thereof registered under the Act. Benefits received by
any Underwriter shall be deemed to be equal to the total underwriting discounts
and commissions, as set forth on the cover page of the Prospectus forming a part
of the Shelf Registration Statement which resulted in such Losses. Relative
fault shall be determined by reference to whether any alleged untrue statement
or omission relates to information provided by the indemnifying party, on the
one hand, or by the indemnified party, on the other hand. The parties agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d). (e) The provisions of this Section 5
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Holder or the Company or any of the officers, directors or
controlling persons referred to in Section 5 hereof, and will survive the sale
by a Holder of Securities covered by a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into nor shall it, on or after the date hereof, enter into, any
agreement with respect to its Securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders; provided that, with respect to any matter that directly or
indirectly affects the rights of the Initial Purchasers hereunder, the Company
shall obtain the written consent of the Initial Purchasers against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities are being sold
pursuant to a Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities being sold rather than registered
under such Shelf Registration Statement. (c) Notices. All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
1. if to you, initially at the address set forth in the
Purchase Agreement;
2. if to any other Holder, at the most current address given by such Holder to
the Company in accordance with the provisions of this Section 6(c), which
address initially is, with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture, with a copy in like manner to
Salomon Brothers Inc; and 3. if to the Company, initially at its address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received, if delivered by hand or air courier, and when sent, if sent
by first-class mail, telex or telecopier.
The Initial Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders. The Company hereby agrees to extend the
benefits of this Agreement to any Holder 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 applicable to agreements made and to be performed
in said State, without regard to the conflicts of law rules thereof. (h)
Severability. In the event that any one of 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. (i) Securities Held
by the Company, etc. Whenever the consent or approval of Holders of a specified
percentage of principal amount of Securities or the Common Stock issuable upon
conversion thereof is required hereunder, Securities or the Common Stock issued
upon conversion thereof held by the Company or its Affiliates (other than
subsequent Holders of Securities or the Common Stock issued upon conversion
thereof if such subsequent Holders are deemed to be Affiliates solely by reason
of their holdings of such Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
SCI SYSTEMS, INC.
-----------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
SALOMON BROTHERS INC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MONTGOMERY SECURITIES
By Salomon Brothers Inc
- ---------------------------
Name:
Title:
For themselves and the other Initial Purchasers named in Schedule I to the
Purchase Agreement.
<PAGE>
EXHIBIT A
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004
Re: 5% Subordinated Convertible Notes due 2006 (the
"Securities") of
SCI Systems, Inc. (the "Issuer")
Ladies and Gentlemen:
Please be advised that the Securities and Exchange Commission has declared
effective a Registration Statement on Form S-3 under the Securities Act of 1933,
as amended, with regard to all of the Securities referenced above. Accordingly,
there is no longer any restriction as to whom such Securities may be sold and
any restrictions on the CUSIP designation are no longer appropriate and may be
removed. I understand that upon receipt of this letter, DTC will remove any stop
or restriction on its system with respect to this issue.
As always, please do not hesitate to call if we can be of further
assistance.
Very truly yours,
Authorized Officer
END OF EXHIBIT 4.4
<PAGE>
EXHIBIT 5.1
- --------------------------------------------------------------------------------
June 7, 1996
- --------------------------------------------------------------------------------
SCI Systems, Inc.
SCI Systems (Alabama), Inc.
2101 West Clinton Avenue
Huntsville, Alabama 35805
Re: Registration Statement on Form S-3 for $287,500,000 Principal
Amount of the 5% Convertible Subordinated Notes Due 2006 of
SCI Systems, Inc.
Ladies and Gentlemen:
We have served as counsel for SCI Systems, Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, pursuant to a Registration Statement on Form S-3 (the
"Registration Statement") of $287,500,000 Principal Amount of the 5% Convertible
Subordinated Notes Due 2006 of the Company (the "Notes") and the shares (the
"Shares") of Common Stock, par value $.10 per share, of the Company issuable
upon conversion of the Notes in accordance with the terms thereof.
We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the authorization and issuance of the Notes and the Shares
pertaining thereto as we have deemed necessary and advisable.
In all such examinations, we have assumed the genuineness of all
signatures on all originals and copies of documents we have examined, the
authenticity of all documents submitted to us as originals, and the conformity
to original documents of all certified, conformed or photostatic copies. As to
questions of fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of appropriate state,
local and federal officials. We express no opinion as to matters under or
involving laws other than the General Corporation Law of the State of Delaware
and the laws of the State of Georgia.
Based upon and subject to the foregoing, and having regard for such
legal considerations as we have deemed relevant, it is our opinion that:
1. The Notes have been duly authorized and are validly issued and
represent the binding obligations of the Company; and
2. The Shares issuable upon the conversion of the Notes, upon receipt
of lawful consideration as provided under the terms of the instruments
pertaining thereto, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY
POWELL, GOLDSTEIN, FRAZER & MURPHY
END OF EXHIBIT 5.1
<PAGE>
EXHIBIT 12
- --------------------------------------------------------------------------------
SCI SYSTEMS, INC.
