<PAGE>
As filed with the Securities and Exchange Commission on April 30, 1999
Registration No. 333-______
- ----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GATEWAY 2000, INC.
(Exact name of registrant as specified in its charter)
-------------------------------------
Delaware 42-1249184
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
4545 Towne Centre Court
San Diego, California 92121
(619) 799-3401
(Address, including zip code and telephone number,
including area code of Registrant's principal executive offices)
-------------------------------------
William M. Elliott, Esq.
Gateway 2000, Inc.
4545 Towne Centre Court
San Diego, California 92121
(619) 799-3401
(Name, address, including zip code and telephone number,
including area code, of agent for service)
-------------------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
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 effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Shares Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Unit Offering Price(1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities
Preferred Stock,
$.01 par value per
share
Common Stock, $.01
par value per share
Total (2) (2) $1,000,000,000 $278,000(2)
===============================================================================================================================
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the SEC, acting pursuant to said Section
8(a), may determine.
(1) Such amount represents the principal amount of any Debt Securities issued
at their principal amount and/or the expected initial public offering price
of any Preferred Stock and/or Common Stock.
(2) The aggregate amount of each of the Debt Securities, the Preferred Stock
and the Common Stock and the aggregate offering price per unit have been
omitted pursuant to Securities Act Release No. 6964. The registration fee
has been calculated in accordance with Rule 457(o) promulgated under the
Securities Act of 1933, as amended, and reflects the offering price rather
than the principal amount of any Debt Securities issued at a discount.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject To Completion, Dated April 30, 1999
[Gateway Logo]
Prospectus
$1,000,000,000
Gateway 2000, Inc.
Debt Securities
Preferred Stock
Common Stock
- -------------------------------------------------------------------------------
We will provide specific terms of these securities in supplements to this
prospectus.
You should read this prospectus and any supplement carefully before you invest.
- --------------------------------------------------------------------------------
Gateway 2000, Inc., a Delaware corporation, may offer from time to time:
. unsecured debt securities in one or more series,
. shares of preferred stock, par value $.01 per share, in one or more series,
. shares of common stock, par value $.01 per share, or
. any combination of the foregoing.
The aggregate principal amount of the debt securities and the aggregate initial
public offering price of the preferred stock and the common stock sold will not
exceed $1,000,000,000 (or the equivalent thereof if debt securities are
denominated in one or more foreign currencies or foreign currency units). We
will determine the price and terms of such securities at or prior to the time of
sale.
Our common stock is listed on the New York Stock Exchange under the trading
symbol "GTW."
These securities involve a degree of risk. See "Risk Factors" beginning on
page 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus may not be used to sell any securities unless accompanied
by a prospectus supplement.
This prospectus is dated _______ ___, 1999
<PAGE>
About This Prospectus
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may sell, over the next two years, any combination
of the securities described in this prospectus in one or more offerings up to a
total dollar amount of $1,000,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may
also add, update or change information contained in this prospectus. You should
read both this prospectus and any prospectus supplement together with the
additional information described under the heading "Where You Can Find More
Information."
About Gateway
General
We and our subsidiaries are a leading direct marketer of personal computers
("PCs") and related products and services. We develop, manufacture, market, and
support a broad line of desktop and portable PCs, digital media (convergence)
PCs, servers, workstations and PC-related products used by individuals,
families, businesses, government agencies and educational institutions. We
believe we are one of the leading suppliers of PCs to the U.S. consumer market.
Our strategy is to deliver the best value to our customers by offering quality,
high-performance PCs and other products employing the latest technology at
competitive prices and by providing outstanding service and support. Internet
users can access information about us and our products and services at
http://www.gateway.com. Information contained at our website is not considered
- -----------------------
a part of this prospectus.
Gateway was incorporated in Iowa on August 15, 1986, merged into a South
Dakota corporation of the same name effective December 29, 1989, and merged into
a Delaware corporation of the same name effective February 20, 1991. In
December 1993, we completed our initial public offering of common stock and were
listed on The NASDAQ National Market. On May 22, 1997, we moved to the New York
Stock Exchange, and began trading under the symbol "GTW." Our principal
executive offices are located at 4545 Towne Centre Court, San Diego, California
92121. Our telephone number is (619) 799-3401.
Risk Factors
The securities being offered by this prospectus involve a degree of risk.
You should carefully consider the following risk factors and all other
information contained in this prospectus, in the applicable prospectus
supplement and in the additional information described under the heading "Where
You Can Find More Information" before you buy any of the securities sold
pursuant to this prospectus:
2
<PAGE>
We May Not Succeed in our Highly Competitive Marketplace
The PC industry is highly competitive, especially with respect to pricing
and the introduction of new products and product features. We compete primarily
by quickly adding new performance features to products while minimizing
corresponding price increases. We cannot guarantee timely introduction of new
products or product features. We cannot be certain that we will continue to
compete successfully by adding new features to our products without
corresponding price increases. In recent years we and many of our competitors
have regularly lowered prices, and we expect these pricing pressures to
continue. We plan to mitigate the impact of falling prices by diversifying our
revenue stream with software bundles, internet services, financing and other
service offerings. If cost reductions or changes in product mix do not mitigate
our pricing pressures, these competitive price pressures could substantially
reduce our profits.
We May Be Unable to Expand Our Infrastructure As Necessary to Support Growth
Our rapid growth creates ongoing demands for personnel, facilities,
information systems and other infrastructure requirements. If we are not
successful in continuing to develop our infrastructure, we could experience
disruptions in operations which could negatively and materially affect our
financial results.
Our Suppliers May Not Deliver Needed Components on a Timely Basis
We require a high volume of quality components for the manufacture of our
products. We also obtain substantially all of our components from outside
suppliers. While we attempt to have multiple suppliers for such components, in
some circumstances we maintain single-source supplier relationships. Failure by
suppliers to meet component delivery schedules have occasionally disrupted our
normal production schedules. We may continue experiencing such occasional
disruptions in the future, which could adversely impact our ability to deliver
products on a timely schedule.
We May Be Unable to Keep Pace with Rapidly Changing Product Requirements
Short product life cycles resulting from rapid changes in technology and
consumer preferences and declining product prices characterize the PC industry.
Our in-house engineering personnel work closely with PC component suppliers and
other technology developers to evaluate the latest developments in PC-related
technology. We may lose, or not acquire, access to or the right to use new
technology. We may be unable to incorporate such new technology in our products
or features in a timely manner.
We May Not Have Access to Technology Required for Our Products
We may not have access to existing or new third-party technology for use in
our products. If we or our suppliers are unable to obtain licenses necessary to
use protected technology in our products on commercially reasonable terms, we
may be forced to market products without
3
<PAGE>
certain desirable technological features. We could also incur substantial costs
redesigning our products around other parties' protected technology or to defend
patent or copyright infringement lawsuits against us.
We Will Face Additional Risks Due to Expansion of our International Operations
We have expanded our operations into both Europe and the Asia-Pacific
region and believe further international growth is necessary for our success.
International expansion involves additional business risks such as foreign
currency fluctuation, government regulation, liability for foreign taxes and
product sales, competition with locally strong competitors, and delivery and
support logistics. We may not effectively manage these additional risks.
We Face Financial Risks Due to Foreign Currency Fluctuations
We engage in hedging programs involving forward exchange contracts in an
effort to minimize the impact of foreign currency fluctuations. Volatility of
currency markets, reliability of sales forecasts and availability of hedging
instruments could adversely impact the effectiveness of such hedging programs.
Our Customers May Default On Their Credit or Loan Accounts
We intend to bear the credit risk of a significant portion of our future
customer credit card or loan accounts as part of our sales and marketing efforts
until the obligations are repaid or sold. We anticipate that customers will be
delinquent in payments on a number of these accounts and that some will
ultimately default on their accounts. The delinquency and default rates we
actually experience may be above anticipated rates, particularly if general
economic conditions worsen.
Expanding Our E-Commerce Business May Require Additional Investment by Us
We intend to expand our e-commerce business through investment in existing
companies and the creation of an e-commerce site that will offer GatewayJ
branded products as well as complementary products from other manufacturers. E-
commerce is a relatively new and emerging distribution channel whose success
depends on a variety of factors, including the continued acceptance of e-
commerce generally by customers. Our success using e-commerce depends on such
factors as:
. the satisfactory performance, reliability and availability of our web
site;
. the reliability and efficiency of our computer and communications
hardware systems;
. our ability to compete with a growing number of rival e-commerce
sites;
4
<PAGE>
. our ability to evolve, update and improve our services and offerings
in response to changing demands; and
. the consumer demand for our products.
Expansion into this emerging growth business may require investment in
start-up activities and initial operating losses for our e-commerce business.
We May Face Additional Risks Associated with Future Acquisitions
We have recently acquired certain businesses which we believe are
complementary to our operations and anticipate possibly making additional
acquisitions in the future. While we believe we will effectively integrate
these acquired businesses with our own, we may be unable to successfully do so
without losing key employees or business relationships. In addition, we may be
unable to smoothly integrate the acquired companies' marketing, production,
development, distribution and management systems resulting in an inability to
realize hoped for cost savings or sales growth. Our gross margins could be
adversely affected by any problems arising during or from such process or the
inability to effectively integrate any future acquisitions.
Unanticipated High Inventory Levels Could Increase Our Costs
By distributing directly to our customers, we have avoided the need to
maintain high levels of inventory. This has minimized costs and allows us to
respond more quickly to changing customer demands, reducing our exposure to the
risk of product obsolescence. A decrease in market demand or an increase in
supply, among other factors, could result in higher inventory levels which could
negatively affect our profitability.
Our Profitability May Suffer Due To Our Customer or Geographic Sales Mix
Our profit on particular product sales varies slightly depending on the
product sold, the customer segment and the geographic market involved. Because
of these profit variations, our profitability in any period will depend, in
part, on the mix of products, customers and geographic markets involved in that
period's sales.
Year 2000 Non-Compliance Could Negatively Affect Our Business
The "Year 2000" issue has arisen because many existing computer programs
and chip-based embedded technology systems use only the last two digits of a
year to refer to the year. These programs and systems do not properly recognize
a year that begins with "20" instead of the familiar "19." If not corrected,
many computer applications could fail or create erroneous results.
Based on information available to us as of the date of this prospectus, we
believe that the Year 2000 issue will not have a material negative effect on our
business, consolidated financial position, results of operations or cash flows.
However, we cannot be certain that we or third
5
<PAGE>
parties will properly and timely remediate the Year 2000 issue. Failure to
remediate the Year 2000 issue could have a material negative effect on us. We
cannot predict the effects that Year 2000 non-compliance would have on us, which
would ultimately depend on numerous uncertainties such as:
. whether significant third parties, including suppliers, properly and
timely address the Year 2000 issue;
. whether broad-based or systemic economic failures occur, and the
severity and duration of such failures, including loss of utility
and/or telecommunications services, and errors or failures in
financial transactions or payment processing systems such as credit
cards; and
. whether we become the subject of litigation or other proceedings
regarding any Year 2000-related events and the outcome of any such
litigation or proceedings.
Use of Proceeds
Except as set forth in any applicable prospectus supplement, we will use
the net proceeds from the sale of the offered securities for general corporate
purposes.
Consolidated Ratio of Earnings to Fixed Charges
The following table sets forth the consolidated ratio of earnings to fixed
charges for each of the last five years.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Consolidated ratio of earnings
to fixed charges 58.2 50.8 85.0 34.8 58.5
</TABLE>
These computations include us and our subsidiaries. For these ratios,
"earnings" is determined by adding pretax income from continuing operations and
fixed charges. Fixed charges include interest expense on notes payable and
capital lease amortization as well as the interest portion of rental expense
relating to operating leases.
6
<PAGE>
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the
- -------------------
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until we sell all of the securities covered by this prospectus or
terminate this offering:
. Annual Report on Form 10-K for the year ended December 31, 1998;
. Proxy Statement dated April 9, 1999; and
. The description of the common stock contained in Form 8-A filed May
15, 1997.
We will provide a copy of each of the documents incorporated by reference
upon your request. You may request a copy of these filings at no cost, by
writing or telephoning us at the following address and telephone number:
Corporate Secretary
Gateway 2000, Inc.
4545 Towne Centre Court
San Diego, California 92121
(619) 799-3401
You should rely only on the information incorporated by reference or
provided in this prospectus or any applicable prospectus supplement. We have
not authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
Forward-Looking Statements
Some of the statements contained or incorporated by reference in this
prospectus constitute "forward-looking statements" within the meaning of Section
27A of the Securities
7
<PAGE>
Act of 1933 or Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements include statements with respect to our plans,
projections or future performance.
These forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially from future
results expressed or implied by such statements. See "Risk Factors" above and
our periodic reports and other documents filed with the SEC for further
discussions of certain of the risks, uncertainties and other factors applicable
to us, our business and the securities proposed to be sold.
Description of Debt Securities
The following briefly summarizes the material provisions of the indenture
we will enter into with one or more commercial banks, as trustee, and the debt
securities. A copy of the indenture is filed as an exhibit to the registration
statement of which this prospectus is a part. You should read the more detailed
provisions of the indenture, including the defined terms, for provisions that
may be important to you before you buy any debt securities. So that you may
easily locate the more detailed provisions, the numbers in parentheses below
refer to sections in the indenture. Wherever particular sections or defined
terms of the applicable indenture are referred to, such sections or defined
terms are incorporated into this prospectus by reference, and the statement in
this prospectus is qualified by that reference. 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 debt securities may be issued from time to time in one or more series.
You should read the particular terms of a series of debt securities, which will
be described in more detail in an applicable prospectus supplement.
General
The debt securities offered by this prospectus will be our unsecured
obligations. The indenture provides that debt securities may be issued in one
or more series, with different maturity dates and different interest rates, at
par or at a discount, in each case as we authorize from time to time. We also
have the right to "reopen" a previous issue of a series of debt securities by
issuing additional debt securities of such series. The indenture does not
contain any limit on the aggregate principal amount of debt securities which may
be issued pursuant to it.
Federal income tax consequences and other special considerations applicable
to any debt securities originally issued at a discount will be described in the
applicable prospectus supplement.
8
<PAGE>
The applicable prospectus supplement relating to any series of debt
securities will describe the following terms, where applicable:
. the title of the debt securities of the series;
. the total principal amount of the debt securities of the series;
. the percentage of the principal amount at which the debt securities
will be sold and, if applicable, the method of determining the price;
. the maturity date or dates;
. the interest rate or the method of computing the interest rate;
. the date or dates from which any interest will accrue, or how such date
or dates will be determined, and the interest payment date or dates and
any related record dates;
. the terms on which a series of debt securities may be convertible into
or exchangeable, if at all, for common or other securities, including
whether such conversion or exchange is mandatory, at the option of the
holder or at our option;
. the location where payments on the debt securities will be made;
. the terms and conditions on which the debt securities may be redeemed,
in whole or in part, at our option or otherwise;
. any obligation we have to redeem, purchase or repay the debt securities
at the option of a holder upon the happening of any event and the terms
and conditions of redemption, purchase or repayment;
. the currency or currency unit in which payment will be made if other
than United States dollars;
. any index, formula or other method used to determine the amount of any
payment on the debt securities;
. if other than the principal amount, the portion of the principal amount
of the debt securities payable if the maturity is accelerated;
. if any payments may be made at our election or the election of a holder
of debt securities in a currency or currency unit other than that in
which the debt securities are stated to be payable, the periods within
which and the terms upon which such election may be made;
9
<PAGE>
. any provisions for the discharge of our obligations relating to the
debt securities by deposit of funds or United States government
obligations;
. whether the debt securities are to trade in "book-entry" form and the
terms and any conditions for exchanging the "global" security in whole
or in part for physical (paper) certificates;
. if the debt securities are to be issued in "book-entry" form, the
depository for such debt securities;
. the date of any global security if other than the original issuance of
the first debt security to be issued;
. the Trustee and any authenticating or paying agents, transfer agents or
registrars;
. any material provisions of the applicable indenture described in this
prospectus that do not apply to the debt securities; and
. any other specific terms of the debt securities (SECTION 3.1).
The debt securities will be issued only in registered form. As currently
anticipated, debt securities of a series will trade in "book-entry" form, and
"global" notes will be issued in physical (paper) form only as described below
under the subheading "Book-Entry Procedures And Settlement For Debt Securities."
Unless otherwise provided in the accompanying prospectus supplement, debt
securities denominated in United States dollars will be issued only in
denominations of $1,000 and whole multiples of $1,000 (SECTION 3.2).
Exchange, Registration, Transfer and Payment
The debt securities may be presented for exchange, and debt securities
other than a global security may be presented for registration of transfer, at
the office of the Trustee maintained for such purpose. You will not have to pay
any service charge for any registration of transfer or exchange of debt
securities, but we may require payment of any tax or other governmental charge
payable in connection with such registration of transfer (SECTION 3.5).
All payments by us to a paying agent on any debt security which remains
unclaimed for one year after such payment has become due and payable may be
repaid to us, and thereafter the holder of such debt security may look only to
us for payment of such amounts.
In the event of any redemption, we will not be required to (a) issue,
register the transfer of or exchange any debt security beginning 15 days before
the day of the mailing of a notice of redemption of debt securities to be
redeemed through and including 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.
10
<PAGE>
Payment of principal of and premium, if any, on the debt securities (other
than those represented by global notes) will be made in the designated currency
against surrender of the debt securities at the principal corporate trust office
of the Trustee. Payment will be made to the registered holder of the debt
securities at the close of business on the record date for such payment.
