AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BORG-WARNER AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 13-3404508
(State or other (I.R.S. Employer
jurisdiction of Identification
incorporation or Number)
organization)
200 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60604
(312) 322-8500
(Address, including zip code, and
telephone number, including
area code, of registrant's
principal executive offices)
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LAURENE H. HORISZNY, ESQ.
VICE PRESIDENT, SECRETARY AND
GENERAL COUNSEL
BORG-WARNER AUTOMOTIVE, INC.
200 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60604
(312) 322-8500
(Name, address, including zip code,
and telephone
number, including area code, of
agent for service)
COPIES TO:
DAVID A. KATZ, ESQ. DANIELLE CARBONE, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ SHEARMAN & STERLING
51 WEST 52ND STREET 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(212) 403-1000 (212) 848-4000
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
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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
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PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING AGGREGATE REGISTRATION
REGISTERED (1) (2) PRICE PER OFFERING FEE
UNIT (3) PRICE (3)
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Debt Securities......... $350,000,000 100% $350,000,000 $97,300
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(1) Any securities registered hereunder may be sold separately, together or as
units with other securities registered hereunder.
(2) If any debt securities are issued at an original issue discount, such
greater amount as shall result in an aggregate offering price to the public
which shall not exceed the amount set forth under Proposed Maximum
Aggregate Offering Price, or if debt securities are issued in a foreign or
composite currency, an equivalent amount of such foreign or composite
currency.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this prospectus is incomplete and may be changed. We may
not sell these securities until a 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 or other jurisdiction where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED AUGUST 11, 1999
PRELIMINARY PROSPECTUS
[BORG-WARNER AUTOMOTIVE LOGO]
BORG-WARNER AUTOMOTIVE, INC.
$350,000,000
DEBT SECURITIES
We may offer from time to time unsecured debt securities in the form of
either senior or subordinated debt. Senior debt includes our notes, debt and
other evidences of unsecured indebtedness, which are for money borrowed and are
not subordinated. Subordinated debt, designated at the time it is issued, is
entitled to interest and principal payments after the senior debt payments.
The specific terms of these securities will be provided in supplements to
this prospectus. You should read this prospectus and the supplements carefully
before you invest.
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT YOU SHOULD CONSIDER, SEE
"RISK FACTORS" COMMENCING ON PAGE 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS ___________ __, 1999.
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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 process, we may sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$350,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we offer to sell securities, we will provide
a supplement to this prospectus that will contain specific information about the
terms of that particular 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."
To find more detail regarding certain of the documents, you should read the
exhibits filed with this registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Rooms. Our filings with the SEC are also available to the public on
the SEC's Internet web site at http://www.sec.gov. Our common stock is listed on
the New York Stock Exchange and information about us is also available at the
NYSE's offices.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to other documents we file with the SEC. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file with the SEC later will automatically update and supersede this
information. We incorporate by reference our documents listed below and any
future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended, until we sell all of the
securities offered in this prospectus.
o Annual Report on Form 10-K for the year ended December 31, 1998, as
amended by the Form 10-K/A filed with the SEC on June 22, 1999;
o Proxy Statement dated March 26, 1999 (other than the sections entitled
"Compensation Committee Report on Executive Compensation" and
"Performance Graph");
o Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1999; and
o Current Reports on Form 8-K dated January 27, 1999, February 1, 1999
(as amended by the Form 8-K/A filed with the SEC on February 10,
1999), February 9, 1999, February 18, 1999, February 24, 1999, March
1, 1999 and March 15, 1999.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Borg-Warner Automotive, Inc.
200 South Michigan Avenue
Chicago, Illinois 60604
Attn: Investor Relations and Communications Department
Telephone (312) 322-8607
or (312) 322-8547
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different or additional information. You should
not assume that the information in this prospectus or any supplement is accurate
as of any date other than the date on the front of this prospectus or the
prospectus supplement.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this prospectus
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed, implied or projected by such
forward-looking statements. The most significant of these risks, uncertainties
and other factors are discussed under the heading "Risk Factors," beginning on
page 5 of this prospectus, and you are urged to carefully consider such factors.
Additional risks and uncertainties are detailed in our filings with the SEC,
including the Cautionary Statements filed as Exhibit 99.1 to our 1998 Annual
Report. We do not have any obligation to update forward-looking statements and
we may or may not do so.
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THE COMPANY
OVERVIEW
We are a leader in highly engineered systems and components for vehicle
powertrains. As a global supplier, we design, manufacture and sell these
products worldwide, primarily to original equipment manufacturers of passenger
cars, sport-utility vehicles, light and heavy-duty trucks and commercial
vehicles. We have four reportable operating segments: Powertrain Systems,
Automatic Transmission Systems, Morse TEC and Air/Fluid Systems.
o POWERTRAIN SYSTEMS. Powertrain Systems accounted for $518.8 million
(28%) of our 1998 consolidated sales before inter-business eliminations.
Its products include four-wheel drive ("4WD") and all-wheel drive transfer
cases. Transfer cases are installed primarily on light trucks and
sport-utility vehicles. A transfer case attaches to the transmission and
distributes torque to the front and rear axles for 4WD, improving vehicle
control during off-road use and in a variety of road conditions. We
believe that we are the world's leading independent manufacturer of 4WD
transfer cases, producing approximately one million transfer cases in 1998.
Our largest customer of 4WD transfer cases is Ford Motor Company. We supply
the majority of the 4WD transfer cases for Ford, including those installed in
the Ford Explorer, the Ford Expedition, the Ford F-150 pick-up truck, the
Ford Ranger, the Mercury Mountaineer and the Lincoln Navigator. We also
supply transfer cases for the Mercedes-Benz M-Class and other 4WD vehicles
manufactured by other original equipment manufacturers around the world. We
have designed and developed an exclusive 4WD Torque-on-Demand(R) transfer
case system, which allows vehicles to automatically shift from two-wheel
drive to 4WD when electronic sensors indicate it is necessary. The
Torque-on-Demand(R) transfer case is available on the Ford Explorer, the best
selling sport-utility vehicle in the United States in 1997 and 1998, the Ford
Expedition, the Lincoln Navigator, the Isuzu Trooper and the SsangYong
(Daewoo) Musso.
o AUTOMATIC TRANSMISSION SYSTEMS. Automatic Transmission Systems
accounted for $402.6 million (21%) of our consolidated 1998 sales before
inter-business eliminations. It is the leading global supplier of innovative
automated transmission shift-quality systems. The components for such systems
include friction plates, clutch packs, one-way clutches, transmission bands,
and races. We supply virtually every major automatic transmission
manufacturer in the world.
o MORSE TEC. Morse TEC accounted for $536.2 million (28%) of our
consolidated 1998 sales before inter-business eliminations. It manufactures
chain, including timing chain, HY-VO front-wheel drive ("FWD") transmission
chain and 4WD chain; chain systems, including Morse Gemini Chain Systems, and
timing chain systems, including crankshaft and camshaft sprockets, chain
tensioners and chain snubbers; turbochargers; and cooling fan and fan drives.
HY-VO chain is used in FWD transmissions and for 4WD transfer case
applications. We believe that we are the world's leading manufacturer of
chain for these applications, supply-
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ing products to every major manufacturer that uses chain for such
applications. Our Morse Gemini Chain System is used on DaimlerChrysler's LH
model and GM's midsize and FWD vehicles. We also believe that we are the
world's leading manufacturer of timing chain. Our timing chain is used on
Ford's new family of overhead cam engines and DaimlerChrysler's 2.7, 3.7
and 4.7 liter overhead cam engines.
We supply turbochargers to European diesel and spark engine manufacturers for
use in the passenger car and commercial vehicle markets. On March 1, 1999, we
purchased Kuhlman Corporation, a leading producer of turbochargers for
commercial vehicles and cooling fan and fan drives for commercial vehicles
and light trucks. With the acquisition of Kuhlman, we believe that we are the
second largest global supplier of turbochargers.
o AIR/FLUID SYSTEMS. Air/Fluid Systems accounted for $351.4 million
(19%) of our consolidated 1998 sales before inter-business eliminations.
It designs and manufactures sophisticated mechanical, electro-mechanical
and electronic components and systems used for engine air intake and
exhaust management, fuel and vapor management, electronically controlled
automatic transmissions and steering and suspension systems. Key products
for engine air intake management that we produce include throttle bodies,
intake manifolds, throttle position sensors, and complete engine induction
systems. Our products for emissions control and improved gas mileage
include mechanical and electrical air pumps, air control valves and
pressure feedback exhaust gas re-circulation valves. The fuel management
and vapor recovery products include roll valves, canister purge solenoids
and complete vapor recovery systems. We also produce oil pumps for
automotive applications and fuel tanks for commercial vehicles.
Our executive offices are located at 200 South Michigan Avenue, Chicago,
Illinois 60604, telephone (312) 322-8500.
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RISK FACTORS
You should carefully consider the following factors, as well as the other
information in this prospectus and the information in the documents incorporated
by reference, before you make any decision to invest in the debt securities
described in this prospectus and the accompanying prospectus supplement.
BECAUSE OF OUR HOLDING COMPANY STRUCTURE THE DEBT SECURITIES WILL BE
SUBORDINATED TO OUR SUBSIDIARIES' LIABILITIES
We are a holding company with no material assets other than the stock of
our subsidiaries. Our subsidiaries conduct substantially all of our operations
and own substantially all of our assets. Consequently, our operating cash flow
and our ability to make principal and interest payments on our outstanding
indebtedness depends upon the cash flow of our subsidiaries and the payment of
funds by our subsidiaries to us in the form of loans, dividends or otherwise.
Our subsidiaries are not obligated to make funds available to us for payment on
the debt securities or otherwise.
The debt securities effectively will rank junior to all liabilities of our
subsidiaries. In the event of a bankruptcy, liquidation or dissolution of any of
our subsidiaries, and following payment of these liabilities, our subsidiaries
may not have sufficient assets remaining to make payments to us as a shareholder
or otherwise.
As of June 30, 1999, total liabilities (other than intercompany
liabilities) of our subsidiaries were approximately $467.8 million excluding
debt of our subsidiaries totaling approximately $135.1 million.
OUR INDUSTRY IS CYCLICAL AND OUR RESULTS OF OPERATIONS WILL BE ADVERSELY
AFFECTED BY INDUSTRY DOWNTURNS
Automotive and truck production and sales are cyclical and sensitive to
general economic conditions and other factors. For example, as compared to the
first half of 1998, automotive and truck production in the first half of 1999
increased in North America and Europe and increased slightly in Asia. As
compared to 1997, automotive production in 1998 remained at the same level in
North America, increased moderately in Europe, and declined in Asia. Any
significant reduction in automotive or truck production in any of the above
geographic areas would have a material adverse effect on our sales to original
equipment manufacturers and our financial position and operating results. In
1998 approximately 14% of our sales, including sales from unconsolidated joint
ventures, were in Asia and our 1998 results were adversely affected by the
decline in Asian auto production.
WE ARE DEPENDENT ON SPORT UTILITY AND LIGHT TRUCK MARKET SEGMENTS
Some of our products, in particular four-wheel drive transfer cases, are
currently used exclusively in four-wheel drive systems for sport utility
vehicles and light trucks. For the second quarter of 1999, sales of four-wheel
drive transfer cases represented 20.6% of our consolidated
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revenue. Any significant reduction in production in this market segment or loss
of business in this market segment would have a material adverse effect on our
sales to original equipment manufacturers and our financial position and
operating results.
WE FACE STRONG COMPETITION
We compete worldwide with a number of other manufacturers and distributors
that produce and sell products similar to ours. Price, quality and technological
innovation are the primary elements of competition. Our competitors include
vertically integrated units of our major original equipment manufacturer
customers, as well as a large number of independent domestic and international
suppliers. We are not as large as a number of these companies and do not have as
many financial or other resources. The competitive environment has changed
dramatically over the past few years as our traditional United States original
equipment manufacturer customers, faced with intense international competition,
have expanded their worldwide sourcing of components. As a result, we have
experienced competition from suppliers in other parts of the world that enjoy
economic advantages, such as lower labor costs, lower health care costs and, in
some cases, export or raw materials subsidies. Increased competition could
adversely affect our businesses.
WE ARE UNDER SUBSTANTIAL PRESSURE FROM ORIGINAL EQUIPMENT MANUFACTURERS TO
REDUCE THE PRICES OF OUR PRODUCTS
There is substantial and continuing pressure on the original equipment
manufacturers to reduce costs, including costs of products we supply. Although
original equipment manufacturers have indicated that they will continue to rely
on outside suppliers, a number of our major original equipment manufacturer
customers manufacture products for their own uses that directly compete with our
products. These original equipment manufacturers could elect to manufacture such
products for their own uses in place of the products we currently supply. We
believe that our ability to develop proprietary new products and to control our
costs will allow us to remain competitive. However, we cannot assure you that we
will be able to improve or maintain our gross margins on product sales to
original equipment manufacturers or that the recent trend by original equipment
manufacturers towards increased outsourcing will continue.
Annual price reductions to original equipment manufacturer customers
appear to have become a permanent feature of our business environment. In 1998,
Borg-Warner Automotive granted $23 million worth of price reductions as compared
to $18 million in 1997. To maintain our profit margins, we seek price reductions
from our suppliers, improve production processes to increase manufacturing
efficiency, update product designs to reduce costs and develop new products
whose benefits support increased pricing. Our ability to pass through increased
raw material costs to our original equipment manufacturer customers is also
limited, with cost recovery less than 100% and often on a delayed basis. We
cannot assure you that we will be able to reduce costs in an amount equal to
annual price reductions and increases in raw material costs.
WE RELY ON SALES TO SEVERAL MAJOR CUSTOMERS
Our worldwide sales in 1998 to Ford, DaimlerChrysler and GM constituted
approximately 36%, 19% and 16%, respectively, of our 1998 consolidated sales.
The corresponding
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percentages for 1997 were 43%, 14% and 20%. No other customer accounted for more
than 10% of our consolidated sales in either 1998 or 1997. Our 1998 consolidated
sales do not include the approximately $246 million of sales made by our
unconsolidated joint ventures. If sales from these unconsolidated joint ventures
were included in 1998 consolidated sales, our worldwide sales to Toyota Motor
Corporation and its affiliates would be approximately 7% of consolidated sales.
Although we have had long-standing relationships with each of Ford,
DaimlerChrysler, GM and Toyota and have sold a wide variety of products to
various divisions of each company globally, the loss of any significant portion
of our sales to any of these customers would have a material adverse effect on
our financial position and operating results.
WE ARE SENSITIVE TO THE EFFECTS OF OUR MAJOR CUSTOMERS' LABOR RELATIONS
All three of our primary North American customers, Ford, DaimlerChrysler
and GM, have major union contracts with the United Automobile, Aerospace and
Agricultural Implement Workers of America, several of which are due to expire in
September 1999. Because of the United States original equipment manufacturers'
dependence on a single union, we are affected by labor difficulties and work
stoppages at original equipment manufacturers' facilities. We cannot assure you
that negotiations for new collective bargaining agreements will be resolved
without work stoppages in the North American operations of our original
equipment manufacturer customers. Any work stoppage could have a material
adverse effect on our financial position and operating results. For example, we
lost approximately $25 million in revenue as result of the 1998 54-day strike by
the union at GM.
A SIGNIFICANT PART OF OUR LABOR FORCE IS UNIONIZED
As of June 30, 1999, approximately 34% of our domestic hourly employees
were unionized. Our two most significant domestic collective bargaining
agreements are for our Muncie, Indiana plant and our Ithaca, New York plant. The
Muncie agreement expires in March 2001 and the Ithaca agreement expires in
October 2003. The hourly workers at our European facilities are also unionized.
While we believe that our relations with our employees are good, a prolonged
dispute with our employees could have a material adverse effect on our financial
position and operating results.
WE ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL REGULATIONS
Our operations are subject to laws governing, among other things,
emissions to air, discharges to waters and the generation, handling, storage,
transportation, treatment and disposal of waste and other materials. We believe
that our business, operations and activities have been and are being operated in
compliance in all material respects with applicable environmental and health and
safety laws. However, the operation of automotive parts manufacturing plants
entails risks in these areas and we cannot assure you that we will not incur
material costs or liabilities. In addition, potentially significant expenditures
could be required in order to comply with evolving environmental and health and
safety laws that may be adopted in the future.
We believe that the overall impact of compliance with regulations and
legislation protecting the environment will not have a material adverse effect
on our future financial position or
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operating results, but we cannot assure you that this will be the case. Capital
expenditures and expenses in 1998 attributable to compliance with environmental
laws were not material.
WE MAY HAVE LIABILITY UNDER ENVIRONMENTAL REGULATIONS
We and certain of our current and former direct and indirect corporate
predecessors, subsidiaries and divisions have been identified by the United
States Environmental Protection Agency and certain state environmental agencies
and private parties as potentially responsible parties at various hazardous
waste disposal sites under the Comprehensive Environmental Response,
Compensation and Liability Act and equivalent state laws. As a result, we may be
liable for the cost of clean-up and other remedial activities at 42 of these
sites.
Based on information available to us, we have established a reserve in our
financial statements for indicated environmental liabilities with a balance of
approximately $12.4 million at June 30, 1999. We currently expect this amount to
be expended over the next three to five years.
We believe that none of these matters, individually or in the aggregate,
will have a material adverse effect on our future financial position or
operating results, either because estimates of the maximum potential liability
at a site are not large or because liability will be shared with other
potentially responsible parties. However, we cannot assure you of the ultimate
outcome.
OUR BUSINESS COULD BE ADVERSELY IMPACTED BY YEAR 2000 COMPLIANCE ISSUES
We are in the process of upgrading certain aspects of our operations to
ensure that our business systems do not fail to function either when the Year
2000 arrives or at other date intervals. Our program to become Year 2000
compliant is being operated on an enterprise-wide basis. A coordinator has been
assigned overall administrative responsibility; however, each operating unit is
responsible for compliance at its location. As of June 30, 1999 substantially
all of our operations had completed remedial actions to become Year 2000
compliant or are expected to be compliant by September 1999. Our exposure to an
enterprise-wide failure is less likely because of the relative autonomy of our
operating units. We have received confirmation from key suppliers and other
third parties that their systems and applications that affect us will be Year
2000 compliant.
As with any program to upgrade business systems, there are risks that
programs will not be completed on schedule and that programs will not accomplish
all that they were supposed to accomplish. The chance of this happening
throughout our company is remote. Moreover, the impact of individual failures to
upgrade timely and effectively would most likely be a reduced level of quality
control for the affected operations and a substantial increase in manual
intervention in areas such as material planning and inventory control,
statistical process control, and financial and operational recordkeeping.
We cannot assure you that the corrective actions we are implementing will
prevent dating-systems problems or that the cost of doing so will not be
material. In addition, disruptions with respect to the computer systems of
vendors or customers, including both information technology and non-IT systems
could impair our ability to obtain necessary materials or products to
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sell to or serve our customers and could have a material adverse effect on our
financial position or operating results.
YOU SHOULD REFER TO THE DISCUSSION ABOVE UNDER THE HEADING "SPECIAL NOTE
REGARDING FORWARD-LOOKING STATEMENTS."
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement, the
net proceeds from the sale of the debt securities will be used for general
corporate purposes, including the repayment of existing indebtedness, additions
to working capital, capital expenditures and acquisitions. Any specific
allocation of the net proceeds of an offering of debt securities to a specific
purpose will be described in the related prospectus supplement. We anticipate
that we will raise additional funds from time to time through equity or debt
financings to repay outstanding indebtedness and to finance our businesses.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated below was
as follows:
Six Months Ended
Year Ended December 31, June 30,
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1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
7.9x 7.0x 3.1x 6.2x 5.3x 5.2x 5.6x
In the computation of our ratio of earnings to fixed charges, earnings
consist of earnings before income taxes, fixed charges and capitalized interest
amortization expense. Fixed charges consist of interest expense excluding the
benefit of capitalized interest and including one-third of rental expense
(approximate portion representing interest).
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DESCRIPTION OF DEBT SECURITIES
The following descriptions of the terms of the debt securities set forth
certain general terms and provisions of the debt securities. The particular
terms of the debt securities offered by any prospectus supplement and the
extent, if any, to which such general provisions may apply to the debt
securities so offered will be described in the prospectus supplement relating to
such offered debt securities. To the extent that any prospectus supplement is
inconsistent with any provision in this summary, the information contained in
such prospectus supplement will control.
The debt securities that will be our senior debt will be issued under an
Indenture (the "SENIOR DEBT INDENTURE") to be entered into between Borg-Warner
Automotive and The First National Bank of Chicago (the "SENIOR TRUSTEE"). The
debt securities that will be our subordinated debt ("SUBORDINATED DEBT
SECURITIES") will be issued under an Indenture (the "SUBORDINATED DEBT
INDENTURE" and, collectively with the Senior Debt Indenture, the "INDENTURES"),
to be entered into between Borg-Warner Automotive and a trustee to be determined
(the "SUBORDINATED TRUSTEE"). The forms of the Indentures and the debt
securities have been filed, or will be filed by amendment, as exhibits to the
registration statement and you should read them for the provisions that may be
important to you. The Indentures are subject to and governed by the Trust
Indenture Act of 1939, as amended (the "TIA"). We have summarized certain
provisions of the debt securities and the Indentures below. The summary is not
complete and is subject to, and qualified in its entirety by reference to, the
Indentures and the debt securities. Capitalized terms used in the summary have
the meanings set forth in the applicable Indenture unless otherwise defined
herein.
GENERAL
The debt securities will be our unsecured senior or subordinated
obligations.
The Indentures do not limit the amount of debt securities that we may
issue thereunder and provide that we may issue debt securities under the
Indentures from time to time in one or more series.
Reference is made to the prospectus supplement for the following terms of
and information relating to the offered debt securities (to the extent such
terms are applicable to such debt securities):
o classification as senior or subordinated debt securities;
o the specific designation, aggregate principal amount, purchase price
and denomination of the offered debt securities;
o the currency or units based on or relating to currencies in which such
debt securities are denominated and/or in which principal (and
premium, if any) and/or any interest will or may be payable;
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o any date of maturity;
o the method by which amounts payable in respect of principal, premium
(if any) or interest on, or upon the redemption of, such debt
securities may be calculated, and any currencies or indices, or value,
rate or price, relevant to such calculation;
o interest rate or rates (or the method by which such rate will be
determined), if any;
o the date or dates on which any such interest will be payable;
o the place or places where the principal of and interest, if any, on
the offered debt securities will be payable;
o any redemption, repayment or sinking fund provisions for the offered
debt securities;
o whether the offered debt securities will be issuable in registered
form or bearer form ("BEARER SECURITIES") or both and, if Bearer
Securities are issuable, any restrictions applicable to the exchange
of one form for another and to the offer, sale and delivery of Bearer
Securities;
o any applicable United States federal income tax consequences not
described in this prospectus, including whether and under what
circumstances we will pay additional amounts on offered debt
securities held by a person who is not a U.S. person (as defined in
the prospectus supplement) in respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether we will
have the option to redeem such debt securities rather than pay such
additional amounts;
o the anticipated market for the offered debt securities; and
o any other specific terms of the offered debt securities, including any
additional or different events of default, remedies or covenants
provided for with respect to such debt securities, and any terms which
may be required by or advisable under applicable laws or regulations.
Debt securities may be presented for exchange and registered debt
securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the debt securities and the prospectus
supplement. Such services will be provided without charge, other than any tax or
other governmental charge payable in connection therewith, but subject to the
limitations provided in the applicable Indenture. Bearer Securities and the
coupons, if any, attached to such Bearer Securities will be transferable by
delivery.
Debt securities may bear interest at a fixed rate or a floating rate. Debt
securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted debt securities or to certain
debt securities
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issued at par which are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
relevant prospectus supplement to the extent not described in this prospectus.
See "Certain U.S. Federal Income Tax Considerations."
We may issue debt securities from time to time with payment terms which
are calculated by reference to the value or price of one or more currencies or
indices. Holders of such debt securities may receive a payment of the principal
amount on any principal payment date, or a payment of interest on any interest
payment date, that is greater than or less than the amount of principal or
interest otherwise payable on such dates, or a redemption amount on any
redemption date that is greater than or less than the principal amount of such
debt securities, depending upon the value or price on such dates of the
applicable currency or index. Information for determining the amount of
principal, premium (if any), interest or redemption amounts payable on any date,
the currencies, commodities or indices to which the amount payable on such date
is linked and certain additional tax considerations will be set forth in the
relevant prospectus supplement.
We are a holding company with no material assets other than the stock of
our subsidiaries. Our subsidiaries conduct substantially all of our operations
and own substantially all of our assets. Consequently, our operating cash flow
and our ability to make principal and interest payments on our outstanding
indebtedness depends upon the cash flow of our subsidiaries and the payment of
funds by our subsidiaries to us in the form of loans, dividends or otherwise.
Our subsidiaries are not obligated to make funds available to us for payment on
the debt securities or otherwise.
The debt securities effectively will rank junior to all liabilities of our
subsidiaries. In the event of a bankruptcy, liquidation or dissolution of any of
our subsidiaries, and following payment of these liabilities, our subsidiaries
may not have sufficient assets remaining to make payments to us as a shareholder
or otherwise.
CERTAIN DEFINITIONS
"ATTRIBUTABLE INDEBTEDNESS" means, with respect to any Sale/Leaseback
Transaction as of any particular time, the present value (discounted at the rate
of interest implicit in the terms of the lease) of the obligations of the lessee
under such lease for net rental payments during the remaining term of the lease
(including any period for which such lease has been extended). "NET RENTAL
PAYMENTS" under any lease for any period means the sum of the rental and other
payments required to be paid in such period by the lessee thereunder, not
including, however, any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments or similar charges.
