As filed with the Securities and Exchange Commission on June 18, 1998
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMERICA ONLINE, INC.
(Exact name of registrant as specified in its charter)
Delaware 54-1322110
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization No.)
22000 AOL Way, Dulles, Virginia 20166-9323 (703) 448-8700
(Address, including zip code, and telephone, including area code, of
registrant's principal executive offices)
Stephen M. Case
Chief Executive Officer
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 448-8700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Sheila A. Clark, Esquire
Vice President and
Deputy General Counsel
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 448-8700
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier 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
<S> <C> <C> <C> <C> <C>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price aggregate offering registration fee
per unit price(1)
Debt Securities (2), Preferred Stock and (4) (4) $1,000,000,000 $295,000 (5)
Common Stock, par value $.01 per share (3)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(i) of the Securities Act of 1933. The aggregate
initial publi offering price of the securities registered hereby will not
exceed $1,00,000,000 in U.S. dollars or the U.S. dollar equivalent in
foreign currency or currency units.
(2) May be issued at an original issue discount.
(3) Includes associated Preferred Share Purchase Rights, which initially are
attached to and trade with the shares of Common Stock being registered
hereby. Value attributable to such Preferred Share Purchase Rights, if any,
is reflected in the market price of Common Stock.
(4) The amount to be registered and the proposed maximum offering price per
unit have been omitted pursuant to Rule 457(o) under the Securities Act of
1933.
(5) The registration fee has been calculated pursuant to Rule 457(o) under the
Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Information contained herein is subject to completion or amendment. A
registration statement related to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS (Subject to Completion)
$1,000,000,000
AMERICA ONLINE, INC.
Debt Securities
Preferred Stock
Common Stock
America Online, Inc., a Delaware corporation (the "Company," "AOL" or
"America Online") may offer from time to time (i) unsecured debt securities in
one or more series ("Debt Securities"), (ii) shares of preferred stock, par
value $.01 per share ("Preferred Stock"), in one or more series, or (iii) shares
of common stock, par value $.01 per share ("Common Stock") (the Debt Securities,
Preferred Stock and Common Stock are collectively referred to as "Securities"),
or any combination of the foregoing, at an aggregate initial public offering
price not to exceed $1,000,000,000 (or the equivalent thereof if Debt Securities
are denominated in one or more foreign currencies or foreign currency units), on
prices and on terms to be determined at or prior to the time of sale.
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement (a
"Prospectus Supplement"), together with the terms of the offering of the
Securities, the initial public offering price and the net proceeds to the
Company from the sale thereof. The Prospectus Supplement will set forth, among
other matters, the following with respect to the particular Securities: (i) in
the case of Debt Securities, the specific designation, aggregate principal
amount, premium, authorized denominations, maturity, rate or method of
calculation of interest, if any, and dates for payment thereof, any redemption,
prepayment or sinking fund provisions, and the currency, currencies or currency
units in which principal, premium, if any, or interest, if any, is payable, (ii)
in the case of Preferred Stock, the designation, number of shares, liquidation
preference, initial public offering price, dividend rate (or method of
calculation thereof), dates on which dividends shall be payable and dates from
which dividends shall accrue, any redemption or sinking fund provisions, any
conversion or exchange rights, and (iii) in the case of Common Stock, the number
of shares of Common Stock and the terms of the offering and sale thereof.
The Company may sell Securities directly to purchasers or through
agents designated from time to time by the Company or to or through
underwriters. If any agents of the Company or any underwriters are involved in
the sale of Securities in respect of which this Prospectus is being delivered,
the names of such agents or underwriters and any applicable commission or
discount will be set forth in the applicable Prospectus Supplement. The net
proceeds to the Company from the sale of Securities will be the initial public
offering price of such Securities less such discount, in the case of an offering
through an underwriter, or the purchase price of such Securities less such
commission, in the case of an offering through an agent, and less, in each case,
other expenses of the Company associated with the issuance and distribution of
such Securities.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE 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 , 1998.
No person is authorized in connection with any offering made hereby to
give any information or to make any representations other than as contained in
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This Prospectus is
not an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024 of the Commission's office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and at its regional
offices located at 7 World Trade Center, Suite 1300, New York, NY 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
of such reports, proxy statements and other information can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, DC 20549 at prescribed rates. The Commission also maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants (including America Online) that file
electronically with the Commission. The address of this site is
http://www.sec.gov. The Company's Common Stock is listed on the New York Stock
Exchange (the "NYSE") under the symbol "AOL" and reports, proxy and information
statements and other information concerning the Company may also be inspected at
the offices of the NYSE at 20 Broad Street, New York, NY 10005.
The Company has filed with the Commission in Washington, DC a
registration statement (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act with
respect to the securities offered or to be offered hereby. This Prospectus does
not contain all of the information included in the Registration Statement,
certain items of which are omitted in accordance with the rules and regulations
of the Commission. For further information about the Company and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
thereto.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997 (File Number 0-19836).
(b) The Company's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1997, December 31, 1997 (as amended) and
March 31, 1998 (File Number 0-19836).
(c) The Company's Current Reports on Forms 8-K for events
dated September 7, 1997, November 12, 1997, November 17, 1997, January
31, 1998 (as amended on April 17, 1998), February 13, 1998 and June 5,
1998 (File No. 0-19836).
(d) The description of the Company's capital stock, including
preferred share purchase rights, which is contained in registration
statements on Form 8-A under the Exchange Act, including any amendments
or reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company with
the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, prior to the termination of this offering, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, on the written or oral request of such
person, a copy of any or all documents incorporated by reference herein, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to: Sheila A. Clark, Vice President and Deputy General Counsel, America Online,
Inc., 22000 AOL Way, Dulles, Virginia 20166-9323, telephone number (703)
448-8700.
CERTAIN PERSONS PARTICIPATING IN AN OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, AND BIDDING FOR AND PURCHASING SHARES OF
THE COMMON STOCK IN THE OPEN MARKET DURING AND AFTER AN OFFERING.
THE COMPANY
The following summary of the business of the Company is qualified in its
entirety by and should be read together with the more detailed information and
financial statements included or incorporated by reference in this Prospectus.
America Online, including its subsidiaries, is a global leader in
interactive services, with over $1.6 billion in revenues during fiscal 1997. The
Company's AOL Internet online service has approximately 12 million members
worldwide as of April 1998, a 100% increase from two years earlier. The Company
has acquired the worldwide online services businesses of CompuServe Corporation,
which has more than 2 million members worldwide as of April 1998. The Company
generates revenues principally through subscription fees, as well as
increasingly from advertising, commerce and other revenues. The Company offers
its AOL Internet online services in the U.S. and Canada and, through joint
ventures, in Austria, France, Germany, Japan, Sweden, Switzerland and the United
Kingdom, and offers access to its AOL service in over 100 countries.
The Company's mission is to become the recognized leader in the global
interactive medium that is changing the way people communicate, stay informed,
are entertained, learn, shop and do business. To accomplish this mission, the
Company's strategy is to continue to improve and expand its service by building
unique and engaging programming and other content and services for delivery into
every home through every distribution means available. The Company seeks to
establish and build its brand names, among others, America Online, AOL, AOL
Studios, CompuServe, AOL.COM and AOL Instant Messenger. By offering a broad
range of high quality Internet online branded content, products and services,
the Company seeks to build its subscriber base as a platform for increasing
subscription revenues and revenues from advertising and electronic commerce.
The Company has reorganized its operations into three interactive
service and content brand groups, AOL Interactive Services, CompuServe
Interactive Services and AOL Studios. Through its AOL Interactive Services
group, which oversees the Company's AOL Internet online service as well as the
AOL.COM website and AOL Instant Messenger, the Company offers its members a
broad range of original programming, features and tools. The AOL service
includes five screennames for each account, member service and support 24 hours
a day, 7 days a week and personal tools designed to encourage members to share
information and ideas and to customize the AOL service to best suit their
individual and business needs. Offerings include electronic mail, Buddy Lists,
Instant Messages, interactive news and magazines, entertainment, weather,
sports, games, stock quotes, financial services transactions, online shopping,
Internet access with search capabilities, software files, computing support,
online classes and auditorium events, online meeting rooms and conversations
(chat), and parental, mail and marketing controls.
On January 31, 1998, the Company completed the acquisition of the
worldwide online services businesses of CompuServe Corporation, and entered into
a joint venture agreement to operate the CompuServe European online business in
partnership with Bertelsmann AG. The Company operates the CompuServe online
services businesses for the United States and the rest of the world (other than
Europe) through a wholly-owned subsidiary, CompuServe Interactive Services,
Inc., a Delaware corporation, which comprises the Company's CompuServe
Interactive Services group. The AOL Bertelsmann joint venture is operated
through CompuServe Interactive Services Ltd., an Irish company, owned 50% each
by the Company and Bertelsmann.
Through its AOL Studios unit, the Company creates and builds original
content for current AOL online services (AOL Interactive Services and CompuServe
Interactive Services), future AOL services and AOL web based service offerings
(AOL.COM), focusing on branded properties in categories such as local content,
multiplayer games, entertainment, romance, sports and women's issues. AOL
Studios manages AOL's interest in Digital City, Inc. ("DCI"), which is owned
approximately 80% by the Company and 20% by the Tribune Company. DCI provides
local, community-based interactive content and services.
America Online was incorporated in Delaware on May 24, 1985. The
Company's principal executive offices are located at 22000 AOL Way, Dulles,
Virginia 20166-9323. Its telephone number at that address is (703) 448-8700.
Recent Developments
New Shareholder Rights Plan
The Company adopted a new shareholder rights plan on May 12, 1998 (the
"New Plan") that has been implemented by declaring a dividend, distributable to
shareholders of record on June 1, 1998, of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock. All rights granted under
the Company's former shareholder rights plan were redeemed in conjunction with
the implementation of the New Plan. The Rights have the anti-takeover effect of
causing substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors. The Rights
will expire on May 12, 2008 unless redeemed by the Company prior to that date.
See "Risk Factors--Anti-Takeover Defense Provisions" and "Description of Capital
Stock--New Shareholder Rights Plan."
Investment in the FamilyEducation Company
In April 1998, the Company and the FamilyEducation Company announced
that they entered into a strategic relationship to build online school
communities. The Company will invest in the FamilyEducation Company, and the
FamilyEducation Network (FEN) will become an anchor tenant within the Company's
Research & Learn and Families channels under a four-year exclusive carriage
agreement. The Company will promote FEN online and conduct a local parental
awareness campaign designed to involve Company members nationwide. See "Risk
Factors--Relationships with Providers."
NetChannel Acquisition
In May 1998, the Company announced that it will acquire NetChannel, Inc., a
Web-enhanced television company. The acquisition, which was consummated on June
16, 1998 will allow the Company to use NetChannel's programming development
experience and technology in connection with the development of an AOL-branded
service to offer interactive content developed for the television medium. The
total purchase price was approximately $29 million, comprised of
approximately $17 million in cash and $12 million of net assumed liabilities.
NetChannel, Inc. is a Web-based personalized television company that
was founded in 1996. The NetChannel service, launched in September 1997, was
discontinued on May 3, 1998. It had approximately 10,000 subscribers. Its
hardware partner was Thomson Consumer Electronics, which supported the
NetChannel service on its RCA Network Computers. See "Risk
Factors--Acquisitions."
Mirabilis Acquisition
The Company acquired Mirabilis Ltd, an Israel-based company, on June 5,
1998 pursuant to an Agreement of Purchase and Sale under which AOL acquired the
assets of Mirabilis, including its ICQ instant communications and chat
technology, for $287 million in cash and contingent payments starting in AOL's
fiscal year 2001 of up to $120 million over three years based on certain
specified growth performance standards. A substantial portion of the $287
million purchase payment is expected to be accounted for as in-process R&D in
the Company's fourth quarter ending June 30, 1998. The business will continue to
be based largely in Tel Aviv and operated as a free Web-based service with its
own brand identity. Launched in November 1996, ICQ's instant communications and
chat technology informs users when family, friends and business colleagues are
online and enables them to exchange messages in real-time. As of June 1998, more
than 12 million users have registered to use the technology. See "Risk
Factors--Acquisitions."
PRO FORMA FINANCIAL INFORMATION
The following represents an update to the unaudited pro forma
information previously disclosed in the Company's Current Report on Form 8-K
dated January 31, 1998, as amended by the Form 8-K/A filed on April 17, 1998
(the "Form 8-K/A"), in connection with the transactions related to the Company's
previously-reported acquisition of the worldwide interactive services division
of CompuServe Corporation (the "COLS Business") and disposition of the Company's
network services subsidiary, ANS Communications, Inc. ("ANS"), pursuant to a
Purchase and Sale Agreement dated as of September 7, 1997 by and among the
Company, ANS and WorldCom, Inc. (such transactions, the "Purchase and Sale").
The information includes the unaudited combined statement of operations data for
the nine month period ended March 31, 1998, reflecting the pro forma adjustments
for the transactions described in the aforementioned Form 8-K/A.
The pro forma combined statement of operations is presented for illustrative
purposes only and does not purport to be indicative of the operating results
that would have actually occurred if the transactions reflected therin had been
in effect on the dates indicated, nor is it indicative of the future operating
results of the Company. The pro forma adjustments are based upon information and
assumptions available at the time of the filing of this Form S-3. The pro forma
information should be read in conjunction with the Company's June 30, 1997
financial statements and notes thereto contained in its Form 10-K dated
September 29, 1997 and the description of the Purchase and Sale contained in the
Form 8-K/A.
<TABLE>
America Online, Inc.
Pro Forma Combined Statement of Operations
For the nine month period ended March 31, 1998
(In thousands, except per share data)
(Unaudited)
Historical Pro Forma
---------------------------- ------------------------------------------
Less
-----------------------
COLS
COLS European
AOL Business 1 ANS 2 Business 3 Subtotal
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,807,274 276,378 $ 28,356 $ 93,393 $ 1,961,903
Costs and expenses:
Cost of revenues 1,170,742 220,754 5,928 74,326 1,311,242
Marketing 278,810 60,443 17,437 15,355 306,461
Product development 66,751 7,734 - - 74,485
General and administrative 164,509 35,224 4,854 14,251 180,628
Amortization of goodwill 8,064 629 2,569 - 6,124
Restructuring charge 33,796 - - - 33,796
Acquired research & development 9,700 - - - 9,700
Settlement charge (1,009) - - - (1,009)
-------------------------------------------------------------------------
Total costs and expenses 1,731,363 324,784 30,788 103,932 1,921,427
-------------------------------------------------------------------------
Income (loss) from operations 75,911 (48,406) (2,432) (10,539) 40,476
Other income, net 8,832 - 507 - 8,325
-------------------------------------------------------------------------
Income (loss) before provision
for income taxes 84,743 (48,406) (1,925) (10,539) 48,801
Provision for income taxes - - 228 - (228)
-------------------------------------------------------------------------
Net income (loss) $ 84,743 $ (48,406) $ (1,697) $ (10,539) $ 48,573
=========================================================================
Net income per common share - diluted $ 0.35
Net income per common share - basic $ 0.41
Weighted average shares outstanding - diluted (5) 243,109
Weighted average shares outstanding - basic (5) 208,793
See accompanying notes
Pro Forma
-------------------------------
Other Pro Forma
Adjustments 4 Combined
-------------------------------
<S> <C> <C>
Revenues $ (20,189) A $ 1,941,714
Costs and expenses:
Cost of revenues (112,345) A,C,D 1,198,897
Marketing (3,512) A 302,949
Product development (175) A 74,310
General and administrative (4,002) A 176,626
Amortization of goodwill 10,242 B 16,366
Restructuring charge - 33,796
Acquired research & development - 9,700
Settlement charge - (1,009)
---------------------------------
Total costs and expenses (109,792) 1,811,635
---------------------------------
Income (loss) from operations 89,603 130,079
Other income, net - 8,325
---------------------------------
Income (loss) before provision
for income taxes 89,603 138,404
Provision for income taxes 228 E -
---------------------------------
Net income (loss) $ 89,831 $ 138,404
=================================
Net income per common share - diluted $ 0.56
Net income per common share - basic $ 0.65
Weighted average shares outstanding - diluted (5) 243,109
Weighted average shares outstanding - basic (5) 208,793
See accompanying notes
</TABLE>
Notes to Unaudited Pro Forma Combined Financial Statements
1. Reflects the results of operations of the COLS Business acquired by AOL.
The statements of operations of the COLS Business includes the results of
operations of CompuServe Corporation's worldwide interactive services
division including the results of operations of its wholly-owned
subsidiary Spry, Inc. (Spry).
Depreciation and amortization on the COLS Business statement of operations
has been included in general and administrative expense for purposes of
these pro formas.
2. Reflects the results of operations of the ANS business sold to WorldCom.
The pro forma statement of operations reflect the elimination of all
operating costs associated with the ANS business sold except for an
estimate of the costs associated with operating the network which provides
access to the Company's interactive service and which the Company expects
to be an ongoing cost of its business.
In generating third party revenues ANS primarily used the same personnel
and network infrastructure that it used to provide access to AOL's
internet/online service. Management has made its best estimate of the
incremental variable costs it believes ANS incurred to generate third party
revenues. General and administrative expenses incurred at ANS, including
compensatory stock option charges related to the sale of ANS of
approximately $8.9 million, have been allocated to AOL based on the ratio
that ANS revenues generated from AOL bear to total ANS revenues on a
standalone basis.
3. Reflects the results of operations of the European component of the
COLS Business (the "COLS European Business"), a 50% interest in which
was sold to Bertelsmann, AG, AOL's European partner, concurrent with the
Purchase and Sale.
The statement of operations has been prepared as if the COLS European
Business had operated as an independent standalone entity for the period
presented. The financial statement includes allocations of corporate
administrative and network service costs. Management believes that these
allocations are reasonable. This financial statement is not necessarily
indicative of the financial position and results of operations that would
have occurred had the COLS European Business been an independent standalone
entity.
4. For purposes of these pro formas, the COLS Business has been valued at
approximately $280 million. The $280 million valuation is allocated $130
million to the domestic and rest-of-world online business, including the
assets of Spry, and $150 million to the COLS European Business, 50% of
which was sold by AOL to Bertelsmann concurrent with the Purchase and Sale.
A. Management intends to dispose of the net assets of Spry within
one year of the date of acquisition. Accordingly, the results
of operations of Spry have been eliminated from the pro forma
statements of operations. A portion of the $130 million
purchase price has been allocated to Spry's net assets based
upon the estimated net realizable value, including the
expected operating results of Spry for the period prior to
disposition
B. Reflects the excess of the fair market value of the domestic
and rest-of-world interactive service business (other than the
COLS European Business) over the net book value of its
historical assets and liabilities, after the recording of
valuation adjustments. This excess represents intangible
assets and goodwill of $80,904. The goodwill and intangible
assets will be amortized on a straight line basis over five
years.
C. Reflects the excess of the fair market value of assets
received over the net book value of the ANS business sold.
This deferred network service credit will be amortized on a
straight-line basis over the term of the Services Agreement as
a reduction to network service expense, which is included in
cost of revenues.
D. Reflects the impact of the pricing contained in a Master
Agreement for Data Communications (the "Services Agreement")
entered into in connection with the Purchase and Sale, as well
as the impact of the amortization of the deferred network
services credit. See Note 4C. The Company has retroactively
applied the pricing it obtained in the Services Agreement by
removing ANS's estimated historical cost of operating its
portion of AOL's dial up network and applying the pricing from
the Services Agreement as if the transaction was consummated
at the beginning of each period presented as required by Rule
11-02(b)(6) of Regulation S-X. The Company does not believe
that the benefit reflected in the cost of revenues is
indicative of the impact the Services Agreement will have on
the future operations of the Company because the Services
Agreement is conditioned upon volume commitments substantially
greater than the Company's volume requirements in the pro
forma periods presented.
E. Reflects the adjustment of the pro forma combined tax
provision to conform the effective tax rate of the pro forma
combined results of operations to equal the effective tax rate
of AOL on a standalone basis.