Interest payments will be made at the principal corporate trust office of the
Trustee, or by a check mailed to the holder at its registered address (SECTIONS
2.2 and 3.7). Payments in any other manner will be specified in the prospectus
supplement.
Book-Entry Procedures and Settlement for Debt Securities
Most series of debt securities will be book-entry securities and not
definitive notes with physical (paper) certificates. Unless we provide
otherwise in the applicable prospectus summary, all book-entry securities of the
same class of a series will be represented by one or more fully registered
global notes, without interest coupons. Each global note will be registered in
the name of a securities depositary or a nominee of the depository. The
depository will thus be the only registered holder of these debt securities and
will be considered the sole owner of the debt securities for purposes of the
indenture.
Purchasers of debt securities may hold interests in the global notes only
through the depository (if they are participants in such system) or through a
securities intermediary--banks, brokerage houses and other institutions that
maintain securities accounts for customers--that has an account with the
depository or its nominee ("participants"). The depository will maintain
accounts showing the debt security holdings of its participants, and these
participants will in turn maintain accounts showing the debt security holdings
of their customers (some of whom may themselves be securities intermediaries
holding debt securities for their customers). Thus, the depository will be
considered the sole owner and holder of the related debt securities. A
purchaser of a book-entry debt securities will, instead, be a beneficial owner
of debt securities and will hold that debt security indirectly through a
hierarchy of intermediaries, with the depository at the "top" and the beneficial
owner's own securities intermediary at the "bottom."
The debt securities of each beneficial owner of a book-entry security will
be evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of the debt securities will generally not be
entitled to have the debt securities represented by the global notes registered
in its name. In most cases, a beneficial owner will also not be able to obtain
a physical (paper) certificate evidencing the holder's ownership of debt
securities. The book-entry system for holding debt securities eliminates the
need for physical movement of certificates and is the system through which most
publicly traded common stock is held in the United States. However, the laws of
some jurisdictions require some purchasers of securities to take physical
delivery of their securities in definitive form. These laws may impair the
ability to transfer book-entry securities.
So long as the depository, or its nominee, is the registered holder and
owner of a global security, each beneficial owner must rely on the procedures of
the depository 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
11
<PAGE>
security. We understand that under existing industry practice, the depository
would authorize the participants to take any action requested by us or the owner
of a beneficial interest 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.
A beneficial owner of a global note may exchange the securities for
definitive notes (physical (paper) certificates) only if:
. the depository is unwilling or unable to continue as depositary for
such global note and we are unable to find a qualified replacement for
the depository within 90 days;
. at any time the depository ceases to be a clearing agency registered
under the Securities Exchange Act of 1934; or
. we in our sole discretion decide to allow some or all book-entry
securities to be exchangeable for definitive notes in registered form.
Unless we indicate otherwise in the applicable prospectus supplement, any
global note that is exchangeable will be exchangeable in whole for definitive
notes in registered form, of like tenor and of an equal aggregate principal
amount, in denominations of $1,000 and whole multiples of $1,000 in excess of
that amount. Definitive notes will be registered in the name or names of the
person or persons specified by the depository in a written instruction to the
registrar of the securities. The depository may base its written instruction
upon directions it receives from its participants. We, the Trustee and any
agent of us or the Trustee may treat the person in whose name the definitive
notes is registered as the owner of such debt security.
In this prospectus and the applicable prospectus supplement, references to
actions taken by debt security holders in relation to book-entry debt securities
will mean actions taken by the depository upon instructions from its
participants, and references to payments and notices of redemption to debt
security holders and notices of redemption to the depository as the registered
holder of the debt securities for distribution to participants in accordance
with the depository's procedures.
We will not have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
Covenants
Any covenants 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. Otherwise, we are not restricted by the indenture from:
. incurring, assuming or becoming liable for any type of debt or other
obligations,
12
<PAGE>
. paying dividends or making distributions on our capital stock, or
. purchasing or redeeming our 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 us to repurchase or redeem or otherwise
modify the terms of any of our debt securities upon a change in control or other
events that may adversely affect the creditworthiness of the debt securities.
Modification of the Indentures
Under the indenture, we and the Trustee can enter into supplemental
indentures to establish or clarify the form and terms of any series of debt
securities or for certain other limited matters without the consent of any
holder of debt securities.
We and the Trustee may, with the consent of at least a majority in
aggregate principal amount of the debt securities, modify the indenture or the
rights of the holders of the securities of such series to be affected. However,
without the consent of the holder of each security so affected, no such
modification may:
. extend the fixed maturity of any such securities;
. reduce the rate or extend the time of payment of interest on such
securities;
. reduce the principal amount of such securities or the premium, if any,
on such securities;
. reduce the amount of the principal payable on any date of any debt
securities originally issued at a discount;
. change the currency in which any payments on such securities are
payable;
. impair the right to institute suit for the enforcement of any payment
on or after the maturity of such securities; or
. reduce the percentage in principal amount of outstanding debt
securities of any series, the consent of whose holders is required to
modify such provisions of the indenture, to waive our compliance with
certain provisions of the indenture or to waive certain defaults under
the indenture.
Certain defaults may be waived by the holders of a majority in principal
amount of the outstanding debt securities of each series. In addition, no
modification that modifies the rights,
13
<PAGE>
duties or immunities of the Trustee may be made without the written consent of
the Trustee. (SECTIONS 5.13 and 9.3).
Defaults
The indenture provides that events of default regarding any series of debt
securities will be:
. failure to pay required interest on debt securities of such series for
30 days;
. failure to pay principal (other than any scheduled installment
payment) or any premium on any debt security of such series when due;
. failure to make any required scheduled installment payment for 30 days
on debt securities of such series;
. failure to perform for 90 days after notice of any failure of any
other covenant in the indenture applicable to that series of debt
securities; and
. certain events of bankruptcy, insolvency or reorganization, whether
voluntary or not (SECTION 5.1).
If an event of default regarding debt securities of any series issued under
the indenture should occur and be continuing, either the Trustee or the holders
of 33% of the aggregate principal amount of outstanding debt securities of such
series (or, if an event of default has occurred with respect to more than one
series, 33% of the aggregate principal amount of all outstanding debt securities
of all such series) may declare each debt security of that applicable series due
and payable (SECTION 5.2). We are required to file annually with the Trustee a
statement of an officer as to our fulfillment of our obligations under the
indenture during the preceding year (SECTION 10.4).
No event of default regarding one series of debt securities issued under
the indenture is necessarily an event of default regarding any other series of
debt securities (SECTION 5.1).
Holders of a majority in principal amount of the outstanding debt
securities of any series (or, if applicable, all such applicable series) will be
entitled to control certain actions of the Trustee under the indenture and to
waive past defaults regarding such series (SECTION 5.12). The Trustee generally
will not be requested, ordered or directed by any of the holders of debt
securities, unless one or more of such holders shall have offered the Trustee
reasonable security or indemnity (SECTION 6.3).
If an event of default occurs and is continuing regarding a series of debt
securities, the Trustee may use any sums that it holds under the indenture for
its own reasonable compensation and expenses incurred prior to paying the
holders of debt securities of such series (SECTION 5.6).
14
<PAGE>
Before any holder of any series of debt securities may institute action for
any remedy, other than payment of the principal of, premium, if any, and
interest on such holder's debt security when due, a request to the Trustee by
the holders of not less than 33% in principal amount of the debt securities of
that series outstanding is required for the Trustee to take action. An offer
satisfactory to the Trustee of security and indemnity against liabilities
incurred by it is also required (SECTION 5.7).
Defeasance
If so specified when a particular series of debt securities is created,
after we have deposited with the Trustee, in trust for the benefit of the
holders of such series, cash or government securities sufficient to pay the
principal of, premium, if any, and interest on the debt securities of such
series when due, then we, at our option:
. will be deemed to have paid and discharged the entire indebtedness on
all outstanding debt securities of such series ("defeasance and
discharge"); or
. will cease to be under any obligation, other than to pay when due the
principal of, premium, if any, and interest on such debt securities,
relating to the debt securities of such series ("covenant
defeasance").
In the case of defeasance and discharge or covenant defeasance, we must
also deliver to the Trustee an opinion of counsel to the effect that the holders
of the debt securities of such series will have no federal income tax
consequences as a result of such deposit and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if the deposit and defeasance had not occurred. In the case of a
defeasance and discharge, the opinion of counsel referred to in the preceding
sentence must be based on a ruling from the Internal Revenue Service or other
change in (or a change in the current interpretation of) applicable federal
income tax law.
When there is a defeasance and discharge, the indenture will no longer
govern the debt securities of such series, we will no longer be liable for
payment and the holders of such debt securities will be entitled only to the
deposited funds. When there is a covenant defeasance, however, we will continue
to be obligated to make payments when due if the deposited funds are not
sufficient. The obligations and rights under the indenture regarding
compensation, reimbursement and indemnification of the Trustee, optional
redemption, mandatory and optional scheduled installment payments, if any,
registration of transfer and exchange of the debt securities of such series,
replacement of mutilated, destroyed, lost or stolen debt securities and certain
other administrative provisions will continue even if we exercise our defeasance
and discharge or covenant defeasance options (SECTIONS 13.2 and 13.3).
15
<PAGE>
Consolidation, Merger and Sale of Assets
We may consolidate or merge with or into any person, or convey, transfer or
lease all or substantially all of our assets, only if the following conditions
have been satisfied:
(a) either (1) we are the continuing person in the case of a merger or (2)
the successor company in any other transaction is a corporation organized and
existing under the laws of the United States, any State or the District of
Columbia and such corporation assumes all of our obligations under the debt
securities and the indenture;
(b) immediately after giving effect to the transaction, no default, event
of default or similar event would occur or be continuing; and
(c) we deliver to the Trustee an officers' certificate and an opinion of
counsel stating that the transaction complies with the indenture.
Upon completion of such transaction, the successor company has all of our
rights and powers under the indenture, and, except in the case of a lease, the
predecessor will be released from its obligations and covenants under the
indenture and all outstanding debt securities.
Notices
Except as otherwise provided in the indenture, the address for notices to
holders of debt securities will be the addresses as they appear in the debt
security register.
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.
Concerning the Trustees
We may appoint a separate Trustee for any series of debt securities.
If the Trustee becomes one of our creditors, the indenture contains certain
limits on the right of the Trustee to obtain payment of certain claims or to
realize for its own account moneys from certain property received by it with
respect to such claim. The Trustee will be permitted to engage in certain other
transactions. However, if the Trustee 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.
We may have had and may continue to have banking relationships with the
Trustee or Trustees in the ordinary course of business.
16
<PAGE>
Description of Preferred Stock
The following briefly summarizes the material terms of our preferred stock.
You should read the particular terms of any series of preferred stock we offer
which will be described in more detail in any prospectus supplement relating to
such series, together with the more detailed provisions of our Restated
Certificate of Incorporation and the certificate of designation relating to each
particular series of preferred stock for provisions that may be important to
you. The Restated Certificate of Incorporation is and the certificates of
designation will be, as applicable, filed as exhibits to the registration
statement of which this prospectus forms a part. The prospectus supplement will
also state whether any of the terms summarized below do not apply to the series
of preferred stock being offered.
General
Under our Restated Certificate of Incorporation, our Board is authorized to
issue up to 5,000,000 shares of preferred stock, without further stockholder
approval, in one or more series, and to establish from time to time a series of
preferred stock with the following terms specified:
. the number of shares to be included in the series;
. the designation, powers, preferences and rights of the shares of the
series; and
. the qualifications, limitations or restrictions of such series, except
as otherwise stated in the Restated Certificate of Incorporation.
Prior to the issuance of any series of preferred stock, our Board will
adopt resolutions creating and designating the series as a series of preferred
stock and the resolutions will be filed in a certificate of designation as an
amendment to the Restated Certificate of Incorporation.
Our Board may issue preferred stock with preferences, powers and rights
(including voting rights) senior to the rights of holders of common stock. The
rights of holders of the preferred stock offered may be adversely affected by
the rights of holders of any shares of preferred stock that may be issued in the
future. Our Board may cause shares of preferred stock to be issued in public or
private transactions for any proper corporate purpose, which may include
issuances to obtain additional financing in connection with acquisitions or
otherwise, and issuances to our officers, directors and employees and our
subsidiaries pursuant to benefit plans or otherwise. Shares of preferred stock
we issue may have the effect, under certain circumstances, alone or in
combination with certain other provisions of the Restated Certificate of
Incorporation, of rendering more difficult or discouraging an acquisition of us
deemed undesirable by our Board.
The preferred stock will be, when issued, fully paid and nonassessable.
Holders of preferred stock will not have any preemptive or subscription rights
to acquire more of our stock.
The prospectus supplement with respect to any series of preferred stock
will state if such series is listed or is to be listed on any securities
exchange.
17
<PAGE>
The transfer agent, registrar, dividend disbursing agent and redemption
agent, as applicable, for shares of each series of preferred stock will be named
in the prospectus supplement relating to such series.
Rank
Unless otherwise specified in the prospectus supplement relating to the
shares of any series of preferred stock, such shares will rank on an equal basis
with each other series of preferred stock and prior to the common stock as to
dividends and distributions of assets.
Dividends
Holders of each series of preferred stock will be entitled to receive cash
dividends, if any, when, as and if declared by our Board out of funds legally
available for dividends. The rates and dates of payment of any dividends will
be set forth in the prospectus supplement relating to a series of preferred
stock. Dividends will be payable to holders of record of preferred stock as
they appear on our books or on the books of the transfer agent for such series
of preferred stock on the record dates fixed by the Board. Dividends on any
series of preferred stock may be cumulative or noncumulative.
We may not declare, pay or set apart for payment dividends on the preferred
stock unless full dividends on any other series of preferred stock that ranks on
an equal or senior basis have been paid or sufficient funds have been set apart
for payment for all prior dividend periods of the other series of preferred
stock that pay dividends on a cumulative basis.
Partial dividends declared on shares of preferred stock and any other
series of preferred stock ranking on an equal basis as to dividends will be
declared pro rata. A pro rata declaration means that the ratio of dividends
declared per share to accrued dividends per share will be the same for both
series of preferred stock.
Similarly, we may not declare, pay or set apart for payment non-stock
dividends or make other payments on the common stock or any of our other capital
stock ranking junior to the preferred stock until full dividends on the
preferred stock have been paid or set apart for payment of all prior dividend
periods if the preferred stock pays dividends on a cumulative basis.
Conversion and Exchange
The prospectus supplement for any series of preferred stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of our capital stock.
18
<PAGE>
Redemption
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at our
option or at the option of the holder thereof and may be mandatorily redeemed.
Any partial redemptions of preferred stock will be made in a way that our Board
decides is equitable.
Unless we default in the payment of the redemption price, dividends will
cease to accrue after the redemption date on shares of preferred stock called
for redemption and all rights of holders of such shares will terminate except
for the right to receive the redemption price.
Liquidation Preference
Upon any of our voluntary or involuntary liquidation, dissolution or
winding up, holders of each series of preferred stock will be entitled to
receive distributions upon liquidation in the amount set forth in the prospectus
supplement relating to such series of preferred stock, plus an amount equal to
any accrued and unpaid dividends. Such distributions will be made before any
distribution is made on any securities ranking junior to such preferred stock
relating to liquidation, including common stock. If the liquidation amounts
payable relating to the preferred stock of any series and any other securities
ranking on a parity regarding liquidation rights are not paid in full, the
holders of the preferred stock of such series and such other securities will
share in any such distribution of our available assets on a ratable basis in
proportion to the full liquidation preferences. Holders of such series of
preferred stock will not be entitled to any other amounts from us after they
have received their full liquidation preference.
Voting Rights
The holders of shares of preferred stock will have no voting rights,
except:
. as otherwise stated in the prospectus supplement;
. as otherwise stated in the certificate of designation establishing
such series; or
. as required by applicable law.
Description of Capital Stock
As of December 31, 1998, our authorized capital stock was 226,000,000
shares. Those shares consisted of: (a) 5,000,000 shares of preferred stock,
par value $0.01 per share, none of which were outstanding; (b) 220,000,000
shares of common stock, par value $0.01 per share, of which 156,568,799 shares
were outstanding; and (c) 1,000,000 shares of Class A Common Stock, par value
$0.01 per share, none of which were outstanding.
19
<PAGE>
Common Stock
Our outstanding shares of common stock are registered on the New York Stock
Exchange, Inc. Dividends may be declared on the common stock by our Board out
of legally available funds, subject to the prior rights of any holders of
preferred stock. Any such dividends will be paid in an equal amount to the
holder of each share. Holders of common stock do not have any pre-emptive
rights nor any liquidation or conversion rights. There are no redemption or
sinking fund provisions and there is no liability to further calls or to
assessments by us. Holders of common stock are entitled to one vote per share
for each share held of record at all meetings of stockholders.
Preferred Stock
The general terms of our preferred stock are described above under
"Description of Preferred Stock" above.
Class A Common Stock
Our Board also has the authority, without further stockholder approval, to
provide for the issuance of up to 1,000,000 shares of Class A Common Stock, $.01
par value per share. All shares of common stock and Class A Common Stock are
identical and will entitle the holder to the same rights and privileges, except
the holders of Class A Common Stock shall not have voting rights. In addition,
we can convert any and all shares of outstanding Class A Common Stock into an
equal number of shares of common stock and the holders of Class A Common Stock
can convert at their option any or all of their shares into shares of common
stock. Although no shares of Class A Common Stock are outstanding, the issuance
of shares of Class A Common Stock, or the issuance of rights to purchase such
shares may have the effect of delaying, deferring or preventing a change in
control of the company.