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (1) all current liabilities (excluding any current liabilities which
are by their terms extendible or renewable at the option of the obligor thereon
to a time more than 12 months after the time as of which the amount thereof is
being computed), (2) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles and (3) appropriate
adjustments on account of minority interests of other Persons holding stock of
our Subsidiaries, all as set forth on our most
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recent balance sheet (but, in any event, as of a date within 150 days of the
date of determination) and computed in accordance with generally accepted
accounting principles.
"CONSOLIDATED NET WORTH" means the amount of total stockholders' equity
shown in our most recent consolidated statement of financial position.
"CURRENT ASSETS" of any Person includes all assets of such Person that
would in accordance with generally accepted accounting principles be classified
as current assets.
"CURRENT LIABILITIES" of any Person includes all liabilities of such
Person that would in accordance with generally accepted accounting principles be
classified as current liabilities.
"NON-RECOURSE INDEBTEDNESS" means our indebtedness or the indebtedness of
any of our Subsidiaries in respect of which the recourse of the holder of such
indebtedness, whether direct or indirect and whether contingent or otherwise, is
effectively limited to specified assets, and with respect to which neither we
nor any of our Subsidiaries provide any credit support.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PRINCIPAL PROPERTY" means any manufacturing plant or warehouse, together
with the land upon which it is erected and fixtures comprising a part thereof,
that we own or that is owned by one of our Subsidiaries which constitutes a "
significant subsidiary" as defined in Rule 1-02 of Regulation S-X of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and is located
in the United States, the gross book value (without deduction of any reserve for
depreciation) of which on the date as of which the determination is being made
is an amount which exceeds 1% of Consolidated Net Tangible Assets, other than
any such manufacturing plant or warehouse or any portion thereof (together with
the land upon which it is erected and fixtures comprising a part thereof) (1)
which is financed by Industrial Development Bonds or (2) which, in the opinion
of the Board of Directors, is not of material importance to our total business
conducted and the total business conducted by our Subsidiaries, taken as a
whole.
"SALE/LEASEBACK TRANSACTION" means any arrangement with any Person
pursuant to which we or any of our Subsidiaries lease for a period of more than
three years, any real or personal property, which property we have or such
Subsidiary has sold or transferred or will sell or transfer to such Person in
contemplation of such leasing.
"SUBSIDIARY" of a Person means (1) any corporation more than 50% of the
outstanding securities having ordinary voting power of which is owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, or (2) any partnership or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned. For the purposes of this
definition, "SECURITIES HAVING ORDINARY VOTING POWER" means securities or other
equity interests that ordinarily have voting power for the election of
directors, or persons having management
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power with respect to the Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
SENIOR DEBT
The debt securities and coupons, if any, appertaining thereto that will
constitute part of our senior debt will be issued under the Senior Debt
Indenture and will rank PARI PASSU with all of our other unsecured and
unsubordinated debt.
LIMITATION ON LIENS
The Senior Debt Indenture provides that we will not, and will not permit
any of our Subsidiaries to, issue, assume or guarantee any indebtedness for
money borrowed ("DEBT") if such Debt is secured by a mortgage, pledge, security
interest or lien (a "MORTGAGE" or "MORTGAGES") upon any of our Principal
Properties or of any of our Subsidiaries' Principal Properties or upon any
shares of stock or other stock or other equity interest or indebtedness of any
of our Subsidiaries (whether such property, shares of stock or other equity
interest or indebtedness is now owned or hereafter acquired) which owns any
Principal Property, without in any such case effectively providing that the debt
securities shall be secured equally and ratably with (or prior to) such Debt;
provided, however, that the foregoing restrictions shall not apply to:
o mortgages existing on the date the debt securities are originally
issued or mortgages provided for under the terms of agreements
existing on such date;
o mortgages on Current Assets securing Current Liabilities;
o mortgages on any property we or any of our Subsidiaries acquire,
construct, alter or improve after the date of the Indenture that are
created or assumed contemporaneously with or within one year after
such acquisition (or, in the case of property constructed, altered
or improved, after the completion and commencement of commercial
operation of such property, whichever is later) to secure or provide
for the payment of the purchase price or cost of such property,
provided that in the case of any such construction, alteration or
improvement the mortgages shall not apply to any property we or any
of our Subsidiaries theretofore owned, other than (1) the property
so altered or improved and (2) any theretofore unimproved real
property on which the property so constructed or altered, or the
improvement, is located;
o existing mortgages on property we or any of our Subsidiaries acquire
(including mortgages on any property acquired from a Person that is
consolidated with or merged with or into us or any of our
Subsidiaries) or mortgages outstanding at the time any Person becomes
one of our Subsidiaries that are not incurred in connection with such
entity becoming one of our Subsidiaries;
o mortgages in our or any of our Subsidiaries' favor;
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o mortgages on any property (1) in favor of domestic or foreign
governmental bodies to secure partial, progress, advance or other
payments pursuant to any contract or statute, (2) securing
indebtedness incurred to finance all or any part of the purchase price
or cost of constructing, installing or improving the property subject
to such mortgages including mortgages to secure Debt of the pollution
control or industrial revenue bond type, or (3) securing indebtedness
issued or guaranteed by the United States, any State, any foreign
country or any department, agency, instrumentality or political
subdivision of any such jurisdiction; and
o any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage
referred to in the foregoing bullet points; provided, however, that
the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension,
renewal or replacement, together with the reasonable costs related to
such extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to all or a part of the
property that secured the mortgage so extended, renewed or replaced
(plus improvements on such property).
Notwithstanding the foregoing, we and any of our Subsidiaries may, without
securing the debt securities, issue, assume or guarantee secured Debt (that
would otherwise be subject to the foregoing restrictions) in an aggregate amount
that, together with all other such secured Debt and the aggregate amount of our
and our Subsidiaries' Attributable Indebtedness deemed to be outstanding in
respect of all Sale/Leaseback Transactions entered into pursuant to the
provisions described below under "-- Limitation on Sale/Leaseback Transactions"
(excluding any such Sale/Leaseback Transactions the proceeds of which have been
applied in accordance with clauses (2) or (3) under the "-- Limitation on
Sale/Leaseback Transactions" covenant described below), does not exceed 10% of
the Consolidated Net Worth, as shown on a consolidated balance sheet as of a
date not more than 90 days prior to the proposed transaction we prepare in
accordance with generally accepted accounting principles.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Senior Debt Indenture provides that we will not, and will not permit
any of our Subsidiaries to, enter into any Sale/Leaseback Transaction with any
Person (other than ourself or one of our Subsidiaries) unless:
(1) at the time of entering into such Sale/Leaseback Transaction, we
or such Subsidiary would be entitled to incur Debt, in a principal amount
equal to the Attributable Indebtedness with respect to such Sale/Leaseback
Transaction, secured by a mortgage on the property subject to such
Sale/Leaseback Transaction, pursuant to the provisions of the covenant
described under "-- Limitation on Liens" without equally and ratably
securing the debt securities pursuant to such provisions;
(2) after the date on which debt securities are first issued, and
within a period commencing six months prior to the consummation of such
Sale/Leaseback Transaction
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and ending six months after the consummation thereof, we or such Subsidiary
shall have expended for property used or to be used in our or such
Subsidiary's ordinary course of business (including amounts expended for
additions, expansions, alterations, repairs and improvements thereto) an
amount equal to all or a portion of the net proceeds of such Sale/Leaseback
Transaction, and we shall have elected to designate such amount as a credit
against such Sale/Leaseback Transaction (with any such amount not being so
designated to be applied as set forth in clause (3) below); or
(3) during the 12-month period after the effective date of such
Sale/Leaseback Transaction, we shall have applied to the voluntary
defeasance or retirement of debt securities or any of our PARI PASSU
indebtedness an amount equal to the net proceeds of the sale or transfer
of the property leased in such Sale/Leaseback Transaction, which amount
shall not be less than the fair value of such property at the time of
entering into such Sale/Leaseback Transaction (adjusted to reflect any
amount we expended as set forth in clause (2) above), less an amount equal
to the principal amount of such debt securities and PARI PASSU
indebtedness we voluntarily defeased or retired within such 12-month
period and not designated as a credit against any other Sale/Leaseback
Transaction we or any of our Subsidiaries entered into during such period.
Unless otherwise specified in the prospectus supplement relating to a
particular series of offered debt securities, the covenants applicable to the
debt securities would not necessarily afford holders protection in the event
that we are involved in a highly leveraged or other transaction, or in the event
of a material adverse change in our financial position or results of operations.
Unless otherwise specified in the prospectus supplement relating to a particular
series of offered debt securities, the debt securities do not contain any other
provisions that are designed to afford protection in the event that we are
involved in a highly leveraged transaction.
SUBORDINATED DEBT
The debt securities and coupons, if any, attached to such debt securities
that will constitute part of the Subordinated Debt Securities will be issued
under the Subordinated Debt Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the Subordinated
Debt Indenture, to all of our Senior Indebtedness. The Subordinated Debt
Indenture defines "SENIOR INDEBTEDNESS" as all of our indebtedness, including
indebtedness we have guaranteed or assumed, for borrowed money or evidenced by
bonds, debentures, notes, letters of credit, interest rate exchange agreements,
currency exchange agreements, commodity forward contracts or other similar
instruments, or indebtedness or obligations with respect to any lease of real or
personal property whether existing on the date hereof or hereinafter incurred,
and any guarantee, amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation, provided that Senior
Indebtedness shall not include (1) obligations that, when incurred and without
respect to any election under Section 1111(b) of Title 11, United States Code,
were without recourse to the issuer, (2) our obligations to any of our
Subsidiaries, and (3) any other obligations which by the terms of the instrument
creating or evidencing the same are specifically designated as not being senior
in right of payment to the Subordinated Debt Securities.
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In the event (1) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation or other similar proceedings including reorganization
in respect of Borg-Warner Automotive or a substantial part of our property, or
(2) that (a) a default shall have occurred with respect to the payment of
principal of (and premium, if any) or any interest on or other monetary amounts
due and payable on any Senior Indebtedness or (b) there shall have occurred an
event of default (other than a default in the payment of principal, premium, if
any, or interest, or other monetary amounts due and payable) with respect to any
Senior Indebtedness, as defined therein or in the instrument under which the
same is outstanding, permitting the holder or holders thereof to accelerate the
maturity thereof, and such default or event of default shall not have been cured
or waived or shall not have ceased to exist, unless, in the case of a default
under clause (b) above, the default with respect to the Senior Indebtedness is
cured or waived, or 180 days pass after notice of the default is given to the
holders of Senior Indebtedness (unless the maturity of such Senior Indebtedness
has been accelerated), then the holders of all Senior Indebtedness shall first
be entitled to receive payment of the full amount unpaid thereon, or provision
shall be made, in accordance with the relevant Senior Indebtedness, for such
payment in money or money's worth, before the holders of any of the Subordinated
Debt Securities or coupons are entitled to receive a payment on account of the
principal of (and premium, if any) or any interest on the indebtedness evidenced
by such Subordinated Debt Securities or of such coupons. No new period of
suspension of payments under clause (b) above may be commenced by reason of the
same event of default (or any other event of default that existed or was
continuing on the date of the commencement of such period) within twelve months
after the first such notice relating thereto. Without limitation of the
foregoing, upon any acceleration of the Subordinated Debt Securities because of
an event of default, we must promptly notify the holders of Senior Indebtedness
of such acceleration, and may not pay the Subordinated Debt Securities unless
(A) 120 days pass after such acceleration and (B) the terms of the Subordinated
Debt Indenture permit such payment at such time.
By reason of such subordination, in the event of our bankruptcy,
insolvency or liquidation, our creditors who are holders of Senior Indebtedness
and our general creditors may recover more, ratably, than holders of the
Subordinated Debt Securities. Certain of our contingent obligations, including
certain guarantees, letters of credit, interest rate exchange agreements,
currency exchange agreements and commodity forward contracts, would constitute
Senior Indebtedness if we became obligated to pay such contingent obligations.
We expect from time to time to incur additional indebtedness constituting
Senior Indebtedness. The Subordinated Debt Indenture does not prohibit or limit
the incurrence of additional Senior Indebtedness or any other indebtedness and
does not require us to adhere to financial covenants or similar restrictions. To
the extent we issue Subordinated Debt Securities, we refer you to the applicable
prospectus supplement for the amount of Senior Indebtedness outstanding.
CONVERSION AND EXCHANGE
The terms, if any, on which debt securities of any series will be
convertible into or exchangeable for our common stock or preferred stock,
property or cash, or a combination of any of the foregoing, will be summarized
in the prospectus supplement relating thereto. Such terms
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may include provisions for conversion or exchange, either on a mandatory basis,
at the option of the holder, or at our option, in which case the number of our
shares of common stock or preferred stock to be received by the holders of the
debt securities would be calculated according to the factors and at such time as
summarized in the related prospectus supplement. The prospectus supplement will
also summarize the material federal income tax consequences applicable to such
convertible or exchangeable debt securities to the extent not set forth in this
prospectus.
EVENTS OF DEFAULT
An "EVENT OF DEFAULT" is defined under each Indenture with respect
to debt securities of any series issued under such Indenture as being:
o default in the payment of any interest on any debt security when
it becomes due and payable, and continuance of such default for a
period of 30 days;
o default in the payment of the principal of any debt security at
its maturity
o default in our performance (or our breach) of any of our
covenants or agreements in such Indenture, continued for 90
days after we receive written notice;
o acceleration of, or any failure to pay at final maturity, any of
our or our Subsidiaries' Debt (other than the debt securities or
Non-Recourse Indebtedness) in an aggregate amount in excess of
$25 million if such acceleration is not rescinded or annulled, or
such indebtedness shall not have been discharged, within 15 days
after we receive written notice thereof; and
o certain events of our or of one of our Significant
Subsidiaries' bankruptcy, insolvency or reorganization.
Each Indenture provides that if an Event of Default, other than certain
events with respect to our bankruptcy, insolvency or reorganization, shall occur
and be continuing, then the Senior Trustee or the Subordinated Trustee, as the
case may be, or the holders of not less than 25% in aggregate principal amount
of the outstanding debt securities may, by a notice in writing to us (and to the
Senior Trustee or the Subordinated Trustee, as the case may be, if given by the
holders), declare the principal of the debt securities, and all accrued and
unpaid interest thereon, to be due and payable immediately. If an Event of
Default with respect to certain events of our bankruptcy, insolvency or
reorganization shall occur and be continuing, then the principal on the debt
securities, and all accrued and unpaid interest thereon, shall be due and
payable immediately without any act on the part of the Senior Trustee or the
Subordinated Trustee, as the case may be, or any holder.
The holders of not less than a majority in principal amount of the
outstanding debt securities may, on behalf of the holders of all of the debt
securities, waive any past default under the
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Indenture and its consequences, except a default (1) in respect of the
payment of principal of or interest on the debt securities or (2) in respect of
a covenant or provision that cannot be modified or amended without the consent
of each holder.
Under each Indenture we are required to file annually with the Senior
Trustee or the Subordinated Trustee, as the case may be, an officers'
certificate as to our compliance with all conditions and covenants. Each
Indenture will provide that the Senior Trustee or the Subordinated Trustee, as
the case may be, may withhold notice to the holders of the debt securities of
any default (except payment defaults on the debt securities) if it considers it
to be in the interest of such holders to do so.
Subject to the provisions of each Indenture relating to the duties of the
Senior Trustee or the Subordinated Trustee, as the case may be, each Indenture
provides that when an Event of Default occurs and is continuing, the Senior
Trustee or the Subordinated Trustee, as the case may be, will be under no
obligation to exercise any of its rights or powers under such Indenture at the
request or direction of any of the holders, unless such holders shall have
offered to the Senior Trustee or the Subordinated Trustee, as the case may be,
reasonable security or indemnity. Subject to such provisions concerning the
rights of the Senior Trustee or the Subordinated Trustee, as the case may be,
the holders of a majority in aggregate principal amount of the outstanding debt
securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Senior Trustee or the
Subordinated Trustee, as the case may be, or exercising any trust or power
conferred on the Senior Trustee or the Subordinated Trustee, as the case may be,
under such Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Indenture provides that we will not consolidate with or merge into
any other corporation, or convey, transfer or lease, or permit one or more of
our Significant Subsidiaries to convey, transfer or lease, all or substantially
all of our property and assets on a consolidated basis, to any Person unless (1)
either we are the continuing corporation or such corporation or Person assumes
by supplemental indenture all of our obligations under such Indenture and the
debt securities issued thereunder, (2) immediately after such transaction no
Default or Event of Default shall exist, and (3) the surviving corporation or
such Person is a corporation, partnership or trust organized and validly
existing under the laws of the United States of America, any state thereof or
the District of Columbia.
MODIFICATION OR WAIVER
Each Indenture provides that we may modify and amend such Indenture, and
the Senior Trustee or the Subordinated Trustee, as the case may be, may modify
and amend such Indenture with the consent of the holders of not less than a
majority in principal amount of the outstanding debt securities; provided that
no such modification or amendment may, without the consent of each holder, among
other things:
o change the maturity of the principal of, or any installment of
interest on, the debt securities;
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o reduce the principal amount of, or the rate of interest on, the debt
securities;
o change the place or currency of payment of principal of, or interest
on, the debt securities;
o impair the right to institute suit for the enforcement of any such
payment on or after the maturity thereof;
o reduce the percentage of holders necessary to modify or amend such
Indenture or to consent to any waiver thereunder or reduce the
requirements for voting or quorum described below; or
o modify the foregoing requirements or reduce the percentage of
outstanding debt securities necessary to waive any past default.
Each Indenture provides that we may modify and amend such Indenture and
the Senior Trustee or the Subordinated Trustee, as the case may be, may modify
and amend such Indenture without the consent of any holder for any of the
following purposes:
o to evidence the succession of another Person to Borg-Warner Automotive
and the assumption by such Person of our covenants contained in such
Indenture and the debt securities;
o to add covenants of Borg-Warner Automotive for the benefit of the
holders or to surrender any right or power conferred upon our company;
o to add Events of Default;
o to secure the debt securities;
o to evidence and provide for the acceptance of appointment by a
successor Senior Trustee or a successor Subordinated Trustee, as the
case may be;
o to cure any ambiguity, defect or inconsistency in such Indenture;
provided such action does not adversely affect the interests of the
holders;
o to supplement any of the provisions of such Indenture to the
extent necessary to permit or facilitate defeasance and discharge of
the debt securities; provided such action shall not adversely affect
the interests of the holders; or
o to conform with the requirements of the TIA.
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DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, terminate our obligations with
respect to the outstanding debt securities ("DEFEASANCE"). Defeasance means that
we will be deemed to have paid and discharged the entire indebtedness
represented by the outstanding debt securities, except for (1) the rights of the
holders of outstanding debt securities to receive payment in respect of the
principal of and interest on such debt securities when such payments are due,
(2) our obligations to issue temporary debt securities, register and transfer or
exchange any debt securities, replace mutilated, destroyed, lost or stolen debt
securities, maintain an office or agency for payments in respect of the debt
securities and segregate and hold money in trust, (3) the rights, powers,
trusts, duties and immunities of the Senior Trustee or the Subordinated Trustee,
as the case may be, and (4) the Defeasance provisions of the applicable
Indenture. In addition, we may, at our option and at any time, elect to
terminate our obligations with respect to the debt securities (being primarily
the restrictions described under "-- Limitation on Liens" and "-- Limitation on
Sale/Leaseback Transactions"), and any omission to comply with such obligations
will not constitute a Default or an Event of Default with respect to the debt
securities ("COVENANT DEFEASANCE").
In order to exercise either Defeasance or Covenant Defeasance:
o we must irrevocably deposit with the Senior Trustee or the
Subordinated Trustee, as the case may be, in trust, for the benefit of
the holders, cash in United States dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and interest
on the outstanding debt securities to maturity;
o we must deliver to the Senior Trustee or the Subordinated Trustee, as
the case may be, an opinion of counsel to the effect that the
holders of the outstanding debt securities will not recognize
income, gain or loss for federal income tax purposes as a result of
such Defeasance or Covenant Defeasance, 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 such Defeasance or
Covenant Defeasance had not occurred (in the case of Defeasance,
such opinion must refer to and be based upon a ruling of the
Internal Revenue Service issued, or a change in applicable federal
income tax laws occurring, after the date hereof);
o no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or,` insofar as the last bullet point
under the first paragraph under "-- Events of Default" is concerned,
at any time during the period ending the 91st day after the date of
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
o such Defeasance or Covenant Defeasance shall not cause the Senior
Trustee or the Subordinated Trustee, as the case may be, to have a
conflicting interest (as defined by the TIA) with respect to any of
our securities;
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o such Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, the applicable Indenture
or any material agreement or instrument to which we are a party or by
which we are bound; and
o we shall have delivered to the Senior Trustee or the Subordinated
Trustee, as the case may be, an officers' certificate and an opinion
of counsel, each stating that all conditions precedent under the
applicable Indenture to either Defeasance or Covenant Defeasance, as
the case may be, have been complied with and that no violations under
agreements governing any other outstanding Debt would result.
SATISFACTION AND DISCHARGE
Each Indenture provides that it will be discharged and will cease to be of
further effect (except as to any surviving rights of registration of transfer or
exchange of the debt securities, as expressly provided for in such Indenture) as
to all outstanding debt securities when (1) either (a) all the debt securities
theretofore authenticated and delivered (except lost, stolen or destroyed debt
securities which have been replaced or paid and debt securities for whose
payment money or certain U.S. Government Obligations has theretofore been
deposited in trust or segregated and held in trust by us and thereafter repaid
to us or discharged from such trust) have been delivered to the Senior Trustee
or the Subordinated Trustee, as the case may be, for cancellation or (b) all
debt securities not theretofore delivered to the Senior Trustee or the
Subordinated Trustee, as the case may be, for cancellation have become due and
payable or will become due and payable at maturity within one year and we have
irrevocably deposited or caused to be deposited with the Senior Trustee or the
Subordinated Trustee, as the case may be, funds in an amount sufficient to pay
and discharge the entire indebtedness on the debt securities not theretofore
delivered to the Senior Trustee or the Subordinated Trustee, as the case may be,
for cancellation, for principal of and interest on the debt securities to the
date of deposit together with irrevocable instructions from us directing the
Senior Trustee or the Subordinated Trustee, as the case may be, to apply such
funds to the payment thereof at maturity; (2) we have paid or have caused to be
paid all other sums payable under such Indenture by us; and (3) we have
delivered to the Senior Trustee or the Subordinated Trustee, as the case may be,
an officers' certificate and an opinion of counsel stating that all conditions
precedent under such Indenture relating to the satisfaction and discharge of
such Indenture have been complied with.
BOOK-ENTRY SYSTEM
Unless otherwise specified in the applicable prospectus supplement, any
debt securities will be represented by certificate in book-entry form ("GLOBAL
DEBT SECURITIES") as set forth below.
Any Global Debt Securities will be registered in the name of The
Depository Trust Company's ("DTC") nominee. Except as set forth below, a Global
Debt Security may not be transferred except as a whole by DTC to a nominee of
DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any
such nominee to a successor of DTC or a nominee of such successor.
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DTC has advised us that it is a limited-purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons who are
not participants may beneficially own securities held by DTC only through
participants.
Upon the issuance by us of any Global Debt Securities, DTC will credit, on
its book-entry registration and transfer system, the respective principal
amounts of debt securities to the accounts of participants. The accounts to be
credited will be designated by the applicable underwriter. Ownership of
beneficial interests in a Global Debt Security will be limited to participants
or persons that may hold interests through participants. Beneficial interests in
a Global Debt Security will be shown on, and the transfer thereof will be
effected only through, records maintained by DTC (with respect to beneficial
interests of participants) or by participants or persons that may hold interests
through participants (with respect to beneficial interests of beneficial
owners). The laws of some states require that certain purchasers of securities
take physical delivery of such securities in certificated form. Such limits and
such laws may impair the ability to transfer beneficial interests in a Global
Debt Security.
For a Global Debt Security, so long as DTC or its nominee is the
registered owner of such Global Debt Security, DTC or its nominee, as the case
may be, will be considered the sole owner or holder of the debt securities
represented by such Global Debt Security for all purposes under the Senior Debt
Indenture. Except as provided below, owners of beneficial interests in a Global
Debt Security will not be entitled to have debt securities represented by such
Global Debt Security registered in their names, will not receive or be entitled
to receive physical delivery of such debt securities in certificated form and
will not be considered the owners or holders thereof under the Senior Debt
Indenture or the Subordinated Debt Indenture, as the case may be.
Principal and interest payments in respect of the debt securities will be
made in immediately available funds by us to DTC or its nominee, as the case may
be, as the holder of the related Global Debt Securities. None of us, the Senior
Trustee or the Subordinated Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in any Global Debt Securities, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. None of us, the Senior Trustee or the Subordinated Trustee
will have any responsibility or liability for DTC's exercise of or failure to
exercise any redemption option with respect to any debt securities on behalf of
any holder of a beneficial interest therein, other than our obligation to redeem
such debt
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securities if such option is properly exercised by DTC or its nominee,
as registered holder, in accordance with the procedures specified therefor. We
expect that DTC, upon receipt of any payment of principal or interest in respect
of any Global Debt Securities, will credit immediately the accounts of the
related participants with payment in amounts proportionate to their respective
beneficial interests in the principal amount of such Global Debt Securities as
shown on the records of DTC. We also expect that payments by participants to
owners of beneficial interests in any Global Debt Securities will be governed by
standing customer instructions and customary practices, as is now the case, with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participants. Payments to
DTC in respect of the debt securities which are represented by any Global Debt
Securities shall be our responsibility or the responsibility of the Senior
Trustee or the Subordinated Trustee, as the case may be. Disbursement of such
payments to direct participants shall be the responsibility of DTC and
disbursement of such payments to beneficial owners shall be the responsibility
of direct and indirect participants.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct and
indirect participants to beneficial owners, and VICE VERSA, are governed by
arrangements among them, subject to statutory or regulatory requirements as may
be in effect from time to time; and none of us, the Senior Trustee or the
Subordinated Trustee will have any responsibility or liability with respect
thereto.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy of such information.