5. On March 16, 1998 the Company effected a two-for-one stock split of the
outstanding shares of common stock that was effected by dividending one
additional share for each share owned as of the record date, February 23,
1998. Accordingly, all data shown in the accompanying unaudited pro forma
combined financial statements has been adjusted to effect the stock split.
RISK FACTORS
An investment in the Securities being offered by this Prospectus
involves a high degree of risk. In addition to the other information contained
in this Prospectus or incorporated herein by reference, prospective investors
should carefully consider the following risk factors before purchasing the
Securities offered hereby. This Prospectus contains and incorporates by
reference forward-looking statements within the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Reference is made in
particular to the discussion set forth under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1997 (the "Form
10-K") and in the Company's quarterly reports on Form 10-Q for the quarters
ended September 30, 1997, December 31, 1997 and March 31, 1998 and in "Business"
in the Company's Form 10-K, incorporated by reference into this Prospectus. Such
statements are based on current expectations that involve a number of
uncertainties including those set forth in the risk factors below. Actual
results could differ materially from those projected in the forward-looking
statements.
Competition
The Company competes in a rapidly-changing marketplace with a wide
range of other companies in the communications, advertising, entertainment and
information, media, direct mail and commerce fields. Current competitors of the
Company for usage, subscribers, advertising and electronic commerce include
online services (for example, the Microsoft Network and Prodigy Services
Company), various national and local Internet service providers using
industry-standard browser and navigational software, long distance and regional
telephone companies who may offer competing services directly to their customers
as part of their telephone service (among others, AT&T Corp., MCI Communications
Corporation and various regional Bell operating companies), cable companies, and
suppliers of operating systems or personal computer manufacturers who may
incorporate functional equivalents to the Company's services in their products.
The Company also competes for usage and advertising and electronic commerce
revenues with major Web sites operated by search services and other companies
such as Yahoo! Inc., Netscape Communications Corporation, Infoseek Corporation,
CNET, Inc., Lycos, Inc. and Excite, Inc. Recently announced strategic alliances
among certain of the Company's competitors (for example, Yahoo! with MCI, Excite
with each of AT&T and Netscape, and Lycos with AT&T) could strengthen the
Company's competition. On a broader scale, the Company competes with global
media companies such as newspapers, radio and television stations and content
providers, such as CBS Corporation, The Walt Disney Company and Time Warner
Inc., and with direct marketing and telemarketing companies.
The development of midband and broadband distribution technologies,
including cable Internet access services offered by @Home Network, Road Runner
Group (owned by Time Warner Inc.) and MediaOne, Inc. (a subsidiary of US WEST
Media Group), advanced telephone-based access services offered through digital
subscriber line (DSL) technologies offered by local telecommunications companies
and other advanced digital services offered by broadcast and satellite
companies, is intensifying the competition to which the Company is subject.
Emerging convergent technologies offering combinations of television and
interactive computer services, such as those offered by WebTV, offer yet an
additional competitive alternative to the offerings of the Company. The Company
has recently announced that it has agreed to acquire NetChannel, Inc., but there
can be no assurance that the acquisition will be consummated or that its
technology will become commercially successful.. See "Summary--Recent
Developments" and "Risk Factors--Changing Technologies."
Some of the present competitors and potential future competitors of the
Company may have greater financial, technical, marketing and/or personnel
resources than the Company. The competitive environment could (i) require price
reductions and increased spending on marketing, network capacity, content
procurement and product development, (ii) limit the Company's opportunities to
enter into and/or renew agreements with content providers and distribution
partners, (iii) limit its ability to develop new products and services, (iv)
limit its ability to continue to grow its subscriber base, (v) result in
increased attrition in the Company's subscriber base and (vi) negatively impact
the Company's ability to meet its business objective of changing its business
model into one in which increasingly more revenues and profits are generated
from sources other than online service subscription revenues, such as
advertising and electronic commerce. Any of the foregoing events could have an
impact on revenues or result in an increase in costs as a percentage of
revenues, which could have a material adverse effect on the Company's business,
financial condition and operating results.
Network Capacity and Operations
Among other pricing plans, the Company has adopted a flat-rate pricing
plan which provides access to AOL for a flat monthly fee with no additional
hourly charges (the "Flat-Rate Plan"). Due to the rapid growth in subscriber
usage resulting from flat-rate pricing, the Company and its data communications
access providers have at times experienced difficulty in providing adequate
server and network capacity, respectively. As a result, members at times have
encountered difficulty in accessing and using the AOL service. In response to
such difficulties, the Company has increased its investments in system capacity,
including constructing a new data center and adding network modems, but there
can be no assurance that access problems will not recur.
America Online employs a diversified portfolio approach in designing,
structuring and operating its network services. America Online manages AOLnet, a
TCP/IP network of third-party network service providers, including Sprint
Corporation, BBN Corporation, a part of GTE Internetworking, and WorldCom,
Inc.'s wholly-owned subsidiaries ANS Communications, Inc. (acquired from the
Company) and UUNET Technologies, Inc. The Company anticipates continuing to
build AOLnet, in order to increase its network capacity, provide its members
with higher speed access, and reduce data network costs on a per-hour basis.
There can be no assurance that the AOLnet build-out or other efforts to expand
server and network capacity will be successful, or if they are successful, that
customer demand will develop for the capacity created, and the failure to do so
could have a material adverse effect on the Company's business, financial
condition and operating results. Also, a substantial majority of the Company's
network services are provided on a fixed cost or minimum commitments basis.
Accordingly, if the number of subscribers or usage significantly decreases,
network costs will not correspondingly decrease; as a result, any such decrease
in subscribers or usage could cause a material adverse effect on the Company's
business, financial condition and operating results.
In addition, supply shortages exist from time to time for local
exchange carrier lines from local telephone companies that the Company requires
to expand network capacity. The buildout of AOLnet requires a substantial
investment in telecommunications equipment, which the Company is financing
principally through leasing and asset-backed debt financing. Supply shortages or
the failure to obtain the necessary financing for the buildout of AOLnet could
have a material adverse effect on the Company's ability to expand network
capacity.
The CompuServe Interactive Service relies on data network services
provided pursuant to a Network Services Agreement between AOL, CompuServe
Incorporated, a wholly-owned subsidiary of WorldCom, and UUNet Technologies,
Inc., with an initial term ending December 31, 2002, subject to possible
extension by AOL under certain circumstances. AOL has committed to use
exclusively the network services for the CompuServe service provided under such
agreement through 1999 and for at least 66% of the usage under the CompuServe
service for the remainder of the initial term of the agreement. The smooth
operation of and access capacity on the CompuServe service are dependent on the
network services provided under the agreement and are subject to disruptions
resulting from service failures by the network services provider.
The Company's operations are dependent on its ability to protect its
computer equipment and the information stored in its data centers against damage
by fire, power loss, telecommunications failures, service failures by third
party network service providers, unauthorized intrusions and other events.
Although the Company believes it has taken prudent measures to reduce the risk
of interruption in its operations for such causes, there can be no assurance
that these measures will be sufficient. Any damage or failure that causes
interruptions in the Company's operations could have a material adverse effect
on its business, financial condition and operating results. Although the Company
carries property and business interruption insurance to cover its operations,
the coverage may not be adequate to compensate for losses that may occur.
Software defects and server and network expansion could also cause service
outages, and although the Company has made efforts to reduce outages, there can
be no assurance that its efforts to reduce outages will be successful, and the
failure to do so could have a material adverse effect on the Company's business,
financial condition and operating results.
Increasing Usage and Costs; Effects of Price Increase on Costs, Margins
and Revenues
The Company's business model relies both on online service revenues
from subscription fees and on revenues generated from non-subscription based
sources such as advertising, electronic commerce and sales of merchandise. Since
the adoption of the Flat-Rate Plan in December 1996, the Company has experienced
greater increases than anticipated in the average total usage hours per member
per month (from less than 17 hours per member per month in the third quarter of
fiscal 1997 to over 23 hours per member per month in the third quarter of fiscal
1998). While the growth and management of AOLnet have provided overall lower per
hour data communications costs, such lower costs have been and are expected to
continue to be offset by the additional costs of network services resulting from
increased total usage hours.
In response to increasing usage and consequent data communications
costs, the Company has, effective April 1, 1998, increased the monthly fee under
the Flat-Rate Plan by $2.00 per month (the "Price Increase"), in an effort to
increase subscription-based revenues in an amount sufficient to offset the
additional costs associated with additional usage and to fund continuing
additional investments needed to maintain and enhance the member experience. Any
resulting increase in subscription-based revenues may not be sufficient to
offset increasing usage and data communications costs or to fund the investments
necessary to maintain and enhance the member experience.
The Price Increase may result in new competitive pricing actions or
offerings or cause existing competitive offerings to the AOL service to become
more attractive to AOL members. The Price Increase may have a material adverse
effect on the Company's performance by reducing demand for the AOL service among
existing or prospective subscribers, slowing or reversing subscriber growth or
reducing subscriber retention rates. If subscriber growth slows or reverses or
retention rates decrease, growth in the advertising, commerce and other revenues
may slow and may require that the Company increase its marketing expenses beyond
what may otherwise be anticipated. The Company believes that reduced growth in
advertising, commerce and other revenues or that increases in marketing expenses
would cause a reduction in gross and operating margins. Therefore, there can be
no assurance that the Price Increase will increase subscription-based revenues
or that the Price Increase will not lead to a significant decrease in
non-subscription based revenues. The described effects of the Price Increase on
costs, margins, revenues and competitive conditions could have a material
adverse effect on the Company's business, financial condition and operating
results.
Changing Business Conditions
The changing business model and resulting expansion of its business and
changes in its operations have placed significant demands on the Company's
administrative, operational and financial resources. The Company's future
performance will depend in part on its ability to manage its growth and to adapt
its administrative, operational and financial control systems to the needs of an
expanded and evolving entity. The failure of management to anticipate, respond
to and manage changing business conditions could have a material adverse effect
on the Company's business, financial condition and results of operations.
Seasonality
The growth in subscriber acquisitions and usage appears to be highest
in the second and third fiscal quarters, when sales of new computers and
computer software are highest due to the holiday season, and following the
holiday season, when new computer and software owners are discovering Internet
online services while spending more time indoors due to winter weather. However,
because of the Company's limited history with the Flat-Rate Plan (which was
adopted effective as of December 1, 1996), the Company does not know whether
such increases in subscriber acquisitions and usage are primarily attributable
to seasonal factors or to increased demand for Internet online services as a
result of the growing market demand and utility for such services.
Beginning with the second quarter of fiscal 1998, the Company believes
it has begun to see the effects of seasonality in securing advertising
commitments. The Company expects that advertising commitments will be highest in
the second fiscal quarter each year due to calendar-year budgeting cycles of
many advertisers. However, because of the Company's recent focus on developing
advertising revenues, the Company does not know whether increases in securing
advertising commitments are due to seasonal factors or to increased interest by
advertisers in the Company's medium and distribution channels or other factors.
Relationships with Providers
As the marketplace in which the Company operates changes and as
competition intensifies in the online services markets, it may become more
difficult or expensive to secure and maintain relationships with electronic
commerce, advertising, marketing, technology and content providers. Although the
Company does not believe that any single relationship is material to its
business, financial condition, or results of operations, there can be no
assurance that the failure to establish new relationships or that the loss of a
number of relationships or significantly increased costs or decreased revenues,
as the case may be, to maintain relationships would not have a material adverse
effect on the Company's business, financial condition and operating results. In
addition, the Company faces risks associated with accepting warrants in lieu of
cash in certain electronic commerce agreements, as the value of such warrants is
dependent upon the common stock price of the issuer at the time the warrants are
earned.
Acquisitions
Since the beginning of January 1996, the Company has acquired or merged
with, among others, the Johnson-Grace Company, the ImagiNation Network, Inc.
(doing business as WorldPlay Entertainment), LightSpeed Media, Inc., Extreme
Fans, Inc., Personal Library Software, Total New York, Inc. (which was acquired
by Digital City, Inc., an approximately 80%-owned subsidiary of the Company)
and, on January 31, 1998, the worldwide online services businesses of CompuServe
Corporation ("CompuServe Interactive"). The Company announced in May, 1998 that
it had agreed to acquire NetChannel, Inc., a Web-enhanced television company and
announced on June 8, 1998 that it had acquired the assets of Mirabilis,
including its ICQ instant communications and chat technology. There can be no
assurance that CompuServe Interactive, NetChannel and Mirabilis can be
successfully managed and operated by the Company. See "Summary--Recent
Developments." Acquisitions by the Company involve risks, including successful
integration and management of acquired technology, operations and personnel. The
integration of acquired businesses may also lead to the loss of key employees of
the acquired companies and diversion of the attention of existing management
from other ongoing business concerns. In addition, acquisitions may result in
significant charges for in-process research and development or other matters.
Any of these factors could have a material adverse effect on the Company's
business, financial condition and operating results.
New Businesses, Operations and International Ventures
The Company pursues new products and services to leverage its
technological and other competencies. There can be no assurance that the Company
will be able to successfully develop, or achieve commercial acceptance for,
these new products and services. Demand for and market acceptance of new
products and services are subject to a high degree of uncertainty.
Critical issues concerning commercial activities via the Internet,
including security, reliability, cost, ease of use and access, remain unresolved
and may adversely impact the growth and development of the Company's business.
The Company offers its online services in the United States and Canada,
and through joint ventures, in Austria, France, Germany, Japan, Sweden,
Switzerland, and the United Kingdom. The Company has recently announced its
intention to offer online services, through a joint venture, in Australia and,
through a license and distribution arrangement, in Hong Kong in 1998. In
addition, the Company's acquisition of CompuServe's business has significantly
expanded its presence in Europe and Japan. There can be no assurance that the
Company or its partners will be able to, or to continue to, successfully market,
sell and deliver its services in these markets. In addition, there are certain
significant risks inherent in doing business on an international level, such as
laws governing content that differ greatly from those in the United States,
unexpected changes in regulatory requirements, political risks, export
restrictions, export controls relating to encryption technology, tariffs and
other trade barriers, fluctuations in currency exchange rates, issues regarding
intellectual property and potentially adverse tax consequences, any or all of
which could impact the Company's international operations.
See "Risk Factors--Government Regulation; Legal Uncertainties."
Changing Technologies
As the marketplace in which the Company operates continues to evolve,
the Company will be required to offer its existing services through advanced
distribution technologies such as cable, satellite, broadcast and enhanced
telephone distribution, and to offer advanced services such as voice and
full-motion video. Currently, Internet online services are accessed primarily
through standard telephone systems by personal computers via modems. As online
and interactive digital services, including Internet access, entertainment and
information services become accessible by cable, satellite, television or other
consumer electronic devices, and become commercially deliverable over other
wired conduits such as digital subscriber lines, coaxial and fiber optic cable,
the Company may have to develop new technology or modify its existing technology
to keep pace with these developments. Competitors of the Company have better
access to those technologies and could gain advantage by implementing new access
technologies more quickly and at lower cost than the Company. Pursuit of these
technological advances will require substantial expenditures, and there can be
no assurance that the Company will succeed in adapting its online service
business to alternate access devices and conduits as rapidly or successfully as
its competitors. See "Risk Factors--Competition."
Government Regulation; Legal Uncertainties
In the United States and most countries in which the Company conducts
its major operations, the Company is not currently subject to direct regulation
other than pursuant to laws applicable to businesses generally. Adverse changes
in the legal or regulatory environment relating to the interactive online
services and Internet industry in the United States, Europe, Japan or elsewhere
could have a material adverse effect on the Company's business, financial
condition and operating results. A number of legislative and regulatory
proposals from various international bodies and foreign and domestic governments
in the areas of telecommunication regulation, access charges, encryption
standards, content regulation, consumer protection, intellectual property,
privacy, electronic commerce, and taxation, among others, are now under
consideration. The Company is unable at this time to predict which, if any, of
such proposals may be adopted and, if adopted, whether such proposals would have
an adverse effect on the Company's business, financial condition and operating
results. See also "Risk Factors--New Businesses, Operations and International
Ventures."
Moreover, the manner in which existing domestic and foreign laws
(including Directive 95/46/EC of the European Parliament and of the European
Council on the protection of individuals with regard to the processing of
personal data and on the free movement of such data, to become effective in the
individual member states by October 24, 1998) will or may be applied to online
service and Internet access providers is uncertain, as is the effect on the
Company's business given different possible applications. Similarly, the Company
is unable to predict the effect on the Company from the potential future
application of various domestic and foreign laws governing content, export
restrictions, privacy, consumer protection, export controls on encryption
technology, tariffs and other trade barriers, intellectual property and taxes.
Reliance on Key Personnel
The Company's success depends in part upon the performance of its
executive officers and other key employees. The loss of the services of one or
more of its key personnel could have a material adverse effect on the Company's
business, financial condition and operating results. The Company depends on its
continued ability to attract and retain highly skilled and qualified personnel.
Competition for such personnel is intense, and there can be no assurance that
the Company will be successful in attracting and retaining such personnel.
Volatility of Share Price
The market price of the Company's Common Stock has a history of
volatility. Factors such as quarterly variations in financial results and
membership growth and usage, new pricing strategies, the announcement of
technological innovations, mergers, acquisitions, strategic partnerships or new
product offerings by the Company or its competitors, the entrance of new
competitors into the online services market and changes in content providers may
have a significant impact on the market price of the Common Stock. Moreover, the
Common Stock could experience price volatility based on market conditions.
Litigation and Other Proceedings
The Company is a party to various litigation matters, investigations and
proceedings, including a lawsuit filed on behalf of shareholders against the
Company and its chief executive officer and chief financial officer alleging
violations of the federal securities laws. Such class action lawsuit was filed
in federal court in Alexandria, Virginia against the Company, its officers,
outside directors and its auditors in February 1997. In July 1997, the court
dismissed the complaint, finding that the allegations of the complaint were not
sufficiently specific. The plaintiffs filed an amended complaint in September
1997, this time naming the Company, its chief executive officer and its chief
financial officer as defendants. Although the case is scheduled to be tried in
1998, the Company has entered into a preliminary agreement to settle the action,
subject to negotiation of final documentation and approval by the court. As part
of the settlement, the Company will make up to $35 million in payments, a
substantial portion of which it expects to be covered by insurance. A
shareholder derivative suit related to such class action lawsuit has also been
filed in Delaware chancery court against certain current and former directors of
the Company and remains pending. The Company has entered into aa preliminary
agreement to settle the shareholder derivative suit, subject to negotiation of
final documentation and approval by the Delaware chancery court, on terms that
will not have a material adverse effect on the financial condition or results of
operations of the Company.
The Company, one of its subsidiaries and two officers are named in a
lawsuit alleging, among other matters, that the Company breached an agreement
and has monopolized and attempted to monopolize an alleged market for online
games. The complaint seeks $100 million in damages and requests other relief. A
trial date has been set for late June 1998.
In late May 1998, the Company entered into an Assurance of Voluntary
Compliance with representatives of the offices of 44 State Attorneys General
regarding the Company's advertising, consumer and marketing practices. The
settlement provides that the Company will provide additional disclosures in its
advertising and marketing materials and individualized notice to members of
material changes in the member agreement or increases in member fees. The
Assurance also requires the Company to make a $2.6 million payment to the states
to cover investigative costs and fund future Internet consumer protection and
education efforts and contains other terms which will not have a material
adverse effect on the financial condition or results of operations of the
Company.
The costs and other effects of pending or future litigation,
governmental investigations, legal and administrative cases and proceedings
(whether civil or criminal), settlements, judgments and investigations, claims
and changes in those matters (including those matters described above), and
developments or assertions by or against the Company relating to intellectual
property rights and intellectual property licenses, could have a material
adverse effect on the Company's business, financial condition and operating
results.