Certain Provisions of Restated Certificate of Incorporation and Bylaws
Our Restated Certificate of Incorporation divides our Board into three
classes, each class to be as nearly equal in number of directors as possible.
At each annual meeting of stockholders, directors in a class will be elected by
the holders of a majority of the shares of common stock represented at the
meeting for three year terms to succeed the directors of that class whose terms
are expiring. The Delaware General Corporation Law requires that our directors
may be removed from office only for cause because our Board is divided into
three classes. Our Restated Certificate of Incorporation provides that cause
shall mean willful and gross misconduct by a director that is materially adverse
to our best interests as determined conclusively by a majority of disinterested
directors. Our Bylaws also include certain other provisions which may restrict
stockholders' ability to effect corporate actions by written consent.
The existence of these provisions in our Restated Certificate of
Incorporation and Bylaws may be disadvantageous to stockholders to the extent
they discourage takeovers in which stockholders might receive a substantial
premium for some or all of their shares. Stockholders
20
<PAGE>
not affiliated with management who desire to participate in such a takeover may
not have the opportunity to do so, even when such stockholders believe
participation in such a transaction to be in their best interest. Also, such
provisions may reduce temporary fluctuations in the market price of the common
stock that may accompany takeover offers, speculation of takeover offers or the
accumulation of large blocks of common stock and thereby deprive stockholders of
an opportunity to sell their stock at a temporarily higher price. In addition to
reducing temporary market fluctuations, such provisions could potentially
depress the market price of shares of common stock and may have the effect of
discouraging changes in control, particularly those that are opposed by our
incumbent management, even if a majority of stockholders desire the change in
control. Such provisions could also prevent the removal of management.
The Delaware Business Combination Act
In general, Section 203 of the Delaware General Corporation Law (known as
the Delaware Business Combination Act) prohibits a public Delaware corporation
from engaging in a merger, asset sale or similar transaction with "interested"
stockholders. An interested stockholder is one who owns, alone or together
with affiliates, or within a three-year period, did own, 15% or more of the
corporation's voting stock, unless the business combination is approved in a
prescribed manner or the transaction by which the person acquired such shares
was approved by the corporation's Board. An interested stockholder would be one
for a period of three years after the date of the transaction in which the
person acquired such interest. We have elected not to be governed by Section
203 because we believe that Section 203 could operate to prevent a business
combination supported by a majority of our stockholders.
Director Liability Provisions
As permitted by the Delaware General Corporate Law, the Restated
Certificate of Incorporation includes provisions eliminating the personal
liability of our directors for monetary damages resulting from breaches of their
fiduciary duty to the extent permitted by Delaware law. The provision does not
affect the availability of equitable remedies for a breach of duty of care, such
as an action to enjoin or rescind a transaction involving a breach of fiduciary
duty. However, in certain circumstances equitable remedies may not be available
as a practical matter. While this provision may be amended or repealed in the
future, such change would only have an effect on liabilities arising after such
change. In addition, the Restated Certificate of Incorporation and Bylaws
include provisions indemnifying our directors and officers to the fullest extent
permitted by Delaware law, including under circumstances in which
indemnification is otherwise discretionary. The Bylaws permit our Board to
grant indemnification to employees and agents to the fullest extent permitted by
Delaware law.
In addition, the limited liability provisions in the Restated Certificate
of Incorporation with respect to directors and the indemnification provisions in
the Bylaws with respect to directors and officers may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty.
Such provisions may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though such an
action, if successful, might otherwise have benefitted us and our stockholders.
Furthermore, a stockholder's investment in us may be adversely affected to the
extent that costs of settlement
21
<PAGE>
and damage awards against our directors and officers are paid by us pursuant to
the indemnification provisions contained in the Bylaws described above.
Plan of Distribution
We may sell the offered securities (a) through agents; (b) through
underwriters or dealers; or (c) directly to one or more purchasers. The
prospectus supplement with respect to the securities being offered will set
forth the terms of that specific offering, including the name or names of any
underwriters, dealers or agents, the purchase price of the securities and net
proceeds to us 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.
By Agents
Offered securities may be sold through agents designated by us. Any agent
involved will be named, and any commissions payable by us to such agent will be
set forth, in the applicable prospectus supplement.
By Underwriters or 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 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 certain conditions and the underwriters will be
obligated to purchase all of the offered securities if any are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If dealers are used, and if so specified in the applicable prospectus
supplement, we will sell such offered securities to the dealers as principals.
The dealers may then resell such 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 any such transaction will be set forth in the applicable
prospectus supplement.
Direct Sales
Offered securities may also be sold directly by us. In this case, no
underwriters, dealers or agents would be involved.
22
<PAGE>
General Information
We may enter into agreements with underwriters, dealers and agents that
entitled them to indemnification against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect to
payments which the underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may be customers of, may engage in transactions
with, or perform services for, us or our subsidiaries in the ordinary course of
business.
Underwriters, dealers and agents that participate in the distribution of
the offered securities may be underwriters as defined in the Securities Act, and
any discounts or commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act. Any underwriters, dealers
or agents used in the offer or sale of securities will be identified and their
compensation described in an applicable prospectus supplement.
Legal Matters
William M. Elliott will issue an opinion about the legality of the
securities offered under this prospectus. Mr. Elliott is Senior Vice President,
General Counsel and Corporate Secretary of Gateway. In addition to being an
officer of Gateway, Mr. Elliott currently holds options to purchase 198,000
shares of common stock. Any underwriters will be advised about other issues
relating to any offering by their own legal counsel.
Experts
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1998 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
23
<PAGE>
TABLE OF CONTENTS
Page
About This Prospectus............................. 2
About Gateway..................................... 2
Risk Factors...................................... 2
Use of Proceeds................................... 6
Consolidated Ratio of Earnings to Fixed Charges... 6
Where You Can Find More Information............... 7
Forward-Looking Statements........................ 7
Description of Debt Securities.................... 8
Description of Preferred Stock.................... 17
Description of Capital Stock...................... 19
Plan of Distribution.............................. 22
Legal Matters..................................... 23
Experts........................................... 23
<PAGE>
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 us. All amounts
set forth below are estimates, other than the SEC registration fee.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.... $278,000
NYSE listing fee....................................... $ 52,500
Accounting fees and expenses........................... $ 15,000
Legal fees and expenses (including blue sky expense)... $100,000
Trustee fees and expenses.............................. $ 20,000
Printing and engraving fees............................ $ 70,000
Miscellaneous.......................................... $ 17,500
--------
Total............................................. $553,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
We are a Delaware corporation. Section 145 of the Delaware General
Corporation Law, as amended (the "GCL"), provides that a corporation may
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 proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
its request in such capacity of another corporation or business organization
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. A Delaware corporation may indemnify officers and directors in any
action by or in the right of a corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
(including attorneys' fees) that such officer or director actually and
reasonably incurred.
Pursuant to Section 102(b)(7) of the GCL, a corporation may provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for
II-1
<PAGE>
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the GCL or (iv) for any transaction from which the director
derived an improper personal benefit.
Under our Restated Certificate of Incorporation and bylaws, we will, to the
full extent permitted by the GCL, indemnify each person made or threatened to be
made a party to any civil, criminal or investigative action, suit or proceeding
by reason of the fact that such person is or was our director, officer or
employee or agent or is or was serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. Our Restated Certificate of Incorporation and Bylaws state
that the indemnification provided therein is not exclusive.
We have in force an insurance policy under which our directors and officers
are insured, within the limits and subject to the limitations in the policy,
against certain expenses in connection with the defense of such actions, suits
or proceedings to which they are parties by reason of being or having been
directors or officers.
Item 16. Exhibits.
Exhibit No. Description
1 Form of Underwriting Agreement
4 Form of Indenture Agreement
5 Legal Opinion of William M. Elliott
12 Statement Re: Computation of Consolidated Ratio of Earnings to Fixed
Charges
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of William M. Elliott (contained in opinion filed as Exhibit
5)
24 Powers of Attorney (included on signature page)
27 Financial Data Schedules
II-2
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of 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 the 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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent 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;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in its Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
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 SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the
II-3
<PAGE>
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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of San Diego, State of California, on April 30, 1999.
GATEWAY 2000, INC.
By: /s/ John J. Todd
------------------
Name: John J. Todd
Title: Senior Vice President, Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John J. Todd, William Elliott and Stephanie Heim
and each of them, as true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities to sign any and all amendments (including pre-
effective and post-effective amendments) to this Registration Statement and any
related Registration Statement filed pursuant to Rule 462(b) or any successor
regulation, 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 and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
* * * *
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: April 30, 1999 /s/ Theodore W. Waitt
----------------------
Theodore W. Waitt
Chief Executive Officer and Director
Date: April 30, 1999 /s/ John J. Todd
-----------------
II-5
<PAGE>
John J. Todd
Senior Vice President, Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date: April 30, 1999 /s/ Charles G. Carey
---------------------
Charles G. Carey
Director
Date: April 30, 1999 /s/ George M. Krauss
---------------------
George M. Krauss
Director
Date: April 30, 1999 /s/ Douglas L. Lacey
---------------------
Douglas L. Lacey
Director
Date: April 30, 1999 /s/ James. F. McCann
----------------------
James F. McCann
Director
Date: April 30, 1999 /s/ Richard D. Snyder
-----------------------
Richard D. Snyder
Director
Date: April 30, 1999 /s/ Jeffrey Weitzen
---------------------
Jeffrey Weitzen
Director
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
1 Form of Underwriting Agreement
4 Form of Indenture Agreement
5 Legal Opinion of William M. Elliott
12 Statement Re: Computation of Consolidated Ratio of Earnings to
Fixed Charges
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of William M. Elliott (contained in opinion filed as
Exhibit 5)
24 Powers of Attorney (included on signature page)
27 Financial Data Schedules
<PAGE>
EXHIBIT 1
FORM OF
Gateway 2000, Inc.
(a Delaware corporation)
Debt Securities
Preferred Stock
Common Stock
UNDERWRITING AGREEMENT
___________, _____
To the Representatives of the
several Underwriters named in
the respective Terms Agreements
hereinafter described
Ladies and Gentlemen:
Gateway 2000, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell, at up to an aggregate initial public offering price of
$1,000,000,000, or the equivalent thereof in one or more foreign currencies or
composite securities, including the euro, in one or more series, its (i)
unsecured debt securities (the "Debt Securities"), (ii) shares of its preferred
stock, $.01 par value per share (the "Preferred Stock"), and (iii) shares of its
common stock, $.01 par value per share (the "Common Stock" and collectively with
the Preferred Stock, the "Capital Stock") in one or more offerings on terms
determined at the time of sale (the "Securities"). Each issue of Debt
Securities may vary as to the aggregate principal amount, maturity date or
dates, interest rate or rates and timing of payments thereof, redemption
provisions, conversion provisions and sinking fund requirements, if any, and any
other variable terms which the indenture applicable to such Debt Securities (the
"Indenture") contemplates may be set forth in the Debt Securities as issued from
time to time.
Section 1. Introduction. Whenever the Company determines to make an
------------
offering of Securities, it will enter into an agreement substantially in the
form of Annex I hereto (the "Terms Agreement") providing for the sale of such
Securities (the "Offered Securities") to, and the purchase and offering thereof
by, the underwriter or underwriters named therein (the "Underwriters" or "you,"
which terms shall include the underwriter or underwriters named therein whether
acting alone in the sale of the Offered Securities or as members of an
underwriting syndicate). This Underwriting Agreement shall not be construed as
an obligation of the Company to sell any of the Securities or as an obligation
of any of the Underwriters to purchase any of the Securities. The obligation of
the Company to issue and sell any of the Securities and the obligation of any of
the Underwriters to purchase any of the Securities shall be evidenced by the
Terms Agreement with respect to the Offered Securities specified therein. A
<PAGE>
Terms Agreement may be evidenced by an exchange of telegraphic communications or
any other rapid transmission device designed to produce a written record of
communications transmitted.
The Terms Agreement relating to each offering of Offered Securities shall
specify, where applicable, the principal amount of the Offered Securities to be
issued, the name or names of the Underwriters participating in such offering
(subject to substitution as provided in Section 8 hereof) and the principal
amount of the Offered Securities which each severally agrees to purchase, the
name or names of the Underwriters acting as manager or co-managers in connection
with such offerings, if any (the "Representatives," which term shall include
each Underwriter in the event that there shall be no manager or co-managers),
the price at which the Offered Securities are to be purchased by the
Underwriters from the Company, the initial public offering price, the date, time
and place of delivery and payment for such Offered Securities (such time and
date, or such other time and date as the Representatives and the Company shall
agree as the time for payment and delivery for such Securities being referred to
as the "Time of Delivery" for such Securities), the number of shares to be
issued in the case of the issuance of the Preferred Stock or Common Stock, to
the extent the Offered Securities are Debt Securities, the Indenture applicable
to the Debt Securities and, to the extent not otherwise specified in the
applicable Indenture in the case of the issuance of the Debt Securities, their
terms. Each offering of the Offered Securities will be governed by this
Agreement, as supplemented by the applicable Terms Agreement, and this Agreement
and such Terms Agreement shall inure to the benefit of and be binding upon each
Underwriter participating in the offering of such Offered Securities.
Section 2. Representations and Warranties. (a) The Company represents
------------------------------
and warrants to, and agrees with, each Underwriter that:
(i) A registration statement on Form S-3 (File No. 333-______) (the
"Initial Registration Statement") in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to or to be delivered by the
Representative for each of the other Underwriters, and, excluding exhibits
thereto but including all documents incorporated by reference in the
prospectus contained therein, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no other
document with respect to the Initial Registration Statement or document
incorporated by reference therein has heretofore been filed with the
Commission (other than prospectuses filed pursuant to Rule 424(b) of the
rules and regulations of the Commission, each in the form heretofore
delivered to the Representatives); and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration
2
<PAGE>
Statement, any post-effective amendment thereto and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial
Registration Statement became effective (but excluding Form T-1), each as
amended at the time such part of the Initial Registration Statement became
effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, are hereinafter collectively called
the "Registration Statement"; the prospectus relating to the Securities,
which has most recently been filed with the Commission on or prior to the
date of this Agreement, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of the
Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after
the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement; and any reference
to the Prospectus as amended or supplemented shall be deemed to refer to
the Prospectus as amended or supplemented in relation to the applicable
Offered Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof, including any documents incorporated by reference therein as of the
date of such filing).
(ii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of an Underwriter expressly for use in the Prospectus as amended or
supplemented relating to the applicable Offered Securities.
3
<PAGE>
(iii) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and, as applicable, the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable filing date as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of an Underwriter expressly for use
in the Prospectus as amended or supplemented relating to the applicable
Offered Securities.
(iv) The Company and its subsidiaries considered as a whole have not
sustained since the date of the latest financial statements included or
incorporated by reference in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree which would be material to the Company and its
subsidiaries taken as a whole, otherwise than as set forth, incorporated by
reference or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise set forth, incorporated by reference or
contemplated in the Prospectus, there has not been any change in the
capital stock (other than upon exercise of outstanding stock options or
warrants, or upon conversion of convertible securities outstanding on the
date of the most recent balance sheet included in the Prospectus or
pursuant to any Company stock option plan or other director or employee
incentive or benefit plan or arrangement), any significant increase in the
long-term debt of the Company and its subsidiaries taken as a whole, or any
material adverse change, or any development which the Company has
reasonable cause to believe will involve a prospective material adverse
change, in or affecting the general affairs, management, consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole.
(v) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to conduct its business as described in
the Prospectus with only such exceptions as would not have a material
adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect").
(vi) The Company has an authorized capitalization as set forth or
incorporated by reference in the Prospectus and all of the issued and
outstanding shares of capital stock of the Company set forth or
incorporated by reference in the Prospectus have been duly authorized and
validly issued and are fully paid and non-assessable.
4
<PAGE>
(vii) The execution, delivery and performance of this Agreement, the
applicable Terms Agreement, the applicable Indenture in the case of the
issuance of Debt Securities, and the consummation of the transactions
contemplated herein and therein will not conflict with or constitute a
breach of, or a default under, any material indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject; nor will such action result
in a violation of the provisions of the Company's Restated Certificate of
Incorporation or bylaws, as amended, or any applicable law, rule,
regulation, judgment, order or administrative or court decree; except for
such conflicts, breaches, defaults or violations which would not have a
Material Adverse Effect.
(viii) No consent, approval, authorization, order, registration or
qualification of any court or governmental authority or agency is required
by the Company for the sale of the Offered Securities or the consummation
of the other transactions contemplated by this Agreement, the applicable
Terms Agreement, or the applicable Indenture in the case of the issuance of
the Debt Securities, except as may be required under the Act, the Exchange
Act, the Trust Indenture Act, any foreign or state securities or blue sky
laws or any rules and regulations promulgated with respect to any of the
foregoing.
(ix) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound except for such
violations which would not have a Material Adverse Effect.
(x) Other than (X) as set forth, incorporated by reference or
contemplated in the Prospectus and (Y) litigation incident to the kind of
business conducted by the Company and its subsidiaries, there are no legal
or governmental proceedings pending to which the Company or its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or its subsidiaries, would have a Material Adverse Effect; and, to
the Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(xi) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company," as such term
is defined in the Investment Company Act of 1940, as amended.