If DTC is at any time unwilling or unable to continue as depository and we
do not appoint a successor depository within 90 days, we will issue debt
securities in certificated form in exchange for each Global Debt Security. In
addition, we may at any time determine not to have one or more series of debt
securities represented by any Global Debt Securities. In any such instance,
owners of beneficial interests in any such Global Debt Security will be entitled
to physical delivery of debt securities in certificated form equal in principal
amount to such beneficial interest and to have such debt securities registered
in their names. Debt securities so issued in certificated form will be issued in
denominations of $1,000 or any integral multiple thereof and will be issued in
registered form only, without coupons.
THE TRUSTEES
The Indentures and provisions of the TIA incorporated by reference therein
contain limitations on the rights of the Senior Trustee or the Subordinated
Trustee, as the case may be thereunder, should the Senior Trustee or the
Subordinated Trustee, as the case may be, become one of our creditors, to obtain
payment of claims in certain cases. We may from time to time maintain bank
accounts and have other customary banking relationships with and obtain credit
facilities and lines of credit from the Senior Trustee or the Subordinated
Trustee, in the ordinary course of business; PROVIDED, HOWEVER, that if the
Senior Trustee or the Subordinated Trustee, as the case
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may be, acquires any conflicting interest (as defined in Section 310(b) of the
TIA), it must eliminate such conflict or resign.
We will appoint the Senior Trustee or the Subordinated Trustee, as the
case may be, at the offices specified in the applicable Indenture as registrar,
principal paying agent and transfer agent for the debt securities. In such
capacities, the Senior Trustee or the Subordinated Trustee, as the case may be,
will be responsible for, among other things, (1) maintaining a record of the
aggregate holdings of debt securities represented by the Global Debt Security
and accepting debt securities for exchange and registration of transfer, (2)
ensuring that payments of principal of and interest on the Global Debt Security
and other debt securities received from us by the Senior Trustee or the
Subordinated Trustee, as the case may be, are duly paid to DTC or its nominee or
the holders thereof, as the case may be, and (3) transmitting to us any notices
from holders of debt securities. We will cause the transfer agent to act as a
registrar. We may vary or terminate the appointment of the transfer agent or
appoint additional or other transfer agents or approve any change in the office
through which any transfer agent acts.
CERTAIN U.S. FEDERAL INCOME
TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax
consequences of the acquisition, ownership and disposition by a U.S. Holder (as
defined below) or a United States Alien Holder (as defined below) of debt
securities issued in registered form. In the event that we issue debt securities
in bearer form, the applicable prospectus supplement will describe the material
federal income tax consequences thereof.
The discussion does not cover all aspects of federal taxation that may be
relevant to, or the actual tax effect that any of the matters described herein
will have on, the acquisition, ownership or disposition of debt securities by
particular investors, and does not address state, local, foreign or other tax
laws. In particular, this summary addresses only investors that will hold the
debt securities as capital assets and does not discuss all of the tax
considerations that may be relevant to certain types of investors subject to
special treatment under the federal income tax laws (such as banks, insurance
companies, investors liable for the alternative minimum tax, individual
retirement accounts and other tax-deferred accounts, tax-exempt organizations,
dealers in securities or currencies, traders in securities that elect to mark to
market for U.S. federal income tax purposes, investors that will hold the debt
securities as part of straddles, hedging transactions or conversion transactions
for federal tax purposes, investors whose functional currency is not the U.S.
dollar or investors who enter into "constructive sales" of the debt securities).
Additional United States federal income tax consequences applicable to
particular debt securities may be set forth in the applicable prospectus
supplement.
As used herein, the term "U.S. HOLDER" means a beneficial owner of debt
securities that is (1) a citizen or individual resident of the United States for
U.S. federal income tax purposes, (2) a corporation, partnership or limited
liability company created or organized under the laws of the United States, any
State thereof or the District of Columbia, (3) an estate the income of which is
subject to U.S. federal income tax on a net income basis regardless of its
source or (4) a trust if
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a court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons has the
authority to control all substantial decisions of the trust. A "UNITED STATES
ALIEN HOLDER" is any holder who or that is not a U.S. Holder.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "CODE"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive effect.
THIS SUMMARY IS FOR GENERAL INFORMATION ONLY. YOU ARE URGED TO CONSULT
YOUR PERSONAL TAX ADVISORS AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES TO YOU OF ACQUIRING, OWNING AND DISPOSING OF THE DEBT
SECURITIES.
U.S. HOLDERS
Except where otherwise expressly indicated, this summary under "U.S.
Holders" deals only with initial purchasers of debt securities at the issue
price that are U.S. Holders.
PAYMENTS OF INTEREST
GENERAL. Interest on a debt security, whether payable in U.S. dollars or a
currency, composite currency or basket of currencies other than U.S. dollars (a
"FOREIGN CURRENCY"), other than interest on a "Discount Debt Security" that is
not "qualified stated interest" (each as defined below under "-- Original Issue
Discount -- General"), will be taxable to a U.S. Holder as ordinary income at
the time it is received or accrued, depending on the holder's method of
accounting for tax purposes.
FOREIGN CURRENCY DENOMINATED INTEREST. If an interest payment is
denominated in, or determined by reference to, a foreign currency, the amount
of income recognized by a cash basis U.S. Holder will be the U.S. dollar
value of the interest payment, based on the exchange rate in effect on the
date of receipt, regardless of whether the payment is in fact converted into
U.S. dollars.
An accrual basis U.S. Holder may determine the amount of income recognized
with respect to an interest payment denominated in, or determined by reference
to, a foreign currency in accordance with either of two methods. Under the first
method, the amount of income accrued will be based on the average exchange rate
in effect during the interest accrual period (or, with respect to an accrual
period that spans two taxable years of a U.S. Holder, the part of the period
within the taxable year).
Under the second method, the U.S. Holder may elect to determine the amount
of income accrued on the basis of the exchange rate in effect on the last day of
the accrual period or, in the case of an accrual period that spans two taxable
years, the exchange rate in effect on the last day
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of the part of the period within the taxable year. Additionally, if a payment of
interest is actually received within five business days of the last day of the
accrual period or taxable year, an electing accrual basis U.S. Holder may
instead translate such accrued interest into U.S. dollars at the exchange rate
in effect on the day of actual receipt. Any such election will apply to all debt
instruments held by the U.S. Holder at the beginning of the first taxable year
to which the election applies or thereafter acquired by the U.S. Holder, and
will be irrevocable without the consent of the Internal Revenue Service (the
"IRS").
Upon receipt of the interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of a debt security)
denominated in, or determined by reference to, a foreign currency, an accrual
basis U.S. Holder that is required to accrue interest income prior to the date
of receipt will recognize ordinary income or loss measured by the difference
between the exchange rate used to accrue interest income pursuant to one of the
two above methods and the exchange rate in effect on the date of receipt,
regardless of whether the payment is in fact converted into U.S. dollars.
ORIGINAL ISSUE DISCOUNT
GENERAL. The following is a summary of the principal federal income tax
consequences of the ownership of debt securities issued at an original issue
discount. It is based in part upon the rules governing original issue discount
that are set forth in Sections 1271 through 1275 of the Code and in Treasury
regulations thereunder (the "OID REGULATIONS"). The following summary does not
discuss the federal income tax consequences of an investment in contingent
payment debt instruments. In the event we issue contingent payment debt
instruments, the applicable prospectus supplement will describe the material
federal income tax consequences thereof.
A debt security, other than a debt security with a term of one year or
less (a "SHORT-TERM DEBT SECURITY"), will be treated as issued at an original
issue discount (a "DISCOUNT DEBT SECURITY") if the excess of the debt security's
"stated redemption price at maturity" over its issue price is more than a "de
minimis amount" (as defined below). Generally, the issue price of a debt
security will be the first price at which a substantial amount of debt
securities included in the issue of which the debt security is a part is sold to
persons other than bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers. The
stated redemption price at maturity of a debt security is the total of all
payments provided by the debt security that are not payments of "QUALIFIED
STATED INTEREST." A qualified stated interest payment is generally any one of a
series of stated interest payments on a debt security that are unconditionally
payable at least annually during the entire term of the debt security at a
single fixed rate (with certain exceptions for lower rates paid during some
periods) applied to the outstanding principal amount of the debt security.
Special rules for "Floating Rate Debt Securities" (as defined below under "--
Original Issue Discount -- Floating Rate Debt Securities") are described below
under "-- Original Issue Discount -- Floating Rate Debt Securities."
In general, if the excess of a debt security's stated redemption price at
maturity over its issue price is less than 1/4 of 1 percent of the debt
security's stated redemption price at maturity multiplied by the number of
complete years to its maturity (the "DE MINIMIS AMOUNT"), then
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such excess, if any, constitutes "DE MINIMIS ORIGINAL ISSUE DISCOUNT" and the
debt security is not a Discount Debt Security. Unless the election described
below under "Original Issue Discount--Election to Treat All Interest as Original
Issue Discount" is made, a U.S. Holder of a debt security with de minimis
original issue discount must include such de minimis original issue discount in
income as capital gain as stated principal payments on the debt security are
made. The includible amount with respect to each such payment will equal the
product of the total amount of the debt security's de minimis original issue
discount and a fraction, the numerator of which is the amount of the principal
payment made and the denominator of which is the stated principal amount of the
debt security.
U.S. Holders of Discount Debt Securities having a maturity of more than
one year from their date of issue must include original issue discount ("OID")
in income calculated on a constant-yield method before the receipt of cash
attributable to such income, and generally will have to include in income
increasingly greater amounts of OID over the life of the debt security. The
amount of OID includible in income by a U.S. Holder of a Discount Debt Security
is the sum of the daily portions of OID with respect to the Discount Debt
Security for each day during the taxable year or portion of the taxable year on
which the U.S. Holder holds such Discount Debt Security ("ACCRUED OID"). The
daily portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. Accrual periods
with respect to a debt security may be of any length selected by the U.S. Holder
and may vary in length over the term of the debt security as long as (1) no
accrual period is longer than one year and (2) each scheduled payment of
interest or principal on the debt security occurs on either the final or first
day of an accrual period. The amount of OID allocable to an accrual period
equals the excess of (a) the product of the Discount Debt Security's adjusted
issue price at the beginning of the accrual period and such debt security's
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the sum of the payments of qualified stated interest on the debt security
allocable to the accrual period. The "ADJUSTED ISSUE PRICE" of a Discount Debt
Security at the beginning of any accrual period is the issue price of the debt
security increased by (x) the amount of accrued OID for each prior accrual
period and decreased by (y) the amount of any payments previously made on the
debt security that were not qualified stated interest payments. For purposes of
determining the amount of OID allocable to an accrual period, if an interval
between payments of qualified stated interest on the debt security contains more
than one accrual period, the amount of qualified stated interest payable at the
end of the interval (including any qualified stated interest that is payable on
the first day of the accrual period immediately following the interval) is
allocated pro rata on the basis of relative lengths to each accrual period in
the interval, and the adjusted issue price at the beginning of each accrual
period in the interval must be increased by the amount of any qualified stated
interest that has accrued prior to the first day of the accrual period but that
is not payable until the end of the interval. The amount of OID allocable to an
initial short accrual period may be computed using any reasonable method if all
other accrual periods other than a final short accrual period are of equal
length. The amount of OID allocable to the final accrual period is the
difference between (x) the amount payable at the maturity of the debt security
(other than any payment of qualified stated interest) and (y) the debt
security's adjusted issue price as of the beginning of the final accrual period.
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ACQUISITION PREMIUM. A U.S. Holder that purchases a Discount Debt Security
for an amount less than or equal to the sum of all amounts payable on the debt
security after the purchase date other than payments of qualified stated
interest but in excess of its adjusted issue price (any such excess being
"ACQUISITION PREMIUM") and that does not make the election described below under
"Original Issue Discount -- Election to Treat All Interest as Original Issue
Discount" is permitted to reduce the daily portions of OID by a fraction, the
numerator of which is the excess of the U.S. Holder's adjusted basis in the debt
security immediately after its purchase over the adjusted issue price of the
debt security, and the denominator of which is the excess of the sum of all
amounts payable on the debt security after the purchase date, other than
payments of qualified stated interest, over the debt security's adjusted issue
price.
PRE-ISSUANCE ACCRUED INTEREST. If (1) a portion of the initial purchase
price of a debt security is attributable to pre-issuance accrued interest, (2)
the first stated interest payment on the debt security is to be made within one
year of the debt security's issue date and (3) the payment will equal or exceed
the amount of pre-issuance accrued interest, then the issue price of the debt
security may be computed by reducing the issue price (as determined under "--
Original Issue Discount -- General") by the amount of pre-issuance accrued
interest. In that event, a portion of the first stated interest payment will be
treated as a return of the excluded pre-issuance accrued interest and not as an
amount payable on the debt security.
DEBT SECURITIES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL Redemption. In
general, if a debt security provides for an alternative payment schedule or
schedules applicable upon the occurrence of a contingency or contingencies and
the timing and amounts of the payments that comprise each payment schedule are
known as of the issue date, and if, based on all the facts and circumstances as
of the issue date, a single payment schedule is significantly more likely than
not to occur, then the yield and maturity of the debt security are computed
based on that payment schedule.
Notwithstanding the general rule described in the preceding paragraph, if
we have an unconditional option or options to redeem a debt security, or the
Holder has an unconditional option or options to cause a debt security to be
repurchased, prior to the debt security's stated maturity, then (1) in the case
of our option or options, we will be deemed to exercise or not exercise an
option or combination of options in the manner that minimizes the yield on the
debt security and (2) in the case of an option or options of the Holder, the
Holder will be deemed to exercise or not exercise an option or combination of
options in the manner that maximizes the yield on the debt security. For
purposes of those calculations, the yield on the debt security is determined by
using any date on which the debt security may be redeemed or repurchased as the
maturity date and the amount payable on such date in accordance with the terms
of the debt security as the principal amount payable at maturity.
If a contingency (including the exercise of an option) actually occurs or
does not occur contrary to an assumption made according to the above rules (a
"CHANGE IN CIRCUMSTANCES") then, except to the extent that a portion of the debt
security is repaid as a result of the change in circumstances and solely for
purposes of the accrual of OID, the yield and maturity of the debt
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security are redetermined by treating the debt security as reissued on the date
of the change in circumstances for an amount equal to the debt security's
adjusted issue price on that date.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. A U.S. Holder
may elect to include in gross income all interest that accrues on a debt
security using the constant-yield method described above under the heading
"Original Issue Discount -- General," with the modifications described below.
For purposes of this election, interest includes stated interest, OID, de
minimis original issue discount, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium (described below
under "U.S. Holders -- Debt Securities Purchased at a Premium") or acquisition
premium.
In applying the constant-yield method to a debt security with respect to
which this election has been made, the issue price of the debt security will
equal the electing U.S. Holder's adjusted basis in the debt security immediately
after its acquisition, the issue date of the debt security will be the date of
its acquisition by the electing U.S. Holder, and no payments on the debt
security will be treated as payments of qualified stated interest. This election
will generally apply only to the debt security with respect to which it is made
and may not be revoked without the consent of the IRS. If this election is made
with respect to a debt security with amortizable bond premium, then the electing
U.S. Holder will be deemed to have elected to apply amortizable bond premium
against interest with respect to all debt instruments with amortizable bond
premium (other than debt instruments the interest on which is excludible from
gross income) held by the electing U.S. Holder as of the beginning of the
taxable year in which the debt security with respect to which the election is
made is acquired or thereafter acquired. The deemed election with respect to
amortizable bond premium may not be revoked without the consent of the IRS.
If the election to apply the constant-yield method to all interest on a
debt security is made with respect to a Market Discount Debt Security (as
defined below under "U.S. Holders -- Market Discount"), the electing U.S. Holder
will be treated as having made the election discussed below under "-- Market
Discount" to include market discount in income currently over the life of all
debt instruments with market discount acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies.
FLOATING RATE DEBT SECURITIES. Debt securities that bear interest at a
floating rate ("FLOATING RATE DEBT SECURITIES") generally will bear interest at
a "qualified floating rate" and thus will be treated as "variable rate debt
instruments" under the OID Regulations. A Floating Rate Debt Security will
qualify as a "variable rate debt instrument" under the OID Regulations if (a)
its issue price does not exceed the total noncontingent principal payments due
under the Floating Rate Debt Security by more than a specified DE MINIMIS amount
and (b) it does not provide for stated interest other than stated interest, paid
or compounded at least annually, at current values of (1) one or more qualified
floating rates, (2) a single fixed rate and one or more qualified floating
rates, (3) a single "objective rate," or (4) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
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A "QUALIFIED FLOATING RATE" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Floating Rate Debt Security is denominated. Although a multiple of a qualified
floating rate will generally not itself constitute a qualified floating rate, a
variable rate equal to the product of a qualified floating rate and a fixed
multiple that is greater than 0.65 but not more than 1.35 will constitute a
qualified floating rate. A variable rate equal to the product of a qualified
floating rate and a fixed multiple that is greater than 0.65 but not more than
1.35, increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, under the OID Regulations, if a debt security
provides for two or more qualified floating rates that can reasonably be
expected to have approximately the same values throughout the term of the
Floating Rate Debt Security (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Floating Rate
Debt Security's issue date), then such qualified floating rates will be treated
as a single qualified floating rate. Notwithstanding the foregoing, a variable
rate that would otherwise constitute a qualified floating rate but which is
subject to one or more restrictions, such as a maximum numerical limitation
(i.e., a cap) or a minimum numerical limitation (i.e., a floor), may, under
certain circumstances, fail to be treated as a qualified floating rate under the
OID Regulations unless such cap or floor is fixed throughout the term of the
debt security or is not reasonably expected significantly to affect the yield on
the debt security.
An "OBJECTIVE RATE" is a rate that is not itself a qualified floating rate
but which is determined using a single fixed formula and which is based upon
objective financial or economic information (e.g., one or more qualified
floating rates or the yield of actively traded personal property) that is not
within the control of the issuer or a related party and is not unique to the
circumstances of the issuer or a related party, such as dividends, profits or
the value of the issuer's stock. The OID Regulations also provide that other
variable interest rates may be treated as objective rates if so designated by
the IRS in the future. Despite the foregoing, a variable rate of interest on a
Floating Rate Debt Security will not constitute an objective rate if it is
reasonably expected that the average value of such rate during the first half of
the Floating Rate Debt Security's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Floating Rate Debt Security's term. A "QUALIFIED INVERSE FLOATING RATE"
is any objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
reflect inversely contemporaneous variations in the qualified floating rate. The
OID Regulations also provide that if a Floating Rate Debt Security provides for
stated interest at a fixed rate for an initial period of one year or less
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Floating Rate Debt Security's
issue date is intended to approximate the fixed rate (e.g., the value of the
variable rate on the issue date does not differ from the value of the fixed rate
by more than 25 basis points), then the fixed rate and the variable rate
together will constitute either a single qualified floating rate or objective
rate, as the case may be.
A qualified floating rate or objective rate in effect at any time during
the term of the instrument must be set at a "current value" of that rate. A
"CURRENT VALUE" of a rate is the value of the rate on any day that is no earlier
than 3 months prior to the first day on which that value is in effect and no
later than 1 year following that first day.
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If a Floating Rate Debt Security that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Floating Rate Debt Security which
is unconditionally payable in cash or property (other than our debt instruments)
at least annually will constitute qualified stated interest and will be taxed
accordingly. Thus, a Floating Rate Debt Security that provides for stated
interest at either a single qualified floating rate or a single objective rate
throughout the term thereof and that qualifies as a "variable rate debt
instrument" under the OID Regulations will generally not be treated as having
been issued with OID unless the Floating Rate Debt Security is issued at a
"true" discount (i.e., at a price below the debt security's stated principal
amount) in excess of a specified DE MINIMIS amount. OID on such a Floating Rate
Debt Security arising from "true" discount is allocated to an accrual period
using the constant yield method described above by assuming that the variable
rate is a fixed rate equal to (1) in the case of a qualified floating rate or
qualified inverse floating rate, the value, as of the issue date, of the
qualified floating rate or qualified inverse floating rate, or (2) in the case
of an objective rate (other than a qualified inverse floating rate), a fixed
rate that reflects the yield that is reasonably expected for the Floating Rate
Debt Security.
In general, any other Floating Rate Debt Security that qualifies as a
"variable rate debt instrument" will be converted into an "equivalent" fixed
rate debt instrument for purposes of determining the amount and accrual of OID
and qualified stated interest on the debt security. The OID Regulations
generally require that such a Floating Rate Debt Security be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the
Floating Rate Debt Security with a fixed rate equal to the value of the
qualified floating rate or qualified inverse floating rate, as the case may be,
as of the Floating Rate Debt Security's issue date. Any objective rate (other
than a qualified inverse floating rate) provided for under the terms of the
Floating Rate Debt Security is converted into a fixed rate that reflects the
yield that is reasonably expected for the Floating Rate Debt Security. In the
case of a Floating Rate Debt Security that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or a
qualified inverse floating rate, if the Floating Rate Debt Security provides for
a qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Debt Security as of
the Floating Rate Debt Security's issue date is approximately the same as the
fair market value of an otherwise identical debt instrument that provides for
either the qualified floating rate or qualified inverse floating rate rather
than the fixed rate. Subsequent to converting the fixed rate into either a
qualified floating rate or a qualified inverse floating rate, the Floating Rate
Debt Security is then converted into an "equivalent" fixed rate debt instrument
in the manner described above.
Once the Floating Rate Debt Security is converted into an "equivalent"
fixed rate debt instrument pursuant to the foregoing rules, the amount of OID
and qualified stated interest, if any, are determined for the "equivalent" fixed
rate debt instrument by applying the general OID rules to the "equivalent" fixed
rate debt instrument and a U.S. Holder of the Floating Rate Debt Security will
account for such OID and qualified stated interest as if the U.S. Holder held
the "equiv-
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alent" fixed rate debt instrument. In each accrual period, appropriate
adjustments will be made to the amount of qualified stated interest or OID
assumed to have been accrued or paid with respect to the "equivalent" fixed rate
debt instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the Floating Rate Debt Security during the accrual
period.
If a Floating Rate Debt Security does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Floating Rate Debt Security
would be treated as a contingent payment debt obligation. Special United States
federal income tax considerations applicable to Floating Rate Debt Securities
that are treated as contingent payment debt obligations will be more fully
described in the applicable prospectus supplement.
SHORT-TERM DEBT SECURITIES. In general, an individual or other cash basis
U.S. Holder of a Short-Term Debt Security is not required to accrue OID (as
specially defined below for the purposes of this paragraph and the immediately
following paragraph) for United States federal income tax purposes unless it
elects to do so (but may be required to include any stated interest in income as
the interest is received). Accrual basis U.S. Holders and certain other U.S.
Holders, including banks, regulated investment companies, dealers in securities,
common trust funds, U.S. Holders who hold debt securities as part of certain
identified hedging transactions, certain pass-thru entities and cash basis U.S.
Holders who so elect, are required to accrue OID on Short-Term Debt Securities
on either a straight-line basis or under the constant-yield method (based on
daily compounding), at the election of the U.S. Holder. In the case of a U.S.
Holder not required and not electing to include OID in income currently, any
gain realized on the sale, exchange or retirement of the Short-Term Debt
Security will be ordinary income to the extent of the OID accrued on a
straight-line basis (unless an election is made to accrue the OID under the
constant-yield method) through the date of sale, exchange or retirement. U.S.
Holders who are not required and do not elect to accrue OID on Short-Term Debt
Securities will be required to defer deductions for interest on borrowings
incurred or continued to purchase or carry such Short-Term Debt Securities in an
amount not exceeding the deferred interest income until the deferred interest
income is realized.
For purposes of determining the amount of OID subject to these rules, all
interest payments on a Short-Term Debt Security, including stated interest, are
included in the Short-Term Debt Security's stated redemption price at maturity.
FOREIGN CURRENCY DISCOUNT DEBT SECURITIES. OID for any accrual period on a
Discount Debt Security that is denominated in, or determined by reference to, a
foreign currency will be determined in the foreign currency and then translated
into U.S. dollars in the same manner as stated interest accrued by an accrual
basis U.S. Holder, as described above under "Payments of Interest -- Foreign
Currency Denominated Interest." Upon receipt of an amount attributable to OID
(whether in connection with a payment of interest or the sale or retirement of a
debt security), a U.S. Holder may recognize ordinary income or loss.
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MARKET DISCOUNT
A Debt Security, other than a Short-Term Debt Security, will be treated as
purchased at a market discount (a "MARKET DISCOUNT DEBT SECURITY") if the debt
security's stated redemption price at maturity or, in the case of a Discount
Debt Security, the debt security's "revised issue price," exceeds the amount for
which the U.S. Holder purchased the debt security by at least 1/4 of 1 percent
of such debt security's stated redemption price at maturity or revised issue
price, respectively, multiplied by the number of complete years to the debt
security's maturity. If such excess is not sufficient to cause the debt security
to be a Market Discount Debt Security, then such excess constitutes "DE MINIMIS
MARKET DISCOUNT." The Code provides that, for these purposes, the "REVISED ISSUE
PRICE" of a debt security generally equals its issue price, increased by the
amount of any OID that has accrued on the debt security.