- --------------------------------------------------------------------------------
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended June 30, Nine Months Ended
March 26, March 24,
1991 1992 1993 1994 1995 1995 1996
--------------------------------------- ---------------
Income from
continuing
operations
before
income taxes
and extraordinary
item $ 8,485 $ 6,802 $42,883 $46,916 $75,661 $51,143 $ 94,772
Plus fixed charges:
interest and
amortization of
debt expenses 22,400 15,479 16,793 15,423 18,400 13,334 17,861
-------------------------------------------------------------
Income from
continuing
operations
before
income taxes
and extraordinary
item,
and fixed
charges $30,885 $22,281 $59,676 $62,339 $94,061 $64,477 $112,633
==============================================================
Ratio of
earnings to
fixed charges (1) 1.38x 1.44x 3.55x 4.04x 5.11x 4.84x 6.31x
(1)The ratios of earnings to fixed charges were calculated by dividing interest
expense and amortization of debt expenses into the sum of income from
continuing operations before income taxes and such fixed charges, and
extraordinary item.
END OF EXHIBIT 12
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of SCI Systems, Inc.
for the registration of Convertible Subordinated Notes and 5,897435 shares of
its common stock and to the incorporation by reference therein of our report
dated August 3, 1995, with respect to the consolidated financial statements of
SCI Systems, Inc. incorporated by reference in its Annual Report (Form 10-K) for
the year ended June 30, 1995 and the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Birmingham, Alabama
June 7, 1996
END OF EXHIBIT 23.2
<PAGE>
EXHIBIT 25.1
Securities Act of 1933 File No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305 (b)(2) [ ]
PNC Bank, Kentucky, Inc.
(Exact name of trustee as specified in its charter)
Commonwealth of Kentucky 61-0191580
- ------------------------ ----------
(State of Incorporation If Not a (I.R.S. Employer
National Bank) Identification No.)
500 W. Jefferson Street
Louisville, Kentucky 40202
- --------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Martha A. Ziskind
Vice President
PNC Bank, Kentucky, Inc.
500 W. Jefferson Street
Louisville, Kentucky 40202
(502) 581-3231
(Name, address, and telephone number of agent for service)
SCI SYSTEMS, INC.
(Exact Name of Obligor as Specified in its Charter)
Delaware 63-0583436
- ----------------------- ------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
2101 West Clinton Avenue, Huntsville, Alabama 35243
(Address of Principal Executive Offices) (Zip Code)
$287,500,000 Convertible Subordinated Notes due 2006
----------------------------------------------------
(Title of the Indenture Securities)
1. General information. Furnish the following information as Trustee:
-------------------
(a) Name and address of each examining or supervising
authority to which it is subject.
Federal Reserve Bank of St. Louis
411 Locust Street, P. O. Box 442
St. Louis, Mo 63266
Department of Financial Institutions
Commonwealth of Kentucky
477 Versailles Road
Frankfort, Ky 40601
(b) Whether it is authorized to exercise corporate trust
powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor. If the obligor is an affiliate of the
--------------------------
Trustee, describe each such affiliation.
Not applicable.
3. Voting Securities of the trustee. Furnish the following information as
--------------------------------
to each class of voting securities of the trustee.
As of May 28, 1996
------------
Col. A Col. B
-------------- -----------------
(Title of Class) Amount Outstanding
-------------- -----------------
PNC Bank, Kentucky, Inc.
Common Stock, par value $30 per share 2,000,000 shares
PNC Bank Corp.
Common Stock, par value $5 per share 341,586,811 shares
4. Trusteeships under other indentures. If the trustee is a trustee under
another indenture under which any other securities, or certificates of interest
or participation in any other securities, of the obligor are outstanding,
furnish the following information:
(a) Title of the securities outstanding under each such other indenture.
Not applicable.
(b) A brief statement of the facts relied upon as a basis for the claim that no
conflicting interest within the meaning of Section 310(b)(1) of the Act arises
as a result of the trusteeship under any such other indenture, including a
statement as to how the indenture securities will rank as compared with the
securities issued under other such other indenture.
Not applicable.
5. Interlocking directorates and similar relationships with the obligor or
underwriters. If the trustee or any of the directors or executive officers of
the trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor, identify
each such person having any such connection and state the nature of each such
connection.
Not applicable.
6. Voting securities of the trustee owned by the obligor or its officials.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner and executive
officer of the obligor:
As of May 28, 1996
------------
Column A Column B Column C Column D
Percentage of
Voting Securities
Represented by
Amount Owned Amount Given
Name of Owner Title of Class Beneficially in Column C
------------- -------------- ------------ --------------
Not applicable.
7. Voting securities of the trustee owned by underwriter or their officials.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, executive officer of each such underwriter:
As of May 28, 1996
------------
Column A Column B Column C Column D
Percentage of
Voting Securities
Represented by
Amount Owned Amount Given
Name of Owner Title of Class Beneficially in Column C
------------- -------------- ------------ --------------
Not applicable.