Year 2000 Potential Problems
The Company utilizes a significant number of computer software programs
and operating systems across its entire organization, including applications
used in operating the AOL Service, the CompuServe Service, their proprietary
software, member services, network access, content providers, joint ventures and
various administrative and billing functions. To the extent the Company's and
CompuServe's software applications contain source codes that are unable to
appropriately interpret the upcoming calendar year 2000, some level of
modification, or even possibly replacement of such applications, may be
necessary. The Company has appointed a Year 2000 Task Force to perform an audit
to assess the scope of the Company's risks and bring its applications into
compliance. This Task Force is currently in the process of completing its
identification of applications that are not Year 2000 compliant. In addition,
the Company has begun to ask its vendors, joint venture partners and content
partners about their progress in identifying and addressing problems that their
computer systems may face in correctly processing date information related to
the Year 2000.
The Company is conducting its Year 2000 audit, and is unable to make a
reasonable estimate of the costs associated with Year 2000 compliance.
Accordingly, no assurance can be given that any or all of the Company's or third
party systems are or will be Year 2000 compliant or that the costs required to
address the Year 2000 issue or the impact of a failure to achieve substantial
Year 2000 compliance will not have a material adverse effect on the Company's
business, financial condition or results of operations.
Future Sales of Common Stock
Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices of the Common Stock. Shareholders of
approximately 5,419,834 shares of America Online Common Stock (outstanding or
issuable upon exercise of certain rights), as well as approximately 6,705,790
shares, subject to adjustment, issuable upon conversion of the Company's 4%
Convertible Subordinated Notes, have rights of registration of their shares for
resale. In connection with a master data communications agreement, the Company
has issued a warrant to purchase 7,200,000 restricted shares of the Company's
common stock under the terms of which the Company would be required to register
such shares on Form S-3 within 45 days of a full exercise. Additional shares are
subject to registration statements on Form S-8 in connection with the Company's
stock option plans. The sales of any of the foregoing shares could have a
material adverse effect on the then-prevailing market price of Common Stock.
Anti-Takeover Defense Provisions
The Company's Restated Certificate of Incorporation and Restated
By-laws contain certain provisions that could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of the Company. Certain of such provisions allow
the Company to issue preferred stock with rights senior to those of its Common
Stock and impose various procedural and other requirements which could make it
more difficult for stockholders to effect certain corporate actions. In
addition, the Company has a new shareholder rights plan pursuant to which
holders of Common Stock are entitled to one preferred share purchase right for
each outstanding share of Common Stock they hold, exercisable under certain
defined circumstances involving a potential change of control. The Rights have
the anti-takeover effect of causing substantial dilution to a person or group
that attempts to acquire the Company in terms not approved by the Company's
Board of Directors. See "Description of Capital Stock--New Shareholder Rights
Plan." The foregoing provisions could limit the price that certain investors
might be willing to pay in the future for shares of Common Stock.
USE OF PROCEEDS
Except as set forth in the Prospectus Supplement for a specific
offering, the net proceeds from the sale of Securities will be applied by the
Company for general corporate purposes.
<TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for the nine months ended March 31, 1998 and for each of the last five fiscal
years.
<S> <C> <C> <C> <C> <C> <C>
Nine Months Ended Fiscal year ended June 30,
March 31,
1998 1997 1996 1995 1994 1993
Ratio of Earnings to
Fixed Charges....... 1.88x -- 4.63x -- 4.98x 4.39x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
earnings represent earnings from continuing operations before income taxes plus
interest expense on indebtedness, amortization of debt discount and premium and
the portion of rent expense deemed representative of an interest factor. Fixed
charges include interest on indebtedness (whether expensed or capitalized),
amortization of debt discount and premium and the portion of rent expense deemed
representative of an interest factor. For the years ended June 30, 1997 and
1995, the deficiency of earnings to fixed charges totaled $448.3 million and
$16.0 million, respectively.
DESCRIPTION OF DEBT SECURITIES
The following statements with respect to the Debt Securities are
summaries of, and are subject to, the detailed provisions of an indenture (the
"Indenture") to be entered into by the Company and one or more commercial banks,
as trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement. The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the Indenture, including
the definitions therein of certain terms. Wherever defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such defined
terms are incorporated herein or therein by reference.
The Debt Securities may be issued from time to time in one or more
series. The particular terms of each series of Debt Securities will be described
in a Prospectus Supplement relating to such series.
General
The Indenture does not limit the aggregate principal amount of Debt
Securities that can be issued thereunder. The Debt Securities may be issued in
one or more series as may be authorized from time to time by the Company. The
Debt Securities will be senior unsecured obligations of the Company.
The applicable Prospectus Supplement will describe the following terms
of the series of Debt Securities with respect to which this Prospectus is being
delivered:
(a) The title of the Debt Securities of the series;
(b) Any limit on the aggregate principal amount of the Debt Securities
of the series that may be authenticated and delivered under the Indenture;
(c) The person to whom any interest on a Debt Security shall be
payable, if other than the person in whose name that Debt Security is registered
on the Regular Record Date;
(d) The date or dates on which the principal and premium, if any, of
the Debt Securities of the series are payable;
(e) The rate or rates (which may be fixed or variable) at which the
Debt Securities will bear interest, if any, or the method of determining the
rate or rates, the date or dates from which such interest will accrue, the
Interest Payment Dates on which any such interest will be payable or the method
by which the dates will be determined, the Regular Record Date for any interest
payable on any Interest Payment Date and the basis upon which interest will be
calculated if other than that of a 360-day year of twelve 30-day months;
(f) The place or places where the principal of and any premium and
interest on the Debt Securities of the series will be payable if other than the
Borough of Manhattan, The City of New York;
(g) The period or periods within which, the price or prices at which
and the terms and conditions upon which the Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Company or otherwise;
(h) The obligation of the Company, if any, to redeem, purchase or repay
the Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the holders and the period or periods within
which, the price or prices at which and the terms and conditions upon which such
Debt Securities shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligation, and any provisions for the remarketing of such Debt
Securities;
(i) The terms, if any, upon which the Debt Securities of the series may
be convertible into or exchanged for other Debt Securities of the Company and
the terms and conditions upon which the conversion or exchange shall be
effected, including the initial conversion or exchange price or rate, the
conversion or exchange period and any other additional provisions;
(j) The denominations in which any Debt Securities will be issuable, if
other than denominations of $1,000 and any integral multiple thereof;
(k) The currency, currencies or currency units in which payment of
principal of and any premium and interest on Debt Securities of the series shall
be payable if other than United States dollars;
(l) Any index, formula or other method used to determine the amount of
payments of principal of and any premium and interest on the Debt Securities;
(m) If the principal amount payable at the stated maturity of Debt
Securities of the series will not be determinable as of any one or more dates
prior to the stated maturity, the amount that will be deemed to be the principal
amount as of any date for any purpose, including the principal amount thereof
which will be due and payable upon any maturity other than the stated maturity
or which will be deemed to be outstanding as of any date (or, in any such case,
the manner in which the deemed principal amount is to be determined), and if
necessary, the manner of determining the equivalent thereof in United States
currency;
(n) If the principal of or any premium or interest on any Debt
Securities is to be payable, at the election of the Company or the holders, in
one or more currencies or currency units other than that or those in which such
Debt Securities are stated to be payable, the currency, currencies or currency
units in which payment of the principal of and any premium and interest on such
Debt Securities shall be payable, and the periods within which and the terms and
conditions upon which such election is to be made;
(o) If other than the principal amount thereof, the portion of the
principal amount of the Debt Securities which will be payable upon declaration
of the acceleration of the maturity thereof or provable in bankruptcy;
(p) The applicability of, and any addition to or change in, the
covenants and definitions then set forth in the Indenture or in the terms then
set forth in the Indenture relating to permitted consolidations, mergers or
sales of assets;
(q) Any changes or additions to the provisions of the Indenture dealing
with defeasance, including the addition of additional covenants that may be
subject to the Company's covenant defeasance option;
(r) Whether any of the Debt Securities are to be issuable in permanent
global form and, if so, the Depositary or Depositaries for such Global Security
and the terms and conditions, if any, upon which interests in such Debt
Securities in global form may be exchanged, in whole or in part, for the
individual Debt Securities represented thereby in definitive registered form,
and the form of any legend or legends to be borne by the Global Security in
addition to or in lieu of the legend referred to in the Indenture;
(s) The Trustee and any authenticating or paying agents, transfer
agents or registrars;
(t) The terms, if any, of any guarantee of the payment of principal,
premium and interest with respect to Debt Securities of the series and any
corresponding changes to the provisions of the Indenture as then in effect;
(u) The terms, if any, of the transfer, mortgage, pledge or assignment
as security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act are applicable and any corresponding
changes to provisions of the Indenture as then in effect;
(v) Any addition to or change in the Events of Default with respect to
the Debt Securities of the series and any change in the right of the Trustee or
the holders to declare the principal, premium and interest with respect to the
Debt Securities due and payable; and
(w) Any other terms of the Debt Securities not inconsistent with the
provisions of the Indenture.
Debt Securities may be issued as Original Issue Discount Securities to
be sold at a substantial discount from their principal amount. United States
federal income tax consequences and other special considerations applicable to
any such Original Issue Discount Securities will be described in the Prospectus
Supplement relating thereto.
If any of the Debt Securities are sold for any foreign currency or
currency unit or if principal of, premium, if any, or interest, if any, on any
of the Debt Securities is payable in any foreign currency or currency unit, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such Debt Securities and such foreign currency or currency unit
will be specified in the Prospectus Supplement relating thereto.
Exchange, Registration, Transfer and Payment
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal, premium, if any, and interest, if any, on the Debt
Securities will be payable, and the exchange of and the transfer of Debt
Securities will be registrable, at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan, The City of New York
and at any other office or agency maintained for such purpose. Unless otherwise
indicated in the applicable Prospectus Supplement, the Debt Securities will be
issued in denominations of $1,000 or integral multiples thereof. No service
charge will be made for any registration of transfer or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection therewith.
All moneys paid by the Company to a Paying Agent for the payment of
principal, premium, if any, or interest, if any, on any Debt Security which
remain unclaimed for two years after such principal, premium or interest has
become due and payable may be repaid to the Company, and thereafter the holder
of such Debt Security may look only to the Company for payment thereof.
In the event of any redemption, the Company shall not be required to
(a) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of Debt Securities of that series to be
redeemed and ending at the close of business on the day of such mailing or (b)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security being
redeemed in part.
Book-Entry System
The provisions set forth below in this section headed "Book-Entry
System" will apply to the Debt Securities of any series if the Prospectus
Supplement relating to such series so indicates.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities of such series will be represented by one or more global
securities (collectively, a "Global Security") registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary
identified in the Prospectus Supplement relating to such series. Except as set
forth below, a Global Security may be transferred, in whole but not in part,
only to the Depositary or another nominee of the Depositary.
Upon the issuance of a Global Security, the Depositary will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Global Security to the
accounts of institutions that have accounts with the Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters, dealers or agents. Ownership of beneficial interests in a Global
Security will be limited to participants or persons that may hold interests
through participants. Ownership of interests in such Global Security will be
shown on, and the transfer of those ownership interests will be effected only
through, records maintained by the Depositary (with respect to participants'
interests) and such participants (with respect to the owners of beneficial
interests in such Global Security). The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary, or its nominee, is the registered holder and
owner of such Global Security, the Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the related Debt Securities
for all purposes of such Debt Securities and for all purposes under the
Indenture. Except as set forth below or as otherwise provided in the applicable
Prospectus Supplement, owners of beneficial interests in a Global Security will
not be entitled to have the Debt Securities represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities in definitive form and will not be considered to be
the owners or holders of any Debt Securities under the Indenture or such Global
Security. Accordingly, each person owning a beneficial interest in a Global
Security must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder of Debt Securities
under the Indenture of such Global Security. The Company understands that under
existing industry practice, in the event the Company requests any action of
holders of Debt Securities or if an owner of a beneficial interest in a Global
Security desires to take any action that the Depositary, as the holder of such
Global Security is entitled to take, the Depositary would authorize the
participants to take such action, and that the participants would authorize
beneficial owners owning through such participants to take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
The Depositary has advised the Company as follows: The Depositary 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 New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold securities
of its participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations, some of whom (or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also 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. The Depositary agrees with and
represents to its participants that it will administer its book-entry system in
accordance with its rules and by-laws and requirements of law.
Payment of principal of and premium, if any, and interest, if any, on
Debt Securities represented by a Global Security will be made to the Depositary
or its nominee, as the case may be, as the registered owner and holder of such
Global Security.
The Company expects that the Depositary, upon receipt of any payment of
principal, premium, if any, or interest, if any, in respect of a Global
Security, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of the Depositary. The
Company expects that payments by participants to owners of beneficial interests
in a Global Security 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 in bearer form or registered in "street name," and
will be the responsibility of such participant. Neither the Company nor the
Trustee nor any agent of the Company or the Trustee 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 Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests or for any other aspect of the relationship between the
Depositary and its participants or the relationship between such participants
and the owners of beneficial interests in such Global Security owning through
such participants.
Unless and until it is exchanged in whole or in part for Debt
Securities in definitive form, a Global Security may not be transferred except
as a whole by the Depositary to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary.
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities represented by a Global Security will be exchangeable for Debt
Securities in definitive form of like tenor as such Global Security in
denominations of $1,000 and in any greater amount that is an integral multiple
thereof if (a) the Depositary notifies the Company and the Trustee that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time the 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, (b) the Company in its sole discretion determines not to have all of
the Debt Securities represented by a Global Security and notifies the Trustee
thereof or (c) there shall have occurred and be continuing an Event of Default
or an event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to the Debt Securities. Any Debt
Security that is exchangeable pursuant to the preceding sentence is exchangeable
for Debt Securities registered in such names as the Depositary shall instruct
the Trustee. It is expected that such instructions may be based upon directions
received by the Depositary from its participants with respect to ownership of
beneficial interests in such Global Security. Subject to the foregoing, a Global
Security is not exchangeable except for a Global Security or Global Securities
of the same aggregate denominations to be registered in the name of the
Depositary or its nominee.
Covenants of the Company
The covenants, if any, that will apply to a particular series of Debt
Securities will be set forth in the Prospectus Supplement relating to such
series of Debt Securities. Except as otherwise provided in the applicable
Prospectus Supplement with respect to any series of Debt Securities, the Company
is not restricted by the Indenture from incurring, assuming or becoming liable
for any type of debt or other obligations, from paying dividends or making
distributions on its capital stock or purchasing or redeeming its capital stock.
The Indenture does not require the maintenance of any financial ratios or
specified levels of net worth or liquidity. In addition, the Indenture does not
contain any provision that would require the Company to repurchase or redeem or
otherwise modify the terms of any of its Debt Securities upon a change in
control or other events involving the Company that may adversely affect the
creditworthiness of the Debt Securities.
Defeasance and Covenant Defeasance
The Indenture provides that, if such provision is made applicable to
the Debt Securities of any series pursuant to the provisions of the Indenture,
the Company may elect (a) to defease and be discharged from any and all
obligations in respect of such Debt Securities except for certain obligations to
register the transfer or exchange of such Debt Securities, to replace temporary,
destroyed, stolen, lost or mutilated Debt Securities, to maintain paying
agencies and to hold monies for payment in trust ("defeasance") or (b) (i) not
to comply with certain restrictive covenants (including the covenants to be set
forth in the Prospectus Supplement relating to such Debt Securities) and (ii) to
deem the occurrence of any event referred to in clauses (d) and (e) under
"Events of Default" below not to be or result in an Event of Default if, in each
case with respect to the Outstanding Debt Securities of such series on or after
the date certain conditions are satisfied ("covenant defeasance"), in either
case upon the deposit with the Trustee (or other qualifying trustee), in trust,
of money or U.S. Government Obligations, which through the payment of interest
and principal with respect thereto in accordance with their terms will provide
money in an amount sufficient to pay the principal of and any premium and
interest on the Debt Securities of such series on the respective stated
maturities and any mandatory sinking fund payments or analogous payments on the
days payable, in accordance with the terms of the Indenture and the Debt
Securities of such series. Such a trust may only be established if, among other
things, the Company has delivered to the Trustee an opinion of counsel to the
effect that the holders of the outstanding Debt Securities of such series will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit, defeasance or covenant defeasance and will be subject to
federal income tax on the same amount, and in the same manner and at the same
times as would have been the case if such deposit, defeasance or covenant
defeasance had not occurred. Such opinion, in the case of defeasance under
clause (a) above, must refer to and be based upon a ruling of the Internal
Revenue Service or a change in applicable federal income tax laws occurring
after the date of the Indenture. The Prospectus Supplement relating to a series
may further describe the provisions, if any, permitting such defeasance or
covenant defeasance with respect to the Debt Securities of a particular series.
Events of Default
The following events are defined in the Indenture as "Events of
Default" with respect to a series of Debt Securities (unless such event is
specifically inapplicable to a particular series as described in the Prospectus
Supplement relating thereto): (a) failure to pay any interest on any Debt
Security of that series when due, continued for 30 days; (b) failure to pay
principal of or any premium on any Debt Security of that series when due; (c)
failure to deposit any sinking fund payment, when due, in respect of any Debt
Security of that series; (d) with respect to each series of Debt Securities,
failure to perform any other covenant of the Company applicable to that series,
continued for 90 days after written notice to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the outstanding Debt Securities of that series specifying such failure,
requiring it to be remedied and stating that such notice is a "Notice of
Default"; (e) (i) failure of the Company to make any payment by the end of any
applicable grace period after maturity of indebtedness, which term as used in
the Indenture means obligations (other than Nonrecourse Obligations or the Debt
Securities of such series) of the Company for borrowed money or evidenced by
bonds, debentures, notes or similar instruments ("Indebtedness") in an amount in
excess of $10,000,000 and continuance of such failure, or (ii) the acceleration
of Indebtedness in an amount in excess of $10,000,000 because of a default with
respect to such Indebtedness without such Indebtedness having been discharged or
such acceleration having been cured, waived, rescinded or annulled, in the case
of (i) or (ii) above, for a period of 30 days after written notice to the
Company by the Trustee or to the Company and the Trustee by the holders of at
least 25% in principal amount of the outstanding Debt Securities of that series
specifying such failure or acceleration, requiring it to be remedied and stating
that such notice is a "Notice of Default"; provided, however, that if any such
failure or acceleration referred to in (i) or (ii) above shall cease or be
cured, waived, rescinded or annulled, then the Event of Default by reason
thereof shall be deemed not to have occurred; (f) certain events of bankruptcy,
insolvency or reorganization involving the Company; and (g) any other Event of
Default provided with respect to Debt Securities of that series.
Subject to the provisions of the Indenture relating to the duties of
the Trustee during default to act with the required standard of care, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders, unless
such holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the holders of a
majority in principal amount of the outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Debt Securities of that
series.
The Indenture provides that the Company will deliver to the Trustee,
within 120 days after the end of each fiscal year, a brief certificate from the
principal executive, financial or accounting officer or treasurer of the Company
as to his or her knowledge of the Company's compliance (without regard to any
period of grace or requirement of notice) with all conditions and covenants of
the Indenture.
If an Event of Default with respect to Debt Securities of any series at
the time outstanding occurs and is continuing, either the Trustee or the holders
of at least 25% in principal amount of the outstanding Debt Securities of that
series by notice as provided in the Indenture may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all the Debt Securities of that series to be due and
payable immediately. At any time after a declaration of acceleration with
respect to Debt Securities of any series has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, the holders of a
majority in principal amount of the outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration.
No holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such holder shall have previously given to the Trustee
written notice of a continuing Event of Default and unless the holders of at
least 25% in principal amount of the outstanding Debt Securities of that series
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the holders of a majority in principal amount of the outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. Such limitations
generally do not apply, however, to a suit instituted by a holder of a Debt
Security for the enforcement of payment of the principal or interest on such
Debt Security on or after the respective due dates expressed in such Debt
Security.