Any gain recognized on the maturity or disposition of a Market Discount
Debt Security will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such debt security.
Alternatively, a U.S. Holder of a Market Discount Debt Security may elect to
include market discount in income currently over the life of the debt security.
Such an election shall apply to all debt instruments with market discount
acquired by the electing U.S. Holder on or after the first day of the first
taxable year to which the election applies. This election may not be revoked
without the consent of the IRS.
Market discount on a Market Discount Debt Security will accrue on a
straight-line basis unless the U.S. Holder elects to accrue such market discount
on a constant-yield method. Such an election shall apply only to the debt
security with respect to which it is made and may not be revoked without the
consent of the IRS. A U.S. Holder of a Market Discount Debt Security that does
not elect to include market discount in income currently generally will be
required to defer deductions for interest on borrowings allocable to such debt
security in an amount not exceeding the accrued market discount on such debt
security until the earlier of the maturity or disposition of such debt security.
RECENT DEVELOPMENTS. President Clinton's fiscal year 2000 budget plan
contains a proposal which, if enacted, would require U.S. Holders who use the
accrual method of accounting to include market discount in income as it accrues.
Under the budget proposal, the U.S. Holder's yield for purposes of calculating
and accruing market discount would be limited to the larger of (1) the
applicable Federal rate at the time the U.S. Holder acquired the debt instrument
plus five percentage points and (2) the original yield-to-maturity of the debt
instrument plus five percentage points. The proposal would affect any debt
instrument acquired on or after the date on which the proposal is enacted. This
summary of the budget proposal concerning market discount is for general
information only. You are urged to consult your personal tax advisors concerning
the status of the proposal and the particular consequences to you if it is
enacted.
DEBT SECURITIES PURCHASED AT A PREMIUM
A U.S. Holder that purchases a debt security for an amount in excess of
its principal amount, or in the case of a Discount Debt Security, its stated
redemption price at maturity, may elect to treat such excess as "amortizable
bond premium," in which case the amount required to
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be included in the U.S. Holder's income each year with respect to interest on
the debt security will be reduced by the amount of amortizable bond premium
allocable (based on the debt security's yield to maturity) to such year. A U.S.
Holder who makes such election must reduce such Holder's tax basis in the debt
security by the amount of amortized premium. In the case of a debt security that
is denominated in, or determined by reference to a foreign currency, bond
premium will be computed in units of foreign currency, and amortizable bond
premium will reduce interest income in units of the foreign currency. At the
time amortized bond premium offsets interest income, exchange gain or loss
(taxable as ordinary income or loss) is realized measured by the difference
between exchange rates at that time and at the time of the acquisition of the
debt securities. Any election to amortize bond premium shall apply to all bonds
(other than bonds the interest on which is excludible from gross income) held by
the U.S. Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired by the U.S. Holder, and is irrevocable without
the consent of the IRS. See also "Original Issue Discount -- Election to Treat
All Interest as Original Issue Discount."
PURCHASE, SALE AND RETIREMENT OF THE DEBT SECURITIES
A U.S. Holder's tax basis in a debt security will generally be its U.S.
dollar cost (as defined below), increased by the amount of any OID or market
discount included in the U.S. Holder's income with respect to the debt security
and the amount, if any, of income attributable to DE MINIMIS original issue
discount and DE MINIMIS market discount included in the U.S. Holder's income
with respect to the debt security, and reduced by (1) the amount of any payments
that are not qualified stated interest payments, and (2) the amount of any
amortizable bond premium applied to reduce interest on the debt security. The
U.S. dollar cost of a debt security purchased with a foreign currency will
generally be the U.S. dollar value of the purchase price on the date of purchase
or, in the case of debt securities traded on an established securities market,
as defined in the applicable Treasury Regulations, that are purchased by a cash
basis U.S. Holder (or an accrual basis U.S. Holder that so elects), on the
settlement date for the purchase.
A U.S. Holder will generally recognize gain or loss on the sale or
retirement of a debt security equal to the difference between the amount
realized on the sale or retirement and the tax basis of the debt security. The
amount realized on a sale or retirement for an amount in foreign currency will
be the U.S. dollar value of such amount on the date of sale or retirement or, in
the case of debt securities traded on an established securities market, as
defined in the applicable Treasury Regulations, sold by a cash basis U.S. Holder
(or an accrual basis U.S. Holder that so elects), on the settlement date for the
sale. Except to the extent described above under "-- Original Issue Discount --
Short-Term Debt Securities" or "-- Market Discount" or described in the next
succeeding paragraph or attributable to accrued but unpaid interest, gain or
loss recognized on the sale or retirement of a debt security will be capital
gain or loss. Gain recognized on the disposition of a capital asset held by an
individual taxpayer for more than one year is generally subject to a maximum
rate of tax of 20%. U.S. Holders are urged to consult their own tax advisors
with respect to recently enacted capital gains legislation.
Gain or loss recognized by a U.S. Holder on the sale or retirement of a
debt security that is attributable to changes in exchange rates will be treated
as ordinary income or loss. However,
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exchange gain or loss is taken into account only to the extent of total gain or
loss realized on the transaction.
EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS
Foreign currency received as interest on a debt security or on the sale or
retirement of a debt security will have a tax basis equal to its U.S. dollar
value at the time such interest is received or at the time of such sale or
retirement. Foreign currency that is purchased will generally have a tax basis
equal to the U.S. dollar value of the foreign currency on the date of purchase.
Any gain or loss recognized on a sale or other disposition of foreign currency
(including its use to purchase debt securities or upon exchange for U.S.
dollars) will be ordinary income or loss.
AMORTIZING DEBT SECURITIES
The applicable prospectus supplement will contain a discussion of special
United States federal income tax rules applicable to debt securities that
provide for partial principal payments prior to stated maturity.
UNITED STATES ALIEN HOLDERS
An alien individual who is neither a citizen nor a lawful permanent
resident of the United States may, subject to certain exceptions, be deemed to
be a resident of the United States for U.S. federal income tax purposes by
virtue of being present in the United States on at least 31 days in the calendar
year and for an aggregate of at least 183 days during a three-calendar-year
period ending in the current calendar year (counting for such purposes all of
the days present in the current year, one-third of the days present in the
immediately preceding year and one-sixth of the days present in the second
preceding year). Resident aliens are subject to United States federal income tax
as if they were United States citizens and residents. See "U.S. Holders" above.
Under present United States federal income and estate tax law and subject
to the discussion of backup withholding below:
(1) payments of principal, premium (if any) and interest (including
OID) by us or any of our paying agents to any holder of a debt security
who or which is a United States Alien Holder will not be subject to United
States federal withholding tax (and, except as discussed in paragraph (4)
below, will not generally be subject to U.S. federal income tax) if, in
the case of premium (if any), interest or OID, (a) the beneficial owner of
the debt security does not actually or constructively own 10% or more of
the total combined voting power of all classes of our stock entitled to
vote, (b) the beneficial owner of the debt security is not a controlled
foreign corporation that is related to us through stock ownership, (c) the
interest on the debt security is not contingent interest to which Section
871(h)(4)(A) of the Code is applicable, and (d) either (i) the beneficial
owner of the debt security certifies to us or our agent, under penalties
of perjury, that it is not a U.S. Holder and provides its name and address
or (ii) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business (a "FINANCIAL INSTITUTION") and holds the debt security
certifies to us or our
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agent under penalties of perjury that such statement has been received from
the beneficial owner by it or by a financial institution acting on behalf
of the beneficial owner and furnishes the payor with a copy thereof;
(2) a United States Alien Holder of a debt security will not be
subject to United States federal withholding tax on any gain realized on
the sale or exchange of a debt security;
(3) a debt security held by an individual who at death is not
a citizen or resident of the United States will not be includible in the
individual's gross estate for purposes of the United States federal estate
tax as a result of the individual's death if the individual did not
actually or constructively own 10% or more of the total combined voting
power of all classes of our stock entitled to vote, the income on the debt
security would not have been effectively connected with a United States
trade or business of the individual at the individual's death and, in the
case of a debt security on which all or a portion of the interest payments
are contingent interest to which Section 871(h)(4)(A) is applicable, to
the extent that the value of such debt security is not allocable to such
contingent interest;
(4) if premium, interest or OID on a debt security of a United
States Alien Holder is effectively connected with the conduct of a United
States trade or business, then such holder, with respect to such premium,
interest or OID, (a) will be exempt from United States withholding tax
(upon such holder's delivery of a properly completed and periodically
updated IRS Form 4224 or successor form thereto), (b) will be subject to
United States federal income tax in the same manner and at the same rates
as if such holder were a U.S. Holder and (c) may be subject, if the United
States Alien Holder is a corporation, to the "branch profits tax" at a 30
% rate (which tax is generally imposed on a foreign corporation on the
actual or deemed repatriation from the United States of earnings and
profits attributable to income that is effectively connected with the
conduct of a U.S. trade or business); and
(5) a United States Alien Holder of a debt security will not be
subject to United States federal income tax on any gain realized on the
sale or exchange of a debt security unless (a) such gain is effectively
connected with the conduct of a United States trade or business, in which
case such holder will be subject to United States federal income tax on
such gain in the same manner and at the same rates as if such holder were
a U.S. Holder and such holder may be subject to the branch profits tax
described in clause (4)(c) above, (b) subject to certain exceptions, the
United States Alien Holder is an individual who holds the debt security as
a capital asset and is present in the United States for 183 days or more
in the taxable year of the disposition, or (c) the United States Alien
Holder is subject to tax pursuant to provisions of United States tax law
applicable to certain United States expatriates (including certain former
citizens or residents of the United States).
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The payment of premium, interest or OID that qualifies for neither the
withholding exemption set forth in paragraph (1) above nor the withholding
exemption set forth in paragraph (4) above will be subject to U.S. federal
withholding tax at the rate of 30%, unless a U.S. income tax treaty applies to
reduce or eliminate such withholding. To claim the benefit of a tax treaty, a
United States Alien Holder must deliver a properly completed and periodically
updated IRS Form 1001 or successor form.
Treasury regulations that will be effective with respect to payments made
after December 31, 1999 (the "WITHHOLDING REGULATIONS"), will provide
alternative methods for satisfying the certification requirements described in
clause (1)(d) above. The Withholding Regulations also will require, in the case
of debt securities held by a foreign partnership, that (x) such certification
requirements be satisfied by the partners and (y) the partnership provide
certain information, including its U.S. taxpayer identification number. A
look-through rule will apply in the case of tiered partnerships. Under the
Withholding Regulations, a United States Alien Holder who is claiming the
benefits of a treaty may be required to obtain a U.S. taxpayer identification
number and providing certain documentary evidence issued by a foreign
governmental authority to prove residence in the foreign country. Certain
special procedures are provided in the Withholding Regulations for payments
through qualified intermediaries.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS
In general, information reporting requirements will apply to payments of
principal, any premium and interest on a debt security to non-corporate U.S.
Holders, the payment of the proceeds of the sale of a debt security before
maturity within the United States to non-corporate U.S. Holders and the accrual
of OID on a Discount Debt Security with respect to non-corporate U.S. Holders,
and "backup withholding" at a rate of 31% will apply to such payments and to
payments of OID if the U.S. Holder fails to provide an accurate taxpayer
identification number or to report all interest and dividends required to be
shown on such U.S. Holder's federal income tax returns. Holders should consult
their tax advisors regarding their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption if applicable. The
amount of any backup withholding from a payment to a U.S. Holder will be allowed
as a credit against such U.S. Holder's U.S. federal income tax liability and may
entitle such U.S. Holder to a refund, provided that the required information is
furnished to the IRS.
UNITED STATES ALIEN HOLDERS
Backup withholding will generally not apply to payments of principal,
premium (if any) and interest (including OID) made by us or a paying agent to a
United States Alien Holder on a debt security if the certification described in
clause (1)(d) under "United States Alien Holders" above is received, provided
that the payor does not have actual knowledge that the holder is a United States
person. We may be required to report annually to the IRS and to each United
States Alien Holder the amount of interest paid to, and the tax withheld, if
any, with respect to such Holder. These information reporting requirements apply
regardless of whether withholding is required. Copies of the information returns
reporting such withholding may also be made
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available to the tax authorities in the country in which the United States Alien
Holder resides under the provisions of an applicable income tax treaty.
Payments of the proceeds from the sale by a United States Alien Holder of
a debt security made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign corporation for United
States tax purposes, a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period or, effective after December 31, 1999, in certain other cases
specified under the Withholding Regulations, information reporting may apply to
such payments. Payments of the proceeds from the sale of a debt security to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the holder or beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption from information
reporting and backup withholding.
THE SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS FOR
GENERAL INFORMATION ONLY. YOU SHOULD CONSULT YOUR OWN PERSONAL TAX ADVISORS AS
TO THE PARTICULAR TAX CONSEQUENCES OF THE DEBT SECURITIES TO YOU, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, FEDERAL, LOCAL, FOREIGN AND OTHER TAX LAWS
AND POSSIBLE CHANGES IN TAX LAW.
PLAN OF DISTRIBUTION
We may sell the debt securities in and/or outside the United States: (1)
through underwriters or dealers; (2) directly to a limited number of purchasers
or to a single purchaser; or (3) through agents. The applicable prospectus
supplement with respect to the debt securities will set forth the terms of the
offering of the debt securities, including the name or names of any underwriters
or agents, if any, the purchase price of the debt securities and the proceeds to
us from such sale. In addition, the applicable prospectus supplement will set
forth any delayed delivery arrangements, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or re-allowed or paid to dealers. Any
initial public offering price and any discount or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale, the debt 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 debt
securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The underwriter or underwriters with respect to a
particular underwritten offering of debt securities will be named in the
prospectus supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such prospectus supplement. Unless otherwise set forth in the
prospectus supplement relating thereto, the obligations of the underwriters to
purchase the offered debt secu-
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rities will be subject to conditions precedent and the underwriters will be
obligated to purchase all the offered debt securities if any are purchased.
If dealers are used in the sale of debt securities in respect of which
this prospectus is delivered, we will sell such debt securities to the dealers
as principals. The dealers may then resell such debt securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
prospectus supplement relating thereto.
The debt securities may be sold through agents we designate from time to
time. Any agent involved in the offer or sale of the debt securities in respect
to which this prospectus is delivered will be named, and any commissions payable
by us to such agent will be set forth, in the prospectus supplement relating
thereto. Unless otherwise indicated in the prospectus supplement, any such agent
will be acting on a best efforts basis for the period of its appointment.
We may sell the debt securities directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act of 1933, as amended (the "SECURITIES ACT") with respect to any
resale thereof. The terms of any such sales, including the terms of any bidding
or auction process, will be described in the prospectus supplement relating
thereto.
Agents, dealers and underwriters may be entitled under agreements entered
into with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such agents, dealers or underwriters may be required to make
in respect thereof. Agents, dealers and underwriters may be our customers,
engage in transactions with us, or perform services for us in the ordinary
course of business.
In connection with an offering, certain persons participating in such
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the debt securities. Specifically, such persons may overallot such
offering, creating a syndicate short position. In addition, such persons may bid
for, and purchase, the debt securities in the open market to cover syndicate
shorts or to stabilize the price of the debt securities. Finally, such persons
may reclaim selling concessions allowed for distributing the debt securities in
an offering, if such persons repurchase previously distributed debt securities
in syndicate covering transactions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the debt
securities above independent market levels. Such persons are not required to
engage in these activities, and may end any of these activities at any time. The
debt securities may or may not be listed on a national securities exchange. We
cannot assure you as to the future liquidity of the trading market, if any, for
any debt securities issued.
LEGAL MATTERS
Certain legal matters in connection with the debt securities offered
hereby will be passed upon for us by our counsel Wachtell, Lipton, Rosen & Katz,
New York, New York and for any underwriters or agents by Shearman & Sterling,
New York, New York.
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EXPERTS
The consolidated financial statements of Borg-Warner Automotive, Inc. as
of December 31, 1998 and December 31, 1997 and for each of the three years in
the period ended December 31, 1998 incorporated in this prospectus by reference
from our Annual Report on Form 10-K for the year ended December 31, 1998, as
amended by the Form 10-K/A filed with the Securities and Exchange Commission on
June 27, 1999 have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of NSK-Warner Kabushiki Kaisha as of March 31,
1999 and 1998, and for each of the years in the three-year period ended March
31, 1999, have been incorporated by reference herein in reliance upon the report
of KPMG, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
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YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND
PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE OFFERING TO SELL THESE SECURITIES ONLY IN
JURISDICTIONS WHERE OFFERS OR SALES ARE PERMITTED.
THE INFORMATION CONTAINED IN THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS SUPPLEMENT.
-----------------------------------
TABLE OF CONTENTS
PROSPECTUS
PAGE
----
About This Prospectus........................................................2
Where You Can Find More Information..........................................2
Special Note Regarding Forward-Looking Statements............................3
The Company..................................................................4
Risk Factors.................................................................6
Use of Proceeds.............................................................10
Ratio of Earnings to Fixed Charges..........................................10
Description of Debt Securities..............................................11
Certain U.S. Federal Income Tax Considerations..............................26
Plan of Distribution........................................................40
Legal Matters...............................................................41
Experts.....................................................................42
-----------------------------------
$350,000,000
BORG-WARNER AUTOMOTIVE, INC.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses of the issuance and distribution
of the securities being registered, all of which will be paid by the Company.
Securities and Exchange Commission Registration fee....... $ 97,300
NYSE and Blue Sky fees and expenses....................... 10,000
Printing and engraving expenses........................... 130,000
Legal fees and expenses................................... 100,000
Trustee fees and expenses................................. 6,000
Accounting fees and expenses.............................. 15,000
Rating Agency fees........................................ 227,500
Miscellaneous............................................. 4,200
-------
Total............................................... $590,000
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
("DGCL") provides that a corporation has the power to indemnify its officers and
directors against the expenses, including attorney's fees, judgments, fines or
settlement amounts actually and reasonably incurred by them in connection with
the defense of any action by reason of being or having been directors or
officers, if such person shall have acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, except that if such action shall be in the right of the
corporation, no such indemnification shall be provided as to any claim, issue or
matter as to which such person shall have been judged to have been liable to the
corporation unless and to the extent that the Court of Chancery of the State of
Delaware, or another court in which the suit was brought, shall determine upon
application that, in view of all of the circumstances of the case, such person
is fairly and reasonably entitled to indemnity.
As permitted by Section 102 of the DGCL, the Restated Certificate of
Incorporation of the Company provides that no director shall be liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director other than (i) for breaches of the director's duty of loyalty to the
Company and its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
the unlawful payment of dividends or unlawful stock purchases or redemptions
under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.
The Restated Certificate of Incorporation of the Company provides for
indemnification of its directors and officers to the fullest extent permitted by
the DGCL, and allows the Company to advance or reimburse litigation expenses
upon submission by the director, officer or employee of an undertaking to repay
such advances or reimbursements if it is ultimately determined that
indemnification is not available to such director or officer.
II-1
<PAGE>
ITEM 16. EXHIBITS.
The following documents are filed as a part of this Registration
Statement.
EXHIBIT NO. DESCRIPTION OF DOCUMENT
----------- ------------------------
1 Form of Underwriting Agreement.
4.1 Form of Senior Debt Indenture.
4.2 Form of Senior Debt Security (incorporated bu reference to
Exhibit 4.2 to Registration Statement No. 333-66879).
4.3 Form of Subordinated Debt Indenture.*
4.4 Form of Subordinated Debt Security.*
5 Opinion of Wachtell, Lipton, Rosen & Katz.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit
5).
23.3 Consent of KPMG.
24 Powers of Attorney (included as part of signature page).
25 Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended.*
- ----------------
* To be filed by Amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended;
(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;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports
II-2
<PAGE>
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c)-(g), (j) Not applicable.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form
of prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to
be part of registration statement as of the time it was
declared effective.
II-3
<PAGE>
(2) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(ii) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized in the City of Chicago, State of Illinois, on August 10, 1999.
BORG-WARNER AUTOMOTIVE, INC.
By: /S/ JOHN F. FIEDLER
--------------------------------------
JOHN F. FIEDLER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John F. Fiedler, Laurene H. Horiszny and Stephanie C. Bransfield, and each
acting alone, his/her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him/her and in his/her name, place
and stead, in any and all capacities, to sign any or all amendments or
supplements to this Registration Statement, whether pre-effective or
post-effective, 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 full power and authority to do
and perform each and every act and thing necessary or appropriate to be done
with respect to this Registration Statement or any amendments or supplements
thereto in the premises, as fully to all intents and purposes as he/she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on August 10, 1999.
SIGNATURE TITLE
--------- -----
/S/ JOHN F. FIEDLER Chairman, Chief Executive Officer, and
- ------------------------------------ Director (Principal Executive Officer)
JOHN F. FIEDLER
/S/ JEFFREY L. OBERMAYER Acting Treasurer (Principal Financial
- ------------------------------------ Officer)
JEFFREY L. OBERMAYER
/S/ WILLIAM C. CLINE Vice President and Controller
- ------------------------------------ (Principal Accounting Officer)
WILLIAM C. CLINE
II-5
<PAGE>
SIGNATURE TITLE
--------- -----
/S/ ANDREW F. BRIMMER Director
- ------------------------------------
ANDREW F. BRIMMER
/S/ JAMES J. KERLEY Director
- ------------------------------------
JAMES J. KERLEY
/S/ ALEXIS P. MICHAS Director
- ------------------------------------
ALEXIS P. MICHAS
/S/ JERE A. DRUMMOND Director
- ------------------------------------
JERE A. DRUMMOND
/S/ IVAN W. GORR Director
- ------------------------------------
IVAN W. GORR
/S/ JOHN RAU Director
- ------------------------------------
JOHN RAU
/S/ PAUL E. GLASKE Director
- ------------------------------------
PAUL E. GLASKE
/S/ WILLIAM E. BUTLER Director
- ------------------------------------
WILLIAM E. BUTLER
/S/ PHYLLIS O. BONANNO Director
- ------------------------------------
PHYLLIS O. BONANNO
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ----------- -----------------------
1 Form of Underwriting Agreement.
4.1 Form of Senior Debt Indenture.
5 Opinion of Wachtell, Lipton, Rosen & Katz.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (contained in
Exhibit 5).
23.3 Consent of KPMG.
II-7
EXHIBIT 1
BORG-WARNER AUTOMOTIVE, INC.
(A DELAWARE CORPORATION)
DEBT SECURITIES
UNDERWRITING AGREEMENT BASIC PROVISIONS
Borg-Warner Automotive, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell up to $___________ aggregate principal amount of its
senior debt securities (the "Senior Securities") or its subordinated debt
securities (the "Subordinated Securities"), or both, from time to time on terms
to be determined at the time of sale. The Senior Securities will be issued under
an indenture dated as of ___________, 1999 (the "Senior Indenture") between the
Company and __________________________________, trustee. The Subordinated
Securities, if any, would be issued under an indenture to be entered into (the
"Subordinated Indenture") between the Company and
__________________________________, trustee. Each issue of Senior Securities,
and Subordinated Securities may vary, as applicable, as to aggregate principal
amount, maturity date, interest rate or formula and timing of payments thereof,
redemption provisions and sinking fund requirements, if any, and any other
variable terms which the Senior Indenture or the Subordinated Indenture, as the
case may be, contemplates may be set forth in the Senior Securities and
Subordinated Securities as issued from time to time. The Senior Securities and
the Subordinated Securities may be offered either together or separately.
This is to confirm the arrangements with respect to the purchase of
Underwritten Securities from the Company by the Representatives and the several
Underwriters listed in the applicable terms agreement entered into between the
Representatives and the Company of which this Underwriting Agreement is Annex A
thereto (the "Terms Agreement"). With respect to any particular Terms Agreement,
the Terms Agreement, together with the provisions hereof incorporated therein by
reference, is herein referred to as the "Agreement." Terms defined in the Terms
Agreement are used herein as therein defined.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3, including a prospectus,
relating to certain of the Senior and/or Subordinated Securities (including the
Underwritten Securities) and the offering thereof from time to time in
accordance with Rule 415 under the Securities Act of 1933, as amended (the "1933
Act"), and has filed such amendments thereto as may have been required to the
date of the Terms Agreement. Such registration statement as amended has been
declared effective by the Commission, and the Senior Indenture has been
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). As
provided in Section 3(a), a prospectus
<PAGE>
supplement reflecting the terms of the Underwritten Securities,
the terms of the offering thereof and the other matters set forth therein
has been prepared and will be filed pursuant to Rule 424 under the 1933 Act.