(xii) The Company has complied and will comply with the provisions of
Florida H.B. 1771, codified as Section 517.075 of the Florida Statutes,
1987, as amended, and all regulations promulgated thereunder relating to
issuers doing business in Cuba.
5
<PAGE>
(xiii) The Company has reviewed its operations and the operations of
its subsidiaries and has made inquiries of material suppliers, vendors and
customers to evaluate the extent to which the business or operations of the
Company or any of its subsidiaries may be affected by the "Year 2000
Problem." As a result of such review, at the date hereof the Company has
no reason to believe, and does not believe, that the Year 2000 Problem,
including costs of remediation, will have a Material Adverse Effect. The
"Year 2000 Problem" shall mean any significant risk that computer hardware
or software or embedded microchips used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems
of any kind will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of dates
or time periods occurring prior to January 1, 2000.
(b) In the event the Offered Securities are Debt Securities, the Company
additionally represents and warrants to, and agrees with, each Underwriter that:
(i) The Debt Securities to be issued and sold pursuant to this
Agreement and the applicable Terms Agreement have been, or will be at the
time of sale thereof, duly authorized, and when issued, authenticated and
delivered pursuant to this Agreement and the applicable Indenture, against
payment of the consideration set forth in the applicable Terms Agreement,
will have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with its terms subject, as to
enforcement, to bankruptcy, insolvency, moratorium, fraudulent transfer,
reorganization or other laws relating to or affecting creditors' rights and
to general equity principles (regardless of whether enforcement is
considered in a proceeding in equity or law), and except as enforcement
thereof may be limited by (X) requirements that a claim with respect to any
Debt Securities payable in a foreign or composite currency (or a foreign or
composite currency judgment in respect of such claim) be converted into
U.S. dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law or (Y) governmental authority to limit, delay or prohibit
the making of payments outside the United States;
(ii) The applicable Indenture has been duly authorized, and when duly
executed and delivered by the Company and the applicable Trustee, will
constitute a valid and legally binding instrument enforceable against the
Company in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, moratorium, fraudulent transfer, reorganization or
other laws relating to or affecting creditors' rights and to general equity
principles (regardless of whether enforcement is considered in a proceeding
in equity or law), and except as enforcement thereof may be limited by (X)
requirements that a claim with respect to any Debt Securities payable in a
foreign or composite currency (or a foreign or composite currency judgment
in respect of such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or (Y)
governmental authority to limit, delay or prohibit the making of payments
outside the United States; and
6
<PAGE>
(iii) The Debt Securities and the applicable Indenture conform in all
material respects to the descriptions thereof in, or incorporated by
reference into, the Prospectus and the applicable Prospectus Supplement.
(c) In the event the Offered Securities are shares of Capital Stock, the
Company additionally represents and warrants to, and agrees with, each
Underwriter that:
(i) The shares of Capital Stock to be issued and sold pursuant to this
Agreement and the applicable Terms Agreement have been, or will be at the
time of sale thereof, duly authorized, and when issued and delivered
pursuant to this Agreement, against payment of the consideration set forth
in the applicable Terms Agreement, will be validly issued and fully paid
and non-assessable.
(ii) The shares of Capital Stock to be sold in accordance with Section
2(c)(i) conform, or will conform at the time of sale thereof, in all
material respects to the description thereof included in or incorporated by
reference into the Prospectus and the applicable Prospectus Supplement and
is not subject to preemptive or other similar rights.
(d) In the event the Offered Securities are convertible into Capital Stock,
the Company additionally represents and warrants to, and agrees with, each
Underwriter that:
(i) The shares of Capital Stock initially issuable upon conversion
have been, or will be at the time of sale thereof, duly authorized and
reserved for issuance, and when issued and delivered, pursuant to the terms
of the applicable Securities, will be validly issued, fully paid and non-
assessable.
(ii) The Capital Stock conforms, or will conform at the time of sale
of the applicable Offered Securities, in all material respects to the
description thereof included in or incorporated by reference into the
Prospectus and the applicable Prospectus Supplement and is not subject to
preemptive or other similar rights.
Section 3. Offering by Underwriter. Upon the execution of the Terms
-----------------------
Agreement applicable to any Offered Securities and authorization by the
Representatives of the release of such Offered Securities, the several
Underwriters propose to offer such Offered Securities for sale upon the terms
and conditions set forth in the Prospectus as amended or supplemented.
Section 4. Sale and Delivery to the Underwriters. The Offered Securities
-------------------------------------
to be purchased by each Underwriter pursuant to the Terms Agreement relating
thereto, in the form specified in such Terms Agreement, and in such authorized
denominations and registered in such names as the Representatives may request
upon at least forty-eight hours notice to the Company prior to the Time of
Delivery, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least forty-eight hours prior to the Time of Delivery.
7
<PAGE>
Section 5. Covenants.
---------
(a) The Company covenants with each Underwriter as follows:
(i) From the date of the applicable Terms Agreement, and for so long
as a Prospectus is required to be delivered in connection with the sale of
the Offered Securities covered by such Terms Agreement, the Company will
give the Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by you in connection
with the offering of the Offered Securities which differs from the
prospectus on file with the Commission at the time the Registration
Statement became effective), will afford the Representatives with respect
to the applicable Offered Securities the reasonable opportunity to comment
on such proposed amendment or supplement proposed to be filed, and will not
file any such amendment or supplement or use any such prospectus to which
you or your counsel shall reasonably and timely object.
(ii) To file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of such Securities, and during such same period
to advise the Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any prospectus relating to the Securities, of the suspension of the
qualification of such Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information.
(iii) In the event of the issuance of a stop order or of any such
order preventing or suspending the use of any prospectus relating to the
Securities or suspending any such qualification, to promptly use its
reasonable efforts to obtain the withdrawal of such order.
(iv) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may reasonably request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Securities, provided that in connection therewith the Company shall
not be required to qualify in any jurisdiction or to file a consent or
otherwise subject itself to service of process in any jurisdiction.
8
<PAGE>
(v) Prior to 1:00 p.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time as
reasonably required, to furnish the Underwriters with copies of the
Prospectus in New York City as amended or supplemented in such quantities
as the Representatives may reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or sale
of the Securities and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or, in the
case of the Debt Securities, the Trust Indenture Act, to notify the
Representatives and to prepare and furnish without charge to the
Representatives of such Securities as many copies as the Representatives
may from time to time reasonably request of an amended Prospectus, a
supplement to the Prospectus or such other documents which will correct
such statement or omission or effect such compliance.
(vi) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158).
(vii) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the
date of this Agreement, and the Company shall at the time of filing either
pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the Act.
(b) In the event the Offered Securities are Debt Securities, the Company
additionally covenants with each Underwriter of such Debt Securities that during
the period beginning from the date of the Terms Agreement for such Offered
Securities and continuing to and including the later of (i) the termination of
trading restrictions for such Offered Securities, as notified to the Company by
the Representatives, and (ii) the Time of Delivery for such Offered Securities,
not to offer, sell, contract to sell or otherwise dispose of any Debt Securities
of the Company which mature more than one year after such Time of Delivery and
which are substantially similar to such Offered Securities except for (X)
proposed issues of Debt Securities with respect to which the Company shall have
advised the Representatives in writing prior to the execution of the applicable
Terms Agreement and (Y) except for such other Debt Securities with respect to
which the Representatives have given their prior written consent (which consent
shall not be unreasonably withheld or delayed).
9
<PAGE>
(c) In the event the Offered Securities are shares of Capital Stock or are
convertible into shares of Capital Stock, the Company additionally covenants
with each Underwriter of such Offered Securities as follows:
(i) The Company will not contract to sell or announce or make any
offering, sale or other disposition of any shares of such Capital Stock
included in such Offered Securities or any securities convertible into such
shares of Capital Stock, as applicable, nor will the Company sell or grant
options, rights or warrants with respect to any such Capital Stock (except
pursuant to any Company stock option plan and other director or employee
incentive and benefit plans, except under options or warrants existing on
the date of the applicable Terms Agreement, except for sales of Capital
Stock under currently effective secondary shelf registration statements,
except for no more than _________ shares of Common Capital Stock issued as
consideration for acquisitions and except for Capital Stock issued upon
conversion of the then outstanding convertible securities) in each case
during a period of 90 days after the commencement of the public offering of
such Offered Securities referenced in this Section 5(c) hereof, except for
(X) proposed issues of Capital Stock with respect to which the Company
shall have advised the Representatives in writing prior to the execution of
the applicable Terms Agreement and (Y) except for such other Capital Stock
with respect to which the Representatives have given their prior written
consent (which consent shall not be unreasonably withheld or delayed).
(ii) The Company will use its best efforts to effect the listing of
(X) Offered Securities that are shares of the Common Stock and (Y) shares
of the Common Stock issuable upon the conversion of the Offered Securities
on the New York Stock Exchange (and/or such other exchanges or trading
markets on which the Common Stock is then listed or admitted for trading),
and to cause such Offered Securities to be registered under the Exchange
Act.
(iii) In the case of the issuance of Offered Securities convertible
into Capital Stock, the Company agrees to reserve and keep available at all
times, free of preemptive rights, shares of Capital Stock issuable upon
conversion of the Offered Securities.
Section 6. Payment of Expenses. The Company covenants and agrees with the
-------------------
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Offered Securities under the Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters, (ii) the cost of printing or producing this
Agreement, any Terms Agreement, any Indenture, in the case of the issuance of
Debt Securities, and any blue sky Memoranda, (iii) all expenses in connection
with the qualification of the Offered Securities for offering and sale under
state securities laws as provided in Section 5(a)(iv) hereof, including the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in
10
<PAGE>
connection with the blue sky surveys; (iv) where applicable, any fees payable in
connection with the rating of the Offered Securities; (v) any filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the
cost of preparing the certificates evidencing Offered Securities; (vii) in the
case of the issuance of Debt Securities, the fees and expenses of the Trustee in
connection with the Indenture; and (viii) all other costs and expenses incident
to the performance by the Company of its obligations hereunder which are not
otherwise specifically provided for in this Section. Except as provided in this
Section and in Section 8, the Underwriters will pay all of their own costs and
expenses, including fees and disbursements of their counsel, stock transfer
taxes on resale of any of the Offered Securities by them, and any advertising
expenses which they may incur.
Section 7. Conditions of Underwriter's Obligations. The obligations of
---------------------------------------
the Underwriters of any Offered Securities under the Terms Agreement related to
such Offered Securities to purchase such Offered Securities shall be subject, in
the discretion of the Representatives, to the condition that all representations
and warranties of the Company herein contained are, at and as of the applicable
Time of Delivery for such Offered Securities, true and correct, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) At the applicable Time of Delivery, the Prospectus as amended or
supplemented in relation to the applicable Offered Securities shall have been
filed with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for filing by the rules and regulations under the Act; if the
Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have become effective by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement; no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction.
(b) At the applicable Time of Delivery, counsel for the Underwriters shall
have furnished to the Representatives such written opinion or opinions, dated as
of the applicable Time of Delivery with respect to the matters set forth in
paragraphs (i), (ii), (iv), (vii) and (viii) of subsection (c)(1) below, and, as
applicable, paragraphs (i) and (ii) of subsection (c)(2) below, paragraph (ii)
of subsection (c)(3) below and paragraph (iii) of subsection (c)(4) below as
well as such other related matters as the Representatives may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters.
(c) At the applicable Time of Delivery, the Representative shall have
received the favorable opinion, dated as of the applicable Time of Delivery, of
William M. Elliott, Senior Vice President, General Counsel and Corporate
Secretary, or another attorney employed by the Company acceptable to the
Representatives (the "Company Attorney Opinion") in form and substance
reasonably satisfactory to your counsel. With respect to matters of New York
law, such counsel may rely, with your consent and approval, on the opinion of
Kaye, Scholer,
11
<PAGE>
Fierman, Hays & Handler, LLP, counsel to the Company, or such other New York
counsel reasonably acceptable to the Representatives.
(1) The Company Attorney Opinion shall be substantially to the effect
that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to conduct its business as described in
the Prospectus as amended and supplemented.
(ii) The Company has an authorized capitalization as set forth or
incorporated by reference in the Prospectus as amended and supplemented and
all of the issued and outstanding shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable.
(iii) To such counsel's knowledge, other than (X) as set forth,
incorporated by reference or contemplated in the Prospectus as amended and
supplemented and (Y) litigation incident to the kind of business conducted
by the Company and its subsidiaries, there are no legal or governmental
proceedings pending to which the Company or its subsidiaries is a party or
of which any property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company, would have a
Material Adverse Effect; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(iv) This Agreement and the applicable Terms Agreement have each been
duly authorized, executed and delivered by the Company.
(v) The execution and delivery of this Agreement, the applicable Terms
Agreement, the applicable Indenture in the case of the issuance of Debt
Securities and the consummation of the transactions contemplated herein and
therein will not conflict with or constitute a breach of, or a default
under, any material indenture, mortgage, loan agreement or other agreement
or instrument, in each case known to such counsel and to which the Company
is a party or by which the Company is bound or to which any of the property
or assets of the Company is subject, nor will such actions result in a
violation of the provisions of the Company's Restated Certificate of
Incorporation or bylaws, as amended, or any applicable law or order, rule
or regulation, known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or its properties, except for
such conflicts, breaches, defaults or violations which would not have a
Material Adverse Effect (except that such counsel need express no opinion
in response to this item as to compliance with any disclosure
requirements).
(vi) No consent, approval, authorization, order, registration or
qualification of any court or governmental authority or agency is required
for the Company for the issue and sale of the Offered Securities or the
consummation of the other transactions contemplated by this Agreement, the
applicable Terms Agreement or the applicable
12
<PAGE>
Indenture in the case of the issuance of the Debt Securities, except as may
be required under the Act, the Exchange Act, the Trust Indenture Act, any
foreign or state securities or blue sky laws or any rules and regulations
promulgated with respect to any of the foregoing in connection with the
purchase and distribution of the Offered Securities by the Underwriters
(such opinion may be limited to those consents, approvals, authorizations,
orders, registrations and qualifications that, in such counsel's
experience, are typically applicable to transactions of the type
contemplated by this Agreement).
(vii) The documents incorporated by reference into the Prospectus as
amended or supplemented (other than the financial statements and related
notes, the financial statement schedules and other financial, statistical
or accounting data and schedules included therein, as to which no opinion
need be rendered), when they were filed with the Commission, complied as to
form in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations of the Commission thereunder.
(viii) At the time the Registration Statement became effective, the
Registration Statement and the Prospectus (other than the financial
statements and related notes, the financial statement schedules and other
financial, statistical or accounting data and schedules included therein
and in the documents incorporated by reference into the Prospectus, as to
which no opinion need be rendered) appeared on its face to comply as to
form in all material respects with the applicable requirements of the Act
and the rules and regulations of the Commission thereunder and, to the
extent applicable, the Trust Indenture Act and the rules and regulations of
the Commission thereunder.
(2) In the event the Offered Securities are Debt Securities, the Company
Attorney's Opinion shall additionally be substantially to the effect that:
(i) The applicable Indenture has been duly authorized, executed and
delivered by the Company and is a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its terms
(provided, that such counsel may take customary exceptions to such opinion
to cover commonly known limitations on enforceability).
(ii) The Debt Securities are substantially in the form established
pursuant to the applicable Indenture, have been duly authorized, executed
and delivered by the Company, and when issued and delivered by the Company
against payment therefor in accordance with the terms of such Indenture,
this Agreement and the applicable Terms Agreement will constitute Debt
Securities under the terms of such Indenture and will constitute the valid
and legally binding obligations of the Company enforceable against the
Company in accordance with their terms (provided, that such counsel may
take customary exceptions to such opinion to cover commonly known
limitations on enforceability).
(iii) The applicable Indenture has been duly qualified under the
Trust Indenture Act.
13
<PAGE>
(iv) The Debt Securities and the applicable Indenture conform in all
material respects to the descriptions thereof set forth or incorporated by
reference in the Prospectus and the applicable Prospectus Supplement.
(3) In the event the Offered Securities are convertible into shares of Capital
Stock, the Company Attorney's Opinion shall additionally be substantially to the
effect that:
(i) Upon issuance and delivery of Offered Securities convertible into
shares of Capital Stock in accordance with this Agreement, the applicable
Terms Agreement, and the applicable Indenture in the case of the issuance
of Debt Securities, such Offered Securities shall be convertible for shares
of Capital Stock in accordance with the terms of such Offered Securities
and the applicable Indenture in the case of Debt Securities.
(ii) The shares of Capital Stock initially issuable upon conversion of
such Offered Securities have been duly authorized and reserved for issuance
and, when issued and delivered pursuant to the terms of the applicable
Securities and the applicable Indenture in the case of Debt Securities,
will be validly issued, fully paid and non-assessable.
(iii) The Capital Stock conforms in all material respects to the
description thereof set forth or incorporated by reference in the
Prospectus and the applicable Prospectus Supplement and is not subject to
preemptive or, to the counsel's knowledge, other similar rights.
(iv) The information in the Prospectus and the applicable Prospectus
Supplement under "Description of Capital Stock" (or a similar heading or
headings) relating to the applicable Offered Securities to the extent that
it constitutes matters of law or legal conclusions, has been reviewed by
such counsel and is correct in all material respects.
(v) The shares of Common Stock initially issuable upon the conversion
of such Offered Securities, if applicable, have been approved for listing
upon notice of issuance on the New York Stock Exchange (and/or such other
principal exchanges or trading markets on which the Common Stock is then
listed or admitted for trading).