Modification, Waiver and Meetings
The Company and the Trustee may enter into supplemental indentures
without the consent of the holders of Debt Securities for one or more of the
following purposes:
(a) To evidence the succession of another person to the Company
pursuant to the provisions of the Indenture relating to consolidations, mergers
and sales of assets and the assumption by the successor of the covenants,
agreements and obligations of the Company in the Indenture and in the Debt
Securities;
(b) To surrender any right or power conferred upon the Company by the
Indenture, to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions for the protection of the holders of all
or any series of Debt Securities as the Board of Directors of the Company shall
consider to be for the protection of the holders of the Debt Securities, and to
make the occurrence, or the occurrence and continuance, of a default in any of
the additional covenants, restrictions, conditions or provisions a default or an
Event of Default under the Indenture (provided, however, that with respect to
any such additional covenant, restriction, condition or provision, the
supplemental indenture may provide for a period of grace after default, which
may be shorter or longer than that allowed in the case of other defaults, may
provide for an immediate enforcement upon the default, may limit the remedies
available to the Trustee upon the default, or may limit the right of holders of
a majority in aggregate principal amount of any or all series of Debt Securities
to waive the default);
(c) To cure any ambiguity or omission or to correct or supplement any
provision contained in the Indenture, in any supplemental indenture or in any
Debt Securities that may be defective or inconsistent with any other provision
contained therein, to convey, transfer, assign, mortgage or pledge any property
to or with the Trustee, or to make such other provisions in regard to matters or
questions arising under the Indenture, in each case as shall not adversely
affect the interests of any holders of Debt Securities of any series in any
material respect;
(d) To modify or amend the Indenture in such a manner as to permit the
qualification of the Indenture or any supplemental indenture under the Trust
Indenture Act as then in effect;
(e) To add guarantees with respect to any or all of the Debt Securities
or to secure any or all of the Debt Securities;
(f) To make any change that does not adversely affect the rights of any
holder;
(g) To add to, change or eliminate any of the provisions of the
Indenture with respect to one or more series of Debt Securities, so long as any
such addition, change or elimination not otherwise permitted under the Indenture
shall (1) neither apply to any Debt Security of any series created prior to the
execution of the supplemental indenture and entitled to the benefit of the
provision nor modify the rights of the holders of any Debt Security with respect
to the provision, or (2) become effective only when there is no such Debt
Security outstanding;
(h) To evidence and provide for the acceptance of appointment by a
successor or separate Trustee with respect to the Debt Securities of one or more
series and to add to or change any of the provisions of the Indenture as shall
be necessary to provide for or facilitate the administration of the Indenture by
more than one Trustee;
(i) To establish the form or terms of Debt Securities of any series;
and
(j) To provide for uncertificated Debt Securities in addition to or in
place of certificated Debt Securities (provided that the uncertificated Debt
Securities are issued in registered form for purposes of Section 163(f) of the
Internal Revenue Code or in a manner such that the uncertificated Debt
Securities are described in Section 163(f)(2)(B) of such code).
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the holders of a majority in
principal amount of the outstanding Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Debt
Security affected thereby, (a) change the stated maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, (b) reduce
the principal amount of, rate of interest on or any premium payable upon the
redemption of any Debt Security, (c) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the maturity
thereof, (d) change the place of payment where, or the coin or currency in
which, any Debt Security or any premium or interest thereon is payable, (e)
impair the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security after the stated maturity, redemption date or
repayment date, (f) reduce the percentage in principal amount of outstanding
Debt Securities of any series, the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults or (g)
modify any of the provisions set forth in this paragraph except to increase any
such percentage or to provide that certain other provisions of the Indenture may
not be modified or waived without the consent of the holder of each outstanding
Debt Security affected thereby.
The holders of a majority in principal amount of the outstanding Debt
Securities of each series may, on behalf of the holders of all the Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture.
The holders of a majority in principal amount of the outstanding Debt Securities
of each series may, on behalf of all holders of Debt Securities of that series
and any coupons appertaining thereto, waive any past default under the Indenture
with respect to Debt Securities of that series, except a default (a) in the
payment of principal of or any premium or interest on any Debt Security of such
series or (b) in respect of a covenant or provision of the Indenture which
cannot be modified or amended without the consent of each holder of outstanding
Debt Securities of the affected series.
The Indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or whether a quorum is present at a meeting of holders of Debt Securities (a)
the principal amount of an Original Issue Discount Security that shall be deemed
to be outstanding shall be the amount of the principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
maturity thereof, (b) the principal amount of a Debt Security denominated in
other than U.S. dollars shall be the U.S. dollar equivalent, determined on the
date of original issuance of such Debt Security, of the principal amount of such
Debt Security (or, in the case of an Original Issue Discount Security, the U.S.
dollar equivalent on the date of original issuance of such Debt Security of the
amount determined as provided in (a) above of such Debt Security) and (c) Debt
Securities owned by the Company or any Subsidiary of the Company shall be
disregarded and deemed not to be Outstanding.
Consolidation, Merger and Sale of Assets
The Company may not consolidate with or merge with or into any person,
or convey, transfer or lease all or substantially all of its assets, or permit
any person to consolidate with or merge into the Company, unless the following
conditions have been satisfied:
(a) Either (1) the Company shall be the continuing person in the case
of a merger or (2) the resulting, surviving or transferee person, if other than
the Company (the "Successor Company"), shall be a corporation organized and
existing under the laws of the United States, any State or the District of
Columbia and shall expressly assume all the obligations of the Company under the
Debt Securities and the Indenture;
(b) Immediately after giving effect to the transaction (and treating
any indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Company as a result of the transaction as having been incurred
by the Successor Company or the Subsidiary at the time of the transaction), no
default, Event of Default or event that, after notice or lapse of time, would
become an Event of Default under the Indenture would occur or be continuing; and
(c) The Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that the consolidation,
merger, transfer or lease complies with the Indenture.
Upon any consolidation by the Company with, or merger by the Company
into, any other person or any conveyance, transfer or lease of the properties
and assets of the Company as an entirety or substantially as an entirety as
described in the preceding paragraph, the Successor Company resulting from such
consolidation or into which the Company is merged or the transferee or lessee to
which such conveyance, transfer or lease is made, will succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture, and thereafter, except in the case of a lease, the predecessor
(if still in existence) will be released from its obligations and covenants
under the Indenture and all outstanding Debt Securities.
Notices
Except as otherwise provided in the Indenture, notices to holders of
Debt Securities will be given by mail to the addresses of such holders as they
appear in the Debt Security Register.
Title
Prior to due presentment of a Debt Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name such Debt Security is registered as the owner
of such Debt Security for the purpose of receiving payment of principal of and
any premium and any interest (other than defaulted interest or as otherwise
provided in the applicable Prospectus Supplement) on such Debt Security and for
all other purposes whatsoever, whether or not such Debt Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Replacement of Debt Securities
Any mutilated Debt Security will be replaced by the Company at the
expense of the Holder upon surrender of such Debt Security to the Trustee. Debt
Securities that become destroyed, stolen or lost will be replaced by the Company
at the expense of the Holder upon delivery to the Trustee of the Debt Security
or evidence of the destruction, loss or theft thereof satisfactory to the
Company and the Trustee. In the case of a destroyed, lost or stolen Debt
Security, an indemnity satisfactory to the Trustee and the Company may be
required at the expense of the holder of such Debt Security before a replacement
Debt Security will be issued.
Governing Law
The Indenture and the Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
Regarding the Trustee
The Company may appoint a separate Trustee for any series of Debt
Securities. As used herein in the description of a series of Debt Securities,
the term "Trustee" refers to the Trustee appointed with respect to the series of
Debt Securities.
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest and there is a default under the Debt Securities of any
series for which the Trustee serves as trustee, the Trustee must eliminate such
conflict or resign.
The Trustee or its affiliate may provide certain banking and financial
services to the Company in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
The statements set forth under this heading with respect to AOL's
Restated Certificate of Incorporation (the "AOL Charter"), AOL's Restated
By-laws (the "AOL By-laws") and the Delaware General Corporation Law (the
"DGCL"), are brief summaries thereof and do not purport to be complete. Such
statements are subject to the detailed provisions of the AOL Charter, the AOL
By-laws and the DGCL.
The authorized capital stock of the Company consists of 600,000,000
shares of Common Stock, $.01 par value ("Common Stock"), and 5,000,000 shares of
Preferred Stock, $.01 par value ("Preferred Stock"). As of June 5, 1998, there
were 218,903,661 shares of Common Stock outstanding and no shares of Preferred
Stock outstanding.. In May 1998, the Board of Directors designated 500,000
shares of the Company's Preferred Stock as Series A-1 Junior Participating
Preferred Stock in connection with the establishment of a new shareholder rights
plan. See "--New Shareholder Rights Plan."
Common Stock
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Stockholders casting a plurality of votes of the stockholders
entitled to vote in an election of directors may elect those directors standing
for election. Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefore, subject to any preferential dividend rights of
Preferred Stock that may be issued at such future time or times. Upon the
liquidation, dissolution or winding up of the Company the holders of Common
Stock are entitled to receive ratably, according to the number of shares of
Common Stock held by them, the net assets of the Company available after the
payment of all debts and other liabilities and subject to the prior rights of
Preferred Stock that may be issued at such time. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of Common Stock are fully paid and nonassessable. The rights, preferences
and privileges of holders of Common Stock are subject to the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
Preferred Stock
The Board of Directors is authorized, subject to any limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 5,000,000 shares of the Company's authorized class of
undesignated Preferred Stock, in one or more series. Each such series of
Preferred Stock shall have such number of shares, designations, preferences,
powers, qualifications and special or relative rights or privileges as shall be
determined by the Board of Directors, which may include, among others, dividend
rights, voting rights, redemption and sinking fund provisions, liquidation
preferences, conversion rights and preemptive rights.
The stockholders of the Company have granted the Board of Directors
authority to issue Preferred Stock and to determine its rights and preferences
to eliminate delays associated with a stockholder vote on specific issuances.
The rights of the holders of Common Stock will be subject to the rights of
holders of any Preferred Stock issued in the future. The issuance of Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring, a majority of the outstanding voting stock of the Company.
Terms
The specific terms of any Preferred Stock being offered (the "Offered Preferred
Stock") will be described in the Prospectus Supplement relating to such Offered
Preferred Stock. The preceding summaries of certain provisions of the Preferred
Stock are subject to, and are qualified in their entirety by reference to, the
Certificate of Incorporation and the Certificate of Designation relating to the
particular class or series of Preferred Stock. Reference is made to the
Prospectus Supplement relating to the Offered Preferred Stock offered thereby
for specific terms, including:
(a) The designation of such Preferred Stock.
(b) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the initial offering price of such
Preferred Stock.
(c) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock.
(d) The date from which dividends on such Preferred Stock shall
accumulate, if applicable.
(e) The procedures for any auction and remarketing, if any, of such
Preferred Stock.
(f) The provision of a sinking fund, if any, for such Preferred Stock.
(g) The provision for redemption, if applicable, of such Preferred
Stock.
(h) Any listing of such Preferred Stock on any securities exchange.
(i) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into or exchangeable for Common Stock, and whether at
the option of the holder thereof or the Company.
(j) Whether such Preferred Stock will rank senior or junior to or on a
parity with any other class or series of Preferred Stock.
(k) The voting rights, if any, of such Preferred Stock.
(l) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
(m) A discussion of Federal income tax considerations applicable to
such Preferred Stock.
Warrant
In connection with an agreement with one of the Company's
communications providers, the Company has issued an outstanding warrant,
exercisable through March 31, 1999, subject to certain performance standards
specified in the agreement, to purchase 7,200,000 shares of Common Stock at a
price of approximately $1.95 per share.
Charter Provisions
The Company's Restated Certificate of Incorporation and Restated
By-Laws provide for a classified Board of Directors. The Board of Directors
currently consists of eight members, classified into three classes. At each
annual meeting of stockholders, directors are elected for a full term of three
years to succeed those directors whose terms are expiring.
The Company's Restated Certificate of Incorporation includes provisions
eliminating the personal liability of the Company's directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by Delaware law. The Company's Restated Certificate of Incorporation and
Restated By-Laws include provisions indemnifying the Company's directors and
officers to the fullest extent permitted by Delaware law, including under
circumstances in which indemnification is otherwise discretionary, and
permitting the Board of Directors to grant indemnification to employees and
agents to the fullest extent permitted by Delaware law.
The Company's Restated By-Laws require that nominations for the Board
of Directors made by the stockholder and proposals by stockholders seeking to
have any business conducted at a stockholders' meeting comply with particular
notice procedures. A notice by a stockholder of a planned nomination or of
proposed business must generally be given not later than 60 days nor earlier
than 90 days prior to the date of the meeting. A stockholder's notice of
nomination must include particular information about the stockholder, the
nominee and any beneficial owner on whose behalf the nomination is made, and a
notice from a stockholder proposing business to be brought before the meeting
must describe such business and include information about the stockholder making
the proposal, any beneficial owner on whose behalf the proposal is made, and any
other stockholder known to be supporting the proposal.
In addition, the Restated Certificate of Incorporation contains a "fair
price" provision (the "Fair Price Provision") providing that certain "Business
Combinations" with any "Interested Stockholder" (as each term is defined in the
Fair Price Provision) may not be consummated without an 80% stockholder vote,
unless either approved by at least a majority of the Disinterested Directors (as
defined in the Fair Price Provision) or certain minimum price and procedural
requirements are met. An "Interested Stockholder" is defined to include any
individual or entity who is, or is an affiliate and during the prior two years
was, the beneficial owner of more than 15% of the voting stock of the Company. A
"Business Combination" includes, among other things, (i) a merger or
consolidation, (ii) the sale or other disposition of 10% or more of the
Company's assets, (iii) the issuance of stock having a value in excess of 10% of
the fair market value of the Company's Common Stock, (iv) any reclassification
or recapitalization which increase the proportionate share holdings of an
Interested Stockholder and (v) the adoption of a plan of liquidation or
dissolution proposed by or on behalf of an Interested Stockholder. A significant
purpose of the Fair Price Provision is to deter a purchaser from using
two-tiered pricing and similar unfair or discriminatory tactics in an attempt to
acquire the Company. The affirmative vote of the holders of 80% of the voting
power of the Company is required to amend or repeal the Fair Price Provision or
adopt any provision inconsistent with it.
The Company's Restated Certificate of Incorporation and Restated
By-Laws provide that any action required or permitted to be taken by the
stockholders of the Company shall be taken only at a duly called annual or
special meeting of the stockholders, or by the unanimous written consent of all
stockholders entitled to vote. Special meetings may be called only by the Board
of Directors or the Chief Executive Officer of the Company. In addition, the
Restated Certificate of Incorporation provides that the Board of Directors may,
from time to time, fix the number of directors constituting the Board of
Directors, and only the directors are permitted to fill vacancies on the Board
of Directors.
The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. The affirmative vote of the holders of at
least 80% of the outstanding voting stock of the Company is required to amend or
repeal certain provisions of the Company's Restated Certificate of
Incorporation, and to reduce the number of authorized shares of Common Stock and
Preferred Stock. Such 80% vote is also required for stockholders to amend or
repeal the Company's Restated By-Laws.
The provisions of the Restated Certificate of Incorporation and
Restated By-Laws discussed above could make more difficult or discourage a proxy
contest or the acquisition of control by substantial block of the Company's
stock or the removal of any incumbent member of the Board of Directors. Such
provisions could also have the effect of discouraging a third party from making
a tender offer or otherwise attempting to obtain control of the Company, even
though such an attempt might be beneficial to the Company and its stockholders.
New Shareholder Rights Plan
The Company adopted a new shareholder rights plan on May 12, 1998 (the
"New Plan"). The New Plan was implemented by declaring a dividend, distributable
to shareholders of record on June 1, 1998, of one preferred share purchase right
(a "Right") for each outstanding share of Common Stock. All rights granted under
the Company's former shareholder rights plan were redeemed in conjunction with
the implementation of the New Plan. Each Right under the New Plan will initially
entitle registered holders of the Common Stock to purchase one one-thousandth of
a share of the Company's new Series A-1 Junior Participating Preferred Stock
("Series A-1 Preferred Stock") at a purchase price of $900 per one
one-thousandth of a share of Series A-1 Preferred Stock, subject to adjustment.
The Rights will be exercisable only if a person or group (i) acquires 15% or
more of the Common Stock or (ii) announces a tender offer that would result in
that person or group acquiring 15% or more of the Common Stock. Once
exercisable, and in some circumstances if certain additional conditions are met,
the New Plan allows shareholders (other than the acquiror) to purchase Common
Stock or securities of the acquiror having a then-current market value of two
times the exercise price of the Right. The Rights are redeemable for $.001 per
Right (subject to adjustment) at the option of the Board of Directors. Until a
Right is exercised, the holder of the Right, as such, has no rights as a
shareholder of the Company. The Rights will expire on May 12, 2008 unless
redeemed by the Company prior to that date.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board of
Directors since the Rights may be redeemed by the Company at $.001 per Right
prior to the earlier of (i) the time prior to such time as any person has become
an Acquiring Person (as defined in the Rights Agreement), or (ii) May 12, 2008.
The New Plan and the Rights will replace the rights issued pursuant to
a shareholder rights plan adopted by the Company in fiscal 1993. The Board of
Directors has approved and the termination of such plan the redemption of the
rights under the former plan effective as of June 1, 1998, as permitted under
the terms of the former plan. The former rights plan provided the registered
holders of Common Stock the right, in certain limited circumstances involving a
potential business combination or change of control transaction of the Company,
to acquire additional shares of Common Stock at a reduced price.
Change of Control
Section 203 of the DGCL prohibits generally a public Delaware
corporation, including AOL, from engaging in a Business Combination (as defined
below) with an Interested Stockholder (as defined below) for a period of three
years after the date of the transaction in which an Interested Stockholder
became such, unless: (i) the board of directors of such corporation approved,
prior to the date such Interested Stockholder became such, either such Business
Combination or such transaction; (ii) upon consummation of such transaction,
such Interested Stockholder owns at least 85% of the voting shares of such
corporation (excluding specified shares); or (iii) such Business Combination is
approved by the board of directors of such corporation and authorized by the
affirmative vote (at an annual or special meeting and not by written consent) of
at least 66 2/3% of the outstanding voting shares of such corporation (excluding
shares held by such Interested Stockholder). A "Business Combination" includes
(i) mergers, consolidations and sales or other dispositions of 10% or more of
the assets of a corporation to or with an Interested Stockholder, (ii) certain
transactions resulting in the issuance or transfer to an Interested Stockholder
of any stock of such corporation or its subsidiaries and (iii) certain other
transactions resulting in a financial benefit to an Interested Stockholder. An
"Interested Stockholder" is a person who owns (or, if such person is an
affiliate or associate of the corporation, within a three-year period did own)
15% or more of a corporation's stock entitled to vote generally in the election
of directors and, the affiliates and associates of such person.
PLAN OF DISTRIBUTION
The Company may sell the Securities: (i) through underwriters or
dealers; (ii) directly to a limited number of purchasers or to a single
purchaser; or (iii) through agents. The Prospectus Supplement with respect to
the Securities being offered (the "Offered Securities") will set forth the terms
of the offering of the Offered Securities, including the name or names of any
underwriters or agents, the purchase price of the Offered Securities and net
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more underwriters. The underwriter or underwriters with respect to a
particular underwritten offering of Securities, or, if an underwriting syndicate
is used, the managing underwriter or underwriters, will be set forth on the
cover of the applicable Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement relating thereto, the obligations of the underwriters to
purchase the Offered Securities will be subject to conditions precedent and the
underwriters will be obligated to purchase all of the Offered Securities if any
are purchased.
If dealers are utilized in the sale of Offered Securities in respect of
which this Prospectus is delivered, and if so specified in the applicable
Prospectus Supplement, the Company will sell such Offered Securities to the
dealers as principals. The dealers may then resell such Offered Securities to
the public at varying prices to be determined by such dealers at the time of
resale. The names of the dealers and the terms of the transaction will be set
forth in the applicable Prospectus Supplement.
The Offered Securities may be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offer or sale of the Offered Securities in respect to which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement.
Underwriters, dealers and agents may be entitled under
agreements entered into with the Company to indemnification by the Company
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which the underwriters, dealers
or agents may be required to make in respect thereof. Underwriters, dealers and
agents may be customers of, may engage in transactions with, or perform services
for, the Company in the ordinary course of business.