Such prospectus supplement, in the form first filed after the date
hereof pursuant to Rule 424, is herein referred to as the "Prospectus
Supplement." Such registration statement, as amended at the date hereof,
including the exhibits thereto and the documents incorporated by reference
therein, is herein called the "Registration Statement," and the basic prospectus
included therein relating to all offerings of securities under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus," except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic prospectus
as so amended or supplemented and as supplemented by the Prospectus Supplement,
in either case including the documents filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
that are incorporated by reference therein. The term "preliminary prospectus
supplement" means each preliminary prospectus supplement specifically relating
to the Underwritten Securities and previously filed pursuant to Rule 424(b),
including all documents incorporated by reference therein filed under the 1934
Act. If the Company files a registration statement with the Commission pursuant
to Rule 462(b) (the "Rule 462(b) Registration Statement") of the rules and
regulations of the 1933 Act (the "1933 Act Regulations"), then, after such
filing, all references to the "Registration Statement" shall also be deemed to
include the Rule 462(b) Registration Statement.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Representatives and to each Underwriter named in a Terms
Agreement as of the date thereof and as of the related Closing Time (each a
"Representation Date"), as follows:
(a) The Company meets the requirements for use of Form S-3 under
the 1933 Act and the Registration Statement and the Prospectus, at the
time the Registration Statement became effective and as of the
applicable Representation Date, complied and will comply in all material
respects with the requirements of the 1933 Act, the 1933 Act Regulations
and the 1939 Act and the rules and regulations of the Commission under
the 1939 Act (the "1939 Act Regulations"). The Registration Statement,
at the time the Registration Statement became effective and as of the
applicable Representation Date, did not, 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. The Prospectus, at the time the Registration Statement
became effective and as of the applicable Representation Date, did not,
and will not, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading; except that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made
2
<PAGE>
in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter
through the Representatives expressly for use in the Registration
Statement or Prospectus or to that part of the Registration Statement
which shall constitute the Statement of Eligibility and Qualification
under the 1939 Act (Form T-1) of the Trustees under the Senior
Indenture.
(b) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they
were or hereafter are filed with the Commission, complied and will
comply, as the case may be, in all material respects with the
requirements of the 1934 Act and the rules and regulations thereunder
(the "1934 Act Regulations") and, when read together and with the other
information in the Prospectus, at the time the Registration Statement
became effective and at the time any amendments thereto become effective
or hereafter during the period specified in Section 3(b), did not 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, in the light of the circumstances under which they
are made, not misleading.
(c) (A) _____________________, who have certified the financial
statements of the Company and the schedules included or incorporated by
reference in the Registration Statement and Prospectus, and (B)
_________________, who have certified the financial statements of
NSK-Warner Kabushiki Kaisha ("NSK-Warner") included or incorporated by
reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(d) The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and
any Terms Agreement; and each of this Agreement and any Terms Agreement
has been duly authorized, executed and delivered by the Company.
(e) The consolidated financial statements and the related notes
of the Company and its Subsidiaries (as defined below) included or
incorporated by reference in the Registration Statement present fairly
the consolidated financial position of the Company and its Subsidiaries
as of the dates indicated and the consolidated results of operations and
cash flows of the Company and its Subsidiaries for the periods
specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as set forth in the notes
thereto) and subject, in the case of any interim statements, to normal
year-end audit adjustments. The financial statement schedules, if any,
included in the Registration Statement present fairly the information
required to be stated therein. The selected financial data included or
incorporated by reference in the Prospectus
3
<PAGE>
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited consolidated financial
statements included or incorporated by reference in the Registration
Statement. The pro forma financial information included or
incorporated by reference in the Prospectus present fairly the
information shown therein, has been prepared in accordance with the
applicable requirements of Rule 11-02 of Regulation S-X, has been
properly compiled on the pro forma bases described therein, and, in
the opinion of the Company, the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein.
(f) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware with
corporate power and authority under such laws to own, lease and operate
its properties and conduct its business as described in the Prospectus.
The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which
it owns or leases property of a nature, or transacts business of a type,
that would make such qualification necessary, except to the extent that
the failure to so qualify or be in good standing would not have a
material adverse effect on the Company and the Subsidiaries, considered
as one enterprise.
(g) The Company's only subsidiaries are set forth in Annex B
hereto (each such corporation is referred to herein as a "Subsidiary"
and, collectively, the "Subsidiaries"). Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation with corporate power and authority
under such laws to own, lease and operate its properties and conduct its
business; and each Subsidiary is duly qualified to transact business as
a foreign corporation and is in good standing in each other jurisdiction
in which it owns or leases property of a nature, or transacts business
of a type, that would make such qualification necessary, except to the
extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and the Subsidiaries,
considered as one enterprise. All of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued
and are fully paid and non-assessable and are owned by the Company,
directly or through one or more of the Subsidiaries, in the percentages
set forth in Exhibit B hereto, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(h) The Company had at the date indicated a duly authorized and
outstanding capitalization as set forth in the Prospectus under the
caption "Capitalization."
4
<PAGE>
(i) The Indenture has been duly authorized by the Company, will
be substantially in the form heretofore delivered to you and, when duly
executed and delivered by the Company and the Trustee, will constitute a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law); and the Indenture conforms to the descriptions
thereof in the Prospectus.
(j) The Underwritten Securities have been duly authorized for
issuance and sale pursuant to this Agreement (or will have been so
authorized prior to each issuance of Underwritten Securities) and, when
executed, authenticated, issued and delivered in the manner provided for
in the Indenture and sold and paid for as provided in this Agreement,
the Underwritten Securities will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or law); and
the Underwritten Securities, the Senior Indenture and the Subordinated
Indenture conform to the descriptions thereof in the Prospectus.
(k) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.
(l) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as described in
the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the condition (financial or otherwise),
results of operations, business affairs or business prospects of the
Company and the Subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, (ii) any transaction
entered into by the Company or any Subsidiary, other than in the
ordinary course of business, that is material to the Company and the
Subsidiaries, considered as one enterprise, or (iii) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock, other than regular quarterly cash dividends declared or
paid on its Common Stock.
5
<PAGE>
(m) Neither the Company nor any of its Subsidiaries is in
violation of its certificate of incorporation or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse effect
on the condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise. The execution and delivery
of this Agreement and the Indenture by the Company, the issuance and
delivery of the Underwritten Securities, the consummation by the Company
of the transactions contemplated in this Agreement and in the
Registration Statement and compliance by the Company with the terms of
this Agreement and the Indenture, have been duly authorized by all
necessary corporate action on the part of the Company and do not violate
and will not result in any violation of the certificate of incorporation
or by-laws of the Company or any Subsidiary, and do not and will not
conflict with, or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary under (i) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
to which the Company or any Subsidiary is a party or by which any of
them may be bound or to which any of their properties may be subject,
except for such conflicts, breaches or defaults or liens, charges or
encumbrances that in the aggregate would not have a material adverse
effect on the condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise or (ii) any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
respective properties, except for such conflicts, breaches or defaults
or liens, charges or encumbrances that in the aggregate would not have a
material adverse effect on the condition (financial or otherwise),
results of operations, business affairs or business prospects of the
Company and the Subsidiaries, considered as one enterprise.
(n) No authorization, approval, consent or license of, or any
material filing with, any government, governmental instrumentality or
court, domestic or foreign (other than under the 1933, the 1933 Act
Regulations, the 1939 Act and the securities or Blue Sky laws of the
various states), is legally required for the valid authorization,
issuance, sale and delivery of the Underwritten Securities or for the
execution, delivery or performance of the Indenture by the Company.
(o) Except as disclosed or incorporated by reference in the
Prospectus, there is no action, suit or proceeding before or by any
government, governmental instrumentality
6
<PAGE>
or court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary that is
required to be disclosed in the Prospectus or that could result in any
material adverse change in the condition (financial or otherwise),
results of operations, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise, or that
could reasonably be expected to adversely affect the consummation of
the transactions contemplated by this Agreement.
(p) There are no contracts or documents of a character required
pursuant to the 1933 Act to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described and filed as required.
(q) The Company and the Subsidiaries each has good and marketable
title to all properties and assets described in the Prospectus as owned
by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as (i) are described in the Prospectus or (ii)
are neither material in amount nor materially significant in relation to
the business of the Company and the Subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of
the Company and the Subsidiaries, considered as one enterprise, and
under which the Company or any Subsidiary holds properties described in
the Prospectus, are in full force and effect, and neither the Company
nor any Subsidiary has any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of such corporation to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(r) The Company and the Subsidiaries each owns, possesses or has
obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations, and has made all
filings with all governmental authorities, necessary to own or lease, as
the case may be, and to operate its properties and to carry on its
business as presently conducted, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to revocation
or modification of any such licenses, permits, certificates, consents,
orders, approvals or authorizations, which, singly or in the aggregate,
if not so owned, possessed or obtained or the subject of an unfavorable
ruling, decision or finding, could materially adversely affect the
condition (financial or otherwise), results of operations, business
affairs or business prospects of the Company and the Subsidiaries,
considered as one enterprise.
(s) The Company and the Subsidiaries each owns or possesses, or
can acquire on reasonable terms, adequate patents, patent licenses,
trademarks, service marks and trade names necessary to carry on its
business as presently conducted, and neither the Company nor any
Subsidiary has received any notice of infringement of or conflict with
7
<PAGE>
asserted rights of others with respect to any patents, patent licenses,
trademarks, service marks or trade names that in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could reasonably
be expected to materially adversely affect the condition (financial or
otherwise), results of operations, business affairs or business
prospects of the Company and the Subsidiaries, considered as one
enterprise.
(t) Except as disclosed in the Prospectus, to the best knowledge
of the Company, no labor problem exists with its employees or with
employees of the Subsidiaries or is imminent that could reasonably be
expected to materially adversely affect the Company and the
Subsidiaries, considered as one enterprise and, to the knowledge of the
Company, except as disclosed in the Prospectus, the Company is not aware
of any material existing or imminent labor dispute by the employees of
any of its or the Subsidiaries' principal customers that could be
expected to materially adversely affect the Company and the
Subsidiaries, considered as one enterprise.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Underwritten Securities.
(v) Except as disclosed in or incorporated by reference in the
Prospectus and except as would not individually or in the aggregate have
a material adverse effect on the condition (financial or otherwise),
results of operations, business affairs or business prospects of the
Company and the Subsidiaries, considered as one enterprise, (i) the
Company and the Subsidiaries are each in compliance with all applicable
Environmental Laws, (ii) the Company and the Subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(iii) there are no pending or threatened Environmental Claims against
the Company or any Subsidiary, and (iv) there are no circumstances with
respect to any property or operations of the Company or the Subsidiaries
that could reasonably be anticipated to form the basis of an
Environmental Claim against the Company or the Subsidiaries.
For purposes of this Agreement, the following terms shall have
the following meanings: "Environmental Law" means any United States (or
other applicable jurisdiction's) federal, state, local or municipal
statute, law, rule, regulation, ordinance, code, policy or rule of
common law and any judicial or administrative interpretation thereof
including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or any chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority. "Environmental Claims" means
any and all administrative, regulatory or judicial actions,
8
<PAGE>
suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law.
(w) All United States federal income tax returns of the Company
(and any of the Subsidiaries, if not included in the Company's U.S.
consolidated federal income tax return) required by law to be filed have
been properly prepared and filed, and all taxes shown on such returns or
otherwise assessed which are due and payable have been paid. All of the
Company's United States federal tax returns (and any of the
Subsidiaries' tax returns if applicable) for taxable periods through and
including the 1992 federal taxable year have been audited by the
Internal Revenue Service or the statute of limitations for such taxable
years has run and thus, all taxes for such periods have been finally
determined (excluding the effect of any net operating loss or credit
carryovers to such periods). All other tax returns of the Company and
the Subsidiaries required to be filed pursuant to applicable foreign,
state, local or other law have been filed, except insofar as the failure
to file such returns would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and the Subsidiaries, considered as
one enterprise. The Company and the Subsidiaries have paid (or there has
been paid on their behalf) all taxes which are due and for which no tax
return is required. There are no liens on any of the Company's or the
Subsidiaries' assets for taxes, other than for taxes which have accrued
but which are not yet due and payable. Neither the Company nor any
Subsidiary is liable for any taxes that are imposed on any other person
or corporation (other than for taxes imposed on the Company or the
Subsidiaries), except as set forth in Treasury Regulation 1.1502-6 with
respect to prior consolidated groups of which the Company or its
subsidiaries were members.
(x) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan"
as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) maintained or contributed to by the
Company or any Subsidiary, or with respect to which the Company or any
Subsidiary could incur any liability under ERISA (collectively, the
"Benefit Plans"), no event has occurred and, to the best knowledge of
the Company, there exists no condition or set of circumstances, in
connection with which the Company or any Subsidiary could be subject to
any liability under the terms of such Benefit Plans, applicable law
(including, without limitation, ERISA and the Internal Revenue Code of
1986, as amended (the "Code")) or any applicable agreement (including,
without limitation, the agreement dated as of January 14, 1993 (the
"PBGC Agreement"), among the Pension Benefit Guaranty Corporation (the
"PBGC"), the Company and Borg-Warner Security Corporation ("BWSC")),
that could materially adversely affect the condition (financial or
otherwise), results of operations, business affairs or business
prospects of the Company and the Subsidiaries, considered as one
enterprise. The Company is in compliance in all respects with its
obligations under the PBGC Agreement.
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<PAGE>
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to the Representatives or counsel for the Underwriters in
connection with an offering of Underwritten Securities shall be deemed a
representation and warranty by the Company to each Underwriter participating in
such offering as to the matters covered thereby.
SECTION 2. PURCHASE AND SALE. The obligations of the Underwriters to
purchase, and the Company to sell, the Underwritten Securities shall be
evidenced by the Terms Agreement. The Terms Agreement specifies the principal
amount of the Senior Securities or Subordinated Securities, or both, the names
of the Underwriters participating in the offering (subject to substitution as
provided in Section 10 hereof) and the principal amount of Underwritten
Securities which each Underwriter severally has agreed to purchase, the purchase
price to be paid by the Underwriters for the Underwritten Securities, the
initial public offering price, if any, of the Underwritten Securities, any
delayed delivery arrangements and any terms of the Underwritten Securities not
already specified in the Indenture pursuant to which they are being issued
(including, but not limited to, designations, denominations, current ratings,
interest rates or formulas and payment dates, maturity dates, redemption
provisions and sinking fund requirements).
The several commitments of the Underwriters to purchase Underwritten
Securities pursuant to the Terms Agreement shall be deemed to have been made on
the basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth.
Payment of the purchase price for, and delivery of, the Underwritten
Securities to be purchased by the Underwriters shall be made at the offices of
___________________, ___ __________________________________________, or at such
other place as shall be agreed upon by the Representatives and the Company, at
10:00 A.M., New York City time, on the third business day (unless postponed in
accordance with the provisions of Section 10) following the date of the Terms
Agreement or such other time as shall be agreed upon by the Representatives and
the Company (each such time and date being referred to as a "Closing Time").
Unless otherwise specified in the Terms Agreement, payment shall be made to the
Company by wire transfer in immediately available funds against delivery to the
Representatives for the respective accounts of the Underwriters of the
Underwritten Securities to be purchased by them. The Underwritten Securities
shall be in such denominations ($1,000 or an integral multiple thereof) and
registered in such names as the Representatives may request in writing at least
two business days before the applicable Closing Time. The Underwritten
Securities, which may be in temporary form, will be made available in New York
City for examination and packaging by the Representatives on or before the first
business day prior to Closing Time.
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<PAGE>
If authorized by the Terms Agreement, the Underwriters named therein may
solicit offers to purchase Underwritten Securities from the Company pursuant to
delayed delivery contracts ("Delayed Delivery Contracts") substantially in the
form of Annex C hereto with such changes therein as the Company may approve. As
compensation for arranging Delayed Delivery Contracts, the Company will pay to
the Representatives at Closing Time, for the accounts of the Underwriters, a fee
equal to that percentage of the principal amount of Senior Securities for which
Delayed Delivery Contracts are made at Closing Time as is specified in the Terms
Agreement. Any Delayed Delivery Contracts are to be with institutional investors
of the types set forth in the Prospectus. At Closing Time the Company will enter
into Delayed Delivery Contracts (for not less than the minimum principal amount
of Senior Securities per Delayed Delivery Contract specified in the applicable
Terms Agreement) with all purchasers proposed by the Underwriters and previously
approved by the Company as provided below, but not for an aggregate principal
amount of Senior Securities in excess of that specified in the Terms Agreement.
The Underwriters will not have any responsibility for the validity or
performance of Delayed Delivery Contracts.
The Representatives shall submit to the Company, at least three business
days prior to Closing Time, the names of any institutional investors with which
it is proposed that the Company will enter into Delayed Delivery Contracts and
the principal amount of Senior Securities to be purchased by each of them, and
the Company will advise the Representatives, at least two business days prior to
Closing Time, of the names of the institutions with which the making of Delayed
Delivery Contracts is approved by the Company and the principal amount of Senior
Securities to be covered by each such Delayed Delivery Contract.
The principal amount of Senior Securities agreed to be purchased by the
respective Underwriters pursuant to the Terms Agreement shall be reduced by the
principal amount of Senior Securities covered by Delayed Delivery Contracts, as
to each Underwriter as set forth in a written notice delivered by the
Representatives to the Company; provided, however, that the total principal
amount of Senior Securities to be purchased by all Underwriters shall be in the
total amount of Senior Securities covered by the applicable Terms Agreement,
less the principal amount of Senior Securities covered by Delayed Delivery
Contracts.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with the
Representatives, and with each Underwriter participating in the offering of
Underwritten Securities, as follows:
(a) Immediately following the execution of the Terms Agreement,
the Company will prepare a Prospectus Supplement setting forth the
principal amount of Senior Securities covered thereby and their terms
not otherwise specified in the Senior Indenture, pursuant to which the
Senior Securities are being issued, the names of the Underwriters
participating in the offering and the principal amount of Senior
Securities
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<PAGE>
which each severally has agreed to purchase, the names of the
Underwriters acting as co-managers in connection with the offering,
the price at which the Underwritten Securities are to be purchased by
the Underwriters from the Company, the initial public offering price,
the selling concession and reallowance, if any, any delayed delivery
arrangements, and such other information as the Representatives and
the Company deem appropriate in connection with the offering of the
Underwritten Securities. The Company will promptly transmit copies of
the Prospectus to the Commission for filing pursuant to Rule 424 of
the Regulations and will furnish to the Underwriters named therein as
many copies of any preliminary prospectus supplement and such
Prospectus as the Representatives shall reasonably request.
(b) At any time when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Underwritten Securities,
the Company will notify the Representatives immediately, and confirm
such notice in writing, of (i) the effectiveness of any amendment to the
Registration Statement, (ii) the mailing or the delivery to the
Commission for filing of any supplement to the Prospectus or any
document to be filed pursuant to the 1934 Act, (iii) the receipt of any
comments from the Commission with respect to the Registration Statement,
the Prospectus or any supplement to the Prospectus, (iv) any request by
the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information,
and (v) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order presenting
or suspending the use of any preliminary prospectus supplement, or of
the qualification of the Underwritten Securities for offering or sale in
any jurisdiction, or of the institution or threatening of any proceeding
for any such purposes. The Company will use every reasonable effort to
prevent the issuance of any such stop order or of any order preventing
or suspending such use and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(c) The Company has furnished or will furnish to the
Representatives and counsel for the Representatives, without charge, as
many copies (including at least one signed copy) of the Registration
Statement (as originally filed) and of all amendments thereto, whether
filed before or after the Registration Statement becomes effective,
copies of all exhibits and documents filed therewith (including
documents incorporated by reference into the Prospectus pursuant to Item
12 and Rule 412) and signed copies of all consents and certificates of
experts, as you may reasonably request and has furnished or will furnish
to you, for each other Underwriter, one conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(including documents incorporated by reference into the Prospectus but
without exhibits).
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<PAGE>
(d) The Company will comply in all material respects with the
1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to
permit the completion of the distribution of the Underwritten Securities
as contemplated in this Agreement and in the Prospectus. If, at any time
when a prospectus is required by the 1933 Act or the 1933 Regulations to
be delivered in connection with sales of the Underwritten Securities,
any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or counsel for
the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the opinion of either such counsel, at
any such time to amend the Registration Statement or amend or supplement
the Prospectus in order to comply with the requirements of the 1933 Act
or the 1933 Act Regulations, the Company will promptly upon becoming
aware of such event or condition prepare and file with the Commission
such amendment or supplement, whether by filing documents pursuant to
the 1934 Act or otherwise, as may be necessary to correct such untrue
statement or omission or to make the Registration Statement and
Prospectus comply with such requirements.
(e) The Company will use its best efforts in cooperation with the
Underwriter to qualify the Underwritten Securities for offering and sale
under the applicable securities laws of such states and other
jurisdictions as the Representatives may designate; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer
in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will
use its best efforts in cooperation with the Underwriters to maintain
such qualifications in effect for as long as may be required for the
distribution of the Underwritten Securities. The Company will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Underwritten Securities have been qualified as
above provided. The Company will also supply the Representatives with
such information as is necessary for the determination of the legality
of the Underwritten Securities for investment under the laws of such
jurisdictions as the Representatives may request.
(f) With respect to each sale of Underwritten Securities, the
Company will make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period
covered thereby, earning statements of the Company (in form complying
with the provisions of Rule 158 of the 1933 Act Regulations) covering a
period of 12 months beginning, in each case, not later than the first
day of the
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<PAGE>
Company's fiscal quarter next following the "effective date" (as
defined in Rule 158) of the Registration Statement relating to
Underwritten Securities.
(g) The Company will use the net proceeds received by it from the
sale of the Underwritten Securities in the manner specified in the
Prospectus under the caption "Use of Proceeds."
(h) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act in connection with the sale
of the Underwritten Securities, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of
the 1934 Act.
(i) Between the date of the Terms Agreement or the Closing Time
with respect to the Underwritten Securities covered thereby, the Company
will not, without the Representatives' prior consent, offer or sell, or
enter into any agreement to sell, any debt securities issued or
guaranteed by the Company with a maturity of more than one year in any
public offering (other than the Underwritten Securities), including
additional Senior Securities. This limitation is not applicable to the
public offering of tax-exempt securities guaranteed by the Company.
(j) At any time when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Underwritten Securities,
the Company will give the Representatives notice of its intention to
file any amendment to the Registration Statement or any amendment or
supplement to the Prospectus, whether pursuant to the 1934 Act, the 1933
Act or otherwise, will furnish the Representatives with copies of any
such amendment or supplement or other documents proposed to be filed a
reasonable time in advance of filing, and will not file any such
amendment or supplement or other documents in a form to which the
Representatives or counsel for the Underwriters shall reasonably object
in writing.
(k) If the Company elects to rely upon Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission
in compliance with Rule 462(b) and pay the applicable fees in accordance
with Rule 111 of the 1933 Act Regulations by the earlier of (i) 10:00
P.M. Eastern time on the date of the Terms Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b).
SECTION 4. PAYMENT OF EXPENSES. The Company will pay and bear all costs
and expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including, financial statements and exhibits), as
originally filed and as amended, any preliminary prospectus and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the
14
<PAGE>
Underwriters, (ii) the preparation, printing and distribution of this Agreement,
the Terms Agreement, the Indenture and the Underwritten Securities and the Blue
Sky Survey (which shall not be typeset), (iii) the delivery of the Underwritten
Securities to the Underwriters, (iv) the fees and disbursements of the Company's
counsel and accountants, (v) the qualification of the Underwritten Securities
under applicable securities laws in accordance with Section 3(e) and any filing
for review of the offering with the National Association of Securities Dealers,
Inc., including filing fees and the reasonable fees and disbursements of counsel
for the Underwriters solely in connection therewith and in connection with the
preparation of any Blue Sky Survey and Legal Investment Survey, (vi) the listing
fees and expenses incurred in connection with listing the Underwritten
Securities on the New York Stock Exchange, (vii) any fees charged by rating
agencies for rating the Underwritten Securities and (viii) the fees and expenses
of the Trustee, including the fees and disbursements of counsel for the Trustee,
in connection with the Indenture and the Underwritten Securities.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse
the Underwriters named in the Terms Agreement for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of Shearman & Sterling
as counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. In addition to the
execution and delivery of the Terms Agreement, the obligations of the several
Underwriters to purchase and pay for the Underwriters Securities that they have
respectively agreed to purchase hereunder are subject to the accuracy of the
representations and warranties of the Company as of each Representation Date
contained herein or in certificates of any officer of the Company or any
Subsidiary delivered pursuant to the provisions hereof, to the performance by
the Company of its obligations hereunder and to the following further
conditions:
(a) At the applicable Closing Time, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company,
shall be contemplated by the Commission.
(b) At the applicable Closing Time, the Representatives shall
have received:
(1) A signed opinion of Wachtell, Lipton, Rosen & Katz,
special counsel for the Company, dated as of Closing Time,
together with signed or reproduced copies of such opinion for
each of the other Underwriters, in form and substance reasonably
satisfactory to counsel for the Underwriters, in the form set
forth in Exhibit A hereto.
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<PAGE>
(2) A signed opinion of Laurene H. Horiszny, Esq., Vice
President, Secretary and General Counsel for the Company, dated
as of the Closing Time, together with signed or reproduced copies
of such opinion for each of the other Underwriters, in form and
substance reasonably satisfactory to counsel for the
Underwriters, in the form set forth in Exhibit B hereto.
(3) A signed opinion of NSK-Warner's Japanese counsel,
dated as of the Closing Time, together with signed or reproduced
copies of such opinion for each of the other Underwriters, in
form and substance reasonably satisfactory to counsel for the
Underwriters, in the form set forth in Exhibit C hereto.
(4) The favorable opinion of ___________________, counsel
for the Underwriters, dated as of the Closing Time, together with
signed or reproduced copies of such opinion for each of the other
Underwriters, to the effect that the opinions delivered pursuant
to Section 5(b)(i), 5(b)(2) and 5(b)(3) hereof appear on their
face to be appropriately responsive to the requirements of this
Agreement except, specifying the same, to the extent waived by
you, and with respect to the incorporation and legal existence of
the Company, this Agreement, the Indenture, the Registration
Statement, the Prospectus and such other related matters as you
may require. In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the
law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware,
upon the opinions of counsel satisfactory to you. Such counsel
may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Subsidiaries and
certificates of public officials.