(4) In the event the Offered Securities are shares of Capital Stock, the
Company Attorney's Opinion shall additionally be substantially to the effect
that:
(i) The Capital Stock conforms in all material respects to the
description thereof set forth or incorporated by reference in the
Prospectus and the applicable Prospectus Supplement and is not subject to
preemptive or, to counsel's knowledge, other similar rights.
14
<PAGE>
(ii) The information in the Prospectus and the applicable Prospectus
Supplement under "Description of Capital Stock" (or a similar heading or
headings) relating to the applicable Offered Securities to the extent that
it constitutes matters of law or legal conclusions, has been reviewed by
such counsel and is correct in all material respects.
(iii) The Capital Stock to be issued and sold pursuant to this
Agreement and the applicable Terms Agreement has been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and the
applicable Terms Agreement and, when issued and delivered by the Company
pursuant to this Agreement and the applicable Terms Agreement against
payment of the consideration set forth in the applicable Terms Agreement,
will be validly issued and fully paid and non-assessable.
(iv) The shares of Common Stock to be issued and sold pursuant to
this Agreement and the applicable Terms Agreement, if applicable, have been
approved for listing upon notice of issuance on the New York Stock Exchange
(and/or such other principal exchanges or trading markets on which the
Common Stock is then listed or admitted for trading).
In addition to the matters set forth above, such opinion shall additionally
state that although such counsel has not independently verified and is not
passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectus, except to the extent specified, as applicable, in paragraph (vii) of
subsection 7(c)(1), paragraph (iv) of subsection 7(c)(2), paragraphs (iii) and
(iv) of subsection 7(c)(3) or paragraphs (i) or (ii) of subsection 7(c)(4),
nothing has come to such counsel's attention that leads such counsel to believe
that the Registration Statement (other than the financial statements and related
notes, the financial statement schedules and other financial, statistical or
accounting data and schedules included or incorporated by reference therein, as
to which such counsel need express no belief), at the time it became effective
(or in the case of documents incorporated by reference, when such document
became effective or was so filed), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
as amended or supplemented (other than the financial statements and related
notes, the financial statement schedules and other financial, statistical or
accounting data and schedules included or incorporated by reference therein, as
to which such counsel need express no belief), at the date of the applicable
Terms Agreement and the applicable Time of Delivery, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) On the date of the Terms Agreement for such Offered Securities at a
time prior to the execution of the Terms Agreement with respect to such Offered
Securities and at the Time of Delivery for such Offered Securities, the
independent accountants of the Company who have certified the financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement shall have furnished to the
Representatives a letter, dated
15
<PAGE>
the respective dates of delivery thereof, in form and substance reasonably
satisfactory to the Representative, to substantially the effect set forth in
Annex II hereto.
(e) (i) The Company and its subsidiaries taken as a whole shall have not
sustained since the date of the latest financial statements included or
incorporated by reference in the Prospectus as amended or supplemented prior to
the date of the Terms Agreement relating to the applicable offered Securities
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth,
incorporated by reference or contemplated in the Prospectus as amended and
supplemented, and (ii) since the respective dates as of which information is
given in the Registration Statement and the Prospectus as amended and
supplemented there shall not have been any change in the capital stock (other
than upon exercise of outstanding stock options or warrants or upon conversion
of convertible securities outstanding at the date of the most recent balance
sheet included in the Prospectus as amended or supplemented or pursuant to any
Company stock option plan or other director or employee incentive or benefit
plan or arrangement) or any significant increase in long-term debt of the
Company and its subsidiaries taken as a whole or any change, or any development
involving a prospective change, in or affecting the general affairs, management,
consolidated financial position, stockholders= equity or results of operations
of the Company and its subsidiaries taken as a whole, otherwise than as set
forth, incorporated by reference or contemplated in the Prospectus as amended
and supplemented, the effect of which, in any such case described in clause (i)
or (ii), is in the judgment of the Representative so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Offered Securities on the terms and in the manner contemplated
in the Prospectus as amended or supplemented.
(f) On or after the date of the applicable Terms Agreement (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities or preferred stock by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities or preferred
stock.
(g) On or after the date of the applicable Terms Agreement there shall not
have occurred any of the following: (i) a suspension or material limitation in
trading in the Common Stock or securities generally on the New York Stock
Exchange; (ii) a general moratorium on commercial banking activities in New York
declared by either Federal or state authorities; or (iii) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this clause (iii) in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Offered
Securities on the terms and in the manner contemplated in the Prospectus as
amended or supplemented.
(h) The Company shall have complied with the provisions of Section 5(a)(vi)
hereof.
16
<PAGE>
(i) The Company shall have furnished or caused to be furnished to the
Representatives, dated as of the applicable Time of Delivery for the Offered
Securities a certificate or certificates of officers of the Company reasonably
satisfactory to the Representatives as to the accuracy of the representations
and warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth in
subsections (a) and (e) of this Section.
Section 8. Indemnification. (a) The Company will indemnify and hold
---------------
harmless each Underwriter against any losses, claims, damages or liabilities to
which such Underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter expressly for use therein; provided, further, however, that this
indemnity agreement does not apply to any losses, claims, damages or liabilities
arising out of any untrue statement or omission or alleged untrue statement or
omission made in a preliminary prospectus or preliminary prospectus supplement,
as the case may be, but eliminated or remedied in the Prospectus as amended and
supplemented if a copy of such Prospectus (excluding documents incorporated
therein by reference) was not delivered by an Underwriter to the person
asserting the claim arising from such untrue statement or omission or such
alleged untrue statement or omission, at or prior to the time required by the
Act.
(b) Each Underwriter will indemnify and hold harmless the Company, its
directors, each of the Company's officers who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act against any and all losses, claims, damages and liabilities which
the Company or any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any such amendment
or supplement,
17
<PAGE>
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Underwriter expressly for use therein and will
reimburse the Company and its directors, officers and controlling persons for
any legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under this indemnity agreement. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any appropriate local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters of the applicable Offered
Securities on the other from the offering of the applicable Offered Securities.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters of the
applicable Offered Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters of the applicable Offered Securities on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters.
18
<PAGE>
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the applicable Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters= obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
Section 9. Default. (a) If any Underwriter or Underwriters default in
-------
their obligations to purchase Offered Securities under an applicable Terms
Agreement and the aggregate amount of the Offered Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the aggregate amount of the Offered Securities, the
Representatives may make arrangements satisfactory to the Company for the
purchase by the Time of Delivery of such Offered Securities by other persons,
including any of the Underwriters. If no such arrangements are made by the Time
of Delivery, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments under this Agreement and the Terms
Agreement, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase.
(b) If any Underwriter or Underwriters so default and the aggregate
amount of the Offered Securities with respect to which such default or defaults
occur exceeds 10% of the aggregate amount of the Offered Securities and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, such Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as provided
in Section 10.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. As used in this Section
only, the "aggregate amount" of Offered Securities which are Debt Securities
shall mean the aggregate principal amount of the applicable
19
<PAGE>
Debt Securities and the "aggregate amount" of Offered Securities which are
Capital Stock shall mean the aggregate number of shares of the applicable
Capital Stock. No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under the applicable Terms Agreement or this Agreement.
In the event of a default by any Underwriter or Underwriters as set forth
in this Section 9(b), either the Representatives or the Company shall have the
right to postpone the applicable Time of Delivery for a period not exceeding
seven days in order that any required changes in the Registration Statement,
Prospectus or applicable Prospectus Supplement, or in any other documents or
arrangements, may be effected.
Section 10. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All agreements, representations and warranties contained in this
- --------
Agreement and the applicable Terms Agreement shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payments for the
Offered Securities.
Section 11. Representatives. In all dealings hereunder, the
---------------
Representatives of the Underwriters of Offered Securities shall act on behalf of
each of such Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by such Representatives jointly or by such of the
Representatives, if any, as may be designated for such purpose in the Terms
Agreement.
Section 12. Notices. All statements, requests, notices and agreements
-------
hereunder shall be in writing, and if to the Underwriters shall be delivered or
sent by mail, telex or facsimile transmission to the address of the
Representatives as set forth in the Terms Agreement; and if to the Company shall
be delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Registration Statement, Attention: Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by the Representative upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
Section 13. Parties. This Agreement and each Terms Agreement shall be
-------
binding upon and inure solely to the benefit of the Underwriters, the Company
and, to the extent provided in Sections 7 and 9 hereof, the officers and
directors of the Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement or any such Terms Agreement. No purchaser of any of
the Offered Securities from any Underwriter shall be deemed a successor or
assign by reason merely of such purchase.
Section 14. Governing Law and Time. This Agreement and each Terms
----------------------
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
20
<PAGE>
Section 15. Counterparts. This Agreement and each Terms Agreement may be
------------
executed by any one or more of the parties hereto and thereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
GATEWAY 2000, INC.
By: _____________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
By:
By: _____________________________
Name:
Title:
21
<PAGE>
ANNEX I-A
GATEWAY 2000, INC.
Debt Securities
TERMS AGREEMENT
___________ __, ____
To: Gateway 2000, Inc.
4545 Towne Centre Court
San Diego, CA 92121
Attention: Treasurer
Dear Sirs:
We understand that Gateway 2000, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $___________ aggregate principal amount
of its Debt Securities. Subject to the terms and conditions set forth herein or
incorporated by reference herein, the underwriter(s) named below (the
"Underwriter(s)") hereby offer(s) to purchase such Offered Securities.
The Offered Securities to be purchased by the Underwriter(s), which are to
be issued under an Indenture dated as of ___________, 199_ between the Company
and ________________________________, as Trustee, shall have the following
terms:
Title:
Initial Offering Price to Public:
Purchase Price by Underwriters:
Closing Date, Time and Location:
Form of Offered Securities:
Specified Funds for Payment of Purchase Price:
Date of Maturity:
Interest Rate:
Interest Payment Dates:
<PAGE>
Redemption Provisions:
Sinking Fund Provisions:
Conversion Provisions:
Extendable Provisions:
Floating Rate Provisions:
Defeasance Provisions:
Other Provisions:
Additional Closing Conditions:
Names and Addresses of Manager or Co-Managers:
All of the provisions contained in the Underwriting Agreement dated as of
____________ __, ____, a copy of which is attached hereto as Annex A, are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Agreement to the same extent as if such provisions had been set forth in
full herein. Terms defined in such document are used herein as therein defined.
Each Underwriter severally agrees, subject to the terms and provisions of this
Terms Agreement, including the terms and provisions incorporated by reference
herein, to purchase from the Company the principal amount of the Offered
Securities set forth opposite its name.
PRINCIPAL NAME AMOUNT
Any notice by the Company to the Underwriter(s) pursuant to this Terms
Agreement shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication addressed to:
_______________________; Attention: __________.
2
<PAGE>
Please accept this offer by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us.
[Manager]
By: ____________________________
Name:
Title:
Accepted this _____ day of __________, _____:
Gateway 2000, Inc.
By: _____________________________
Name:
Title:
3
<PAGE>
ANNEX I-B
GATEWAY 2000, INC.
Preferred Stock
TERMS AGREEMENT
___________ __, ___
To: Gateway 2000, Inc.
4545 Towne Centre Court
San Diego, CA 92121
Attention: Treasurer
Dear Sirs:
We understand that Gateway 2000, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell ___________ shares of its preferred
stock, $.01 par value per share (the "Preferred Stock"). Subject to the terms
and conditions set forth herein or incorporated by reference herein, the
underwriter(s) named below (the "Underwriter(s)") hereby offer(s) to purchase
such Offered Securities.
The Offered Securities to be purchased by the Underwriter(s) shall have the
following terms:
Title:
Initial Offering Price Per Share to the Public:
Purchase Price Per Share to the Underwriters:
Closing Date, Time and Location:
Names and Addresses of Manager or Co-Managers:
All of the provisions contained in the Underwriting Agreement dated as of
____________ __, ____, a copy of which is attached hereto as Annex A, are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Agreement to the same extent as if such provisions had been set forth in
full herein. Terms defined in such document are used herein as therein defined.
Each Underwriter severally agrees, subject to the terms and provisions of this
Terms Agreement, including the terms and provisions incorporated by reference
herein, to purchase from the Company the number of shares of Preferred Stock set
forth opposite its name.
<PAGE>
NAME NUMBER OF SHARES
Any notice by the Company to the Underwriter(s) pursuant to this Terms
Agreement shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication addressed to:
_______________________; Attention: __________.
Please accept this offer by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us.
[Manager]
By:_____________________________
Name:
Title:
Accepted this _____ day of _________, _____:
Gateway 2000, Inc.
By:_____________________________
Name:
Title:
2
<PAGE>
ANNEX I-C
GATEWAY 2000, INC.
Common Stock
TERMS AGREEMENT
___________ __, ____
To: Gateway 2000, Inc.
4545 Towne Centre Court
San Diego, CA 92121
Attention: Treasurer
Dear Sirs:
We understand that Gateway 2000, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell ___________ shares of its common stock,
$.01 par value per share (the "Common Stock"). Subject to the terms and
conditions set forth herein or incorporated by reference herein, the
underwriter(s) named below (the "Underwriter(s)") hereby offer(s) to purchase
such Offered Securities.
The Offered Securities to be purchased by the Underwriter(s) shall have the
following terms:
Title:
Initial Offering Price Per Share to the Public:
Purchase Price Per Share to the Underwriters:
Closing Date, Time and Location:
Names and Addresses of Manager or Co-Managers:
All of the provisions contained in the Underwriting Agreement dated as of
____________ __, ____, a copy of which is attached hereto as Annex A, are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Agreement to the same extent as if such provisions had been set forth in
full herein. Terms defined in such document are used herein as therein defined.
Each Underwriter severally agrees, subject to the terms and provisions of this
Terms Agreement, including the terms and provisions incorporated by reference
herein, to purchase from the Company the number of shares of Common Stock set
forth opposite its name.
<PAGE>
NAME NUMBER OF SHARES
Any notice by the Company to the Underwriter(s) pursuant to this Terms
Agreement shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication addressed to:
_______________________; Attention: __________.
Please accept this offer by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us.
[Manager]
By:_____________________________
Name:
Title:
Accepted this _____ day of _________, _____:
Gateway 2000, Inc.
By:_____________________________
Name:
Title:
2
<PAGE>
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriter substantially to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included or
incorporated by reference in the Registration Statement or the Prospectus as
amended or supplemented, when they were filed with the Commission, complied as
to form in all material respects with the applicable accounting requirements of
the Act or the Exchange Act, as applicable, and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the representative or
representatives of the Underwriters (the "Representatives") such term to include
an Underwriter or Underwriters who act without any firm being designated as its
or their representatives.
(iii) They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or included
in the Company's quarterly reports on Form 10-Q incorporated by reference into
the Prospectus; and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated financial
statements referred to in paragraph (vi)(A)(i) below comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came to
their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations.
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the most recent fiscal year incorporated by reference in the Prospectus
agrees with the corresponding amounts (after restatement where applicable) in
the
1
<PAGE>
audited consolidated financial statements for such five fiscal years included or
incorporated by reference in the Company's Annual Reports on Form 10-K for such
fiscal years.
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as a
result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of Items 301, 302 and 402, respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
below, a reading of the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books of the Company and
its subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of officials
of the Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act as it applies to Form 10-Q and the related published
rules and regulations, or (ii) any material modifications should be
made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
2
<PAGE>
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and warrants and upon conversions of convertible securities,
in each case which were outstanding on the date of the latest balance
sheet included or incorporated by reference in the Prospectus or
pursuant to any Company stock option plan or other director or
employee incentive or benefit plan or arrangement) or any increase in
the consolidated long-term debt of the Company and its subsidiaries,
or any decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with amounts shown in the latest balance sheet included
or incorporated by reference in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the
specified date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases which the Prospectus discloses have occurred
or may occur or which are described in such letter.
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives which are derived from
the general accounting records of the Company and its subsidiaries, which appear
in the Prospectus (excluding documents incorporated by reference) or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by
3
<PAGE>
reference in the Prospectus specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them to be
in agreement.
All references in this Annex II to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Terms Agreement for purposes of such letter and to the
Prospectus as amended or supplemented (including the documents incorporated by
reference therein) in relation to the applicable Offered Securities for purposes
of the letter delivered at the Time of Delivery for such Offered Securities.
4
<PAGE>
EXHIBIT 4
FORM OF
GATEWAY 2000, INC.