LEGAL MATTERS
The validity of the Securities offered hereby is being passed upon for
the Company by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. An attorney
at Mintz Levin, who is vice chairman of the Company in an honorary capacity,
owns an aggregate of 200 shares of Common Stock and options to purchase 344,000
shares of Common Stock.
EXPERTS
The consolidated financial statements of America Online, Inc. appearing
in its Annual Report (Form 10-K) for the year ended June 30, 1997, 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.
The financial statements of Interactive Services Division of CompuServe
Corporation at April 30, 1997 and for the year then ended appearing in America
Online, Inc.'s Current Report on Form 8-K/A dated January 31, 1998 and filed
April 17, 1998 have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such 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.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the expenses in connection with the issuance
and distribution of the Securities being registered, other than underwriting
discounts and commissions. All such expenses shall be borne by the Company. All
amounts set forth below are estimates, other than the SEC registration fee.
SEC Registration Fee $295,000
Legal Fees and Expenses 45,000
Accounting Fees and Expenses 20,000
Trustee Fees 10,000
Rating Agency Fees 100,000
Miscellaneous 10,000
------
TOTAL $480,000
Item 15. Indemnification of Officers and Directors
Section 145(a) of the General Corporation Law of the State of Delaware
("Delaware Corporation Law") provides, in general, that a corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director or officer of the corporation. Such indemnity may be against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding, if the indemnified party acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and if, with respect to any criminal action or proceeding, the
indemnified party did not have reasonable cause to believe his conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the corporation, against any expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation.
Section 145(g) of the Delaware Corporation law provides, in general,
that a corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation
against any liability asserted against him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of the law.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law
(the "Delaware Statute"), Article Ninth of the Registrant's Restated Certificate
of Incorporation (the "Certificate of Incorporation") provides that:
To the fullest extent permitted by the Delaware General
Corporation Law as the same now exists or may hereafter be amended, the
Corporation shall indemnify, and advance expenses to, its directors and
officers and any person who is or was serving at the request of the
Corporation as a director or officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
Corporation, by action of its board of directors, may provide
indemnification or advance expenses to employees and agents of the
Corporation or other persons only on such terms and conditions and to
the extent determined by the board of directors in its sole and
absolute discretion.
The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article Ninth shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office.
The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him against
such liability under this Article Ninth.
The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article Ninth shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of
the heirs, executors and administrators of such officer or director.
The indemnification and advancement of expenses that may have been
provided to an employee or agent of the Corporation by action of the
board of directors, pursuant to the last sentence of Paragraph 1 of
this Article Ninth, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be an employee or
agent of the Corporation and shall inure to the benefit of the heirs,
executors and administrators of such a person, after the time such
person has ceased to be an employee or agent of the Corporation, only
on such terms and conditions and to the extent determined by the board
of directors in its sole discretion.
In addition, Article Five of the Registrant's Restated By-Laws
(Incorporated by reference herein) provides that:
Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved
in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or
was a director or an officer of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust
or other enterprise, including service with respect to an employee
benefit plan (hereinafter an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and
loss (including attorney's fees, judgments, fines, ERISA excise taxes
or penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith; provided, however,
that, except as provided in the section "Right of Indemnitees to Bring
Suit" of this Article with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such Indemnitee in
connection with a proceeding (or part thereof) initiated by such
Indemnitee only if such proceeding (or part thereof) was authorized by
the board of directors of the Corporation.
Right to Advancement of Expenses. The right to indemnification
conferred in Section 1 of this Article shall include the right to be
paid by the Corporation the expenses (including attorney's fees)
incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an
Indemnitee in his capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such Indemnitee,
including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking,
by or on behalf of such Indemnitee, to repay all amounts so advanced if
it shall ultimately be determined by final judicial decision from which
there is no further right to appeal that such Indemnitee is not
entitled to be indemnified for such expenses under this section or
otherwise. The rights to indemnification and to the advancement of
expenses conferred in this section and the section "Right to
Indemnification" of this Article shall be contract rights and such
rights shall continue as to an Indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the Indemnitee's heirs, executors and administrators. Any repeal or
modification of any of the provisions of this Article shall not
adversely affect any right or protection of an Indemnitee existing at
the time of such repeal or modification.
Right of Indemnitees to Bring Suit. If a claim under the
sections "Right to Indemnification" and "Right to Advancement of
Expenses" of this Article is not paid in full by the Corporation within
sixty (60) days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty (20)
days, the Indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking, the Indemnitee shall also be entitled to be paid the
expenses of prosecuting or defending such suit. In (i) any suit brought
by the Indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the Indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any
suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the
Indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of
the Corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the Indemnitee is
proper in the circumstances because the Indemnitee has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard
of conduct, shall create a presumption that the Indemnitee has not met
the applicable standard of conduct or, in the case of such a suit
brought by the Indemnitee, be a defense to such suit. In any suit
brought by the Indemnitee to enforce a right to indemnification or to
an advancement of expenses hereunder, or brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the Indemnitee is not entitled
to be indemnified, or to such advancement of expenses, under this
Article or otherwise shall be on the Corporation.
Non-Exclusivity of Rights. The rights to indemnification and
to the advancement of expenses conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter
acquire under any statute, the Corporation's Certificate of
Incorporation as amended from time to time, these By-Laws, any
agreement, any vote of stockholders or disinterested directors or
otherwise.
Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware
General Corporation Law.
Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the
board of directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to
the fullest extent of the provisions of this Article with respect to
the indemnification and advancement of expenses of directors and
officers of the Corporation.
The directors and officers of the Registrant are covered by a policy of
liability insurance.
Item 16. Exhibits.
Exhibit Description
No.
<TABLE>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement (to be filed by amendment)
2.1 -- Agreement and Plan of Reorganization dated as of May 11, 1994, as amended, among the Registrant, RCC
Acquisition Corporation and RCC Communications Corporation (Filed as Annex A to the Registrant's
Registration Statement on Form S-4, Registration No. 33-82030, and incorporated herein by reference.)
2.2 -- Agreement and Plan of Reorganization dated as of November 8, 1994, among the Registrant, BLT
Acquisition Corporation, CMG Information Services, Inc. and Booklink Technologies, Inc. (Filed as
Exhibit 1 to the Registrant's Report on Form 8-K, filed January 9, 1995 and incorporated herein by
reference.)
2.3 -- Asset Purchase Agreement by and between the Registrant and Advanced Network & Services, Inc.
dated as of November 25, 1994 (Filed as Exhibit 1 to the Registrant's Report on Form 8-K, filed
February 28, 1995 and incorporated herein by reference.)
2.4 -- Agreement and Plan of Merger dated as of December 20, 1995, among the Registrant, Santa's
Acquisition Corp. and Johnson-Grace Company and its Principal Shareholders (Filed as Exhibit
2.1 to the Registrant's Report on Form 8-K, filed February 14, 1996 and incorporated herein by
reference.)
2.5 -- Stock Purchase Agreement, dated as of August 5, 1996, among the Registrant, The ImagiNation Network,
Inc. and AT&T Corp. (Filed as Exhibit 10 to the Registrant's Report on Form 8-K, filed August 5,
1996, and incorporated herein by reference.)
2.6 -- Purchase and Sale Agreement dated as of September 7, 1997 by and among America Online, Inc., ANS
Communications, Inc. and WorldCom, Inc. (Filed as Exhibit 2 to the Company's Current Report on Form
8-K, dated September 19, 1997, and incorporated herein by reference.)
2.7 -- Agreement of Purchase and Sale dated as of June 5, 1998 by and among America Online, Inc., AOL
Acquisition Corp., R.G.A.O. Holdings Ltd., and Mirabilis Ltd and the Principal Stockholders
(Confidential treatment has been requested with respect to certain portions of the Agreement) (Filed
as Exhibit 2 to the Registrant's Report on Form 8-K, dated June 5, 1998 and incorporated herein by
reference.)
4.1 -- Amendment of Section A of Article 4 of the Restated
Certificate of Incorporation of America Online, Inc. (Filed as
Exhibit 4.1 to the Registrant's Registration Statement on Form
S-3, Registration No.
333-46633 and incorporated herein by reference.)
4.2 -- Section B of Article 4, Article 6 and Article 8 of the Restated Certificate of Incorporation of the
Registrant (Filed as part of Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the year
ended June 30, 1997, and incorporated herein by reference.)
4.3 -- Rights Agreement dated as of May 12, 1998, between America Online, Inc. and BankBoston, N.A., as
Rights Agent (Filed as Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 and incorporated herein by reference.)
4.4 -- Form of Indenture between the Registrant and one or more commercial banks to be named, as trustee
4.5 -- Form of Debt Security (to be filed by amendment)
5.1 -- Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with respect to the legality of the
securities being registered (to be filed by amendment)
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consents of Ernst & Young LLP
23.2 -- Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in Exhibit 5.1)
24.1 -- Powers of Attorney
25.1 -- Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of Trustee
(to be filed by amendment)
</TABLE>
Item 17. Undertakings.
A. Rule 415 Offering
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:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the 1934 Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed 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.
B. Filings Incorporating Subsequent Exchange Act Documents by Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of Exchange Act, as amended (the "Exchange Act") (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Request for Acceleration of Effective Date Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
D. Rule 430A Undertaking
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
E. Qualification of Trust Indentures Under the Trust Indenture
Act of 1939
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Securities Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 County of Loudoun, Commonwealth of Virginia on June 18,
1998.
AMERICA ONLINE, INC.
By: /S/LENNERT J. LEADER
Lennert J. Leader
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signatures Title Date
* Chairman of the Board and Chief Executive June 18, 1998
Stephen M. Case Officer (principal executive officer)
* President, Chief Operating Officer and Director June 18, 1998
Robert W. Pittman
Senior Vice President and Chief Financial June 18, 1998
/S/LENNERT J. LEADER Officer (principal financial and accounting
Lennert J. Leader officer)
* Director June 18, 1998
Daniel F. Akerson
* Director June 18, 1998
Frank J. Caufield
* Director June 18, 1998
Robert J. Frankenberg
* Director June 18, 1998
Alexander M. Haig, Jr.
* Director June 18, 1998
William N. Melton
* Director June 18, 1998
Thomas Middelhoff
</TABLE>
*By: /S/LENNERT J. LEADER
Lennert J. Leader, Attorney-in-Fact
EXHIBIT INDEX
Exhibit Description
No.
4.4 -- Form of Indenture between the Registrant and one or more
commercial banks to be named, as
trustee
12.1 -- Computation of Ratio of Earnings to Fixed Charges
23.1 -- Consents of Ernst & Young LLP
24.1 -- Powers of Attorney
AMERICA ONLINE, INC.
AND
[NAME OF TRUSTEE],
AS TRUSTEE
INDENTURE
DATED AS OF _______ __, 1998
DEBT SECURITIES
AS MAY BE ISSUED FROM TIME TO TIME IN ONE OR MORE SERIES
AMERICA ONLINE, INC.
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE,
OF THE TRUST INDENTURE ACT OF 1939:
Trust Indenture Indenture
Act Section Section
Section 310
(a)(1)..............................................609
(a)(2)..............................................609
(a)(3)..............................................Not Applicable
(a)(4)..............................................Not Applicable
(b).................................................608, 610
Section 311
(a).................................................613
(b).................................................613
Section 312
(a).................................................701, 702(a)
(b).................................................702(b)
(c).................................................702(c)
Section 313
(a).................................................703(a)
(b).................................................703(a)
(c).................................................703(a)
(d).................................................703(b)
Section 314
(a).................................................704
(a)(4)..............................................1004
(b).................................................Not Applicable
(c)(1)..............................................102
(c)(2)..............................................102
(c)(3)..............................................Not Applicable
(d).................................................Not Applicable
(e).................................................102
Section 315
(a).................................................601, 603(1)
(b).................................................602
(c).................................................601
(d).................................................601
(e).................................................514
Section 316
(a) ................................................101
(a)(1)(A)...........................................512
(a)(1)(B)...........................................513
(a)(2)..............................................Not Applicable
(b).................................................508
(c).................................................104(e)
Section 317
(a)(1)..............................................503
(a)(2)..............................................504
(b).................................................1003
Section 318
(a).................................................107
This reconciliation and tie shall not, for any purpose, be deemed part of the
Indenture.
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Page
Section 101. Definitions......................................................1
Section 102. Certificates and Opinions........................................7
Section 103. Form of Documents Delivered to Trustee......................... .7
Section 104. Acts of Holders; Record Dates....................................8
Section 105. Notices, Etc., to Trustee and Company............................9
Section 106. Notice to Holders; Waiver........................................9
Section 107. Conflict with Trust Indenture Act...............................10
Section 108. Effect of Headings and Table of Contents........................10
Section 109. Successors and Assigns..........................................10
Section 110. Separability Clause.............................................10
Section 111. Benefits of Indenture...........................................10
Section 112. Governing Law...................................................10
Section 113. Legal Holidays..................................................10
Section 114. No Recourse Against Others......................................10
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.................................................11
Section 202. Form of Face of Security........................................11
Section 203. Form of Reverse of Security.....................................13
Section 204. Form of Legend for Global Securities............................16
Section 205. Form of Trustee's Certificate of Authentication.................16
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series............................17
Section 302. Denominations...................................................19
Section 303. Execution, Authentication, Delivery and Dating..................19
Section 304. Temporary Securities............................................20
Section 305. Registration, Registration of Transfer and Exchange.............21
Section 306. Mutilated, Destroyed, Lost and Stolen Securities................22
Section 307. Payment of Interest; Interest Rights Preserved..................23
Section 308. Persons Deemed Owners...........................................24
Section 309. Cancellation....................................................24
Section 310. Computation of Interest.........................................25
Section 311. Wire Transfers..................................................25
Section 312. CUSIP Numbers...................................................25
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.........................25
Section 402. Application of Trust Money......................................26
ARTICLE FIVE
REMEDIES OF THE TRUSTEE
AND HOLDERS IN EVENT OF DEFAULT
Section 501. Events of Default...............................................26
Section 502. Acceleration of Maturity; Rescission and Annulment..............28
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee......................................................29
Section 504. Trustee May File Proofs of Claim................................30
Section 505. Trustee May Enforce Claims Without Possession of Securities.....30
Section 506. Application of Money Collected..................................31
Section 507. Limitation on Suits.............................................31
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest....................................................32
Section 509. Restoration of Rights and Remedies..............................32
Section 510. Rights and Remedies Cumulative..................................32
Section 511. Delay or Omission Not Waiver....................................32
Section 512. Control by Holders..............................................33
Section 513. Waiver of Past Defaults.........................................33
Section 514. Undertaking for Costs...........................................34
Section 515. Waiver of Stay or Extension Laws................................34
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.............................34
Section 602. Notice of Defaults..............................................34
Section 603. Certain Rights of Trustee.......................................35
Section 604. Not Responsible for Recitals or Issuance of Securities..........35
Section 605. May Hold Securities.............................................35
Section 606. Money Held in Trust.............................................36
Section 607. Compensation and Reimbursement..................................36
Section 608. Disqualification; Conflicting Interests.........................36
Section 609. Corporate Trustee Required; Eligibility.........................37
Section 610. Resignation and Removal; Appointment of Successor...............37
Section 611. Acceptance of Appointment by Successor..........................38
Section 612. Merger, Conversion, Consolidation or Succession to Business.....39
Section 613. Preferential Collection of Claims Against Company...............39
Section 614. Appointment of Authenticating Agent.............................39
Section 615. Compliance with Tax Laws........................................41
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of...............41
Section 702. Preservation of Information; Communications to Holders..........41
Section 703. Reports by Trustee..............................................41
Section 704. Reports by Company..............................................42
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on Certain Terms ...........42
Section 802. Successor Substituted...........................................42
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders..............43
Section 902. Supplemental Indentures with Consent of Holders.................44
Section 903. Execution of Supplemental Indentures............................45
Section 904. Effect of Supplemental Indentures...............................45
Section 905. Conformity with Trust Indenture Act.............................45
Section 906. Reference in Securities to Supplemental Indentures .............45
ARTICLE TEN
PARTICULAR COVENANTS OF THE COMPANY
Section 1001. Payment of Principal, Premium and Interest......................45
Section 1002. Maintenance of Office or Agency.................................45
Section 1003. Money for Securities Payments to Be Held in Trust...............46
Section 1004. Statement by Officers as to Default.............................46
Section 1005. Existence.......................................................47
Section 1006. Maintenance of Properties.......................................47
Section 1007. Payment of Taxes and Other Claims...............................47
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article........................................47
Section 1102. Election to Redeem; Notice to Trustee...........................47
Section 1103. Selection by Trustee of Securities to Be Redeemed ..............48
Section 1104. Notice of Redemption ...........................................48
Section 1105. Deposit of Redemption Price ....................................49
Section 1106. Securities Payable on Redemption Date ..........................49
Section 1107. Securities Redeemed in Part ....................................49
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article .......................................50
Section 1202. Satisfaction of Sinking Fund Payments with Securities ..........50
Section 1203. Redemption of Securities for Sinking Fund ......................50
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance ...50
Section 1302. Defeasance and Discharge .......................................51
Section 1303. Covenant Defeasance ............................................51
Section 1304. Conditions to Defeasance or Covenant Defeasance ................51
Section 1305. Deposited Money and U.S. Government Obligations to be Held
in Trust; Indemnity for U.S. Government Obligations;
Repayment to Company............................................52
Section 1306. Reinstatement...................................................53
ARTICLE FOURTEEN
REPAYMENT AT OPTION OF SECURITY HOLDERS
Section 1401. Applicability of Article........................................53
Section 1402. Repayment of Securities.........................................53
Section 1403. Exercise of Option; Notice .....................................53
Section 1404. Securities Payable on the Repayment Date .......................54
INDENTURE, dated as of ______ __, 1998, AMERICA ONLINE, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 22000 AOL Way,
Dulles, Virginia 20166, and [NAME OF TRUSTEE], a national banking association
duly organized and existing under the laws of the United States, as Trustee
hereunder (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its senior unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), unlimited as to principal amount, to bear such rates of interest,
to mature at such time or times, to be issued in one or more series and to have
such other provisions as shall be fixed as hereinafter provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
For and in consideration of the premises and the purchase of the.
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States of America, and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Basis Point Amount" has the meaning specified in Section 1108.
"Board of Directors" means either the board of directors of the Company or any
committee of that board duly authorized to act for it in respect thereof.
"Board Resolution" means a copy of one or more resolutions certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close, except as may otherwise be provided in the form of
Securities of any particular series pursuant to the provisions of this
Indenture.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its Vice Chairman, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means, as of any particular time,
the aggregate amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom: (a) all current liabilities except
for (1) notes and loans payable, (2) current maturities of long-term debt and
(3) current maturities of obligations under capital leases; and (b) to the
extent included in such aggregate amount of assets, all goodwill, trade names,
trademarks, patents, organization expenses, unamortized debt discount and
expenses (other than capitalized unamortized product development costs, such as,
without limitation, capitalized hardware and software development costs), all as
set forth on the most recent consolidated balance sheet of the Company and its
consolidated subsidiaries and computed in accordance with generally accepted
accounting principles.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be conducted,
which office, at the date of execution of this Indenture, is located at
________________________.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable
in whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as Depositary
for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934.
"Global Security" means a Security that evidences all or part of the
Securities of any series and is authenticated and delivered to, and registered
in the name of, the Depositary for such Securities or a nominee thereof.
"H.15 Statistical Release" has the meaning specified in Section 1108.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of the
particular series of Securities established as contemplated by Section 301;
provided, however, that if at any time more than one Person is acting as Trustee
under this Indenture due to the appointment of one or more separate Trustees for
any one or more separate series of Securities, "Indenture" shall mean, with
respect to such series of Securities for which any such Person is Trustee, this
instrument as originally executed or as it may from time to time be supplemented
or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof and shall include the terms of particular
series of Securities for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is not
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee, but to which such Person, as such Trustee, was not a party; provided
further that in the event that this indenture is supplemented or amended by one
or more indentures supplemental hereto which are only applicable to certain
series of Securities, the term "Indenture" for a particular series of Securities
shall only include the supplemental indentures applicable thereto.