8. Securities of the obligor owned or held by the trustee. Furnish
the following information as to securities of the obligor owned beneficially or
held as collateral security for obligations in default by the trustee.
As of May 28, 1996
------------
Column A Column B Column C Column D
Amount Owned
Beneficially
Whether the or Held as
Securities are Collateral Percent of
Voting or Security for Class Represented
Nonvoting Obligations in by Amount Given
Title of Class Securities Default in Column C
-------------- ---------- ------------- ---------------
Not applicable.
9. Securities of the underwriters owned or held by the trustee.
-------------------------------------------------------------
If the trustee owns beneficially of holds as collateral security for obligations
in default any securities of an underwriter for the obligor, furnish the
following information as to each class of securities of such underwriter any of
which are so owned or held by the trustee:
As of May 28, 1996
------------
Column A Column B Column C Column D
Amount Owned
Beneficially
or Held as
Collateral Percent of
Title of Issuer Security for Class Represented
and Amount Obligations in by Amount Given
Title of Class Outstanding Default by Trustee in Column C
-------------- ----------- ------------------ -------------
Not applicable.
10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor. If the trustee owns beneficially
or holds collateral security for obligations in default voting securities of a
person who, to the knowledge of the trustee (1) owns 10% or more of the voting
securities of the obligor or (2) is an affiliate, other than a subsidiary, of
the obligor, furnish the following information as to the voting securities of
such person:
As of May 28, 1996
------------
Column A Column B Column C Column D
Amount Owned
Beneficially
or Held as
Collateral Percent of
Title of Issuer Security for Class Represented
and Amount Obligations in by Amount Given
Title of Class Outstanding Default by Trustee in Column C
-------------- ----------- ------------------ ---------------
Not applicable.
11. Ownership or holdings by the trustee of any securities of a person owning 50
percent or more of the voting securities of the obligor. If the trustee owns
beneficially or holds as collateral security for obligations in default any
securities of a person who, to the knowledge of the trustee, owns 50 percent or
more of the voting securities of the obligor, furnish the following information
as to each class of securities of such person any of which are so owned or held
by the trustee:
As of May 28, 1996
------------
Column A Column B Column C Column D
Amount Owned
Beneficially
or Held as
Collateral Percent of
Title of Issuer Security for Class Represented
and Amount Obligations in by Amount Given
Title of Class Outstanding Default by Trustee in Column C
-------------- ----------- ------------------ -------------
Not applicable.
12. Indebtedness of the obligor to the trustee.
---------------------------------------------
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
As of May 28, 1996
------------
Column A Column B Column C
Nature of Amount
Indebtedness Outstanding Due Date
------------ ----------- --------
Not applicable.
13. Defaults by the obligor.
-----------------------
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of any such default.
None.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is the trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
Not applicable.
14. Affiliation with the Underwriters. If any underwriter is an
affiliate of the trustee, describe each such affiliation.
Not applicable.
15. Foreign Trustee. Identify the order or rule pursuant to
which the foreign trustee is authorized to act as sole trustee
under indentures qualified or to be qualified under the Act.
Not applicable.
16. List of Exhibits. List below all exhibits filed as part of
this statement of eligibility.
1. A copy of the Articles of Incorporation of the Trustee now in
effect is hereby incorporated by reference to Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 22-23572, dated as of February 24, 1993.
2. Certificate of authority of the Trustee to commence business,
contained in the Articles of Incorporation is hereby
incorporated by reference to Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No.22-23572, dated
as of February 24, 1993.
3. Authorization of the Trustee to exercise corporate trust
powers, contained in the Articles of Incorporation is hereby
incorporated by reference to Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. 22-23572, dated
as of February 24, 1993.
4. A copy of the existing By-Laws of the trustee is hereby
incorporated by reference to Exhibit 1 to Amendment No.1 to
Form T-1 filed with Registration Statement No. 22- 23572,
dated as of February 24, 1993.
5. Copy of each indenture referred to in Item 4, if the
obligor is in default. Not applicable.
6. The consent of United States institutional trustees required
by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is hereby incorporated by
reference to its Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and Quarterly Report on Form
10-Q for the Quarter ended March 31, 1996 which were
previously filed with the Commission.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, PNC Bank, Kentucky, Inc., a corporation organized and existing under
the laws of the Commonwealth of Kentucky, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Louisville and State of Kentucky on the
28th day of MAY, 1996.
PNC BANK, KENTUCKY, INC.
By: /s/ DAVID G. METCALF
David G. Metcalf
Vice President
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(B) OF THE ACT
PNC Bank, Kentucky, Inc., the Trustee executing the statement of
eligibility and qualification to which this Exhibit is attached does hereby
consent that reports of examinations of the undersigned by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefore in accordance with the
provisions of Section 321(b) of the Trust Indenture Act of 1939.
PNC BANK, KENTUCKY, INC.
BY:/s/ DAVID G. METCALF
David G. Metcalf
Vice President
May 28, 1996
------------
Date
END OF EXHIBIT 25.1
<PAGE>