AND
[NAME OF TRUSTEE],
AS TRUSTEE
INDENTURE
DATED AS OF _______ __, ____
DEBT SECURITIES
AS MAY BE ISSUED FROM TIME TO TIME IN ONE OR MORE SERIES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......................................... 1
Section 1.1 Definitions............................................................................. 1
Section 1.2 Certificates and Opinions............................................................... 8
Section 1.3 Form of Documents Delivered to Trustee.................................................. 9
Section 1.4 Acts of Holders; Record Dates........................................................... 9
Section 1.5 Notices, Etc., to Trustee and Company................................................... 11
Section 1.6 Notice to Holders; Waiver............................................................... 11
Section 1.7 Conflict with Trust Indenture Act; Incorporation by Reference........................... 12
Section 1.8 Effect of Headings and Table of Contents................................................ 12
Section 1.9 Successors and Assigns.................................................................. 12
Section 1.10 Separability Clause..................................................................... 12
Section 1.11 Benefits of Indenture................................................................... 12
Section 1.12 Governing Law........................................................................... 13
Section 1.13 Legal Holidays.......................................................................... 13
Section 1.14 No Recourse Against Others.............................................................. 13
Section 1.15 Counterparts............................................................................ 13
Section 1.16 Obligation to Disclose Beneficial Ownership of Securities............................... 13
Section 1.17 Acceptance of Trust..................................................................... 14
Section 1.18 Rules by Trustee and Agents............................................................. 14
Section 1.19 Trustee as Paying Agent................................................................. 14
ARTICLE 2 SECURITY FORMS.................................................................................. 14
Section 2.1 Forms Generally......................................................................... 14
Section 2.2 Form of Face of Security................................................................ 14
Section 2.3 Form of Reverse of Security............................................................. 17
Section 2.4 Form of Legend for Global Securities.................................................... 21
Section 2.5 Form of Trustee's Certificate of Authentication......................................... 22
ARTICLE 3 THE SECURITIES.................................................................................. 22
Section 3.1 Amount Unlimited; Issuable in Series.................................................... 22
Section 3.2 Denominations........................................................................... 25
Section 3.3 Execution, Authentication, Delivery and Dating.......................................... 26
Section 3.4 Temporary Securities.................................................................... 27
Section 3.5 Registration, Registration of Transfer and Exchange..................................... 28
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities........................................ 31
Section 3.7 Payment of Interest; Interest Rights Preserved.......................................... 32
Section 3.8 Persons Deemed Owners................................................................... 33
Section 3.9 Cancellation............................................................................ 34
Section 3.10 Computation of Interest................................................................. 34
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 3.11 Wire Transfers.......................................................................... 34
Section 3.12 CUSIP Numbers........................................................................... 35
ARTICLE 4 SATISFACTION AND DISCHARGE...................................................................... 35
Section 4.1 Satisfaction and Discharge of Indenture................................................. 35
Section 4.2 Application of Trust Money.............................................................. 36
Section 4.3 Repayment to the Company................................................................ 37
ARTICLE 5 REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT......................................... 37
Section 5.1 Events of Default....................................................................... 37
Section 5.2 Acceleration of Maturity; Rescission and Annulment...................................... 39
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee......................... 40
Section 5.4 Trustee May File Proofs of Claim........................................................ 41
Section 5.5 Trustee May Enforce Claims Without Possession of Securities............................. 42
Section 5.6 Application of Money Collected.......................................................... 42
Section 5.7 Limitation on Suits..................................................................... 43
Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest............... 44
Section 5.9 Restoration of Rights and Remedies...................................................... 44
Section 5.10 Rights and Remedies Cumulative.......................................................... 44
Section 5.11 Delay or Omission Not Waiver............................................................ 45
Section 5.12 Control by Holders...................................................................... 45
Section 5.13 Waiver of Past Defaults................................................................. 46
Section 5.14 Undertaking for Costs................................................................... 46
Section 5.15 Waiver of Stay or Extension Laws........................................................ 47
ARTICLE 6 THE TRUSTEE..................................................................................... 47
Section 6.1 Certain Duties and Responsibilities..................................................... 47
Section 6.2 Notice of Defaults...................................................................... 48
Section 6.3 Certain Rights of Trustee............................................................... 48
Section 6.4 Not Responsible for Recitals or Issuance of Securities.................................. 49
Section 6.5 May Hold Securities..................................................................... 50
Section 6.6 Money Held in Trust..................................................................... 50
Section 6.7 Compensation and Reimbursement.......................................................... 50
Section 6.8 Disqualification; Conflicting Interests................................................. 51
Section 6.9 Corporate Trustee Required; Eligibility................................................. 51
Section 6.10 Resignation and Removal; Appointment of Successor....................................... 51
Section 6.11 Acceptance of Appointment by Successor.................................................. 53
Section 6.12 Merger, Conversion, Consolidation or Succession to Business............................. 54
Section 6.13 Preferential Collection of Claims Against Company....................................... 54
Section 6.14 Appointment of Authenticating Agent..................................................... 55
Section 6.15 Compliance with Tax Laws................................................................ 56
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 7 HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY............................................... 57
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders............................... 57
Section 7.2 Preservation of Information; Communications to Holders.................................. 57
Section 7.3 Reports by Trustee...................................................................... 58
Section 7.4 Reports by Company...................................................................... 58
ARTICLE 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE............................................ 58
Section 8.1 Company May Consolidate, Etc., Only on Certain Terms.................................... 58
Section 8.2 Successor Substituted................................................................... 59
ARTICLE 9 SUPPLEMENTAL INDENTURES......................................................................... 59
Section 9.1 Supplemental Indentures Without Consent of Holders...................................... 59
Section 9.2 Supplemental Indentures with Consent of Holders......................................... 61
Section 9.3 Execution of Supplemental Indentures.................................................... 62
Section 9.4 Effect of Supplemental Indentures....................................................... 62
Section 9.5 Conformity with Trust Indenture Act..................................................... 62
Section 9.6 Reference in Securities to Supplemental Indentures...................................... 62
ARTICLE 10 PARTICULAR COVENANTS OF THE COMPANY............................................................. 63
Section 10.1 Payment of Principal, Premium and Interest.............................................. 63
Section 10.2 Maintenance of Office or Agency......................................................... 63
Section 10.3 Money for Securities Payments to Be Held in Trust....................................... 63
Section 10.4 Statement by Officers as to Default..................................................... 65
Section 10.5 Existence............................................................................... 65
Section 10.6 Maintenance of Properties............................................................... 65
Section 10.7 Payment of Taxes and Other Claims....................................................... 65
ARTICLE 11 REDEMPTION OF SECURITIES........................................................................ 66
Section 11.1 Applicability of Article................................................................ 66
Section 11.2 Election to Redeem; Notice to Trustee................................................... 66
Section 11.3 Selection by Trustee of Securities to Be Redeemed....................................... 66
Section 11.4 Notice of Redemption.................................................................... 67
Section 11.5 Deposit of Redemption Price............................................................. 68
Section 11.6 Securities Payable on Redemption Date................................................... 68
Section 11.7 Securities Redeemed in Part............................................................. 68
Section 11.8 Optional Redemption..................................................................... 69
ARTICLE 12 SINKING FUNDS................................................................................... 69
Section 12.1 Applicability of Article................................................................ 69
Section 12.2 Satisfaction of Sinking Fund Payments with Securities................................... 69
Section 12.3 Redemption of Securities for Sinking Fund............................................... 70
ARTICLE 13 DEFEASANCE AND COVENANT DEFEASANCE.............................................................. 70
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
Section 13.1 Company's Option to Effect Defeasance or Covenant Defeasance............................ 70
Section 13.2 Defeasance and Discharge................................................................ 70
Section 13.3 Covenant Defeasance..................................................................... 71
Section 13.4 Conditions to Defeasance or Covenant Defeasance......................................... 71
Section 13.5 Deposited Money and U.S. Government Obligations to be Held in Trust;
Indemnity for U.S. Government Obligations; Repayment to Company......................... 73
Section 13.6 Reinstatement........................................................................... 74
ARTICLE 14 REPAYMENT AT OPTION OF SECURITY HOLDERS......................................................... 74
Section 14.1 Applicability of Article................................................................ 74
Section 14.2 Repayment of Securities................................................................. 74
Section 14.3 Exercise of Option; Notice.............................................................. 74
Section 14.4 Securities Payable on the Repayment Date................................................ 75
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- -------
<S> <C>
Section 310
(a)(1)................................................................................... 6.9
(a)(2)................................................................................... 6.9
(a)(3)........................................................................ Not Applicable
(a)(4)........................................................................ Not Applicable
(a)(5)................................................................................... 6.9
(b)................................................................................ 6.8, 6.10
(c)........................................................................... Not Applicable
Section 311
(a)..................................................................................... 6.13
(b)..................................................................................... 6.13
(c)........................................................................... Not Applicable
Section 312
(a)................................................................................. 7.1, 7.2(a)
(b)...................................................................................... 7.2(b)
(c)...................................................................................... 7.2(c)
Section 313
(a)...................................................................................... 7.3(a)
(b)(1)................................................................................... 7.3(a)
(b)(2)................................................................................... 7.3(a)
(c)...................................................................................... 7.3(a)
(d)...................................................................................... 7.3(b)
Section 314
(a)...................................................................................... 7.4
(a)(4).................................................................................. 10.4
(b)........................................................................... Not Applicable
(c)(1).............................................................................. 1.2, 1.3
(c)(2).............................................................................. 1.2, 1.3
(c)(3)........................................................................ Not Applicable
(d)........................................................................... Not Applicable
(e)...................................................................................... 1.2
(f)........................................................................... Not Applicable
Section 315
(a)................................................................................. 6.1, 6.3(1)
(b)...................................................................................... 6.2
(c)...................................................................................... 6.1
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
(d)...................................................................................... 6.1
(e)..................................................................................... 5.14
Section 316
(a) (last sentence)...................................................................... 1.1
(a)(1)(A)............................................................................... 5.12
(a)(1)(B)............................................................................... 5.13
(a)(2)........................................................................ Not Applicable
(b)...................................................................................... 5.8
(c)...................................................................................... 1.4(e)
Section 317
(a)(1)................................................................................... 5.3
(a)(2)................................................................................... 5.4
(b)..................................................................................... 10.3
Section 318
(a)...................................................................................... 1.7
</TABLE>
This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
vi
<PAGE>
This INDENTURE is dated as of __________ ___, ____, between GATEWAY 2000,
INC., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 4545
Towne Centre Court, San Diego, California 92121, 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 (as defined herein) to provide for the issuance from time to time of
its 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.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder that are required to be a part of this
Indenture and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of
the premises and the purchase of the Securities by the Holders (as defined
herein) thereof, it is mutually agreed, for the equal and proportionate benefit
of all Holders of the Securities or of series thereof, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in theTrust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
<PAGE>
(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 as in effect from time to time,
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;
(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;
(5) "or" is not exclusive; and
(6) provisions apply to successive events and transactions.
"Act," when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the Company or
any authorized committee of that board.
"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 which is delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the applicable 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 Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
2
<PAGE>
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company 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 which is delivered to the Trustee.
"Corporate Trust Office" means the address of the Trustee specified in
Section 1.5 or such other address of which the Trustee may give notice to the
Company.
"Covenant Defeasance" has the meaning specified in Section 13.3.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Defeasance" has the meaning specified in Section 13.2.
"Depository" 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 Depository
for such Securities as contemplated by Section 3.1.
"Event of Default" has the meaning specified in Section 5.1.
"Equivalent Principal Terms" has the meaning specified in Section
11.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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 Depository for such Securities or a nominee thereof.
"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 3.1;
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
3
<PAGE>
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 3.1, 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.
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Judgement Currency" has the meaning specified in Section 5.6.
"Mandatory sinking fund payment" has the meaning specified in Section 12.1.
"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.
"Notice of Default" means a written notice of the kind specified in Section
5.1(4).
"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 which is 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
reasonably acceptable to the Trustee.
"Optional sinking fund payment" has the meaning specified in Section 12.1.
"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 5.2.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
4
<PAGE>
(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 13.2; and
(4) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
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 5.2, (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 3.1 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 of 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.
5
<PAGE>
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization, joint stock
company, incorporated or unincorporated association or government or any agency
or political subdivision thereof or other entity of any kind.
"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 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"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 3.1.
"Repayment Date," when used with respect to any Security to be repaid upon
exercise of an 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 an option for repayment by the Holder, means the price at which
it is to be repaid pursuant to this Indenture.
"Required Currency" has the meaning specified in Section 5.6.
"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.
6
<PAGE>
"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 3.5.
"Special Record Date" for the payment of any Defaulted Interest on any
Security means a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity," when used with respect to any Security or any
installment of 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 a majority 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 a majority 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.
"Successor Company" has the meaning specified in Section 8.1(a).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided in
Section 9.5; provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as then amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean 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, or obligations the principal and interest on which are
unconditionally guaranteed by, 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, and shall also include a certificate, depository
7
<PAGE>
receipt or other instruments which evidence a direct ownership interest issued
by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended) or trust company subject to federal or state supervision or examination
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 certificate, depository
receipt or other such instrument, 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 1.2 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 10.4) shall comply with Section 314(e) of the Trust Indenture Act
and 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, such
individual has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Trustee
8
<PAGE>
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 such officer's 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. Any certificate or opinion of an officer of the Company
or statement or opinion of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of, or representations by, an
accountant (who may be an employee of the Company), or firm of accountants
unless such officer or counsel, as the case may be, has actual knowledge that
the certificate or opinion or representations with respect to the accounting
matters upon which such officer's or counsel's certificate, statement or opinion
may be based as aforesaid 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 1.4 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 6.1) 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
9
<PAGE>
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 or her the execution thereof. Where such execution is by a
signer acting in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his or her
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 action or 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
Act, 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 7.1) 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
10
<PAGE>
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 5.1, 5.2 or 5.12.
(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 1.5 Notices, Etc., to Trustee and Company
Any request, demand, authorization, direction, notice, consent, waiver or
other action 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 at
__________________________________________________, 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, with a copy to the Secretary,
of the Company at the address of the Company=s principal office specified
in the first paragraph of this Indenture 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 1.6 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 such Holder's 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 and any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given. 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
11
<PAGE>
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 1.7 Conflict with Trust Indenture Act; Incorporation by Reference
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under the Trust Indenture Act to be a
part of and govern this Indenture, the applicable provision of the Trust
Indenture Act 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 applicable provision of the Trust Indenture Act shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Unless the context requires otherwise, wherever this Indenture refers to a
provision of the Trust Indenture Act, such provision is incorporated by
reference in and made a part of this Indenture.
Section 1.8 Effect of Headings and Table of Contents
The Article and Section headings herein and the Table of Contents hereof
are for convenience only and shall not affect the construction hereof.
Section 1.9 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 1.10 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 1.11 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 1.12 Governing Law
12
<PAGE>
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Section 1.13 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, 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 on such date, but may be made
on the next succeeding Business Day 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, with respect to such payment.
Section 1.14 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
whatsoever for any obligations, covenants or agreements 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 waives
and releases all such liabilities. The waiver and release is part of the
consideration for executing the Indenture and issuing the Securities.
Section 1.15 Counterparts
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 1.16 Obligation to Disclose Beneficial Ownership of Securities
All Securities shall be held and owned upon the express condition that,
upon demand of any regulatory agency having jurisdiction over the Company, and
pursuant to law or regulation empowering such agency to assert such demand, any
Holder shall disclose to such agency the identity of the beneficial owners of
all Securities held by such Holder.
Section 1.17 Acceptance of Trust
____________________, the Trustee named herein, hereby accepts the trusts
in this Indenture declared and provided, upon the terms and conditions set forth
herein.
Section 1.18 Rules by Trustee and Agents
13
<PAGE>
The Trustee will make reasonable rules for action by or at a meeting of
Holders. Each of the Security Registrar and Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
Section 1.19 Trustee as Paying Agent
The Company initially appoints the Trustee as Paying Agent.
ARTICLE 2
SECURITY FORMS
Section 2.1 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 conclusively 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 3.3 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 2.2 Form of Face of Security
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE
REGULATIONS THEREUNDER.]
14
<PAGE>
GATEWAY 2000, INC.
No._____________ $_______________
GATEWAY 2000, 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 the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be the
________ 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 the 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.]
15
<PAGE>
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 Depository, or to such name or entity as is requested by an authorized
representative of the Depository. 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:
GATEWAY 2000, INC.
By:
---------------------------------
16
<PAGE>
Attest:
Section 2.3 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 ______, ____ (herein called the
"Indenture"), between the Company and ________________, 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 [IF APPLICABLE, INSERT--, limited in aggregate amount to
$__________].
[IF APPLICABLE, INSERT THE RELEVANT PROVISIONS--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 Redemption Prices (expressed as
percentages of the principal amount) set forth below, 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
Regular Record Dates referred to on the face hereof or on the relevant Special
Record Dates, all as provided in the Indenture.]
[IF APPLICABLE, INSERT--
If Redeemed During the 12-month Period
Beginning Redemption Price]
- -------------------------------------- -----------------
[IF APPLICABLE, INSERT THE RELEVANT PROVISIONS--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 (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, 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
17
<PAGE>
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 Regular Record Dates referred to on the face hereof or on the relevant
Special Record Date, all as provided in the Indenture.]
IF REDEEMED THROUGH
OPERATION OF THE SINKING FUND
-----------------------------
If Redeemed on
_______________ of the Redemption Price
following years ----------------
- ----------------------
IF REDEEMED OTHERWISE THAN
THROUGH OPERATION OF THE SINKING FUND
-------------------------------------
If Redeemed During the 12-Month Period
Beginning Redemption Price
- --------------------------------------- ----------------
[IF APPLICABLE, INSERT--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.]
18
<PAGE>
[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.
19
<PAGE>
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 REGARD 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.
[IF APPLICABLE INSERT--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 and
executed, 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 _________)].
20
<PAGE>
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: _______________________
(Signature)
(Name)
Note: The signature must correspond with the name as written upon the
face of the Security in every particular without alteration or enlargement.]
Section 2.4 Form of Legend for Global Securities
Every Global Security authenticated and delivered hereunder shall bear
a legend in substantially the following form:
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depository or a
nominee of a Depository. This Global Security is exchangeable for Securities
registered in the name of a Person other than the Depository or its nominee only
in the limited circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the Depository to
a nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository) may be registered except in such limited
circumstances. Every Security delivered upon registration of transfer of, or in
exchange for, or in lieu of, this Global Security shall be a Global Security
subject to the foregoing, except in the limited circumstances described above.