"Independent Investment Banker" has the meaning specified in Section
1108.
"Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Make-Whole Premium" has the meaning specified in Section 1108.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, exercise of option for
repayment or otherwise.
"Nonrecourse Obligation" means indebtedness or other obligations
substantially related to (a) the acquisition of assets not previously owned by
the Company or any Restricted Subsidiary or (b) the financing of a project
involving the development or expansion of properties of the Company or any
Restricted Subsidiary, as to which the obligee with respect to such indebtedness
or obligation has no recourse to the Company or any Restricted Subsidiary or any
assets of the Company or any Restricted Subsidiary other than the assets which
were acquired with the proceeds of such transaction or the project financed with
the proceeds of such transaction (and the proceeds thereof).
"Notice of Default" means a written notice of the kind specified in
Sections 501(4), 501(5) and (501)(6).
"Officers' Certificate" means a certificate signed by the Chairman, any
Vice Chairman, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company (and who may be an employee of the Company), or other
counsel acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities; provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected
pursuant to Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company; provided, however, that in determining
whether the Holders of the requisite principal amount of the
Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or are present at a
meeting of Holders for quorum purposes, (a) the principal amount of an
Original Issue Discount Security that shall be deemed to be Outstanding
shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 502, (b) the principal amount of a
Security denominated in one or more foreign currencies or currency
units shall be the U.S. dollar equivalent, determined in the manner
provided as contemplated by Section 301 on the date of original
issuance of such Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the U.S. dollar equivalent on the
date of original issuance of such Security of the amount determined as
provided in (a) above) of such Security, and (c) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such
determination as to the presence of a quorum, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated destroyed, lost or stolen Security.
"Principal Property" means the land, land improvements, buildings and
fixtures (to the extent they constitute real property interests) (including any
leasehold interest therein) constituting the principal corporate office, any
manufacturing plant or any manufacturing facility (whether owned at the date of
this Indenture or thereafter acquired) and any equipment located thereon which
(a) is owned by the Company or any Subsidiary; (b) is located within any of the
present 50 states of the United States of America (or the District of Columbia);
(c) has not been determined in good faith by the Board of Directors not to be
materially important to the total business conducted by the Company and its
Subsidiaries taken as a whole; and (d) has a net book value on the date as of
which the determination is being made in excess of 1% of Consolidated Net
Tangible Assets of the Company as most recently determined on or prior to such
date (including for purposes of such calculation the land, land improvements,
buildings and such fixtures comprising such office, plant or facility, as the
case may be).
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Remaining Term" has the meaning specified in Section 1108.
"Repayment Date", when used with respect to any Security to be repaid
upon exercise of option for repayment by the Holders, means the date fixed for
such repayment by or pursuant to this Indenture.
"Repayment Price", when used with respect to any Security to be repaid
upon exercise of option for repayment by the Holder, means the price at which it
is to be repaid pursuant to this Indenture.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary which owns any Principal
Property, provided, however, that the term "Restricted Subsidiary" shall not
include (a) any Subsidiary that is principally engaged in financing receivables,
or that is principally engaged in financing the Company's operations outside the
United States of America; or (b) any Subsidiary less than 80% of the voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries if
the common stock of such Subsidiary is traded on any national securities
exchange or quoted on the Nasdaq National Market or in the over-the-counter
market. For purposes of this definition, "voting stock" has the meaning
specified in the definition of "Subsidiary" below.
"Security" or "Securities" has the meaning stated in the first recital
of this Indenture and more particularly means any Security or Securities
authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means (a) any corporation of which at least 66 2/3% of the
outstanding voting stock is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or (b) any other Person (other
than a corporation) in which the Company or one or more other Subsidiaries
directly or indirectly has at least 66 2/3% equity ownership and power to direct
the policies, management and affairs thereof. For the purposes of this
definition, "voting stock" means stock that ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.
"Treasury Yield" has the meaning specified in Section 1108.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed, except as provided in
Section 905; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"U.S. Government Obligations" means securities that are (a) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case under clauses (a) or (b) are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of 1933) as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
on or principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
Section 102. Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than those provided
for in Section 1004) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein related thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where
it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in
favor of the Trustee and the Company, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof. Where such execution is by a signer acting
in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in
any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon
such Security.
(e) The Company may, in the circumstances permitted by the
Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Securities of any series entitled to give or
take any request, demand, authorization, direction, notice, consent,
waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders of Securities of such series.
If not set by the Company prior to the first solicitation of a Holder
of Securities of such series made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the
record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be
provided pursuant to Section 701) prior to such first solicitation or
vote, as the case may be. With regard to any record date for action to
be taken by the Holders of one or more series of Securities, only the
Holders of Securities of such series on such date (or their duly
designated proxies) shall be entitled to give or take, or vote on, the
relevant action. With regard to any record date set pursuant to this
paragraph, the Holders of Outstanding Securities of the relevant series
on such record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action, whether
or not such Holders remain Holders after such record date. With regard
to any action that may be given or taken hereunder only by Holders of a
requisite principal amount of Outstanding Securities of any series (or
their duly appointed agents) and for which a record date is set
pursuant to this paragraph, the Company may, at its option, set an
expiration date after which no such action purported to be given or
taken by any Holder shall be effective hereunder unless given or taken
on or prior to such expiration date by Holders of the requisite
principal amount of Outstanding Securities of such series on such
record date (or their duly appointed agents). On or prior to any
expiration date set pursuant to this paragraph, the Company may, on one
or more occasions at its option, extend such date to any later date.
Nothing in this paragraph shall prevent any Holder (or any duly
appointed agent thereof) from giving or taking, after any expiration
date, any action identical to, or, at any time, contrary to or
different from, any action given or taken, or purported to have been
given or taken, hereunder by a Holder on or prior to such date, in
which event the Company may set a record date in respect thereof
pursuant to this paragraph. Notwithstanding the foregoing or the Trust
Indenture Act, the Company shall not set a record date for, and the
provisions of this paragraph shall not apply with respect to, any
action to be given or taken by Holders pursuant to Section 501, 502 or
512.
(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any
particular Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with regard
to all or any different part of such principal amount.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to the
attention of the Treasurer at the address of the Company's principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company; provided,
however, that such notice shall not be deemed to be given until received by the
Company.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, any Authenticating Agent, Paying Agent, Security Registrar and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York (without reference to
principles of conflicts of law).
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Repayment
Date or Stated Maturity of any Security shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or the
Securities (other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date, Redemption Date, Repayment Date or at the Stated
Maturity, provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity,
as the case may be.
Section 114. No Recourse Against Others.
An incorporator or any past, present or future director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on or otherwise in respect of the Securities or the Indenture.
By accepting a Security, each Holder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Securities.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
Section 202. Form of Face of Security.
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE
REGULATIONS THEREUNDER.]
AMERICA ONLINE, INC.
No._____________ $_______________
AMERICA ONLINE, INC., a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _____________, or registered assigns,
the principal sum of _______________ Dollars on _________________ [IF THE
SECURITY IS TO BEAR INTEREST PRIOR TO MATURITY, INSERT--, and to pay interest
thereon from _______________ or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semiannually on
______________ and ___________________ in each year, commencing _______________,
at the rate of __% per annum, until the principal hereof is paid or made
available for payment [IF APPLICABLE, INSERT--, and (to the extent that the
payment of such interest shall be legally enforceable) at the rate of __% per
annum on any overdue principal and premium and on any overdue installment of
interest]. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the ________ or __________ (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.]
[IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT--
The principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption, upon
repayment or at Stated Maturity and in such case the overdue principal of this
Security shall bear interest at the rate of __ % per annum (to the extent that
the payment of such interest shall be legally enforceable), which shall accrue
from the date of such default in payment to the date payment of such principal
has been made or duly provided for. Interest on any overdue principal shall be
payable on demand. Any such interest on any overdue principal that is not so
paid on demand shall bear interest at the rate of __% per annum (to the extent
that the payment of such interest shall be legally enforceable), which shall
accrue from the date of such demand for payment to the date payment of such
interest has been made or duly provided for, and such interest shall also be
payable on demand.]
Payment of principal of (and premium, if any) and [IF APPLICABLE,
INSERT--any such] interest on this Security will be made at the office or agency
of the Trustee maintained for that purpose in ____________, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. In the event the Global Security
representing the Securities becomes exchangeable for definitive Securities
pursuant to the terms of the Indenture, at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
[IF APPLICABLE, INSERT--So long as all of the Securities of this series
are represented by Global Securities, the principal of, premium, if any, and
interest, if any, on this Global Security shall be paid in same day funds to the
Depositary, or to such name or entity as is requested by an authorized
representative of the Depositary. If at any time the Securities of this series
are no longer represented by the Global Securities and are issued in definitive
form ("Certificated Securities"), then the principal of, premium, if any, and
interest, if any, on each Certificated Security at Maturity shall be paid in
same day funds to the Holder upon surrender of such Certificated Security at the
Corporate Trust Office of the Trustee, or at such other place or places as may
be designated in or pursuant to the Indenture, provided that such Certificated
Security is surrendered to the Trustee, acting as Paying Agent, in time for the
Paying Agent to make such payments in such funds in accordance with its normal
procedures. Payments of interest with respect to Certificated Securities other
than at Maturity may, at the option of the Company, be made by check mailed to
the address of the Person entitled thereto as it appears on the Security
Register on the relevant Regular or Special Record Date or by wire transfer in
same day funds to such account as may have been appropriately designated to the
Paying Agent by such Person in writing not later than such relevant Regular or
Special Record Date.]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereof has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
AMERICA ONLINE, INC.
By:__________________________
Attest:
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of ______, 1998 (herein called the
"Indenture"), between the Company and [Name of Trustee], as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [, limited in aggregate amount to $__________].
[IF APPLICABLE, INSERT--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [IF APPLICABLE,
INSERT--(1) on _____________ in any year commencing with the year and ending
with the year _________ through operation of the sinking fund for this series at
a Redemption Price equal to 100% of the principal amount, and (2)] at any time
[on or after __________, ____ ], as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [on or before _______________, _________%, and if
redeemed] during the 12 month period beginning __________________ of the years
indicated, and thereafter at a Redemption Price equal to _______ % of the
principal amount, together in the case of any such redemption [IF APPLICABLE,
INSERT--(whether through operation of the sinking fund or otherwise) ] with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.]
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
[IF APPLICABLE, INSERT--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on _______________in
any year commencing with the year ________ and ending with the year
______________ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below,
and (2) at any time [on or after ________], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning _____________ of the years indicated, and thereafter at a Redemption
Price equal to _____ % of the principal amount, together in the case of any such
redemption (whether through operation of the sinking fund or otherwise) with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.]
REDEMPTION PRICES FOR REDEMPTION
THROUGH OPERATION OTHERWISE THAN THROUGH
YEAR OF THE SINKING FUND OPERATION OF SINKING FUND
[Notwithstanding the foregoing, the Company may not, prior to
___________, redeem any Securities of this series as contemplated by [Clause (2)
of] the preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than _____ % per annum. ]
[The sinking fund for this series provides for the redemption on
________________ in each year beginning with the year ________ and ending with
the year _________ of [not less than $___________ ("mandatory sinking fund") and
not more than] $_________ aggregate principal amount of Securities of this
series. Securities of this series acquired or redeemed by the Company otherwise
than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made [in
the inverse order in which they become due].]
[IF THE SECURITY IS TO BE SUBJECT TO REPAYMENT AT THE OPTION OF THE
HOLDER, INSERT--To be repaid at the option of the Holder, the Company must
receive this Security, with the form of "Option to Elect Repayment" hereon duly
completed, at an office or agency of the Company maintained for that purpose in
__________________ (or at such other place of which the Company shall from time
to time notify the Holder of this Security) not less than ________________ nor
more than __________ days prior to the Repayment Date. The exercise of the
repayment option by the Holder shall be irrevocable.]
[IF THE SECURITY IS SUBJECT TO REDEMPTION, INSERT--In the event of
redemption of this Security in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.]
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT--If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT--If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to--INSERT FORMULA FOR DETERMINING THE
AMOUNT. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all of the Company's obligations in respect of the payment of the principal of
and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
[IF APPLICABLE, INSERT--Each of the defeasance and covenant defeasance
provisions of Article Thirteen of the Indenture shall apply to this Security.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar, duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $__________ and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Security shall for all purposes be governed by and construed in
accordance with the laws of the State of New York (without reference to
principles of conflicts of law).
The terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
[Form of Option to Elect Repayment.]
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Security (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Repayment Date, to the undersigned, at
(Printed or Typewritten Name and Address of the Undersigned)
For this Security to be repaid, the Company must receive this Security,
with this "Option to Elect Repayment" form duly completed, at an office or
agency of the Company maintained for that purpose in __________, or at such
other place of which the Company shall from time to time notify the Holder, no
less than _______ days nor more than ________ days prior to [_________, or
_______________] [the_____________ or______________ (commencing on _________)].
If less than the entire principal amount of the within Security is to
be repaid, specify the portion thereof (which shall be $___________, or an
integral multiple of $_____________) which the Holder elects to have repaid:
$_____________.
Dated:
________________________
Note: The signature must correspond with the name as written upon the face
of the Security in every particular without alteration or enlargement
Section 204. Form of Legend for Global Securities.
Any Global Security authenticated and delivered hereunder may bear any
legend required to comply with the requirements of any Depositary.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication on all Securities
authenticated by the Trustee shall be in substantially the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated:
[NAME OF TRUSTEE],
As Trustee
By:
_______________________
Authorized Officer
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be issued,
executed, authenticated, delivered and Outstanding under this Indenture is
unlimited.
The Securities may be issued from time to time in one or more series as
may be authorized from time to time by the Company's Board of Directors. There
shall be established in or pursuant to a Board Resolution and, subject to
Section 303, set forth, or determined in a manner provided, in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series any or all of the following:
(a) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(b) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906, 1107
or 1404 and except for any Securities which, pursuant to Section 303,
are deemed never to have been authenticated and delivered hereunder);
(c) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date;
(d) the date or dates on which the principal and premium, if
any, of the Securities of the series are payable;
(e) the rate or rates (which may be fixed or variable) at
which the Securities of the series shall bear interest, if any, or the
method of determining the rate or rates, the date or dates from which
such interest shall accrue, the Interest Payment Dates on which any
such interest shall be payable or the method by which the dates will be
determined, the Regular Record Date for any interest payable on any
Interest Payment Date and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day
months;
(f) the place or places where the principal of and any premium
and interest on Securities of the series shall be payable, if other
than the Borough of Manhattan, The City of New York;
(g) the period or periods within which and the terms and
conditions upon which the Securities of the series may be redeemed, in
whole or in part, at the option of the Company or otherwise, if other
than or in addition to those set forth in Section 1108, and, unless the
Board Resolution provides that Section 1108 shall not apply to the
Securities of the series, the Make-Whole Premium and Basis Point Amount
with respect to such series;
(h) the obligation of the Company, if any, to redeem, purchase
or repay the Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which such Securities of the series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation, and any provisions for the remarketing of such Securities;
(i) the terms, if any, upon which Securities of the series may
be convertible into or exchanged for other securities of the Company
and the terms and conditions upon which the conversion or exchange
shall be effected, including the initial conversion or exchange price
or rate, the conversion or exchange period and any other additional
provisions;
(j) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which the Securities of the
series shall be issuable;
(k) the currency, currencies or currency units in which
payment of principal of and any premium and interest on Securities of
the series shall be payable, if other than the currency of the United
States of America;
(l) any index, formula or other method used to determine the amount of
payments of principal of or any premium or interest on the Securities;
(m) if the principal amount payable at the stated maturity of
the Securities of the series will not be determinable as of any one or
more dates prior to the stated maturity, the amount that will be deemed
to be the principal amount as of any date for any purpose, including
the principal amount thereof which will be due and payable upon any
maturity other than the stated maturity or which will be deemed to be
outstanding as of any date (or, in any such case, the manner in which
the deemed principal amount is to be determined), and, if necessary,
the manner of determining the equivalent thereof in United States
currency;
(n) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the
Company or the Holders thereof, in one or more currencies or currency
units other than that or those in which the Securities are stated to be
payable, the currency, currencies or currency units in which payment of
the principal of and any premium and interest on Securities of such
series shall be payable, and the periods within which and the terms and
conditions upon which such election is to be made;
(o) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502 or provable in bankruptcy;
(p) the applicability of, and any addition to or change in,
the covenants and definitions then set forth in this Indenture or in
terms then set forth herein relating to permitted consolidations,
mergers or sale of assets;
(q) any changes or additions to the provisions provided in
Article Thirteen of this Indenture dealing with defeasance, including
the addition of additional covenants that may be subject to the
Company's covenant defeasance option;
(r) whether any of the Securities of such series shall be
issuable in permanent global form and, if so, the Depositary or
Depositaries for such Global Security or Global Securities and the
terms and conditions, if any, other than those set forth in Section
305, upon which interests in such Global Security may be exchanged, in
whole or in part, for the individual Securities represented thereby in
definitive registered form, and the form of any legend or legends to be
borne by the Global Security in addition to or in lieu of the legend
referred to in this Indenture;
(s) the Trustee and any authenticating agents, Paying Agents,
transfer agents or registrars;
(t) the terms, if any, of any guarantee of the payment of
principal, premium and interest with respect to Securities of the
series and any corresponding changes to the provisions of this
Indenture as then in effect;
(u) the terms, if any, of the transfer, mortgage, pledge or
assignment as security for the Securities of the series of any
properties, assets, moneys, proceeds, securities or other collateral,
including whether certain provisions of the Trust Indenture Act are
applicable and any corresponding changes to provisions of this
Indenture as then in effect;
(v) any addition to or change in the Events of Default with
respect to the Securities of the series and any change in the right of
the Trustee or the holders to declare the principal, premium and
interest with respect to the Securities due and payable; and
(w) any other terms of the Securities of such series (which
terms shall not be inconsistent with the provisions of this Indenture,
except as permitted by Section 901(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 303) set
forth, or determined in the manner provided in the Officers' Certificate
referred to above or in any such indenture supplemental hereto. All Securities
of any one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened for issuances of additional Securities of
such series.
If any of the terms of the Securities of any series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
Section 302. Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman, any Vice Chairman, its President, one of its Vice Presidents or its
Treasurer, under its corporate seal reproduced thereon attested by its Secretary
or one of its Assistant Secretaries. The signature of any of these officers on
the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order (which may provide that Securities that are the subject
thereof will be authenticated and delivered by the Trustee from time to time
upon the telephonic or written order of Persons designated in said Company Order
and that such Persons are authorized to determine such terms and conditions of
said Securities as are specified in the Company Order) shall authenticate and
deliver such Securities. If the form or terms of the Securities of the series
have been established in or pursuant to one or more Board Resolutions as
permitted by Sections 201 and 301, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(1) if the form such Securities has been established by or
pursuant to a Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established by
or pursuant to a Board Resolution as permitted by Section 301, that
such terms have been established in conformity with the provisions of
this Indenture; and
(3) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles and to such other matters as counsel may
specify.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued and contemplate issuance of all Securities of such
series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company maintained pursuant to Section
1002 in a Place of Payment for that series for the purpose of exchanges of
Securities of such series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor. Until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any office or agency of
the Company in a Place of Payment being herein sometimes collectively referred
to as the "Security Register") in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.
Upon surrender for registration of transfer of any Security of any
series at the office or agency maintained pursuant to Section 1002 for such
purpose in a Place of Payment for that series, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series of any authorized denominations and of a
like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1404 not involving any transfer.
In the event of any redemption, the Company shall not be required to
(a) issue, register the transfer of or exchange Securities of any series during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities of that series selected for
redemption under Section 1103 and ending at the close of business on the day of
such mailing, or (b) to register the transfer of or exchange any Security, or
portion thereof called for redemption, except the unredeemed portion of any
Security being redeemed in part.