(c) At the Closing Time, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall comply in
all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the 1939 Act Regulations, and
neither the Registration Statement nor the Prospectus, as they may then
be amended or supplemented, shall 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, (ii)
there shall not have been, since the respective dates as of which
information is given in the Registration Statement, any material adverse
change in the condition (financial or otherwise), results of operations,
business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise, whether or not arising in
the ordinary course of business, (iii) no action, suit or proceeding at
law or in equity shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary that would be required
to be set forth in the Prospectus other than as set forth therein and no
proceedings shall be pending or, to
16
<PAGE>
the knowledge of the Company, threatened against the Company or any
Subsidiary before or by any federal, state or other commission, board
or administrative agency wherein an unfavorable decision, ruling or
finding could materially adversely affect the condition (financial or
otherwise), results of operations, business affairs or business
prospects of the Company and the Subsidiaries, considered as one
enterprise, other than as set forth in the Prospectus, (iv) the
Company shall have complied with all agreements and satisfied all
conditions set forth in this Agreement on its part to be performed or
satisfied at or prior to the Closing Time and (v) the other
representations and warranties of the Company set forth in Section 1
shall be accurate as though expressly made at and as of the Closing
Time. At the Closing Time, you shall have received a certificate of
the President or a Vice President, and the Treasurer or an Assistant
Treasurer, of the Company, dated as of the Closing Time, to such
effect.
(d) At the time that this Agreement is executed by the Company,
you shall have received from _____________________ a letter, dated such
date, in form and substance satisfactory to you, together with signed or
reproduced copies of such letter for each of the other Underwriters,
confirming that they are independent public accountants with respect to
the Company within the meaning of the 1933 Act and the applicable
published 1933 Act Regulations, and stating in effect that:
(i) in their opinion, the audited financial statements and
the related financial statement schedules included or
incorporated by reference in the Registration Statement and the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933
Act Regulations;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting
of a reading of the unaudited interim consolidated financial
statements of the Company included or incorporated by reference
in the Registration Statement and the Prospectus (collectively,
the "10-Q Financials"), a reading of the latest available
unaudited interim consolidated financial statements of the
Company, a reading of the minutes of all meetings of the
stockholders and directors of the Company and the Subsidiaries
and each Committee of the Company's Board of Directors and of
each Committee of the Board of Directors of any Subsidiary since
_________, ____, inquiries of certain officials of the Company
and the 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:
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<PAGE>
(A) the 10-Q Financials incorporated by reference
in the Registration Statement and the Prospectus do not
comply as to form in all material respects with the
accounting requirements of the 1934 Act and the 1934 Act
Regulations applicable to unaudited financial statements
included in Form 10-Q or any material modifications should
be made to the 10-Q Financials included or incorporated by
reference in the Registration Statement and the Prospectus
for them to be in conformity with generally accepted
accounting principles;
(B) at _________________ and at a specified date
not more than three days prior to the date of this
Agreement, there was any change in the capital stock of
the Company and the Subsidiaries or any decrease in the
consolidated net current assets or stockholders' equity of
the Company and the Subsidiaries or any increase in
long-term debt of the Company and the Subsidiaries, in
each case as compared with amounts shown in the latest
consolidated balance sheet included or incorporated by
reference in the Registration Statement, except in each
case for changes, decreases or increases that the
Registration Statement discloses have occurred or may
occur; or
(C) for the period from _______________ to
_____________ and for the period from _______________ to a
specified date not more than three days prior to the date
of this Agreement, there was any decrease in net sales,
equity in affiliate earnings and other income, earnings
before interest and finance charges and income taxes or
net earnings, in each case as compared with the comparable
period in the preceding year;
(iii) based upon the procedures set forth in clause (ii)
above and a reading of the Selected Historical Financial Data
included in the Registration Statement and a reading of the
financial statements from which certain of such data were
derived, nothing has come to their attention that gives them
reason to believe that the Selected Historical Financial Data
included in the Registration Statement do not comply as to form
in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations, that
the information set forth therein is not fairly stated in
relation to the financial statements from which it was derived or
that the financial statements not included in the Registration
Statement from which certain of such data were derived are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement; and
18
<PAGE>
(iv) they are unable to and do not express any opinion on
the Pro Forma Financial Data (the "Pro Forma Statement") included
or incorporated by reference in the Registration Statement or on
the pro forma adjustments applied to the historical amounts
included in the Pro Forma Statement; however, for purposes of
such letter they have:
(A) read the Pro Forma Statement;
(B) made inquiries of certain officials of the
Company who have responsibility for financial and
accounting matters about the basis for their determination
of the pro forma adjustments and whether the Pro Forma
Statement complies as to form in all material respects
with the applicable accounting requirements of Rule 11-02
of Regulation S-X; and
(C) proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the Pro Forma Statement; and
on the basis of such procedures, and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that the Pro Forma
Statement included or incorporated by reference in the
Registration Statement does not comply as to form in all material
respects with the applicable requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(v) in addition to the procedures referred to in clause
(ii) above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts,
percentages, numerical data and financial information appearing
in the Registration Statement, which have previously been
specified by you and which shall be specified in such letter, and
have compared certain of such items with, and have found such
items to be in agreement with, the accounting and financial
records of the Company.
(e) At the time that this Agreement is executed by the Company,
you shall have received from _________________ a letter, dated such
date, in form and substance satisfactory to you, together with signed or
reproduced copies of such letter for each of the other Underwriters,
confirming that they are independent public accountants with respect to
the NSK-Warner within the meaning of the 1933 Act and applicable
published 1933 Act Regulations, and stating in effect that:
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<PAGE>
(i) in their opinion, the audited financial statements and
the related financial statement schedules for NSK-Warner included
or incorporated by reference in the Registration Statement and
the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations;
(ii) they have read the latest available unaudited interim
consolidated financial statements of NSK-Warner, the minutes of
all meetings of the stockholders and directors of NSK-Warner and
each Committee of the Board of Directors since _____________,
inquired of certain officials of NSK-Warner responsible for
financial and accounting matters, and made such other inquiries
and performed such other procedures as may be specified in such
letter, and officials of NSK-Warner stated that:
(A) at _________________ and at a specified date
not more than three days prior to the date of this
Agreement, there was no change in the common stock of
NSK-Warner or decrease in the net current assets or
stockholders' equity of NSK-Warner or increase in the
notes payable or long-term debt of NSK-Warner, in each
case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the
Registration Statement; or
(B) for the period from _____________ to
_________________ and from _______________ to a specified
date not more than three days prior to the date of this
Agreement, there was no decrease in sales, earnings before
income taxes or net earnings, in each case as compared
with the corresponding period in the preceding year.
(f) At the Closing Time, you shall have received from each of
_____________________ and _________________ a letter, in form and
substance satisfactory to you and dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letters furnished
pursuant to Sections 5(d) and 5(e), respectively, except that the
specified date referred to shall be a date not more than five days prior
to the Closing Time.
(g) Subsequent to the execution and delivery of any Terms
Agreement and prior to the Closing Time, there shall not have been any
downgrading, nor any notice given of any intended or potential
downgrading or of a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities, including the Underwritten Securities, by any "nationally
recognized statistical
20
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rating organization," as such term is defined for purposes of Rule
436(g)(2) under the 1933 Act.
(h) At the applicable Closing Time, counsel for the Underwriters
shall have been furnished with all such documents, certificates and
opinions as they may reasonably request for the purpose of enabling them
to pass upon the issuance and sale of the Underwritten Securities as
herein contemplated and related proceedings or in order to evidence the
accuracy and completeness of any of the representations and warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Underwritten Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
If any of the conditions specified in this Section shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by the Representatives by notice to the Company at any time at
or prior to the applicable Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof. Notwithstanding any such termination, the provisions of Sections 6, 7
and 8 shall remain in effect.
SECTION 6. INDEMNIFICATION OF UNDERWRITERS. (a) (1) The Company agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), and all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of an
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom, of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected
21
<PAGE>
with the written consent of the Company, except as otherwise provided
by Section 6(d); and
(iii) against any and all expense whatsoever, as incurred
(including fees and disbursements of counsel chosen by you), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under (i)
or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(2) Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of an Underwriter
or who controls an Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and who, at the date of this Agreement, is a
director, officer or controlling person of the Company, such indemnity agreement
is subject to the undertaking of the Company in the Registration Statement under
Item 17 thereof.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND ITS OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have otherwise than on
22
<PAGE>
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 6(a) above, counsel to the indemnified parties shall be selected by
the Representatives in the case of parties indemnified pursuant to Sections 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying party or parties be liable
for the fees and expenses of more than one counsel (in addition to any local
counsel) separate from 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.
No indemnifying party shall, without the prior written consent of the
indemnified parties, which consent shall not be unreasonably withheld, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 45 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request for fees and expenses of
counsel prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the
Underwritten Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in
23
<PAGE>
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the
Underwritten Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Underwritten Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact related to information
supplied by the Company or by the Underwriters 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 contribution pursuant to this Section 7 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 Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Underwritten 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 any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the
24
<PAGE>
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The Underwriters' respective obligations to contribute pursuant to this Section
7 are several in proportion to the principal amount of Underwritten Securities
set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements and other
statements of the Company or its officers set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Underwriter or any person
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, and will survive delivery of and payment for the
Underwritten Shares.
SECTION 9. TERMINATION. (a) The Representatives may terminate this
Agreement, by notice to the Company, at any time prior to the applicable Closing
Time (i) if there has been, since the date of the Terms Agreement or since the
respective dates as of which information is given in the Registration Statement,
any material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and the Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States, or any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective adverse change in national or international political,
financial or economic conditions, in each case the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, impracticable to market the Underwritten Securities or
enforce contracts for the sale of the Underwritten Securities, or (iii) if
trading in any securities of the Company has been suspended by the Commission or
the New York Stock Exchange, or if trading generally on the American Stock
Exchange or the New York Stock Exchange or on the Nasdaq has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
by such system or by order of the Commission, the New York Stock Exchange, the
NASD or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal, New York or Illinois authorities. For purposes
of this Section 9(a), the deployment of a Level 1 trading halt by the New York
Stock Exchange in and of itself shall not constitute a material limitation on
trading on such exchanges or by such system.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4.
25
<PAGE>
Notwithstanding any such termination, the provisions of Sections 1, 6, 7 and 8
shall remain in effect.
SECTION 10. DEFAULT. If one or more of the Underwriters participating in
an offering of Senior Securities shall fail at the applicable Closing Time to
purchase the Underwritten Securities that it or they are obligated to purchase
under the applicable Terms Agreement (the "Defaulted Securities"), then the
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, satisfactory to the Company to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and upon
the terms set forth in this Agreement and the applicable Terms Agreement. If,
however, during such 24 hours the shall not have completed such arrangements for
the purchase of all of the Defaulted Securities, then:
(a) if the aggregate principal amount of Defaulted Securities
does not exceed 10% of the aggregate principal amount of the
Underwritten Securities to be purchased pursuant to the Terms Agreement,
the non-defaulting Underwriters named in such Terms Agreement shall be
obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations thereunder bear to the
underwriting obligations of all such non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of the Underwritten
Securities to be purchased pursuant to such Terms Agreement, the Terms
Agreement shall terminate without any liability on the part of any
non-defaulting Underwriters.
As used in this Section only, the aggregate amount or aggregate
principal amount of Underwritten Securities shall mean the aggregate principal
amount of any Senior Securities or Subordinated Securities included in the
relevant Underwritten Securities.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default under this Agreement and
the Terms Agreement.
In the event of a default by any Underwriter or Underwriters as set
forth in this Section, either the Representatives or the Company shall have the
right to postpone the applicable Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section.
SECTION 11. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by
26
<PAGE>
any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Representatives at ___________________________ notices to the
Company shall be directed to it at 200 South Michigan Avenue, Chicago, Illinois
60604, Attention: General Counsel.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Company and any Underwriter who becomes a party hereto, and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto or thereto and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Underwritten Securities from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed by the
laws of the State of New York. Specified times of the day refer to New York City
time.
SECTION 14. COUNTERPARTS. The Terms Agreement may be executed in one or
more counterparts, and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
27
<PAGE>
ANNEX A
BORG-WARNER AUTOMOTIVE, INC.
(A DELAWARE CORPORATION)
$ ___,000,000
__ % SENIOR NOTES DUE 20__
TERMS AGREEMENT
Dated: ________ __ , 1999
Borg-Warner Automotive, Inc.
200 South Michigan Avenue
Chicago, Illinois 60604
Dear Sirs:
We (the "Representatives") understand that Borg-Warner Automotive, Inc.,
a Delaware corporation (the "Company"), proposes to issue and sell $ _______
aggregate principal amount of its __% Senior Notes due 20__ (the "Notes due
20__") (collectively, the "Underwritten Securities"). Subject to the terms and
conditions set forth herein or incorporated by reference herein, the Company has
agreed to sell to the underwriters named below (the "Underwriters"), and the
Underwriters have agreed, severally and not jointly, to purchase from the
Company, the amounts of Notes due 20__ set forth below opposite their respective
names at the purchase prices set forth below.
PRINCIPAL
AMOUNT
OF NOTES
UNDERWRITER DUE 20__
- --------------------------------------------- -----------------
Total........................................
The Underwritten Securities shall have the following terms:
Title of Debt Securities: __% Senior Notes due 20__
<PAGE>
A-2
Currency: U.S. dollars
Principal amount to be
issued:
$ __________ Notes due 20__
Current ratings: Moody's Investors Service, Inc. --;
Standard & Poor's Corporation --.
Interest rate: __% Senior Notes due 20__.
Spread:
Interest Payment Dates: __________ and _______ __, beginning __, 1999
Regular Record Dates: __________ or _______
Stated Maturity Dates: Senior Notes due 20__: __, 20__
Optional Redemption: Redemption at option of Company, in whole at
any time, or in part from time to time, at a redemption
price equal to the greater of : (1) 100% of such Notes
principal amount and (2) the sum of the present values of
the remaining scheduled payments of principal and interest
discounted to the date of redemption on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus __ basis points in the
case of the Notes due 20__, accrued and unpaid interest on
the principal amount being redeemed to such redemption
date.
Sinking fund requirements: None
Delayed Delivery Contracts: authorized
Date of delivery:
Minimum contract:
Maximum aggregate principal amount:
Fee: %
Initial public offering price for Notes due 20__: __%, plus accrued interest, if
any, or amortized original issue discount, if any, from __, 1999.
<PAGE>
A-3
Purchase price for Notes due 20__: __%, plus accrued interest, if any, or
amortized original issue discount, if any, from __, 1999 (payable in
immediately available funds).
Form: Book-entry represented by global securities deposited with The
Depository Trust Company.
Ranking: Senior, unsecured obligations of the Company.
Closing Date and Location: __, 1999, New York, New York.
All the provisions contained in the document attached as Annex A hereto
entitled "Borg-Warner Automotive, Inc.--Debt Securities--Underwriting Agreement
Basic Provisions" are hereby incorporated by reference in their entirety herein
and shall be deemed to be a part of this Terms 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.
<PAGE>
A-4
If the foregoing is in accordance with your understanding of our
agreement, please sign a copy of this Terms Agreement in the space set forth
below and return the signed copy to us.
Very truly yours,
By: _____________________________
By ________________________________
Name:
Title:
By:________________________________
By _______________________________
Name:
Title:
For themselves and as Representatives
of the other Underwriters named
herein.
Accepted:
BORG-WARNER AUTOMOTIVE, INC.
By _________________________________
Name:
Title:
<PAGE>
ANNEX C
BORG-WARNER AUTOMOTIVE, INC.
(A DELAWARE CORPORATION)
[TITLE OF SECURITIES]
DELAYED DELIVERY CONTRACT
, 19
BORG-WARNER AUTOMOTIVE, INC.
200 South Michigan Avenue
Chicago, Illinois 60604
Attention:
Dear Sirs:
The undersigned hereby agrees to purchase from Borg-Warner Automotive, Inc.
(the "Company"), and the Company agrees to sell to the undersigned on ______ 19
("Delivery Date"),__________ principal amount of the Company's [insert title of
security] (the "Securities"), offered by the Company's Prospectus dated _______,
19 , as supplemented by its Prospectus Supplement dated _________, 19 , receipt
of which is hereby acknowledged at a purchase price of [ ]% of the principal
amount thereof, plus accrued interest from ________, 19 , to the Delivery Date,
and on the further terms and conditions set forth in this contract.
Payment for the Securities which the undersigned has agreed to purchase
on the Delivery Date shall be made to the Company or its order by certified or
official bank check in New York Clearing House funds at the office of, on the
Delivery Date, upon delivery to the undersigned of the Securities to be
purchased by the undersigned in definitive form and in such denominations and
registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than three full
business days prior to the Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for Securities on the Delivery Date shall be subject only to the conditions that
(1) the purchase of Securities to be made by the undersigned shall not on the
Delivery Date be prohibited under the laws of the jurisdiction to which the
undersigned is subject and (2) the Company, on or before , 19 , shall have sold
to the Underwriters of the Securities (the "Underwriters") such principal amount
of the Securities as is to be sold to them pursuant to the Terms Agreement dated
, 19 between the Company and the Underwriters. The obligation of the undersigned
to take delivery of and make payment for Securities shall not be affected by the
failure of any purchaser to take delivery of and make payments for Securities
pursuant to other contracts similar to this contract. The undersigned represents
and warrants to you that its investment in the Securities is not, as of
<PAGE>
C-2
the date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and which govern such investment.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
By the execution hereof, the undersigned represents and warrants to the
Company that all necessary corporate action for the due execution and delivery
of this contract and the payment for and purchase of the Securities has been
taken by it and no further authorization or approval of any governmental or
other regulatory authority is required for such execution, delivery, payment or
purchase, and that, upon acceptance by the Company and mailing or delivery of a
copy as provided below, this contract will constitute a valid and binding
agreement of the undersigned in accordance with its terms.
This contract will inure to the benefit of and binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that the Company will not accept Delayed Delivery
Contracts for an aggregate principal amount of Securities in excess of $ and
that the acceptance of any Delayed Delivery Contract is in the Company's sole
discretion and, without limiting the foregoing, need not be on a first-come,
first-served basis. If this contract is acceptable to the Company, it is
requested that the Company sign the form of acceptance on a copy hereof and mail
or deliver a signed copy hereof to the undersigned at its address set forth
below. This will become a binding contract between the Company and the
undersigned when such copy is so mailed or delivered.
This Agreement shall be governed by the laws of the State of New York.
Yours very truly,
______________________________________
(NAME OF PURCHASER)
BY _________________________________
(TITLE)
_________________________________
_________________________________
(ADDRESS)
<PAGE>
C-3
Accepted as of the date first above written.
Borg-Warner Automotive, Inc.
By ___________________________________
(TITLE)
PURCHASER--PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the Representatives of the Purchaser
with whom details of delivery on the Delivery Date may be discussed are as
follows: (Please print.)
TELEPHONE NO.
(INCLUDING
NAME...................................AREA CODE)
_____ ___________
EXHIBIT 4.1
BORG-WARNER AUTOMOTIVE, INC.
TO
----------------------------------
Trustee
Indenture
Dated as of , 1999
<PAGE>
BORG-WARNER AUTOMOTIVE, INC.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of ____________, 1999
Trust Indenture
Act Section Indenture Section
ss.310(a)(1) .........................................607(a)
(a)(2) .........................................607(a)
(b) .........................................607(b), 608
ss.312(c) .........................................701
ss.313(a) .........................................702
ss.314(a) .........................................703
(a)(4) .........................................1004
(c)(1) .........................................102
(c)(2) .........................................102
(e) .........................................102
ss.315(b) .........................................601
ss.316(a)(last
sentence) .........................................101("Outstanding")
(a)(1)(A) .........................................502, 512
(a)(1)(B) .........................................513
(b) .........................................508
(c) .........................................104(e)
ss.317(a)(1) .........................................503
(a)(2) .........................................504
(b) .........................................1003
ss.318(a) .........................................111
<PAGE>
TABLE OF CONTENTS
Page
PARTIES.................................................................... 1
RECITALS OF THE COMPANY.................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.................................................. 1
Act.......................................................... 2
Additional Amounts........................................... 2
Affiliate.................................................... 2
Attributable Indebtedness.................................... 2
Authenticating Agent......................................... 2
Authorized Newspaper......................................... 3
Bearer Security.............................................. 3
Board of Directors........................................... 3
Board Resolution............................................. 3
Business Day................................................. 3
CEDEL S.A.................................................... 3
Commission................................................... 3
Common Depositary............................................ 3
Company...................................................... 3
Company Request or Company Order............................. 4
Consolidated Net Tangible Assets............................. 4
Consolidated Net Worth....................................... 4
Conversion Date.............................................. 4
Conversion Event............................................. 4
Corporate Trust Office....................................... 4
corporation.................................................. 4
coupon....................................................... 4
Currency..................................................... 5
Current Assets............................................... 5
(i)
<PAGE>
Page
Current Liabilities.......................................... 5
Debt......................................................... 5
Default...................................................... 5
Defaulted Interest........................................... 5
Dollar or $.................................................. 5
Dollar Equivalent of the Currency Unit....................... 5
Dollar Equivalent of the Foreign Currency.................... 5
ECU.......................................................... 5
Election Date................................................ 5
Euroclear.................................................... 5
European Communities......................................... 5
European Monetary System..................................... 5
Event of Default............................................. 6
Exchange Date................................................ 6
Exchange Rate Agent.......................................... 6
Exchange Rate Officer's Certificate.......................... 6
Extension Notice............................................. 6
Extension Period............................................. 6
Federal Bankruptcy Code...................................... 6
Final Maturity............................................... 6
Foreign Currency............................................. 6
Government Obligations....................................... 6
Holder...................................................... 7
Indenture.................................................... 7
Indexed Security............................................. 7
Industrial Development Bonds................................. 7
interest..................................................... 7
Interest Payment Date........................................ 8
Lien......................................................... 8
Market Exchange Rate......................................... 8
Maturity..................................................... 8
Non-Recourse Indebtedness.................................... 8
Officers' Certificate........................................ 9
Opinion of Counsel........................................... 9
Optional Reset Date.......................................... 9
Original Issue Discount Security............................. 9
Original Stated Maturity..................................... 9
Outstanding.................................................. 9
(ii)
<PAGE>
Page
Paying Agent................................................. 10
Person....................................................... 10
Place of Payment............................................. 10
Predecessor Security......................................... 10
Principal Property........................................... 10
Redemption Date.............................................. 11
Redemption Price............................................. 11
Registered Security.......................................... 11
Regular Record Date.......................................... 11
Repayment Date............................................... 11
Repayment Price.............................................. 11
Reset Notice................................................. 12
Responsible Officer.......................................... 12
Restricted Securities........................................ 12
Sale/Leaseback Transaction................................... 12
Securities................................................... 12
Security Register and Security Registrar..................... 12
Significant Subsidiary....................................... 12
Special Record Date.......................................... 12
Stated Maturity.............................................. 12
Subsidiary................................................... 13
Trust Indenture Act or TIA................................... 13
Trustee..................................................... 13
United States................................................ 13
United States person......................................... 13
Valuation Date............................................... 13
Vice President............................................... 13
Voting Stock................................................. 13
Yield to Maturity............................................ 14
SECTION 102. Compliance Certificates and Opinions..................... 14
SECTION 103. Form of Documents Delivered to Trustee................... 15
SECTION 104. Acts of Holders.......................................... 15
SECTION 105. Notices, Etc., to Trustee and Company.................... 17
SECTION 106. Notice to Holders; Waiver................................ 18
SECTION 107. Effect of Headings and Table of Contents................. 19
SECTION 108. Successors and Assigns................................... 19
SECTION 109. Separability Clause...................................... 19
SECTION 110. Benefits of Indenture.................................... 19
SECTION 111. Governing Law............................................ 19
SECTION 112. Legal Holidays........................................... 20
(iii)
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Page
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.......................................... 20
SECTION 202. Form of Trustee's Certificate of Authentication.......... 21
SECTION 203. Securities Issuable in Global Form....................... 21
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series..................... 23
SECTION 302. Denominations............................................ 27
SECTION 303. Execution, Authentication, Delivery and Dating........... 27
SECTION 304. Temporary Securities..................................... 30
SECTION 305. Registration, Registration of Transfer and Exchange...... 33
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities......... 36
SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset.................................. 37
SECTION 308. Optional Extension of Stated Maturity.................... 40
SECTION 309. Persons Deemed Owners.................................... 41
SECTION 310. Cancellation............................................. 42
SECTION 311. Computation of Interest.................................. 42
SECTION 312. Currency and Manner of Payments in Respect of Securities. 42
SECTION 313. Appointment and Resignation of Successor Exchange Rate
Agent.................................................... 46
SECTION 314. Designation as Senior Indebtedness....................... 47
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.................. 47
SECTION 402. Application of Trust Money............................... 49
(iv)
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ARTICLE FIVE
REMEDIES
Page
SECTION 501. Events of Default........................................ 49
SECTION 502. Acceleration of Maturity; Rescission and Annulment....... 51
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee............................................... 52
SECTION 504. Trustee May File Proofs of Claim......................... 53
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities............................................... 54
SECTION 506. Application of Money Collected........................... 54
SECTION 507. Limitation on Suits...................................... 55
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest..................................... 56
SECTION 509. Restoration of Rights and Remedies....................... 56
SECTION 510. Rights and Remedies Cumulative........................... 56
SECTION 511. Delay or Omission Not Waiver............................. 56
SECTION 512. Control by Holders....................................... 57
SECTION 513. Waiver of Past Defaults.................................. 57
SECTION 514. Waiver of Stay or Extension Laws......................... 58
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults....................................... 58
SECTION 602. Certain Rights of Trustee................................ 58
SECTION 603. Trustee Not Responsible for Recitals or Issuance
of Securities............................................ 60
SECTION 604. May Hold Securities...................................... 60
SECTION 605. Money Held in Trust...................................... 60
SECTION 606. Compensation and Reimbursement........................... 61
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests.................................... 62
SECTION 608. Resignation and Removal; Appointment of Successor........ 62
SECTION 609. Acceptance of Appointment by Successor................... 64
SECTION 610. Merger, Conversion, Consolidation or Succession to
Business................................................. 65
SECTION 611. Appointment of Authenticating Agent...................... 65
(v)
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Page
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders............. 67
SECTION 702. Reports by Trustee....................................... 67
SECTION 703. Reports by Company....................................... 68
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms..... 68
SECTION 802. Successor Person Substituted............................. 69
SECTION 803. Securities to Be Secured in Certain Events............... 70
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders....... 70
SECTION 902. Supplemental Indentures with Consent of Holders.......... 72
SECTION 903. Execution of Supplemental Indentures..................... 73
SECTION 904. Effect of Supplemental Indentures........................ 73
SECTION 905. Conformity with Trust Indenture Act...................... 73
SECTION 906. Reference in Securities to Supplemental Indentures....... 73
SECTION 907. Notice of Supplemental Indentures........................ 74
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest..... 74
SECTION 1002. Maintenance of Office or Agency......................... 74
SECTION 1003. Money for Securities Payments to Be Held in Trust....... 76
SECTION 1004. Statement as to Compliance.............................. 78
SECTION 1005. Additional Amounts...................................... 78
SECTION 1006. Payment of Taxes and Other Claims....................... 79
(vi)
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Page
SECTION 1007. Maintenance of Principal Properties..................... 79
SECTION 1008. Corporate Existence..................................... 80
SECTION 1009. Limitation on Liens..................................... 80
SECTION 1010. Limitation on Sale and Leaseback Transactions........... 81
SECTION 1011. Waiver of Certain Covenants............................. 82
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article................................ 83
SECTION 1102. Election to Redeem; Notice to Trustee................... 83
SECTION 1103. Selection by Trustee of Securities to Be Redeemed....... 83
SECTION 1104. Notice of Redemption.................................... 84
SECTION 1105. Deposit of Redemption Price............................. 85
SECTION 1106. Securities Payable on Redemption Date................... 85
SECTION 1107. Securities Redeemed in Part............................. 86
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article................................ 87
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities... 87
SECTION 1203. Redemption of Securities for Sinking Fund............... 88
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article................................ 89
SECTION 1302. Repayment of Securities................................. 89
SECTION 1303. Exercise of Option...................................... 89
SECTION 1304. When Securities Presented for Repayment Become Due
and Payable............................................. 90
SECTION 1305. Securities Repaid in Part............................... 91
(vii)
<PAGE>
Page
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or
Covenant Defeasance..................................... 91
SECTION 1402. Defeasance and Discharge................................ 92
SECTION 1403. Covenant Defeasance..................................... 92
SECTION 1404. Conditions to Defeasance or Covenant Defeasance......... 93
SECTION 1405. Deposited Money and Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions..... 95
SECTION 1406. Reinstatement........................................... 96
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called............... 96
SECTION 1502. Call, Notice and Place of Meetings...................... 96
SECTION 1503. Persons Entitled to Vote at Meetings.................... 97
SECTION 1504. Quorum; Action.......................................... 97
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings................................. 99
SECTION 1506. Counting Votes and Recording Action of Meetings.........100
TESTIMONIUM .............................................................101
SIGNATURES AND SEALS.......................................................101
FORMS OF CERTIFICATION EXHIBIT A
(viii)
<PAGE>
INDENTURE, dated as of ___________, 1999, between Borg-Warner
Automotive, Inc., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company"), having its principal office
at 200 South Michigan Avenue, Chicago, IL 60604, and _______________________,
a national banking association duly organized and existing under the laws of the
United States of America, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), which may be convertible into or exchangeable for any securities
of any person (including the Company), to be issued in one or more series as in
this Indenture provided.