Unless this certificate is presented by an authorized representative
of [The Depository] to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
[The Depository Nominee] or in such other name as is requested by an authorized
representative of [The Depository] (and any payment is to be made to [The
Depository Nominee] or to such other entity as is requested by an authorized
representative of [The Depository]), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, [Depository Nominee], has an interest herein.
Section 2.5 Form of Trustee's Certificate of Authentication
21
<PAGE>
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 3
THE SECURITIES
Section 3.1 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 Board of Directors. There shall
be established in or pursuant to a Board Resolution and, subject to Section 3.3,
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 3.4, 3.5, 3.6, 9.6, 11.7 or 14.4 and except for any Securities which,
pursuant to Section 3.3, are deemed never to have been authenticated and
delivered hereunder);
(c) the price or prices at which the Securities of such series will be
offered by the Company (such price or prices to be expressed as a percentage of
the principal amount of the Securities of such series);
22
<PAGE>
(d) 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;
(e) the date or dates on which the principal of and any premium on the
Securities of the series are payable;
(f) 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, if any, on which any such interest shall be
payable or the method by which the dates will be determined, the Regular Record
Date, if any, for any interest payable on any Interest Payment Date, the rate or
rates of interest, if any, payable on overdue installments of principal of, or
any premium or interest on the Securities of such series, and the basis upon
which interest shall be calculated if other than that of a 360-day year of
twelve 30-day months;
(g) 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, whether such conversion or exchange is mandatory, at the option
of the Holder or the Company, and any other additional provisions;
(h) 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;
(i) 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;
(j) 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 (upon the happening of any event
or otherwise) 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;
(k) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the Securities of the series shall be
issuable;
(l) if payment of principal of and any premium and interest on
Securities of the series may be payable at the election of the Company or a
Holder thereof in currency, currencies or currency units other than the currency
of the United States of America, the periods within which and the terms upon
which such election may be made;
23
<PAGE>
(m) any index, formula or other method used to determine the amount of
payments of principal of or any premium or interest on the Securities;
(n) 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;
(o) 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;
(p) 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 5.2 or
provable in bankruptcy;
(q) 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;
(r) any changes or additions to the provisions provided in Article 13
of this Indenture dealing with defeasance, including the addition of additional
covenants that may be subject to the Company's covenant defeasance option;
(s) whether any of the Securities of such series shall be issuable in
permanent global form and, if so, the Depository or Depositories for such Global
Security or Global Securities and the date of such Global Security or Global
Securities (if other than the date of the original issuance of the first
Security of such series) and the terms and conditions, if any, other than those
set forth in Section 3.5, 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, if any,
referred to in this Indenture;
(t) the Trustee and any Authenticating Agents, Paying Agents, transfer
agents or Security Registrars;
24
<PAGE>
(u) 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;
(v) 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;
(w) 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
(x) 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 9.1(g)).
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 3.3) set
forth, or determined in the manner provided in the Officers' Certificate
referred to above or in any 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 3.2 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 3.1. 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 3.3 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, its
Treasurer or one of its Assistant Treasurers, 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.
25
<PAGE>
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 2.1 and 3.1, 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 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(1) if the form of such Securities has been established by or
pursuant to a Board Resolution as permitted by Section 2.1, 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 3.1, 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 3.1 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 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or
26
<PAGE>
prior to the time of 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 3.9, 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 3.4 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
10.2 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 3.5 Registration, Registration of Transfer and Exchange
(a) The Company shall cause to be kept at the Corporate Trust
Office a register for the Securities of each series (the register maintained in
such office and in any office
27
<PAGE>
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 of such series and of transfers of such Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided. The
Company may change any Security Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act as Security Registrar.
Subject to Section 3.5(c), upon surrender for registration of transfer
of any Security of any series at the office or agency maintained pursuant to
Section 10.2 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.
Subject to Section 3.5(c), 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 3.4, 9.6, 11.7 or 14.4 not involving any transfer.
The Company shall not be required to (1) 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 11.3 and ending
at the close of business on the day of such mailing or (2) to register the
transfer of or exchange any Security of any series, or portion thereof called
for redemption, except the unredeemed portion of any Security being redeemed in
part.
28
<PAGE>
(b) In case the Company, pursuant to Article 8 hereof, will be
consolidated or merged with or into any other Person or will convey, transfer or
lease substantially all of its properties and assets to any Person, and the
Successor Company resulting from such consolidation, or surviving such merger,
or into which the Company will have been merged, or the Person which will have
received a conveyance, transfer or lease as aforesaid, will have executed an
indenture supplemental hereto with the Trustee pursuant to Article 8 hereof, any
of the Securities authenticated or delivered prior to such consolidation,
merger, conveyance, transfer or lease may, from time to time, at the request of
the Successor Company, be exchanged for other Securities executed in the name of
the Successor Company with such changes in phraseology and form as may be
appropriate, but otherwise in substance and of like tenor as the Securities
surrendered for such exchange and of like aggregate principal amount; and the
Trustee, upon receipt of an Officers' Certificate from the Successor Company,
will authenticate and deliver Securities as specified in such request for the
purpose of such exchange. If Securities will at any time be authenticated and
delivered in any new name of a Successor Company pursuant to this Section 3.5(b)
in exchange or substitution for or upon registration of transfer of any
Securities, such Successor Company, at the option of the Holders but without
expense to them, will provide for the exchange of all Securities at the time
outstanding for Securities authenticated and delivered in such new name.
(c) The Company will execute and the Trustee will, in accordance
with this Section 3.5(c) for so long as the Securities of any series are to be
issued in whole or in part in the form of one or more Global Securities,
authenticate and deliver one or more Global Securities that will (i) represent
and will be denominated in an amount equal to the aggregate outstanding
principal amount of the Securities to be represented by such Global Security or
Securities, (ii) be registered in the name of the Depository for such Global
Security or Securities or the nominee of such Depository, (iii) be delivered by
the Trustee to such Depository or pursuant to such Depository's instructions and
(iv) bear the legends set forth in Section 2.4.
Each Depository appointed in accordance with Section 3.1 for a Global
Security must, at the time of its appointment and at all times while it serves
as Depository, be a clearing agency registered under the Exchange Act, and any
other applicable statute or regulation.
Notwithstanding any other provision of this Section 3.5(c), unless and
until it is exchanged in whole for Securities in definitive form of any series,
a Global Security representing all or a portion of the Securities of any series
may not be transferred except as a whole by the Depository to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
If at any time the Depository is unwilling or unable to continue as
Depository or if at any time the Depository will no longer be eligible to act as
such under this Section 3.5(c), the Company will appoint a successor Depository.
If (i) a successor Depository is not appointed by the Company within 90 days
after the Company receives notice from the Depository or otherwise becomes aware
of such unwillingness, inability or ineligibility or (ii) an Event of Default
has
29
<PAGE>
occurred and is continuing, the Company will execute and deliver to the Trustee
as promptly as practicable Securities in definitive form, together with an
Officers' Certificate relating to the authentication and delivery of such
Securities, and the Trustee, as promptly as practicable after the receipt of
such Securities and Officers' Certificate, will authenticate and deliver
Securities in definitive form in an aggregate principal amount equal to the
principal amount of, and containing terms and provisions identical to, the
Global Security or Securities in exchange for such Global Security or
Securities.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global Securities
will no longer be represented by such Global Security or Securities. In such
event, the Company will execute and deliver to the Trustee Securities in
definitive form, together with an Officers' Certificate relating to the
authentication and delivery of Securities in definitive form, and the Trustee,
as promptly as practicable after the receipt of such Securities in definitive
form and Officers' Certificate, will authenticate and deliver Securities in
definitive form in an aggregate principal amount equal to the principal amount
of, and containing terms and provisions identical to, the Global Security or
Securities in exchange for such Global Security or Securities.
Upon the exchange of a Global Security in whole or in part for
Securities in definitive form, such Global Security will be canceled by the
Trustee. Securities in definitive form issued in exchange for a Global Security
pursuant to this Section 3.5(c) will be registered in such names and in such
authorized denominations as the Depository, pursuant to instructions from its
direct or indirect participants or otherwise, will instruct the Trustee in
writing. The Trustee will deliver such Securities in definitive form to the
Persons in whose names such Securities are so registered or as it may otherwise
be directed by the Depository. Upon the exchange of less than the entire
principal amount of a Global Security for Securities in definitive form, the
Company will also execute, and the Trustee, upon receipt of an Officers'
Certificate will also authenticate and deliver, a new Global Security in
aggregate principal amount equal to the difference between the principal amount
of the surrendered Global Security and the aggregate principal amount of
Securities in definitive form issuable upon such exchange.
In any exchange provided for in any of the preceding three paragraphs,
the Company will execute and the Trustee will authenticate and deliver
Securities in definitive form in authorized denominations.
If a Security in definitive form is issued in exchange for any portion
of a Global Security after the close of business at the office or agency where
such exchange occurs on or after any Regular Record Date for an Interest Payment
Date and before the opening of business at such office or agency on the next
Interest Payment Date, interest will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of such
Security in definitive form, but will be payable on such Interest Payment Date
only to the Person to whom interest in respect of such portion of such Global
Security is payable in accordance with the provisions of this Indenture.
30
<PAGE>
Section 3.6 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 3.7 Payment of Interest; Interest Rights Preserved
Except as otherwise provided as contemplated by Section 3.1 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 Depository or its nominee, unless otherwise
specified by Section 3.1, payment of principal, premium, if any, and interest,
if any, will be made to the Depository or its nominee, as
31
<PAGE>
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 or 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 (except as otherwise specified pursuant to Section 3.1 hereof for
Securities of such series) 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. If notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor have 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, if any, 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
32
<PAGE>
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
3.1.
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 3.8 Persons Deemed Owners
Subject to Section 3.5(c), 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
3.1(d) and subject to Sections 3.5 and 3.7) 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 Depository for such
Global Security, or its nominee, is the registered owner of such Global
Security, such Depository 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
3.5(c), 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 Depository or (b) impair, as between a
Depository and holders of beneficial interests in any Global Security, the
operation of customary practices governing the exercise of the rights of the
Depository as Holder of such Global Security.
None of the Company, the Trustee, any Paying Agent, any Authenticating
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 interest in a Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Section 3.9 Cancellation
33
<PAGE>
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. If the Company shall so
acquire any of the Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, 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 3.10 Computation of Interest
Except as otherwise specified as contemplated by Section 3.1 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 3.11 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 any premium 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 3.12 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 4
34
<PAGE>
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture
This Indenture shall upon a Company Request cease to be of further
effect with respect to any series of Securities (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 of such series which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 3.6 and
(ii) Securities of such series for whose payment money has theretofore been
deposited in trust with the Trustee or any Paying Agent or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 10.3) have been
delivered to the Trustee for cancellation; or
(B) all such Securities of such series 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) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements reasonably
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 any premium) 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;
35
<PAGE>
(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 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 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 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2 Application of Trust Money
Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations deposited with the Trustee pursuant to
Section 4.1 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto 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.
Section 4.3 Repayment to the Company
Upon termination of the trust established pursuant to Section 4.1
hereof, the Trustee and the Paying Agent shall promptly pay to the Company any
excess money or U.S. Government Obligations.
ARTICLE 5
REMEDIES OF THE TRUSTEE
AND HOLDERS IN EVENT OF DEFAULT
Section 5.1 Events of Default
36
<PAGE>
"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 3.1 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, and the continuance of such
default for a period of 30 days; 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 written notice thereof
shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 33% in principal amount of the Outstanding Securities of that
series specifying such failure or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder or, in the case of any such failure or breach which can be
cured but which cannot, with reasonable diligence, be cured within
such 90-day period, failure of the Company to proceed with reasonable
diligence after the receipt of such notice; or
(5) 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
37
<PAGE>
(6) 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 of 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
(7) any other Event of Default established as contemplated by
Section 3.1 with respect to Securities of that series;
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 5.1 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 5.1,
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 5.2 Acceleration of Maturity; Rescission and Annulment
If an Event of Default with respect to Securities of any series at the
time Outstanding (other than an Event of Default with respect to the Company
specified in Section 5.1(5) or (6) occurs and is continuing, then in every such
case either the Trustee or the Holders of at least 33%
38
<PAGE>
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;
provided, however, that if an Event of Default shall have occurred and be
- -------- -------
continuing with respect to more than one series of Securities, the Trustee or
the Holders of not less than 33% in aggregate principal amount of the
Outstanding Securities of all such series, considered as one class, may make
such declaration of acceleration, and not the Holders of the Securities of any
one of such series. If an Event of Default specified in Section 5.1(5) or (6)
occurs, such an amount will ipso facto become and be immediately due and payable
---- -----
without any declaration, notice or other act on the part of the Trustee, the
Company or any Holder.
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 any premium 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 5.13.
If an Event of Default shall have occurred and be continuing with respect to
more than one series of Securities, the Trustee or the Holders of not less than
a majority in aggregate principal amount of the Outstanding Securities of all
such series, considered as one class, may
39
<PAGE>
rescind and annul such declaration or declarations of acceleration, and not the
Holders of the Securities of any one of such series. 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 5.2
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 5.2,
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 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee
The Company covenants that if:
(1) default is made in the payment of any interest 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 any
premium 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 a
period of 30 days or any other 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
40
<PAGE>
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 5.4 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 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 6.7.
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 5.5 Trustee May Enforce Claims Without Possession of Securities
41
<PAGE>
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 5.6 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 6.7;
SECOND: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal 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
42
<PAGE>
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 5.7 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 33% 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
43
<PAGE>
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 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest
Notwithstanding any other provision of this Indenture, the Holder of any
Security of any series shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and any premium and
(except as specified as contemplated by Section 3.1(d) and subject to Section
3.7) 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 5.9 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 their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.6, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver
No delay or omission of the Trustee or of any Holder of any 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 5.12 Control by Holders
44
<PAGE>
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, however, that if an Event of Default shall have occurred
-------- -------
and be continuing with respect to more than one series of Securities, the
Holders of a majority or more in aggregate principal amount of the Outstanding
Securities of all such series, considered as one class, shall have the right to
make such direction, and not the Holders of the Securities of any one of such
series; provided, further, however, 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 written notice directing the time,
method or place of conducting any such proceeding or exercising any such trust
or power with respect to Securities of a series all or part of which is
represented by a Global Security and if such direction is from Holders of less
than a majority in aggregate principal amount of Outstanding Securities of such
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 written notice, which record
date shall be the close of business on the day the Trustee receives such written
notice. Promptly after the establishment of a record date pursuant to the
provisions of this Section 5.12, 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 written notice, whether or not such Holders remain Holders after
such record date; provided that, unless such written notice 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
written notice 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 contrary to or different from, or,
after the expiration of such period, identical to, a notice which 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 5.13 Waiver of Past Defaults
45
<PAGE>
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 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
If a past default shall have occurred with respect to more than one series
of Securities, the Trustee or Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of all such series, considered as
one class, may waive such past default and its consequence, except as set forth
in subparagraphs (1) and (2) of the immediately preceding paragraph, and not the
Holders of the Securities of any one of such series.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs
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 5.14 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 any premium or interest on,
any Security on or after the due date for such payment.
Section 5.15 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
46
<PAGE>
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE 6
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities
If an Event of Default has occurred and is continuing, the Trustee will
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in such exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties that are specifically
set forth in this Indenture and no others, and no implied covenants or
obligations will be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which are specifically
required to be furnished to the Trustee by any of the provisions hereof,
the Trustee will examine the certificates and opinions to determine whether
or not, on their face, they appear to conform to the requirements of this
Indenture.
The Trustee may not be relieved from liabilities for its own gross
negligent action, its own gross negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of the immediately
preceding paragraph;
(ii) the Trustee will not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was grossly negligent in ascertaining the pertinent facts; and
(iii) the Trustee will not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.2 or when exercising any other trust
or power conferred upon the Trustee under this Indenture.
Whether or not herein expressly so provided, every provision of this Indenture
that in any way relates to the Trustee is subject to clauses (i), (ii) and (iii)
of this paragraph.
47
<PAGE>
Notwithstanding the foregoing (but subject to Section 1.7), 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 hereunder if it has
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
The Trustee shall not be required to give any bond or surety in respect of
the exercise of its powers and performance of its duties hereunder.
Section 6.2 Notice of Defaults
If a default hereunder occurs and is continuing with respect to Securities
of any series and if such default is known to the Trustee, the Trustee shall
give the Holders of Securities of such series notice of such default as and to
the extent provided by the Trust Indenture Act and in the manner provided in
Section 1.6; provided, however, that in the case of any default of the character
-------- -------
specified in Section 5.1(4), with respect to Securities of such series, no such
notice to Holders shall be given until at least 90 days after the occurrence
thereof. However, except in the case of a default in the payment of the
principal of or any premium or interest on any Security of such series, or in
the payment of any sinking or analogous installment, the Trustee may withhold
such notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of such
Holders. 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 6.3 Certain Rights of Trustee
Subject to the provisions of Section 6.1:
(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
48
<PAGE>
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 5.12), 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 6.4 Not Responsible for Recitals or Issuance of Securities
The recitals contained herein and in the Securities, except the Trustee=s
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture 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 6.5 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
6.8 and 6.13, 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 6.6 Money Held in Trust
49
<PAGE>
Subject to the provisions of Section 13.5(c) and the last paragraph of
Section 10.3, 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 13, 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 6.7 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 reasonable costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder,
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 any premium) or interest, if any,
on particular Securities.