Notwithstanding any other provision in this Indenture, any Global
Security shall be exchangeable pursuant to this Section 305 for Securities
registered in the names of Persons other than the Depositary for such Global
Security or its nominee only when (a) such Depositary notifies the Company and
the Trustee in writing 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, (b) the Company in its sole
discretion determines that Securities shall no longer be represented by a Global
Security and executes and delivers to the Trustee a Company Order that such
Global Security shall be so exchangeable, (c) there shall have occurred and be
continuing an Event of Default or an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default with respect to the
Securities represented by such Global Security or (d) there shall exist such
other circumstances, if any, as shall be specified for this purpose as
contemplated by Section 301. Any Global Security that is exchangeable pursuant
to clause (a), (b), (c) or (d) above, shall be surrendered by the Depositary, or
such other depositary as shall be specified in the Company Order with respect
thereto, to the Trustee, as the agent for such purpose, to be exchanged, in
whole or in part, for definitive Securities without charge, and the Trustee
shall authenticate and deliver, in exchange for each portion of such permanent
Global Security, an equal aggregate principal amount of definitive Securities,
executed by the Company, of the same series of authorized denominations and of
like tenor as the portion of such Global Security to be exchanged, which shall
be in the form of registered Securities as provided in the Company Order.
Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security other than
pursuant to clauses (a), (b), (c) or (d) in the preceding paragraph, whether
pursuant to this Section, Sections 304, 306, 906, 1107 or 1404 or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a) evidence to their
satisfaction of the destruction, loss or theft of any Security and (b) such
security or indemnity as may be required by them to save each of them and any
agent of either of them harmless, then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and the Trustee shall authenticate and deliver in lieu
of any such destroyed, lost or stolen Security, a new Security of the same
series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
In the case of Securities represented by a Global Security registered
in the name of or held by a Depositary or its nominee, unless otherwise
specified by Section 301, payment of principal, premium, if any, and interest,
if any, will be made to the Depositary or its nominee, as the case may be, as
the registered owner or Holder of such Global Security. None of the Company, the
Trustee, any Paying Agent, any Authenticating Agent nor the Security Registrar
for such Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of a beneficial ownership
interest in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities of such series at his address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice is given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee. At the option of
the Company, interest on Securities of any series that bear interest
may be paid by
mailing a check to the address of the Person entitled thereto as such address
shall appear in the Security Register, except as otherwise provided pursuant to
Section 301.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (except as otherwise specified as contemplated by Section 301(3) and subject
to Section 307) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
In the case of a Global Security, so long as the Depositary for such
Global Security, or its nominee, is the registered owner of such Global
Security, such Depositary or such nominee, as the case may be, will be
considered the sole owner or Holder of the Securities represented by such Global
Security for all purposes under this Indenture. Except as provided in Section
305, owners of beneficial interests in a Global Security will not be entitled to
have Securities that are represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such
Securities in definitive form and will not be considered the owners or Holders
thereof under this Indenture.
Notwithstanding the foregoing, with respect to any Global Security,
nothing herein shall (a) 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 a Depositary or (b) impair, as between a
Depositary and holders of beneficial interests in any Global Security, the
operation of customary practices governing the exercise of the rights of the
Depositary as Holder of such Global Security.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security issued in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of by the Trustee in accordance with its customary
practices, and the Trustee shall from time to time, or upon request by the
Company, deliver to the Company certificates of destruction with respect
thereto.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
Section 311. Wire Transfers.
Notwithstanding any other provision to the contrary in this Indenture,
the Company may make any payment of moneys required to be deposited with the
Trustee on account of principal of, or premium, if any, or interest on, the
Securities (whether pursuant to optional or mandatory redemption payments,
interest payments or otherwise) by wire transfer in immediately available funds
to an account designated by the Trustee on or before the date and time such
moneys are to be paid to the Holders of the Securities in accordance with the
terms hereof.
Section 312. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the accuracy of such numbers either
as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year and are not repayable at the option of the Holder prior thereto,
or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company and are not
repayable at the option of the Holder prior thereto,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose,
lawful money of the United States or U.S. Government Obligations which through
the payment of interest and principal in respect thereof in accordance with
their terms will provide lawful money not later than the due dates of principal
(and premium, if any) or interest, or any combination thereof, in an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if requested to do so with respect to the
Securities of all series to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then the
effectiveness of any such instrument shall be conditioned upon receipt of such
instruments from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto as set
forth in the Securities Register, of the principal and any premium and interest
for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE
AND HOLDERS IN EVENT OF DEFAULT
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to a series of
Securities, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
except to the extent such event is specifically deleted or modified as
contemplated by Section 301 for the Securities of that series:
(1) failure to pay any interest upon any Security of that series when
it becomes due and payable, and continuance of such default for a period of 30
days; or
(2) failure to pay the principal of (or any premium on,) any Security
of that series at its Maturity; or
(3) failure to deposit any sinking fund payment, when and as due by the
terms of a Security of that series; or
(4) with respect to a series of Securities, failure to perform, or the
breach of, any other covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in whose performance or whose
breach is specifically dealt with elsewhere in this Section or which has
expressly been included in this Indenture solely for the benefit of a series of
Securities other than that series or which has been included in this Indenture
but not made applicable to the Securities of such series), and continuance of
such default or breach for a period of 90 days after there has been given a
written notice specifying such failure or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Securities of that series; or
(5) failure by the Company to make any payment by the end of any
applicable grace period after maturity of indebtedness, which term as used
herein means obligations (other than Nonrecourse Obligations or the Securities
of such series) of the Company for borrowed money or evidenced by bonds,
debentures, notes or other similar instruments ("Indebtedness") in an amount in
excess of $10,000,000 or the equivalent thereof in any other currency or
composite currency and such failure shall have continued for a period of 30 days
after written notice thereof shall have been given to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series a written notice specifying
such failure and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(6) the acceleration of Indebtedness in an amount in excess of
$10,000,000 or the equivalent thereof in any other currency or composite
currency without such Indebtedness having been discharged or such acceleration
having been cured, waived, rescinded or annulled for a period of 30 days after
written notice thereof shall have been given to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of that series a written notice specifying
acceleration and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(7) the entry by a court having jurisdiction in the premises of (a) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (b) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its properties, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days; or
(8) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company to the entry of a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by the Company to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its properties, or the making by the Company of an
assignment for the benefit of creditors, or the admission by the Company in
writing its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such action; or
(9) any other Event of Default established as contemplated by Section
301 with respect to Securities of that series; provided that if any such failure
or acceleration referred to in clauses (5) or (6) above shall cease or be cured,
waived, rescinded or annulled, then the Event of Default hereunder by reason
thereof shall be deemed not to have occurred.
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 501 with respect to Securities of any series, a record date shall
automatically and without any other action by any Person be set for the purpose
of determining the Holders of Outstanding Securities of such series entitled to
join in such Notice of Default, which record date shall be the close of business
on the day the Trustee receives such Notice of Default. Promptly after the
establishment of a record date pursuant to the provisions of this Section 501,
the Trustee shall notify the Company and the Holders of Outstanding Securities
of such series of the establishment of such record date. The Holders of
Outstanding Securities of such series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
Notice of Default, whether or not such Holders remain Holders after such record
date; provided that, unless such Notice of Default shall have become effective
by virtue of Holders of the requisite principal amount of Outstanding Securities
of such series on such record date (or their duly appointed agents) having
joined therein on or prior to the 90th day after such record date, such Notice
of Default shall automatically and without any action by any Person be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder (or a
duly appointed agent thereof) from giving, before or after the expiration of
such 90-day period, a Notice of Default contrary to or different from, or, after
the expiration of such period, identical to, a Notice of Default that has been
canceled pursuant to the proviso to the preceding sentence, in which event a new
record date in respect thereof shall be set pursuant to this paragraph.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case either the
Trustee or the Holders of at least 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms of
that series) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such acceleration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed therefor
in such Securities, to the extent that payment of such interest is lawful,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or any
rescission and annulment of any such declaration, pursuant to this Section 502
with respect to Securities of any series, a record date shall automatically and
without any other action by any Person be set for the purpose of determining the
Holders of Outstanding Securities of such series entitled to join in such
declaration, or rescission or annulment, as the case may be, which record date
shall be the close of business on the day the Trustee receives such declaration,
or rescission and annulment, as the case may be. Promptly after the
establishment of a record date pursuant to the provisions of this Section 502,
the Trustee shall notify the Company and the Holders of Outstanding Securities
of such series of the establishment of such record date. The Holders of
Outstanding Securities of such series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
declaration, or rescission and annulment, as the case may be, whether or not
such Holders remain Holders after such record date; provided that, unless such
declaration, or rescission and annulment, as the case may be, shall have become
effective by virtue of Holders of the requisite principal amount of Outstanding
Securities of such series on such record date (or their duly appointed agents)
having joined therein on or prior to the 90th day after such record date, such
declaration or rescission and annulment, as the case may be, shall automatically
and without any action by any Person be canceled and of no further effect.
Nothing in this paragraph shall prevent a Holder (or a duly appointed agent
thereof) from giving, before or after the expiration of such 90-day period, a
declaration of acceleration, or a rescission and annulment of any such
declaration, contrary to or different from, or, after the expiration of such
period, identical to, a declaration, or rescission and annulment, as the case
may be, that has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date in respect thereof shall be set
pursuant to this paragraph.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof, or
(3) default is made in the payment of any sinking or purchase
fund or analogous obligation when the same becomes due by the terms of the
Securities of any series, and any such default continues for any period of grace
provided with respect to the Securities of such series,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holder of any such Security (or the Holders of any such series in the case of
clause (3) above), the whole amount then due and payable on any such Security
(or on the Securities of any such series in the case of clause (3) above) for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor by
the terms of any such Security (or of Securities of any such series in the case
of clause (3) above); and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceedings to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities of such series and
collect the money adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of the amounts then due and unpaid for principal
of and any premium and interest on the Securities inrespect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal and any premium and interest, respectively; and
THIRD: The balance, if any, to the Company or any other Person or
Persons entitled thereto.
In any case where Securities are outstanding which are denominated in
more than one currency, or in a composite currency and at least one other
currency, and the Trustee is directed to make ratable payments under this
Section to Holders of Securities, the Trustee shall calculate the amount of such
payments as follows: (i) as of the day the Trustee collects an amount under this
Article, the Trustee shall, as to each Holder of a Security to whom an amount is
due and payable under this Section which is denominated in a foreign currency or
a composite currency, determine that amount of U.S. Dollars that would be
obtained for the amount owing such Holder, using the rate of exchange at which
in accordance with normal banking procedures the Trustee could purchase in The
City of New York U.S. Dollars with such amount owing, (ii) calculate the sum of
all U.S. Dollar amounts determined under (i) and add thereto any amounts due and
payable in U.S. Dollars; and (iii) using the individual amounts determined in
(i) or any individual amounts due and payable in U.S. Dollars, as the case may
be, as a numerator and the sum calculated in (ii) as a denominator, calculate as
to each Holder of a Security to whom an amount is owed under this Section the
fraction of the amount collected under this Article payable to such Holder. Any
expenses incurred by the Trustee in actually converting amounts owing Holders of
Securities denominated in a currency or composite currency other than that in
which any amount is collected under this Article shall be likewise (in
accordance with this paragraph) borne ratably by all Holders of Securities to
whom amounts are payable under this Section.
To the fullest extent allowed under applicable law, if for the purpose
of obtaining judgment against the Company in any court it is necessary to
convert the sum due in respect of the principal of, or any premium or interest
on the Securities of any series (the "Required Currency") into a currency in
which judgment will be rendered (the "Judgment Currency"), the rate of exchange
used shall be the rate at which in accordance with normal banking procedures the
Trustee could purchase in The City of New York the Required Currency with the
Judgment Currency on the New York Business Day preceding that on which final
judgment is given. The Company shall not be liable for any shortfall nor shall
it benefit from any windfall in payments to Holders of Securities under this
Section caused by a change in exchange rates between the time the amount of a
judgment against it is calculated as above and the time the Trustee converts the
Judgment Currency into the Required Currency to make payments under this Section
to Holders of Securities, but payment of such judgment shall discharge all
amounts owed by the Company on the claim or claims underlying such judgment.
Section 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, premium, if any, and (except as specified
as contemplated by Section 301(3) and subject to Section 307) any interest on
such Security on the Stated Maturity or Maturities expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to thier former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine (it being understood) that the
Trustee shall have no obligation to make such determination) that the action so
directed would be unjustly prejudicial to Holders of Securities of that series,
or any other series, not taking part in such direction, and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 512 with respect to Securities of any series, a record date shall
automatically and without any other action by any Person be set for the purpose
of determining the Holders of Outstanding Securities of such series entitled to
join in such Notice of Default, which record date shall be the close of business
on the day the Trustee receives such Notice of Default. Promptly after the
establishment of a record date pursuant to the provisions of this Section 512,
the Trustee shall notify the Company and the Holders of Outstanding Securities
of such series of the establishment of such record date. The Holders of
Outstanding Securities of such series on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to join in such
Notice of Default, whether or not such Holders remain Holders after such record
date; provided that, unless such Notice of Default shall have become effective
by virtue of Holders of the requisite principal amount of Outstanding Securities
of such series on such record date (or their duly appointed agents) having
joined therein on or prior to the 90th day after such record date, such Notice
of Default shall automatically and without any action by any Person be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder (or a
duly appointed agent thereof) from giving, before or after the expiration of
such 90-day period, a Notice of Default contrary to or different from, or, after
the expiration of such period, identical to, a Notice of Default that has been
canceled pursuant to the proviso to the preceding sentence, in which event a new
record date in respect thereof shall be set pursuant to this paragraph.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 514. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking and that
the provisions of this Section 514 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
that series or to any suit instituted by any Holder in each case for the
enforcement of the payment of the principal of, or premium, if any, or interest
on, any Security on or after the due date for such payment.
Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law 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 that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing (but subject to Section
107), no provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any or its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default known to the Trustee as and to the extent provided by the Trust
Indenture Act and in the manner provided in Section 106; provided, however, that
in the case of any default of the character specified in Sections 501(4), 501(5)
and 501(6) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) in the absence of bad faith on the part of the Trustee, the Trustee
may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture (including, without limitation,
under Section 512), unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, unless
requested in writing to do so by the Holders of a majority in aggregate
principal amount of Outstanding Securities of a series affected by such matter;
and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities, if any, of
any series, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Securities and perform its
obligations hereunder, and that the statements made by it or to be made by it in
a Statement of Eligibility and Qualification on Form T-1 supplied to the Company
are true and accurate. The Trustee or any Authenticating Agent shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
Subject to the provisions of Section 1305(c) and the last paragraph of
Section 1003, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee shall be under no liability for investment of or interest on
any money received by it hereunder except as otherwise agreed with the Company.
Except for amounts deposited pursuant to Article Thirteen, so long as no Event
of Default shall have occurred and be continuing, all interest allowed on any
such moneys shall be paid from time to time to the Company upon a Company Order.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except to the extent any
such expense, disbursement or advance may be attributable to its negligence or
bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder or the
performance of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder, except to the extent
any such loss, liability or expense may be attributable to its negligence,
willful misconduct or bad faith.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for payment of principal of (and premium, if any) or interest, if any,
on particular Securities.
"Trustee", for purposes of this Section 607, includes any predecessor
Trustee, provided that the negligence, willful misconduct or bad faith of any
Trustee shall not affect the rights under this Section 607 of any other Trustee.
Section 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture, and the Company
shall take prompt action to have a successor Trustee appointed in the manner
provided herein. For purposes of Section 301(b)(1) of the Trust Indenture Act,
no Trustee hereunder will be deemed to have a conflicting interest solely by
reason of being Trustee in respect of more than one series of Securities.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder with respect to the
Securities of each series, which shall be a Person that is eligible pursuant to
the Trust Indenture Act to act as such, has a combined capital and surplus of at
least $50,000,000, and be subject to supervision or examination by Federal or
State authority. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then, for the purposes of this Section, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article. No obligor upon the Securities
of a particular series or Person directly or indirectly controlling, controlled
by or under common control with such obligor shall serve as Trustee upon the
Securities of such series.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(A) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months, or
(B) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(C) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of one or more series, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If, within six months after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to Securities of any series and each
appointment of a successor Trustee with respect to Securities of any series to
all Holders of Securities of such series in the manner provided in Section 106.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (i) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (ii) if the retiring Trustee is not retiring with respect to
all Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (iii) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities. In the
event any Securities shall not have been authenticated by such predecessor
Trustee, any such successor Trustee may authenticate and deliver such
Securities, in either its own name or that of its predecessor Trustee, with the
full force and effect which this Indenture provides for the certificate of
authentication of the Trustee.
Section 613. Preferential Collection of Claims Against Company.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then,
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.
Dated:
[NAME OF TRUSTEE],
As Trustee
By:
_______________________________
As Authenticating Agent
By:
_______________________________
Authorized Officer
Section 615. Compliance with Tax Laws.
The Trustee hereby agrees to comply with all U.S. Federal income tax
information reporting and withholding requirements applicable to it with respect
to payments of premium (if any) and interest on the Securities of any series,
whether acting as Trustee, Security Registrar, Paying Agent or otherwise with
respect to the Securities of any series.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than 15 days after the Regular
Record Date for each series of Securities, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of Securities
as of such Regular Record Date (unless the Trustee has such information), or if
there is no Regular Record Date for interest for such series of Securities,
semi- annually, upon such dates as are set forth in the Board Resolution or
indenture supplemental hereto authorizing such series, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
Section 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Securities (i)
contained in the most recent list furnished to the Trustee for each series as
provided in Section 701 and (ii) received by the Trustee for each series in the
capacity as Security Registrar if the Trustee is acting in such capacity. The
Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and privileges of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to the names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders of Securities, as
their names and addresses appear in the Security Register, such reports, if any,
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. Any such reports required pursuant to Section 313(a) of the
Trust Indenture Act shall be transmitted on or about ______, 1998 and on or
about each ______ thereafter and shall be dated not more than 60 days before
such ________.
(b) A copy of such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, if any, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge with or into any
Person, or convey, transfer or lease all or substantially all of its assets, or
permit any Person to consolidate with or merge into the Company, unless the
following conditions have been satisfied:
(a) either (1) the Company shall be the continuing Person in
the case of a merger or (2) the resulting, surviving or transferee Person, if
other than the Company (the "Successor Company"), shall be a corporation
organized and existing under the laws of the United States, any State or the
District of Columbia and shall expressly assume all the obligations of the
Company under the Securities and the Indenture.
(b) immediately after giving effect to the transaction (and
treating any indebtedness that becomes an obligation of the Successor Company or
any Subsidiary of the Company as a result of the transaction as having been
incurred by the Successor Company or the Subsidiary at the time of the
transaction), no default, Event of Default or event that, after notice or lapse
of time, would become an Event of Default under this Indenture would occur or be
continuing; and
(c) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that the
consolidation, merger, transfer or lease complies with this Indenture.
Section 802. Successor Substituted.