This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are required to be part of this Indenture and shall,
to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act,
<PAGE>
either directly or by reference therein, have the meanings assigned to them
therein, and the terms "cash transaction" and "self-liquidating paper", as
used in TIA Section 311, shall have the meanings assigned to them in the
rules of the Commission adopted under the Trust Indenture Act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Three, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Amounts" has the meaning specified in Section 1005.
"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.
"Attributable Indebtedness" means, with respect to any Sale/Leaseback
Transaction as of any particular time, the present value (discounted at the rate
of interest implicit in the terms of the lease) of the obligations of the lessee
under such lease for net rental payments during the remaining term of the lease
(including any period for which such lease has been extended). "Net rental
payments" under any lease for any period means the sum of the rental and other
payments required to be paid in such period by the lessee thereunder, not
including, however, any amounts required to be paid by such lessee (whether or
not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments or similar charges.
"Authenticating Agent" means any Person appointed by the Trustee to
act on
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behalf of the Trustee pursuant to Section 611 to authenticate Securities.
"Authorized Newspaper" means a newspaper, in the English language or
in an official language of the country of publication, customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays,
and of general circulation in each place in connection with which the term is
used or in the financial community of each such place. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same city
meeting the foregoing requirements and in each case on any Business Day.
"Bearer Security" means any Security except a Registered Security.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the Securities,
means, unless otherwise specified with respect to any Securities pursuant to
Section 301, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment or other location are
authorized or obligated by law or executive order to close.
"CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres, S.A.,
or its successor.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, 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.
"Common Depositary" has the meaning specified in Section 304.
"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.
3
<PAGE>
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated Net Tangible Assets" means the total amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities (excluding any current liabilities which
are by their terms extendible or renewable at the option of the obligor thereon
to a time more than 12 months after the time as of which the amount thereof is
being computed), (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles and (iii)
appropriate adjustments on account of minority interests of other Persons
holding stock of the Company's Subsidiaries, all as set forth on the most recent
balance sheet of the Company and its consolidated Subsidiaries (but, in any
event, as of a date within 150 days of the date of determination) and computed
in accordance with generally accepted accounting principles.
"Consolidated Net Worth" means the amount of total stockholders'
equity shown in the most recent consolidated statement of financial position of
the Company.
"Conversion Date" has the meaning specified in Section 312(d).
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such Currency and by
a central bank or other public institution of or within the international
banking community for the settlement of transactions, (ii) the ECU both within
the European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any currency unit
(or composite currency) other than the ECU for the purposes for which it was
established.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office on the date of execution of this Indenture is
located at ___________________________________, except that with respect to
presentation of Securities for payment or for registration of transfer or
exchange, such term shall mean the office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted, which at
the date hereof is 14 Wall Street, 8th Floor, New York, New York 10005.
"corporation" includes corporations, associations, companies and
business trusts.
"coupon" means any interest coupon appertaining to a Bearer Security.
4
<PAGE>
"Currency" means any currency or currencies, composite currency or
currency unit or currency units, including, without limitation, the ECU, issued
by the government of one or more countries or by any recognized confederation or
association of such governments.
"Current Assets" of any Person includes all assets of such Person that
would in accordance with generally accepted accounting principles be classified
as current assets.
"Current Liabilities" of any Person includes all liabilities of such
Person that would in accordance with generally accepted accounting principles be
classified as current liabilities.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 312(g).
"Dollar Equivalent of the Foreign Currency" has the meaning specified
in Section 312(f).
"ECU" means the European Currency Unit as defined and revised from
time to time by the Council of the European Communities.
"Election Date" has the meaning specified in Section 312(h).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established
5
<PAGE>
by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Date" has the meaning specified in Section 304.
"Exchange Rate Agent" means, with respect to Securities of or within
any series, unless otherwise specified with respect to any Securities pursuant
to Section 301, a New York Clearing House bank, designated pursuant to Section
301 or Section 313.
"Exchange Rate Officer's Certificate" means a tested telex or a
certificate setting forth (i) the applicable Market Exchange Rate and (ii) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a Security having
the lowest denomination principal amount determined in accordance with Section
302 in the relevant Currency), payable with respect to a Security of any series
on the basis of such Market Exchange Rate, sent (in the case of a telex) or
signed (in the case of a certificate) by the Treasurer, any Vice President or
any Assistant Treasurer of the Company.
"Extension Notice" has the meaning specified in Section 308.
"Extension Period" has the meaning specified in Section 308.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"Final Maturity" has the meaning specified in Section 308.
"Foreign Currency" means any Currency other than Currency of the
United States.
"Government Obligations" means, unless otherwise specified with
respect to any series of Securities pursuant to Section 301, securities which
are (i) direct obligations of the government which issued the Currency in which
the Securities of a particular series are payable or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
the government which issued the Currency in which the Securities of such series
are payable, the timely payment of which is unconditionally guaranteed by such
government, which, in either case, are full faith and credit obligations of such
government payable in such Currency and are not callable or redeemable at the
option of the issuer thereof and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of
6
<PAGE>
any such Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Obligation or the specific payment of interest or
principal of the Government Obligation evidenced by such depository receipt.
"Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the case of
a Bearer Security, the bearer thereof and, when used with respect to any coupon,
shall mean the bearer thereof.
"Indenture" means this instrument as originally executed and 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 established as
contemplated by Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
particular series of Securities for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any provisions or terms
which relate solely to other series of Securities for which such Person is not
Trustee, regardless of when such terms or provisions were adopted, and exclusive
of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such
Trustee but to which such Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that
the principal amount thereof payable at Stated Maturity may be more or less than
the principal face amount thereof at original issuance.
"Industrial Development Bonds" means obligations issued by a state, a
commonwealth, a territory or a possession of the United States of America, or
any political subdivision of any of the foregoing, or the District of Columbia,
the interest on which is excludable from gross income of the holders thereof
pursuant to the provisions of Section 103(a) of the Internal Revenue Code of
1986, as amended (or any similar provision of such Code), as in effect at the
time of the issuance of such obligations.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity at the rate prescribed in such Original Issue Discount
Security.
7
<PAGE>
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Lien" means any pledge, mortgage, lien, charge, encumbrance or
security interest.
"Market Exchange Rate" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, (i) for any conversion involving a
currency unit on the one hand and Dollars or any Foreign Currency on the other,
the exchange rate between the relevant currency unit and Dollars or such Foreign
Currency calculated by the method specified pursuant to Section 301 for the
Securities of the relevant series, (ii) for any conversion of Dollars into any
Foreign Currency, the noon (New York City time) buying rate for such Foreign
Currency for cable transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (iii) for any conversion of
one Foreign Currency into Dollars or another Foreign Currency, the spot rate at
noon local time in the relevant market at which, in accordance with normal
banking procedures, the Dollars or Foreign Currency into which conversion is
being made could be purchased with the Foreign Currency from which conversion is
being made from major banks located in either New York City, London or any other
principal market for Dollars or such purchased Foreign Currency, in each case
determined by the Exchange Rate Agent. Unless otherwise specified with respect
to any Securities pursuant to Section 301, in the event of the unavailability of
any of the exchange rates provided for in the foregoing clauses (i), (ii) and
(iii), the Exchange Rate Agent shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank of New York as
of the most recent available date, or quotations from one or more major banks in
New York City, London or another principal market for the Currency in question,
or such other quotations as the Exchange Rate Agent shall deem appropriate.
Unless otherwise specified by the Exchange Rate Agent, if there is more than one
market for dealing in any Currency by reason of foreign exchange regulations or
otherwise, the market to be used in respect of such Currency shall be that upon
which a non-resident issuer of securities designated in such Currency would
purchase such Currency in order to make payments in respect of such securities.
"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, notice of redemption, notice of option to elect
repayment or otherwise.
"Non-Recourse Indebtedness" means indebtedness of the Company or any
Subsidiary of the Company in respect of which the recourse of the holder of such
indebtedness, whether direct or indirect and whether contingent or otherwise, is
effectively limited to specified assets, and with respect to which neither the
Company nor any Subsidiary of the
8
<PAGE>
Company provides any credit support.
"Officers' Certificate" means a certificate signed by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company, and who shall be
acceptable to the Trustee.
"Optional Reset Date" has the meaning specified in Section 307(b).
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Original Stated Maturity" has the meaning specified in Section 308.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
or repayment at the option of the Holder 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 and any coupons appertaining thereto; provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Securities, except to the extent provided in Sections 1402 and
1403, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Fourteen; and
(iv) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have
9
<PAGE>
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, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal amount of an
Original Issue Discount Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Security denominated
in a Foreign Currency that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be equal
to the Dollar equivalent, determined as of the date such Security is originally
issued by the Company as set forth in an Exchange Rate Officers' Certificate
delivered to the Trustee, of the principal amount (or, in the case of an
Original Issue Discount Security, the Dollar equivalent as of such date of
original issuance of the amount determined as provided in clause (i) above) of
such Security, (iii) the principal amount of any Indexed Security that may be
counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of such
Indexed Security at original issuance, unless otherwise provided with respect to
such Security pursuant to Section 301, and (iv) Securities owned by the Company
or any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (or premium, if
any) or interest, if any, on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
10
<PAGE>
"Place of Payment" means, when used with respect to the Securities of
or within any series, the place or places where the principal of (and premium,
if any) and interest, if any, on such Securities are payable as specified as
contemplated by Sections 301 and 1002.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security or a Security to which a
mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains, as the case may be.
"Principal Property" means any manufacturing plant or
warehouse, together with the land upon which it is erected and fixtures
comprising a part thereof, owned by the Company or any Significant Subsidiary
and located in the United States, the gross book value (without deduction of any
reserve for depreciation) of which on the date as of which the determination is
being made is an amount which exceeds 1% of Consolidated Net Tangible Assets,
other than any such manufacturing plant or warehouse or any portion thereof
(together with the land upon which it is erected and fixtures comprising a part
thereof) (i) which is financed by Industrial Development Bonds or (ii) which, in
the opinion of the Board of Directors, is not of material importance to the
total business conducted by the Company and its Subsidiaries, taken as a whole.
"Redemption Date", when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" means any Security registered in the Security
Register.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301.
"Repayment Date" means, when used with respect to any Security to be
repaid at the option of the Holder, the date fixed for such repayment pursuant
to this Indenture.
"Repayment Price" means, when used with respect to any Security to be
repaid at the option of the Holder, the price at which it is to be repaid
pursuant to this Indenture.
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"Reset Notice" has the meaning specified in Section 307(b).
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any Vice President, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Securities" has the meaning specified in Section 1009.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary, for a period of more
than three years, of any real or personal property, which property has been or
is to be sold or transferred by the Company or such Subsidiary to such Person in
contemplation of such leasing.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture; provided, however, that if at any time there is more than
one Person acting as Trustee under this Indenture, "Securities" with respect to
the Indenture as to which such Person is Trustee shall have the meaning stated
in the first recital of this Indenture and shall more particularly mean
Securities authenticated and delivered under this Indenture, exclusive, however,
of Securities of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Significant Subsidiary" means any subsidiary of the Company which
constitutes a "Significant Subsidiary" as defined in Rule 1-02 of Regulation S-X
under the Exchange Act.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the Trustee
pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable, as such date may be
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extended pursuant to the provisions of Section 308.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries, or (ii) any partnership or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned. For the purposes
of this definition, "securities having ordinary voting power" means securities
or other equity interests that ordinarily have voting power for the election of
directors, or persons having management power with respect to the Person,
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
"Trust Indenture Act" or "TIA" 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 905.
"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;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"United States" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, the United States of America (including the
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with respect
to any Securities pursuant to Section 301, an individual who is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
"Valuation Date" has the meaning specified in Section 312(c).
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of a corporation (irrespective of
whether or not at the time stock of any other class or
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classes shall have or might have voting power by reason of the happening of any
contingency).
"Yield to Maturity" means the yield to maturity, computed at the time
of issuance of a Security (or, if applicable, at the most recent redetermination
of interest on such Security) and as set forth in such Security in accordance
with generally accepted United States bond yield computation principles.
SECTION 102. Compliance 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 an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture (other than pursuant to
Section 1004) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such covenant or condition has been complied with.
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SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing. If Securities of a series are issuable as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of such series may, alternatively, be embodied in and evidenced by the
record of Holders of Securities of such series voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of Holders of
Securities of such series duly called and held in accordance with the provisions
of Article Fifteen, or a combination of such instruments and any such record.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and any such record (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the
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"Act" of the Holders signing such instrument or instruments or so voting at any
such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a Security, shall
be sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section. The
record of any meeting of Holders of Securities shall be proved in the manner
provided in Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of 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 principal amount and serial numbers of Registered Securities
held by any Person, and the date of holding the same, shall be proved by the
Security Register.
(d) The principal amount and serial numbers of Bearer Securities held
by any Person, and the date of holding the same, may be proved by the production
of such Bearer Securities or by a certificate executed, as depositary, by any
trust company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the Bearer Securities therein described; or such facts may be
proved by the certificate or affidavit of the Person holding such Bearer
Securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of any
Bearer Security continues until (1) another certificate or affidavit bearing a
later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3)
such Bearer Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding. The principal amount and
serial numbers of Bearer Securities held by any Person, and the date of holding
the same, may also be proved in any other manner that the Trustee deems
sufficient. (e) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do
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so. Notwithstanding TIA Section 316(c), such record date shall be the record
date specified in or pursuant to such Board Resolution, which shall be a date
not earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than eleven months after the
record date.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration Division, 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 it at the address of its 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.
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SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders of
Registered Securities by the Company or the Trustee, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each such Holder affected by such
event, at his address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders of Registered Securities 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 of Registered Securities or the sufficiency
of any notice to Holders of Bearer Securities given as provided. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders of Registered Securities when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be sufficient giving of such notice for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 301, where this Indenture
provides for notice to Holders of Bearer Securities of any event, such notice
shall be sufficiently given to Holders of Bearer Securities if published in an
Authorized Newspaper in The City of New York and in such other city or cities as
may be specified in such Securities on a Business Day at least twice, the first
such publication to be not earlier than the earliest date, and not later than
the latest date, prescribed for the giving of such notice. Any such notice shall
be deemed to have been given on the date of the first such publication.
In case, by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause, it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of such notice with
respect to other Holders of Bearer Securities or the sufficiency of any notice
to Holders of Registered Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any
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published notice may be in an official language of the country of publication.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 108. 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 109. Separability Clause.
In case any provision in this Indenture or in any Security or coupon
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 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities or coupons, express or
implied, shall give to any Person, other than the parties hereto, any
Authenticating Agent, any Paying Agent, any Securities Registrar and their
successors hereunder and the Holders of Securities or coupons, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
Unless otherwise provided pursuant to Section 301 with respect to any
term of the Securities of any series denominated and/or payable in a foreign
currency or currency unit, this Indenture and the Securities and coupons shall
be governed by and construed in accordance with the law of the State of New
York. This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of this Indenture and shall, to the extent
applicable, be governed by such provisions.
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SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, sinking
fund payment date or Stated Maturity or Maturity of any Security shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of this Indenture or of any Security or coupon other than a provision in the
Securities of any series which specifically states that such provision shall
apply in lieu of this Section), payment of principal (or premium, if any) or
interest, if any, need not be made at such Place of Payment on such date, but
may be made on the next succeeding Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment Date or Redemption
Date or Repayment Date or sinking fund payment date, or at the Stated Maturity
or Maturity; provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Repayment Date, sinking
fund payment date, Stated Maturity or Maturity, as the case may be.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series and related coupons shall be in substantially
the forms 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
or coupons, as evidenced by their execution of the Securities or coupons. If the
forms of Securities or coupons 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 Company Order
contemplated by Section 303 for the authentication and delivery of such
Securities or coupons. Any portion of the text of any Security may be set forth
on the reverse thereof, with an appropriate reference thereto on the face of the
Security.
Unless otherwise specified as contemplated by Section 301, Securities
in bearer form shall have interest coupons attached.
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The Trustee's certificate of authentication on all Securities shall be
in substantially the form set forth in this Article.
The definitive Securities and coupons shall be printed, lithographed
or engraved on steel-engraved borders or may be produced in any other manner,
all as determined by the officers of the Company executing such Securities, as
evidenced by their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
, as Trustee
By
Authorized Officer
SECTION 203. Securities Issuable in Global Form.
If Securities of or within a series are issuable in global form, as
specified as contemplated by Section 301, then, notwithstanding clause (8) of
Section 301, any such Security shall represent such of the Outstanding
Securities of such series as shall be specified therein and may provide that it
shall represent the aggregate amount of Outstanding Securities of such series
from time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be increased
or decreased to reflect exchanges. Any endorsement of a Security in global form
to reflect the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or in the Company Order to be delivered to the Trustee pursuant to Section 303
or Section 304. Subject to the provisions of Section 303 and, if applicable,
Section 304, the Trustee shall deliver and redeliver any Security in permanent
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global form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or Section 304 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel.
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of (and premium,
if any) and interest, if any, on any Security in permanent global form shall be
made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as provided
in the preceding paragraph, the Company, the Trustee and any agent of the
Company and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security (i) in the
case of a permanent global Security in registered form, the Holder of such
permanent global Security in registered form, or (ii) in the case of a permanent
global Security in bearer form, Euroclear or CEDEL.
If at any time, (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository or if at any time the Depository
shall no longer be registered or in good standing under the Securities Exchange
Act of 1934, or other applicable statute or regulation and a successor
Depository is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be, or
(ii) the Company determines that the Securities shall no longer be represented
by a global Security or Securities and that the provisions of this Section 203
shall no longer apply to the Securities, then in such event this Section 203
shall no longer be applicable to the Securities and the Company will execute and
the Trustee, upon Company Request, will authenticate and deliver Securities in
definitive registered form, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the global Security or
Securities in exchange for such global Security whereupon the global Security or
Securities shall be canceled by the Trustee. Such Securities in definitive
registered form issued in exchange for the global Security or Securities
pursuant to this paragraph shall be registered in such names and issued in such
authorized denominations as the Depository, pursuant to instructions from
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its direct or indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Securities to the Persons in whose names such
Securities are so registered.
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted by
one or more Board Resolutions and, subject to Section 303, set forth in, or
determined in the 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, as applicable (each of
which (except for the matters set forth in clauses (1), (2) and (17) below), if
so provided, may be determined from time to time by the Company with respect to
unissued Securities of the series and set forth in such Securities of the series
when issued from time to time):
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other series of Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series that may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906, 1107 or 1305);
(3) the date or dates, or the method by which such date or dates will
be determined or extended, on which the principal of the Securities of the
series is payable;
(4) the rate or rates at which the Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue, or the
method by which such date or dates shall be determined, the Interest
Payment Dates on which such interest shall be payable and the Regular
Record Date, if any, for the interest payable on any Registered Security on
any Interest Payment Date, or the method by which such date or dates shall
be
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determined, and the basis upon which interest shall be calculated if other
than on the basis of a 360-day year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to the
Borough of Manhattan, The City of New York, where the principal of (and
premium, if any) and interest, if any, on Securities of the series shall be
payable, where any Registered Securities of the series may be surrendered
for registration of transfer, where Securities of the series may be
surrendered for exchange, where Securities of the series that are
convertible or exchangeable may be surrendered for conversion or exchange,
as applicable and, if different than the location specified in Section 106,
the place or places where notices or demands to or upon the Company in
respect of the Securities of the series and this Indenture may be served;
(6) the period or periods within which, the price or prices at which,
the Currency in which, and other terms and conditions upon which Securities
of the series may be redeemed, in whole or in part, at the option of the
Company, if the Company is to have that option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or periods
within which, the price or prices at which, the Currency in which, and
other terms and conditions upon which Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denomination or denominations in which any Registered
Securities of the series shall be issuable and, if other than denominations
of $5,000, the denomination or denominations in which any Bearer Securities
of the series shall be issuable;
(9) if other than the Trustee, the identity of each Security Registrar
and/or Paying Agent;
(10) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series that shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502
or the method by which such portion shall be determined;
(11) if other than Dollars, the Currency in which payment of the
principal of (or premium, if any) or interest, if any, on the Securities of
the series shall be payable or in which the Securities of the series shall
be denominated and the particular
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provisions applicable thereto in accordance with, in addition to or in lieu of
any of the provisions of Section 312;
(12) whether the amount of payments of principal of (or premium, if
any) or interest, if any, on the Securities of the series may be determined
with reference to an index, formula or other method (which index, formula
or method may be based, without limitation, on one or more Currencies,
commodities, equity indices or other indices), and the manner in which such
amounts shall be determined;
(13) whether the principal of (or premium, if any) or interest, if
any, on the Securities of the series are to be payable, at the election of
the Company or a Holder thereof, in a Currency other than that in which
such Securities are denominated or stated to be payable, the period or
periods within which (including the Election Date), and the terms and
conditions upon which, such election may be made, and the time and manner
of determining the exchange rate between the Currency in which such
Securities are denominated or stated to be payable and the Currency in
which such Securities are to be so payable, in each case in accordance
with, in addition to or in lieu of any of the provisions of Section 312;
(14) the designation of the initial Exchange Rate Agent, if any;
(15) the applicability, if any, of Sections 1402 and/or 1403 to the
Securities of the series and any provisions in modification of, in addition
to or in lieu of any of the provisions of Article Fourteen that shall be
applicable to the Securities of the series;
(16) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;
(17) any deletions from, modifications of or additions to the Events
of Default or covenants (including any deletions from, modifications of or
additions to Section 1011) of the Company with respect to Securities of the
series, whether or not such Events of Default or covenants are consistent
with the Events of Default or covenants set forth herein;
(18) whether Securities of the series are to be issuable as Registered
Securities, Bearer Securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or delivery of Bearer
Securities, whether any Securities of the series are to be issuable
initially in temporary global form and whether any Securities of the series
are to be issuable in permanent global form with or without coupons and, if
so, whether beneficial owners of interests in any such permanent global
Security may exchange such interests for Securities of such series and of
like tenor of
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any authorized form and denomination and the circumstances under which any
such exchanges may occur, if other than in the manner provided in Section
305, whether Registered Securities of the series may be exchanged for
Bearer Securities of the series (if permitted by applicable laws and
regulations), whether Bearer Securities of the series may be exchanged for
Registered Securities of such series, and the circumstances under which and
the place or places where any such exchanges may be made and if Securities
of the series are to be issuable in global form, the identity of any
initial depository therefor;
(19) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the series
shall be dated if other than the date of original issuance of the first
Security of the series to be issued;
(20) the Person to whom any interest on any Registered 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 for such interest, the manner in
which, or the Person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary global Security on an Interest Payment Date will be paid if other
than in the manner provided in Section 304;
(21) if Securities of the series are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary Security of
such series) only upon receipt of certain certificates or other documents
or satisfaction of other conditions, the form and/or terms of such
certificates, documents or conditions;
(22) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to be
authenticated and delivered;
(23) whether, under what circumstances and the Currency in which the
Company will pay Additional Amounts as contemplated by Section 1005 on the
Securities of the series to any Holder who is not a United States person
(including any modification to the definition of such term) in respect of
any tax, assessment or governmental charge and, if so, whether the Company
will have the option to redeem such Securities rather than pay such
Additional Amounts (and the terms of any such option);
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(24) if the Securities of the series are to be convertible into or
exchangeable for any securities of any Person (including the Company), the
terms and conditions upon which such Securities will be so convertible or
exchangeable; and
(25) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to the series (which
terms shall not be inconsistent with the requirements of the Trust
Indenture Act or the provisions of this Indenture).