"Trustee," for purposes of this Section 6.7, includes any predecessor
Trustee, provided that the negligence, willful misconduct or bad faith of any
Trustee shall not affect the rights under this Section 6.7 of any other Trustee.
Section 6.8 Disqualification; Conflicting Interests
50
<PAGE>
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 310(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 6.9 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 6.10 Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(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 6.11 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:
51
<PAGE>
(A) the Trustee shall fail to comply with Section 6.8 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 6.9 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 the Securities of such series, or (ii)
subject to Section 5.14, 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 and the appointment of a successor Trustee or Trustees with
respect to the Securities of such series.
(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 6.11.
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 6.11, 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 6.11, 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
52
<PAGE>
Trustee with respect to Securities of any series to all Holders of
Securities of such series in the manner provided in Section 1.6. 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 6.11 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.
53
<PAGE>
(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 6.12 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 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 6.13 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 6.14 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 3.6, 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.
54
<PAGE>
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. In case any
Securities shall have been authenticated, but not delivered, by the
Authenticating Agent then in office, any successor by merger, conversion or
consolidation to such Authenticating Agent may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Authenticating Agent had itself authenticated such Securities. In the
event any Securities shall not have been authenticated by such predecessor
Authenticating Agent, any such successor Authenticating Agent may authenticate
and deliver such Securities, in either its own name or that of its predecessor
Authenticating Agent, with the full force and effect which this Indenture
provides for the certificate of authentication of 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.
55
<PAGE>
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 6.7.
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 6.15 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 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1 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
56
<PAGE>
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 7.2 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 7.1 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 7.1 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 and any other applicable laws.
(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. The Company, the Trustee, the Securities Registrar
and all other Persons will have the protection of Section 312(c) of the Trust
Indenture Act.
Section 7.3 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 ______, ____ and on or
about each ______ thereafter and shall be dated not more than 60 days before
such ________. The Trustee also will comply with the Trust Indenture Act
Sections 313(b), 313(c) and 313(d).
(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
57
<PAGE>
Commission and with the Company. The Company will notify the Trustee when any
Securities are listed on any stock exchange.
Section 7.4 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 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1 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 of America, any State thereof 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, 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 8.2 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 Section 8.1, 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
58
<PAGE>
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 Securities.
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.1 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, conveyances, transfers or leases of properties or assets and the
assumption by the Successor Company (or other Person) of the covenants,
agreements and obligations of the Company under this Indenture 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;
59
<PAGE>
(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) not
apply to any Security (x) which is Outstanding at the time of such addition,
change or elimination and (y) of any series created prior to the execution of
the supplemental indenture which is entitled to the benefit of the provisions of
this Indenture, 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 9.2 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 (all such series considered as one class), 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
5.2, 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
60
<PAGE>
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 5.13,
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 6.11(b) and
9.1(h).
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 9.3 Execution of Supplemental Indentures
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) 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 9.4 Effect of Supplemental Indentures
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act
61
<PAGE>
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6 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.
62
<PAGE>
ARTICLE 10
PARTICULAR COVENANTS OF THE COMPANY
Section 10.1 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 10.2 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 10.3 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 in trust for the
benefit of the Persons entitled to such principal, premium or
63
<PAGE>
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
In the event the Company is not acting as Paying Agent with respect to any
series of Securities, the Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent will agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of, and
any premium or interest on, Securities of such series in trust for the
benefit of the Holders of such series of Securities and the Trustee
entitled thereto until such sums will be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default or Event of Default by the
Company in the making of any payment of principal, any premium or interest;
(3) at any time during the continuance of any such default or Event of
Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent; and
(4) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and liabilities
of such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Except as provided in the Securities of any series, any 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 one year 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 10.4 Statement by Officers as to Default
64
<PAGE>
The Company will deliver to the Trustee within 120 days after the end of
each fiscal year of the Company an Officers' Certificate stating whether or not
the signers know of any default or Event of Default that occurred during such
period. If they do know of a default or an Event of Default, the Officers'
Certificate will describe the default or Event of Default and the action the
Company is taking or proposes to take with respect thereto.
The Company will give prompt written notice to the Trustee of the
occurrence of any default or Event of Default.
Section 10.5 Existence
Subject to the provisions of Article 8 hereof, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and the rights (charter and statutory) and material
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 10.6 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 10.7 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
65
<PAGE>
or in the aggregate with all such failures, have a material adverse effect on
the Company and its Subsidiaries taken as a whole.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1 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 3.1 for Securities of any series) in
accordance with this Article.
Section 11.2 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 30 days (20 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 11.3 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 less than 20 nor 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
66
<PAGE>
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 11.4 Notice of Redemption
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 15 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 just prior to the time the notice of redemption is to be sent.
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 the same series
and of like tenor, of authorized denominations as requested by such Holder,
for the aggregate principal amount thereof remaining unredeemed,
67
<PAGE>
(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 11.5 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 10.3) 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 11.6 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 3.1, 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 Regular or Special Record Dates according to
their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 11.7 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
68
<PAGE>
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.
Section 11.8 Optional Redemption
The Company may redeem all or any portion of the Outstanding Securities of
any series at any time and from time to time that are redeemable before their
Stated Maturity except as otherwise specified as contemplated by Section 3.1 for
Securities of such series at the redemption prices together in each case, with
accrued interest, if any, to the date fixed for redemption, determined pursuant
to Section 3.1 hereof.
ARTICLE 12
SINKING FUNDS
Section 12.1 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 3.1 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 Amandatory 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 Aoptional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 12.2. 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 12.2 Satisfaction of Sinking Fund Payments with Securities
The Company may at its option (a) deliver Outstanding Securities of a
series (other than any previously called for redemption) and/or (b) 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
69
<PAGE>
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 12.3 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 12.2 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 11.3 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 11.4. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.6 and 11.7.
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
Section 13.1 Company's Option to Effect Defeasance or Covenant Defeasance
Section 13.2 and/or Section 13.3 shall apply to the Outstanding Securities
of any series to the extent specified as contemplated by Section 3.1 for
Securities of such series.
Section 13.2 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 13.4 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 13.4 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 3.4, 3.5, 3.6, 10.2 and 10.3.
Thereafter, the Company's obligations set forth in Sections 6.7 and 13.5 shall
survive.
70
<PAGE>
Subject to compliance with this Article 13, the Company may defease the
Outstanding Securities of any series pursuant to this Section 13.2
notwithstanding the prior Defeasance of the Outstanding Securities of such
series pursuant to Section 13.3. 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 13.3 Covenant Defeasance
The Company shall be released from its obligations under Article 8 and
Sections 7.4, 10.5 through 10.7, inclusive, and any other covenants to the
extent contemplated by Section 3.1 for Securities of such series, and the
occurrence of any event specified in Section 5.1(4) and any other Section to the
extent contemplated by Section 3.1 for Securities of such series (with respect
to any of Article 8 or Sections 7.4, 10.5 through 10.7, inclusive, and any other
covenants to the extent contemplated by Section 3.1 for Securities of such
series), and Section 5.1(4) (and any other Section to the extent contemplated by
Section 3.1 for Securities of such series), 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 13.4 are satisfied (hereinafter called "Covenant Defeasance"),
and such Securities shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent, declaration or act of Holders (and
the consequences thereof) in connection with such Articles and Sections, but
shall continue to be "Outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to such Outstanding
Securities, 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 Article or
Section, whether directly or indirectly by reason of any reference elsewhere
herein to any such Article or Section or by reason of any reference in any such
Article or Section to any other provision herein or in any other document and
such omission to comply shall not constitute a default or Event of Default under
Section 5.1(4) (or any other Section to the extent contemplated by Section 3.1
for Securities of such series), or otherwise, as the case may be, but, except as
specified above, the remainder of this Indenture and the Securities of such
series shall be unaffected thereby.
Section 13.4 Conditions to Defeasance or Covenant Defeasance
The following shall be the conditions to Defeasance pursuant to Section
13.2 or Covenant Defeasance pursuant to Section 13.3 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 6.9 and agrees to comply with the
provisions of this Article 13 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,
71
<PAGE>
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, (1) the principal of, and any premium and
interest on, the Securities of such series on the respective Stated
Maturities (or Redemption Date, if applicable) of such principal, premium
or installment of interest and (2) any mandatory sinking fund payments or
analogous payments applicable to such Outstanding Securities on the day on
which such payments are due and payable in accordance with the terms of
this Indenture and such Securities; provided that the Trustee shall have
been irrevocably instructed by the Company to apply such money or the
proceeds of such U.S. Government Obligations to said payments with respect
to such Securities. Before such a deposit, the Company may give to the
Trustee, in accordance with Section 11.2 hereof, a notice of its election
to redeem all or any portion of such Outstanding Securities at a future
date in accordance with the terms of the Securities of such series and
Article 11 hereof, which notice shall be irrevocable. Such irrevocable
redemption notice, if given, shall be given effect in applying the
foregoing.
(2) In the case of Defeasance under Section 13.2, 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 Outstanding 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 13.3, 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 5.1(5) and (6), at any time
on or prior to the 90th day after the date of such
72
<PAGE>
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, as amended, unless such
trust shall be qualified under such Act or exempt from regulation
thereunder.
Section 13.5 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 10.3,
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 13.6, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 13.4 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 Outstanding 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 13.4 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 13 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 13.4 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
73
<PAGE>
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 13.6 Reinstatement
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article 13 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 13 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 13.5 with respect to Securities of such series in accordance with
this Article 13; 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 14
REPAYMENT AT OPTION OF SECURITY HOLDERS
Section 14.1 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 3.1 for Securities of
such series) in accordance with this Article.
Section 14.2 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 3.1.
Section 14.3 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
74
<PAGE>
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 14.4 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 14.3, 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 3.7.
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.
75
<PAGE>
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.
GATEWAY 2000, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
[NAME OF TRUSTEE]
By:_________________________________
Name:_______________________________
Title:______________________________
76
<PAGE>
Exhibit 5
[Gateway 2000, Inc. Letterhead]
April 30, 1999
Board of Directors
Gateway 2000, Inc.
4545 Towne Centre Court
San Diego, CA 92121
Gentlemen:
I am the General Counsel of Gateway 2000, Inc., a Delaware corporation (the
"Corporation") and, as such, I have acted as counsel for the Corporation in
connection with the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities Act
of 1933, as amended (the "Act"), up to $1,000,000,000 aggregate offering price
of the following securities (collectively, the "Securities"):
(a) one or more series of unsecured debt securities generally in the form
included in Exhibit 4 to the Registration Statement, with appropriate
insertions (the "Debt Securities");
(b) one or more series of preferred stock, par value $.01 per share (the
"Preferred Stock"), of the Corporation; and
(c) common stock, par value $.01 per share (the "Common Stock"), of the
Corporation.
In connection with the Registration Statement, I and the lawyers over whom
I exercise general legal supervision have examined such corporate records,
certificates and other documents upon which I have relied and reviewed such
questions of law as I have deemed necessary or appropriate for the purposes of
this opinion. On the basis of such examination and review, I advise you that, in
my opinion:
(a) the Debt Securities of each series will be validly issued and will
constitute binding obligations of the Corporation, enforceable in
accordance with their terms (except as limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization or other
similar laws affecting creditors' rights, by general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and by applicable law affecting the
availability of remedies) if, at the time of the issuance of the Debt
Securities of such series:
1. the Board of Directors of the Corporation shall have authorized
the issuance and sale of the Debt Securities of such series;
<PAGE>
2. the Registration Statement shall have become and remain effective
for the purpose of the issuance and sale of the Debt Securities
of such series; the Debt Securities of such series shall have
been sold in accordance with the description of the sale in the
Registration Statement; and the Prospectus relating to the Debt
Securities shall have been duly supplemented with respect to the
Debt Securities of such series and, as so supplemented, duly
filed under the Act;
3. if the Debt Securities of such series are to be sold pursuant to
a purchase, underwriting or similar agreement (an "Underwriting
Agreement"), such Underwriting Agreement in the form filed as an
exhibit to the Registration Statement, or any post-effective
amendment thereto, has been duly authorized, executed and
delivered by the Corporation;
4. the Indenture under which the Debt Securities are to be issued
(the "Indenture") has been duly executed and delivered by the
Corporation and the Trustee thereunder and has been duly
qualified under the Trust Indenture Act of 1939;
5. the supplemental indenture, if any, relating to the Debt
Securities of such series shall have been duly authorized,
executed and delivered, the resolutions of the Board of Directors
of the Corporation, if any, or the certificate of officers
pursuant to resolutions of the Board of Directors of the Company,
if any, authorizing the issuance of such series of Debt
Securities shall have been duly authorized, executed and
delivered and all actions required by the terms of the Indenture
to be taken as a condition to or in connection with the issuance
of the Debt Securities of such series shall have been duly taken;
and
6. the Debt Securities of such series shall have been duly executed,
authenticated and delivered and the consideration therefor paid
to or at the direction of the Corporation.
(b) the Preferred Stock of each series will be legally issued, fully paid
and non-assessable if, at the time of the issuance of the Preferred
Stock of such series:
1. the Board of Directors of the Corporation shall have authorized
the issuance and sale of the Preferred Stock of such series;
2. the Registration Statement shall have become and remain effective
for the purpose of the issuance and sale of the Preferred Stock
of such series; the Preferred Stock of such series shall have
been sold in accordance with the description of the sale in the
Registration Statement; and the Prospectus relating to the
Preferred Stock of such series shall have been duly
2
<PAGE>
supplemented with respect to the Preferred Stock of such series
and, as so supplemented, duly filed under the Act;
3. if the Preferred Stock of such series is to be sold pursuant to
an Underwriting Agreement, such Underwriting Agreement in the
form filed as an exhibit to the Registration Statement, or any
post-effective amendment thereto, has been duly authorized,
executed and delivered by the Corporation;
4. the Board has adopted a Certificate of Designation relating to
the Preferred Stock of such series in accordance with the
applicable provisions of the General Corporation Law of the State
of Delaware ("DGCL");
5. the filing of the Certificate of Designation with respect to such
series of Preferred Stock with the Secretary of State of the
State of Delaware has duly occurred and such Certificate of
Designation becomes, and continues to be, effective; and
6. the certificates evidencing shares of the Preferred Stock of such
series shall have been duly executed, countersigned, registered
and delivered and the consideration therefor approved by the
Board of Directors of the Corporation paid to or at the direction
of the Corporation.
(c) the Common Stock will be legally issued, fully paid and non-assessable
if, at the time of the issuance of the Common Stock:
1. the Board of Directors of the Corporation shall have authorized
the issuance and sale of the Common Stock;
2. the Registration Statement shall have become and remain effective
for the purpose of the issuance and sale of the Common Stock; the
Common Stock shall have been sold in accordance with the
description of the sale in the Registration Statement; and the
Prospectus relating to the Common Stock shall have been duly
supplemented with respect to the Common Stock and, as so
supplemented, duly filed under the Act;
3. if the Common Stock is to be sold pursuant to an Underwriting
Agreement, such Underwriting Agreement in the form filed as an
exhibit to the Registration Statement, or any post-effective
amendment thereto, has been duly authorized, executed and
delivered by the Corporation; and
4. the certificates evidencing shares of the Common Stock shall have
been duly executed, countersigned, registered and delivered and
the consideration therefor approved by the Board of Directors of
the Corporation paid to or at the direction of the Corporation.
3
<PAGE>
I hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement, and to all references to me included in
such Registration Statement. In giving such consent, I do not thereby admit that
I come within the category of persons whose consent is required under Section 7
of the Act or the rules and regulations of the SEC thereunder.
Very truly yours,
/s/ William M. Elliott
------------------------
William M. Elliott
4
<PAGE>
Exhibit 12
Gateway 2000, Inc.
Consolidated Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------
1994 1995 1996 1997 1998
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Pre-tax income $146,103 $262,093 $382,716 $203,620 $541,248
Fixed charges:
Interest expense $ 1,762 $ 3,210 $ 637 $ 716 $ 930
Interest portion of rental expense
relating to operating leases $ 790 $ 2,051 $ 3,918 $ 5,315 $ 8,485
Total fixed charges $ 2,552 $ 5,261 $ 4,555 $ 6,031 $ 9,415
Earnings before income taxes and
fixed charges $148,655 $267,354 $387,271 $209,651 $550,663
Consolidated ratio of earnings to fixed charges 58.2 50.8 85.0 34.8 58.5
</TABLE>
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 21, 1999 relating to the
financial statements and financial statement schedule, which appears in Gateway
2000, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
PricewaterhouseCoopers LLP
San Diego, California
April 28, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GATEWAY
2000, INC.'S CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1998 AND THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,169,810
<SECURITIES> 158,657
<RECEIVABLES> 573,799
<ALLOWANCES> 14,948
<INVENTORY> 167,924
<CURRENT-ASSETS> 2,228,186
<PP&E> 765,578
<DEPRECIATION> 234,590
<TOTAL-ASSETS> 2,890,380
<CURRENT-LIABILITIES> 1,429,674
<BONDS> 3,360
0
0
<COMMON> 1,566
<OTHER-SE> 1,342,809
<TOTAL-LIABILITY-AND-EQUITY> 2,890,380
<SALES> 7,467,925
<TOTAL-REVENUES> 7,467,925
<CGS> 5,921,651
<TOTAL-COSTS> 5,921,651
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,991
<INTEREST-EXPENSE> 930
<INCOME-PRETAX> 541,248
<INCOME-TAX> 194,849
<INCOME-CONTINUING> 346,399
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 346,399
<EPS-PRIMARY> 2.23
<EPS-DILUTED> 2.18
</TABLE>