Upon any consolidation by the Company with, or merger by the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company as an entirety or substantially as an entirety as
described in the preceding paragraph, the Successor Company resulting from such
consolidation or into which the Company is merged or the transferee or lessee to
which such conveyance, transfer or lease is made, will succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture, and thereafter, except in the case of a lease, the predecessor
(if still in existence) will be released from its obligations and covenants
under this Indenture and all Outstanding Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company pursuant to the provisions of this Indenture relating to consolidations,
mergers and sales of assets and the assumption by the successor of the
covenants, agreements and obligations of the Company herein and in the
Securities;
(b) to surrender any right or power conferred upon the Company
by this Indenture, to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions for the protection of the
Holders of all or any series of Securities as the Board of Directors of the
Company shall consider to be for the protection of the Holders of the
Securities, and to make the occurrence, or the occurrence and continuance of a
default in any of the additional covenants, restrictions, conditions or
provisions a default or an Event of Default under this Indenture (provided,
however, that with respect to any such additional covenant, restriction,
condition or provision, the supplemental indenture may provide for a period of
grace after default, which may be shorter or longer than that allowed in the
case of other defaults, may provide for an immediate enforcement upon the
default, may limit the remedies available to the Trustee upon the default, or
may limit the right of Holders of a majority in aggregate principal amount of
any or all series of Securities to waive the default);
(c) to cure any ambiguity or omission or to correct or
supplement any provision contained in this Indenture, in any supplemental
indenture or in any Securities that may be defective or inconsistent with any
other provision contained therein, to convey, transfer, assign, mortgage or
pledge any property to or with the Trustee, or to make such other provisions in
regard to matters or questions arising under this Indenture, in each case as
shall not adversely affect the interests of any Holders of Securities of any
series in any material respect;
(d) to modify or amend this Indenture in such a manner as to
permit the qualification of this Indenture or any supplemental indenture under
the Trust Indenture Act as then in effect;
(e) to add guarantees with respect to any or all of the
Securities or to secure any or all of the Securities;
(f) to make any change that does not adversely affect the
rights of any Holder;
(g) to add to, change or eliminate any of the provisions of
this Indenture with respect to one or more series of Securities, so long as any
such addition, change or elimination not otherwise permitted hereunder shall (1)
neither apply to any Security of any series created prior to the execution of
the supplemental indenture and entitled to the benefit of the provision nor
modify the rights of the Holders of any Security with respect to the provision,
or (2) become effective only when there is no such Security outstanding;
(h) to evidence and provide for the acceptance of appointment
by a successor or separate Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of this Indenture
by more than one Trustee;
(i) to establish the form or terms of Securities of any
series; and
(j) to provide for uncertificated Securities in addition to or
in place of certificated Securities (provided that the uncertificated Securities
are issued in registered form for purposes of Section 163(f) of the Internal
Revenue Code or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of such code).
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any payment on or after the Stated
Maturity thereof (or, in the case of redemption or repayment, on or after the
Redemption Date or Repayment Date, as the case may be), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Section
513, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby, provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section, or the deletion of this proviso, in accordance with the
requirements of Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) 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. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
PARTICULAR COVENANTS OF THE COMPANY
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (a) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (b) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
All monies deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request (including interest income on such funds,
if any), or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, a brief
certificate from the principal executive, financial or accounting officer or
treasurer of the Company as to his or her knowledge of the Company's compliance
(without regard to any period of grace or requirement of notice provided
hereunder) with all conditions and covenants hereof.
Section 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Company shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 1006. Maintenance of Properties.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as (and to the extent)
in the judgment of the Company may be necessary or appropriate in connection
with its business; provided, however, that nothing in this Section shall prevent
the Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
Section 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
within 30 days after the Company shall have received notice that the same has
become delinquent (1) all material taxes, assessments and governmental charges
levied or imposed upon the Company or any Subsidiary or upon the income, profits
or property of the Company or any Subsidiary, and (2) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a material
lien upon the property of the Company or any Subsidiary; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings;
provided, further, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim unless
the failure to pay or discharge such tax, assessment, charge or claim would,
individually or in the aggregate with all such failures, have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series of the same tenor, the Company
shall, at least 60 days (45 days in the case of redemption of all Securities of
any series or of any series with the same (i) Stated Maturity, (ii) period or
periods within which, price or prices at which and terms and conditions upon
which such Securities may or shall be redeemed or purchased, in whole or in
part, at the option of the Company or pursuant to any sinking fund or analogous
provision or repayable at the option of the Holder and (iii) rate or rates at
which the Securities bear interest, if any, or formula pursuant to which such
rate or rates accrue (collectively, the "Equivalent Principal Terms")) prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities with Equivalent Principal Terms of any
series are to be redeemed (unless all of the Securities of such series and of a
specified tenor are to be redeemed), the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series with Equivalent
Principal Terms or any integral multiple thereof) of the principal amount of
Securities of such series with Equivalent Principal Terms of a denomination
larger than the minimum authorized denomination for Securities of that series.
Unless otherwise provided in the terms of a particular series of Securities, the
portions of the principal of Securities so selected for partial redemption shall
be equal to the minimum authorized denomination of the Securities of such
series, or an integral multiple thereof, and the principal amount which remains
outstanding shall not be less than the minimum authorized denomination for
Securities of such series.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified in the Securities to be redeemed, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
Any notice that is mailed to the Holder of any Securities in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest,
if any, to be paid,
(3) if less than all the Outstanding Securities of any series
are to be redeemed, the identification (and, in the case of partial redemption
of any Securities, the principal amounts) of the particular Securities to be
redeemed,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder of such Security
will receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". The cash amount of any sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (a) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (b) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
Series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering the crediting Securities of that series pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
Section 1302 and/or Section 1303 shall apply to the Outstanding
Securities of any series to the extent specified as contemplated by Section 301
for Securities of such series.
Section 1302. Defeasance and Discharge.
The Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Securities of such series as
provided in this Section on and after the date the conditions set forth in
Section 1304, in the case if defeasance are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities of such series and to have satisfied all of its other
obligations under the Securities of such series and this Indenture insofar as
the Securities of such series are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the same), subject
to the following which shall survive until all the Securities of such series
have been paid in full: (a) the rights of Holders of Securities of such series
to receive, solely from the trust fund described in Section 1304 and as more
fully set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities of such series when payments are due,
and (b) the Company's obligations with respect to the Securities of such series
under Sections 304, 305, 306, 1002 and 1003. Thereafter, the Company's
obligations set forth in Sections 607 and 1305 shall survive.
Subject to compliance with this Article Thirteen, the Company may
defease the Outstanding Securities of any series pursuant to this Section 1302
notwithstanding the prior
Defeasance of the Outstanding Securities of such series pursuant to
Section 1303. If the Company exercises its defeasance option, payment of the
Securities of the defeased series may not be accelerated because of an Event of
Default.
Section 1303. Covenant Defeasance.
The Company shall be released from its obligations under Sections 1005
through 1009, inclusive, and the occurrence of any event specified in Sections
501(4) (with respect to any of Sections 1005 through 1009 inclusive) and 501(9)
shall be deemed not to be or result in an Event of Default, in each case with
respect to Outstanding Securities of any series as provided in this Section on
and after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
specified Section (to the extent so specified in the case of Section 501(4)),
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section or by reason of any reference in any such Section to any other
provision herein or in any other document, but the remainder of this Indenture
and the Securities of such series shall be unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to Defeasance pursuant to Section
1302 or Covenant Defeasance pursuant to Section 1303 of the Outstanding
Securities of any series:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article Thirteen applicable to it) as trust funds in trust
for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of Outstanding
Securities of such series, (A) money in an amount, or (B) U.S. Government
Obligations that through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than the
due date of any payment, money in an amount, or (C) a combination thereof, in
each case sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge each installment of principal
(including mandatory sinking fund payments and amounts that may be payable at
the option of the Holder on any Repayment Date) of, and premium (not relating to
optional redemption), if any, and interest on, the Outstanding Securities of
such series on the dates such installments of principal of, and premium (not
relating to optional redemption), if any, or interest are due.
(2) In the case of Defeasance under Section 1302, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (A) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date first set forth hereinabove, there has
been a change in the applicable Federal income tax law, in either case (A) or
(B) to the effect that, and based thereon such opinion shall confirm that, the
Holders of the Oustanding Securities of such series will not recognize gain or
loss for Federal income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to the Securities of such series and will
be subject to Federal income tax on the same amount, in the same manner and at
the same times as would be the case if such deposit, Defeasance and discharge
were not to occur.
(3) In the case of Covenant Defeasance under Section 1303, the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of the deposit
and Covenant Defeasance to be effected with respect to the Securities of such
series and will be subject to Federal income tax on the same amount, in the same
manner and at the same times as would be the case if such deposit and Covenant
Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an
Officers' Certificate to the effect that the Securities of such series, if then
listed on any securities exchange, will not be delisted as a result of such
deposit.
(5) No Event of Default or event that (after notice or lapse
of time or both) would become an Event of Default shall have occurred and be
continuing at the time of such deposit or, with regard to any Event of Default
or any such event specified in Sections 501(7) and (8), at any time on or prior
to the 90th day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance (including the
deposit pursuant to such Defeasance or Covenant Defeasance) shall not result in
a breach or violation of, or constitute a default under, the Indenture or any
other agreement or instrument to which the Company is a party or by which it is
bound.
(7) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant Defeasance have
been complied with.
(8) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, unless such trust shall be
qualified under such Act or exempt from regulation thereunder.
Section 1305. Deposited Money and U.S. Government Obligations to be Held in
Trust; Indemnity for U.S. Government Obligations; Repayment to Company.
(a) Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 1306, then Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1304 in respect
of the Securities of any series shall be held in trust and applied by the
Trustee, in accordance with the provisions of the Securities of such series and
this Indenture, to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of Securities of such series, of all sums due and to
become due thereon in respect of principal and any premium and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law.
(b) The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge that by
law is for the account of the Holders of Outstanding Securities.
(c) Anything in this Article Thirteen to the contrary
notwithstanding, the Trustee and any Paying Agent shall promptly deliver or pay
to the Company upon Company Request any money or U.S. Government Obligations
held by them as provided in Section 1304 with respect to Securities of any
series that, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Defeasance or Covenant Defeasance with respect
to the Securities of such series.
Section 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Thirteen with respect to the Securities of any
series by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities of such series
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article Thirteen with respect to Securities of such series until such time
as the Trustee or Paying Agent is permitted to apply all money held in trust
pursuant to Section 1305 with respect to Securities of such series in accordance
with this Article Thirteen; provided, however, that if the Company makes any
payment of principal of or any premium or interest on any Security of such
series following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of Securities of such series to receive
such payment from the money so held in trust.
ARTICLE FOURTEEN
REPAYMENT AT OPTION OF SECURITY HOLDERS
Section 1401. Applicability of Article.
Securities of any series which are repayable at the option of the Holders
thereof before their Stated Maturity shall be repaid in accordance with their
terms and (except as otherwise contemplated by Section 301 for Securities of
such series) in accordance with this Article.
Section 1402. Repayment of Securities.
Each Security which is subject to repayment in whole or in part at the
option of the Holder thereof on a Repayment Date shall be repaid at the
applicable Repayment Price together with interest accrued to such Repayment Date
as specified pursuant to Section 301.
Section 1403. Exercise of Option; Notice.
Each Holder desiring to exercise his option for repayment shall, as
conditions to such repayment, surrender the Security to be repaid together with
all coupons, if any, appertaining thereto maturing after the Repayment Date and
with written notice of the exercise of such option at any office or agency of
the Company in a Place of Payment, not less than 15 nor more than 30 days prior
to the Repayment Date. Such notice, which shall be irrevocable, shall identify
the Security to be repaid and shall specify the principal amount of such
Security to be repaid, which shall be not less than the minimum authorized
denomination for such Security or an integral multiple thereof and, in the case
of a partial repayment of the Security, the denomination or denominations of the
Security or Securities with Equivalent Principal Terms to be issued to the
Holder for the portion of the principal of the Security surrendered which is not
to be repaid.
Any Security which is to be repaid only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities with Equivalent Principal Terms, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the repayment of Securities shall relate,
in the case of any Security repaid or to be repaid only in part, to the portion
of the principal of such Security which has been or is to be repaid.
Section 1404. Securities Payable on the Repayment Date.
Notice of exercise of the option of repayment having been given and the
Securities so to be repaid having been surrendered as aforesaid, such Securities
shall, on the Repayment Date, become due and payable at the Repayment Price
therein specified and from and after such date (unless the Company shall default
in the payment of Repayment Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for repayment in
accordance with Section 1403, such Security shall be paid by the Company at the
Repayment Price, together with accrued interest to the Repayment Date; provided,
however, that, installments of interest on Securities whose Stated Maturity is
on or prior to the Repayment Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security duly surrendered for repayment shall not be so paid,
the principal and any premium shall, until paid, bear interest from the
Repayment Date at the rate prescribed therefor in the Security.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
AMERICA ONLINE, INC.
By:
_______________________________
Name:
_______________________________
Title:
_______________________________
[NAME OF TRUSTEE]
By:
_______________________________
Name:
_______________________________
Title:
_______________________________
America Online, Inc. and Subsidiaries
Statements RE Computation of Ratios of Earnings to Fixed Charges
Nine Months Ended March 31, 1998 and Years Ended
June 30, 1997, June 30, 1996, June 30, 1995, June 30, 1994
and June 30, 1993
<TABLE>
Nine months Year Year Year Year Year
ended ended ended ended ended ended
March 31, 1997 June 30, 1997 June 30, 1996 June 30, 1995 June 30, 1994 June 30, 1993
<S> <C> <C> <C> <C> <C> <C>
Fixed charges
Interest expense $ 8,981 $ 1,567 $ 1,659 $ 1,076 $ 309 $ 29
Amortization of bond
issue costs 604 - - - - -
Interest portion (1) of
rent expense 86,822 49,487 15,528 3,504 1,197 603
Total fixed charges $ 96,407 $ 51,054 $ 17,187 $ 4,580 $ 1,506 $ 632
Income (loss) before
income taxes (2) (3) (4) (5) 84,743 (499,347) 62,339 (20,582) 5,986 2,143
Earnings (6) $ 181,150 $(448,293) $ 79,526 $ (16,002) $ 7,492 $ 2,775
Ratio of earnings to fixed charges 1.88 - 4.63 - 4.98 4.39
</TABLE>
1) The interest portion of the rent expense is estimated to be equal to 28% in
year one, 18% in year two, 7% in year three and 5% in year four.
2) Net income in the nine months ended March 31, 1998 includes approximately
$33.8 million of expense related to a restructuring charge, $9.7 million of
expense related to acquired research and development and approximately $1.0
million of income related to a settlement charge.
3) Net Loss for the year ended June 30, 1997 includes charges of approximately
$385.2 million for the write-off of deferred subscriber acquisition costs,
approximately $48.6 million for a restructuring charges, approximately $24.2
million for legal settlements and approximately $24.5 million for contract
termination charges.
4) Net income for the year ended June 30, 1996 includes charges of
approximately $17.0 million for acquired research and development, $8.0
million for the settlement of a class action lawsuit, and approximately
$0.8 million for merger expenses.
5) Net loss in the year ended June 30, 1995 includes charges of approximately
$50.3 million for acquired research and development and approximately $2.2
million for merger expenses.
6) Earnings represent income from continuing operations before income taxes
plus interest expense on indebtedness, amortization of debt discount and
the portion of rent expense deemed representative of an interest factor.
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) and related Prospectus of
America Online, Inc. for the registration of its debt securities, its
preferred stock and its common stock and to the incorporation by reference
therein of our report dated September 10, 1997, with respect to the
consolidated financial statements of America Online, Inc. included in its
Annual Report (Form 10-K) for the year ended June 30, 1997, filed with the
Securities and Exchange Commission.
/s/Ernst & Young LLP
Vienna, Virginia
June 17, 1998
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) and related Prospectus of
America Online, Inc. for the registration of its debt securities, its
preferred stock and its common stock and to the incorporation by reference
therein of our report dated March 26, 1998, with respect to the financial
statements of Interactive Services Division of CompuServe Corporation for
the year ended April 30, 1997 included in America Online, Inc.'s Current
Report on Form 8-K/A dated April 17, 1998, filed with the Securities and
Exchange Commission.
/s/Ernst & Young LLP
Columbus, Ohio
June 17, 1998
POWER OF ATTORNEY
I, Stephen M. Case, a director of America Online, Inc. (the "Company")
whose signature appears below, constitute and appoint Stephen M. Case, Sheila A.
Clark, Lennert J. Leader, Robert W. Pittman, and George Vradenburg, III, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution in each of them, for him/her and in his/her
name, place and stead, and in any and all capacities, to sign the Registration
Statement on Form S-3 for the public offering of Company common stock, and any
required amendments or supplements thereto (and any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in or about the premises,
for to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his/her substitute or substitutes lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 17th day of June, 1998.
/S/STEPHEN M. CASE
POWER OF ATTORNEY
I, Daniel F. Akerson, a director of America Online, Inc. (the "Company")
whose signature appears below, constitute and appoint Stephen M. Case, Sheila A.
Clark, Lennert J. Leader, Robert W. Pittman, and George Vradenburg, III, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution in each of them, for him/her and in his/her
name, place and stead, and in any and all capacities, to sign the Registration
Statement on Form S-3 for the public offering of Company common stock, and any
required amendments or supplements thereto (and any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in or about the premises,
for to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his/her substitute or substitutes lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 15th day of June, 1998.
/S/DANIEL F. AKERSON
POWER OF ATTORNEY
I, Frank J. Caufield, a director of America Online, Inc. (the "Company")
whose signature appears below, constitute and appoint Stephen M. Case, Sheila A.
Clark, Lennert J. Leader, Robert W. Pittman, and George Vradenburg, III, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution in each of them, for him/her and in his/her
name, place and stead, and in any and all capacities, to sign the Registration
Statement on Form S-3 for the public offering of Company common stock, and any
required amendments or supplements thereto (and any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in or about the premises,
for to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his/her substitute or substitutes lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 17th day of June, 1998.
/S/FRANK J. CAUFIELD
POWER OF ATTORNEY
I, Robert J. Frankenberg, a director of America Online, Inc. (the
"Company") whose signature appears below, constitute and appoint Stephen M.
Case, Sheila A. Clark, Lennert J. Leader, Robert W. Pittman, and George
Vradenburg, III, and each of them, my true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution in each of them, for
him/her and in his/her name, place and stead, and in any and all capacities, to
sign the Registration Statement on Form S-3 for the public offering of Company
common stock, and any required amendments or supplements thereto (and any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended), and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in or
about the premises, for to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his/her substitute or substitutes lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 16th day of June, 1998.
/S/ROBERT J. FRANKENBERG
POWER OF ATTORNEY
I, General Alexander M. Haig, Jr., a director of America Online, Inc. (the
"Company") whose signature appears below, constitute and appoint Stephen M.
Case, Sheila A. Clark, Lennert J. Leader, Robert W. Pittman, and George
Vradenburg, III, and each of them, my true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution in each of them, for
him/her and in his/her name, place and stead, and in any and all capacities, to
sign the Registration Statement on Form S-3 for the public offering of Company
common stock, and any required amendments or supplements thereto (and any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended), and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in or
about the premises, for to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his/her substitute or substitutes lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 15th day of June, 1998.
/S/GENERAL ALEXANDER M. HAIG, JR.
POWER OF ATTORNEY
I, William N. Melton, a director of America Online, Inc. (the "Company")
whose signature appears below, constitute and appoint Stephen M. Case, Sheila A.
Clark, Lennert J. Leader, Robert W. Pittman, and George Vradenburg, III, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution in each of them, for him/her and in his/her
name, place and stead, and in any and all capacities, to sign the Registration
Statement on Form S-3 for the public offering of Company common stock, and any
required amendments or supplements thereto (and any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in or about the premises,
for to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his/her substitute or substitutes lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 16th day of June, 1998.
/S/WILLIAM N. MELTON
POWER OF ATTORNEY
I, Dr. Thomas Middelhoff, a director of America Online, Inc. (the
"Company") whose signature appears below, constitute and appoint Stephen M.
Case, Sheila A. Clark, Lennert J. Leader, Robert W. Pittman, and George
Vradenburg, III, and each of them, my true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution in each of them, for
him/her and in his/her name, place and stead, and in any and all capacities, to
sign the Registration Statement on Form S-3 for the public offering of Company
common stock, and any required amendments or supplements thereto (and any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended), and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in or
about the premises, for to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his/her substitute or substitutes lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 17th day of June, 1998.
/S/DR. THOMAS MIDDELHOFF
POWER OF ATTORNEY
I, Robert W. Pittman, a director of America Online, Inc. (the "Company")
whose signature appears below, constitute and appoint Stephen M. Case, Sheila A.
Clark, Lennert J. Leader, Robert W. Pittman, and George Vradenburg, III, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution in each of them, for him/her and in his/her
name, place and stead, and in any and all capacities, to sign the Registration
Statement on Form S-3 for the public offering of Company common stock, and any
required amendments or supplements thereto (and any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in or about the premises,
for to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his/her substitute or substitutes lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 17th day of June, 1998.
/S/ROBERT W. PITTMAN