All Securities of any one series and the coupons appertaining to any
Bearer Securities of such series shall be substantially identical except, in the
case of Registered Securities, as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolution (subject to Section 303) and
set forth in such Officers' Certificate or in any such indenture supplemental
hereto. Not all Securities of any one series need 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 series are established by action taken
pursuant to one or more Board Resolutions, such Board Resolutions shall be
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in such denominations
as shall be specified as contemplated by Section 301. With respect to Securities
of any series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued in
global form (which may be of any denomination), shall be issuable in
denominations of $1,000 and any integral multiple thereof and the Bearer
Securities of such series, other than the Bearer Securities issued in global
form (which may be of any denomination), shall be issuable in a denomination of
$5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities and any coupons appertaining thereto shall be executed
on behalf of the Company by its Chairman, its President or a Vice President,
under its corporate seal reproduced thereon attested by its Secretary or an
Assistant Secretary. The signature of any of these officers on the Securities or
coupons may be the manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise reproduced on the
Securities.
Securities or coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company,
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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 or coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series together with
any coupon appertaining thereto, 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 such Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided further
that, unless otherwise specified with respect to any series of Securities
pursuant to Section 301, a Bearer Security may be delivered in connection with
its original issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate in the form set forth in Exhibit A-1
to this Indenture, dated no earlier than 15 days prior to the earlier of the
date on which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer Security in
accordance with the terms of such temporary Security and this Indenture. If any
Security shall be represented by a permanent global Bearer Security, then, for
purposes of this Section and Section 304, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon exchange of a
portion of a temporary global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest in
such permanent global Security. Except as permitted by Section 306, the Trustee
shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and cancelled. If not all
the Securities of any series are to be issued at one time and if the Board
Resolution or supplemental indenture establishing such series shall so permit,
such Company Order may set forth procedures acceptable to the Trustee for the
issuance of such Securities and determining terms of particular Securities of
such series such as interest rate, stated maturity, date of issuance and date
from which interest shall accrue.
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 TIA Sections 315(a)
through 315(d)) shall be fully protected in relying upon, an Opinion of Counsel
stating:
(a) that the form or forms of such Securities and any coupons have
been established in conformity with the provisions of this Indenture;
(b) that the terms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture;
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(c) that such Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed and
delivered by the Company to the Trustee for authentication in accordance
with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization and other similar laws of general
applicability relating to or affecting the enforcement of creditors'
rights, to general equitable principles and to such other qualifications as
such counsel shall conclude do not materially affect the rights of Holders
of such Securities and any coupons;
(d) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities, any coupons and of the
supplemental indentures, if any, have been complied with and that
authentication and delivery of such Securities and any coupons and the
execution and delivery of the supplemental indenture, if any, by the
Trustee will not violate the terms of the Indenture;
(e) that the Company has the corporate power to issue such Securities
and any coupons, and has duly taken all necessary corporate action with
respect to such issuance; and
(f) that the issuance of such Securities and any coupons will not
contravene the articles of incorporation or by-laws of the Company or
result in any violation of any of the terms or provisions of any law or
regulation or of any indenture, mortgage or other agreement known to such
Counsel by which the Company is bound.
Notwithstanding the provisions of Section 301 and of the preceding two
paragraphs, if not all the Securities of any series are to be issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to the preceding two paragraphs prior to or at the
time of issuance of each Security, but such documents shall be delivered prior
to or at the time of issuance of the first Security of such series.
The Trustee shall not be required to authenticate and deliver any such
Securities if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
Each Registered Security shall be dated the date of its authentication
and each Bearer Security shall be dated as of the date specified as contemplated
by Section 301.
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No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
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 310 together with a written statement (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as conclusively the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities. Such temporary Securities may be in global form.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with the provisions of the following paragraphs), 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 in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series (accompanied by any unmatured coupons appertaining thereto), the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of the same series of
authorized denominations; provided, however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Registered Security; and provided
further that a definitive Bearer Security shall be delivered in exchange for a
temporary Bearer Security only in compliance with the conditions set forth in
Section 303. Until so exchanged the temporary Securities of any series shall in
all respects be
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entitled to the same benefits under this Indenture as definitive Securities of
such series.
If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the "Common
Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit to the
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Securities, in aggregate principal amount equal to the principal
amount of such temporary global Security, executed by the Company. On or after
the Exchange Date such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in bearer form, registered form, permanent
global bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 301, and, if any combination
thereof is so specified, as requested by the beneficial owner thereof; provided,
however, that, unless otherwise specified in such temporary global Security,
upon such presentation by the Common Depositary, such temporary global Security
is accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Security held for
its account then to be exchanged and a certificate dated the Exchange Date or a
subsequent date and signed by CEDEL S.A. as to the portion of such temporary
global Security held for its account then to be exchanged, each in the form set
forth in Exhibit A-2 to this Indenture (or in such other form as may be
established pursuant to Section 301); and provided further that definitive
Bearer Securities shall be delivered in exchange for a portion of a temporary
global Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary global
Security shall be exchanged for definitive Securities of the same series and of
like tenor following the Exchange Date when the account holder instructs
Euroclear or CEDEL S.A., as the case may be, to request such exchange on his
behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier than
15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and
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CEDEL S.A., the Trustee, any Authenticating Agent appointed for such series of
Securities and each Paying Agent. Unless otherwise specified in such temporary
global Security, any such exchange shall be made free of charge to the
beneficial owners of such temporary global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like in the event that such Person does not take delivery
of such definitive Securities in person at the offices of Euroclear or CEDEL
S.A. Definitive Securities in bearer form to be delivered in exchange for any
portion of a temporary global Security shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL
S.A. on such Interest Payment Date upon delivery by Euroclear and CEDEL S.A. to
the Trustee of a certificate or certificates in the form set forth in Exhibit
A-2 to this Indenture (or in such other form as may be established pursuant to
Section 301), for credit without further interest thereon on or after such
Interest Payment Date to the respective accounts of the Persons who are the
beneficial owners of such temporary global Security on such Interest Payment
Date and who have each delivered to Euroclear or CEDEL S.A., as the case may be,
a certificate dated no earlier than 15 days prior to the Interest Payment Date
occurring prior to such Exchange Date in the form set forth in Exhibit A-1 to
this Indenture (or in such other form as may be established pursuant to Section
301). Notwithstanding anything to the contrary herein contained, the
certifications made pursuant to this paragraph shall satisfy the certification
requirements of the preceding two paragraphs of this Section and of the third
paragraph of Section 303 of this Indenture and the interests of the Persons who
are the beneficial owners of the temporary global Security with respect to which
such certification was made will be exchanged for definitive Securities of the
same series and of like tenor on the Exchange Date or the date of certification
if such date occurs after the Exchange Date, without further act or deed by such
beneficial owners. Except as otherwise provided in this paragraph, no payments
of principal (or premium, if any) or interest, if any, owing with respect to a
beneficial interest in a temporary global Security will be made unless and until
such interest in such temporary global Security shall have been exchanged for an
interest in a definitive Security. Any interest so received by Euroclear and
CEDEL S.A. and not paid as herein provided shall be returned to the Trustee
immediately prior to the expiration of two years after such Interest Payment
Date in order to be repaid to the Company in accordance with Section 1003.
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SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register for each series of Securities (the registers maintained
in the Corporate Trust Office of the Trustee and in any other office or agency
of the Company in a Place of Payment being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Registered Securities and of transfers of Registered Securities. The Security
Register shall be in written form or any other form capable of being converted
into written form within a reasonable time. At all reasonable times, the
Security Register shall be open to inspection by the Trustee. The Trustee is
hereby initially appointed as security registrar (the "Security Registrar") for
the purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.
Upon surrender for registration of transfer of any Registered Security
of any series at the office or agency 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, one or more new Registered Securities of the
same series, of any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series, of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Registered Securities to be exchanged at such office or agency. Whenever
any Registered Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Registered
Securities which the Holder making the exchange is entitled to receive. Unless
otherwise specified with respect to any series of Securities as contemplated by
Section 301, Bearer Securities may not be issued in exchange for Registered
Securities.
If (but only if) expressly permitted in or pursuant to the applicable
Board Resolution and (subject to Section 303) set forth in the applicable
Officers' Certificate, or in any indenture supplemental hereto, delivered as
contemplated by Section 301, at the option of the Holder, Bearer Securities of
any series may be exchanged for Registered Securities of the same series of any
authorized denomination and of a like aggregate principal amount and tenor, upon
surrender of the Bearer Securities to be exchanged at any such office or agency,
with all unmatured coupons and all matured coupons in default thereto
appertaining. If the Holder of a Bearer Security is unable to produce any such
unmatured coupon or coupons or matured coupon or coupons in default, any such
permitted exchange may be effected if the Bearer Securities are accompanied by
payment in funds acceptable to the Company in an amount equal to the face amount
of such missing coupon or coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there is furnished to
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them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall surrender
to any Paying Agent any such missing coupon in respect of which such a payment
shall have been made, such Holder shall be entitled to receive the amount of
such payment; provided, however, that, except as otherwise provided in Section
1002, interest represented by coupons shall be payable only upon presentation
and surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such office or agency in a permitted exchange for a
Registered Security of the same series and like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture.
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.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
only as provided in this paragraph. If any beneficial owner of an interest in a
permanent global Security is entitled to exchange such interest for Securities
of such series and of like tenor and principal amount of another authorized form
and denomination, as specified as contemplated by Section 301 and provided that
any applicable notice provided in the permanent global Security shall have been
given, then without unnecessary delay but in any event not later than the
earliest date on which such interest may be so exchanged, the Company shall
deliver to the Trustee definitive Securities in aggregate principal amount equal
to the principal amount of such beneficial owner's interest in such permanent
global Security, executed by the Company. On or after the earliest date on which
such interests may be so exchanged, such permanent global Security shall be
surrendered by the Common Depositary or such other depositary as shall be
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or from time to time
in part, for definitive Securities without charge, and the Trustee shall
authenticate and deliver, in exchange for each portion of such permanent global
Security, an equal aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of such
permanent global Security to be exchanged which, unless the Securities of the
series are not issuable both
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as Bearer Securities and as Registered Securities, as specified as contemplated
by Section 301, shall be in the form of Bearer Securities or Registered
Securities, or any combination thereof, as shall be specified by the beneficial
owner thereof; provided, however, that no such exchanges may occur during a
period beginning at the opening of business 15 days before any selection of
Securities to be redeemed and ending on the relevant Redemption Date if the
Security for which exchange is requested may be among those selected for
redemption; and provided further that no Bearer Security delivered in exchange
for a portion of a permanent global Security shall be mailed or otherwise
delivered to any location in the United States. If a Registered Security is
issued in exchange for any portion of a permanent global Security after the
close of business at the office or agency where such exchange occurs on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the provisions
of this Indenture.
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 Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any transfer.
The Company shall not be required (i) to 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 selection for redemption of Securities
of that series under Section 1103 or 1203 and ending at the close of business on
(A) if Securities of the series are issuable only as Registered Securities, the
day of the mailing of the relevant notice of redemption and (B) if
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Securities of the series are issuable as Bearer Securities, the day of the first
publication of the relevant notice of redemption or, if Securities of the series
are also issuable as Registered Securities and there is no publication, the
mailing of the relevant notice of redemption, or (ii) to register the transfer
of or exchange any Registered Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of that series
and like tenor; provided that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon
appertaining to it 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, with coupons corresponding to the coupons, if
any, appertaining to the surrendered Security, or, in case any such mutilated
Security or coupon has become or is about to become due and payable, the Company
in its discretion may, instead of issuing a new Security, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security,
pay such Security or coupon.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
or coupon and (ii) 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 or coupon has been
acquired by a bona fide purchaser, the Company shall execute and upon Company
Order the Trustee shall authenticate and deliver, in lieu of any such destroyed,
lost or stolen Security or in exchange for the Security for which a destroyed,
lost or stolen coupon appertains (with all appurtenant coupons not destroyed,
lost or stolen), a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding, with
coupons corresponding to the coupons, if any, appertaining to such destroyed,
lost or stolen Security or to the Security to which such destroyed, lost or
stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case
any such mutilated, destroyed, lost or stolen Security or coupon has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, with coupons corresponding to the coupons, if any,
appertaining to such mutilated, destroyed, lost or stolen Security or to the
Security to which such mutilated, destroyed, lost or stolen coupon appertains,
pay such Security or coupon; provided, however, that payment of principal of
(and
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premium, if any) and interest, if any, on Bearer Securities shall, except as
otherwise provided in Section 1002, be payable only at an office or agency
located outside the United States and, unless otherwise specified as
contemplated by Section 301, any interest on Bearer Securities shall be payable
only upon presentation and surrender of the coupons appertaining thereto.
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 with its coupons, if any, issued
pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen
Security or in exchange for a Security to which a mutilated, destroyed, lost or
stolen coupon appertains, shall constitute an original additional contractual
obligation of the Company, whether or not the mutilated, destroyed, lost or
stolen Security and its coupons, if any, or the mutilated, destroyed, lost or
stolen coupon 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 and their coupons, if any, 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 or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved; Optional
Interest Reset.
(a) Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest, if any, on any Registered
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 such Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 1002; provided, however,
that each installment of interest, if any, on any Registered Security may at the
Company's option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 309,
to the address of such Person as it appears on the Security Register or (ii)
transfer to an account located in the United States maintained by the payee.
Unless otherwise provided as contemplated by Section 301 with respect
to the Securities of any series, payment of interest, if any, may be made, in
the case of a Bearer Security, by transfer to an account located outside the
United States maintained by the payee.
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Unless otherwise provided as contemplated by Section 301, every
permanent global Security will provide that interest, if any, payable on any
Interest Payment Date will be paid to each of Euroclear and CEDEL S.A. with
respect to that portion of such permanent global Security held for its account
by the Common Depositary, for the purpose of permitting each of Euroclear and
CEDEL S.A. to credit the interest, if any, received by it in respect of such
permanent global Security to the accounts of the beneficial owners thereof.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date 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 and, if applicable, interest on such defaulted interest (to the extent
lawful) at the rate specified in the Securities of such series (such defaulted
interest and, if applicable, interest thereon herein collectively called
"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 Registered 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 Registered 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 in the Currency in which the Securities of such
series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given in the manner provided in
Section 106, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so given, such Defaulted Interest shall be
paid to the Persons in whose name the Registered 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
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clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice 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.
(b) The provisions of this Section 307(b) may be made applicable to
any series of Securities pursuant to Section 301 (with such modifications,
additions or substitutions as may be specified pursuant to such Section 301).
The interest rate (or the spread or spread multiplier used to calculate such
interest rate, if applicable) on any Security of such series may be reset by the
Company on the date or dates specified on the face of such Security (each an
"Optional Reset Date"). The Company may exercise such option with respect to
such Security by notifying the Trustee of such exercise at least 50 but not more
than 60 days prior to an Optional Reset Date for such Note. Not later than 40
days prior to each Optional Reset Date, the Trustee shall transmit, in the
manner provided for in Section 106, to the Holder of any such Security a notice
(the "Reset Notice") indicating whether the Company has elected to reset the
interest rate (or the spread or spread multiplier used to calculate such
interest rate, if applicable), and if so (i) such new interest rate (or such new
spread or spread multiplier, if applicable) and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date or if there is no such next Optional Reset Date, to the Stated
Maturity Date of such Security (each such period a "Subsequent Interest
Period"), including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during the
Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
(or the spread or spread multiplier used to calculate such interest rate, if
applicable) provided for in the Reset Notice and establish an interest rate (or
a spread or spread multiplier used to calculate such interest rate, if
applicable) that is higher than the interest rate (or the spread or spread
multiplier, if applicable) provided for in the Reset Notice, for the Subsequent
Interest Period by causing the Trustee to transmit, in the manner provided for
in Section 106, notice of such higher interest rate (or such higher spread or
spread multiplier, if applicable) to the Holder of such Security. Such notice
shall be irrevocable. All Securities with respect to which the interest rate (or
the spread or spread multiplier used to calculate such interest rate, if
applicable) is reset on an Optional Reset Date, and with respect to which the
Holders of such Securities have not tendered such Securities for repayment (or
have validly revoked any such tender) pursuant to the next succeeding paragraph,
will bear such higher interest rate (or such higher spread or spread multiplier,
if applicable).
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The Holder of any such Security will have the option to elect
repayment by the Company of the principal of such Security on each Optional
Reset Date at a price equal to the principal amount thereof plus interest
accrued to such Optional Reset Date. In order to obtain repayment on an Optional
Reset Date, the Holder must follow the procedures set forth in Article Thirteen
for repayment at the option of Holders except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date and except that, if the Holder has tendered any
Security for repayment pursuant to the Reset Notice, the Holder may, by written
notice to the Trustee, revoke such tender or repayment until the close of
business on the tenth day before such Optional Reset Date.
Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. Optional Extension of Stated Maturity.
The provisions of this Section 308 may be made applicable to any
series of Securities pursuant to Section 301 (with such modifications, additions
or substitutions as may be specified pursuant to such Section 301). The Stated
Maturity of any Security of such series may be extended at the option of the
Company for the period or periods specified on the face of such Security (each
an "Extension Period") up to but not beyond the date (the "Final Maturity") set
forth on the face of such Security. The Company may exercise such option with
respect to any Security by notifying the Trustee of such exercise at least 50
but not more than 60 days prior to the Stated Maturity of such Security in
effect prior to the exercise of such option (the "Original Stated Maturity"). If
the Company exercises such option, the Trustee shall transmit, in the manner
provided for in Section 106, to the Holder of such Security not later than 40
days prior to the Original Stated Maturity a notice (the "Extension Notice")
indicating (i) the election of the Company to extend the Stated Maturity, (ii)
the new Stated Maturity, (iii) the interest rate, if any, applicable to the
Extension Period and (iv) the provisions, if any, for redemption during such
Extension Period. Upon the Trustee's transmittal of the Extension Notice, the
Stated Maturity of such Security shall be extended automatically and, except as
modified by the Extension Notice and as described in the next paragraph, such
Security will have the same terms as prior to the transmittal of such Extension
Notice.
Notwithstanding the foregoing, not later than 20 days before the
Original Stated Maturity of such Security, the Company may, at its option,
revoke the interest rate provided for in the Extension Notice and establish a
higher interest rate for the Extension Period by causing the Trustee to
transmit, in the manner provided for in Section 106, notice of such higher
interest rate to the Holder of such Security. Such notice shall be irrevocable.
All
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Securities with respect to which the Stated Maturity is extended will bear such
higher interest rate.
If the Company extends the Maturity of any Security, the Holder will
have the option to elect repayment of such Security by the Company on the
Original Stated Maturity at a price equal to the principal amount thereof, plus
interest accrued to such date. In order to obtain repayment on the Original
Stated Maturity once the Company has extended the Maturity thereof, the Holder
must follow the procedures set forth in Article Thirteen for repayment at the
option of Holders, except that the period for delivery or notification to the
Trustee shall be at least 25 but not more than 35 days prior to the Original
Stated Maturity and except that, if the Holder has tendered any Security for
repayment pursuant to an Extension Notice, the Holder may by written notice to
the Trustee revoke such tender for repayment until the close of business on the
tenth day before the Original Stated Maturity.
SECTION 309. Persons Deemed Owners.
Prior to due presentment of a Registered 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 Registered Security is registered as the
owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Sections 305 and 307)
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and none of the Company, the Trustee or
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
Title to any Bearer Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company or
the Trustee may treat the bearer of any Bearer Security and the bearer of any
coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupons be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by any
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depositary, as a Holder, with respect to such global Security or impair, as
between such depositary and owners of beneficial interests in such global
Security, the operation of customary practices governing the exercise of the
rights of such depositary (or its nominee) as Holder of such global Security.
SECTION 310. Cancellation.
All Securities and coupons surrendered for payment, redemption,
repayment at the option of the Holder, registration of transfer or exchange or
for credit against any current or future sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee.
All Securities and coupons so delivered to the Trustee shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and 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
cancelled 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 cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with its customary procedures and certification of their disposal delivered to
the Company unless by Company Order the Company shall direct that cancelled
Securities be returned to it.
SECTION 311. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 with
respect to any Securities, interest, if any, on the Securities of each series
shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 312. Currency and Manner of Payments in Respect of Securities.
(a) With respect to Registered Securities of any series not permitting
the election provided for in paragraph (b) below or the Holders of which have
not made the election provided for in paragraph (b) below, and with respect to
Bearer Securities of any series, except as provided in paragraph (d) below,
payment of the principal of (and premium, if any) and interest, if any, on any
Registered or Bearer Security of such series will be made in the Currency in
which such Registered Security or Bearer Security, as the case may be, is
payable. The provisions of this Section 312 may be modified or superseded with
respect to any Securities pursuant to Section 301.
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(b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (d) and (e) below, to receive payments of principal of (or
premium, if any) or interest, if any, on such Registered Securities in any of
the Currencies which may be designated for such election by delivering to the
Trustee a written election with signature guarantees and in the applicable form
established pursuant to Section 301, not later than the close of business on the
Election Date immediately preceding the applicable payment date. If a Holder so
elects to receive such payments in any such Currency, such election will remain
in effect for such Holder or any transferee of such Holder until changed by such
Holder or such transferee by written notice to the Trustee (but any such change
must be made not later than the close of business on the Election Date
immediately preceding the next payment date to be effective for the payment to
be made on such payment date and no such change of election may be made with
respect to payments to be made on any Registered Security of such series with
respect to which an Event of Default has occurred or with respect to which the
Company has deposited funds pursuant to Article Four or Fourteen or with respect
to which a notice of redemption has been given by the Company or a notice of
option to elect repayment has been sent by such Holder or such transferee). Any
Holder of any such Registered Security who shall not have delivered any such
election to the Trustee not later than the close of business on the applicable
Election Date will be paid the amount due on the applicable payment date in the
relevant Currency as provided in Section 312(a). The Trustee shall notify the
Exchange Rate Agent as soon as practicable after the Election Date of the
aggregate principal amount of Registered Securities for which Holders have made
such written election.
(c) Unless otherwise specified pursuant to Section 301, if the
election referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section 301, not later
than the fourth Business Day after the Election Date for each payment date for
Registered Securities of any series, the Exchange Rate Agent will deliver to the
Company a written notice specifying, in the Currency in which Registered
Securities of such series are payable, the respective aggregate amounts of
principal of (and premium, if any) and interest, if any, on the Registered
Securities to be paid on such payment date, specifying the amounts in such
Currency so payable in respect of the Registered Securities as to which the
Holders of Registered Securities of such series shall have elected to be paid in
another Currency as provided in paragraph (b) above. If the election referred to
in paragraph (b) above has been provided for pursuant to Section 301 and if at
least one Holder has made such election, then, unless otherwise specified
pursuant to Section 301, on the second Business Day preceding such payment date
the Company will deliver to the Trustee for such series of Registered Securities
an Exchange Rate Officer's Certificate in respect of the Dollar or Foreign
Currency payments to be made on such payment date. Unless otherwise specified
pursuant to Section 301, the Dollar or Foreign Currency amount receivable by
Holders of Registered Securities who have elected payment in a Currency as
provided in paragraph (b) above shall be determined by the Company on the basis
of the applicable Market Exchange
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Rate in effect on the third Business Day (the "Valuation Date") immediately
preceding each payment date, and such determination shall be conclusive and
binding for all purposes, absent manifest error.
(d) If a Conversion Event occurs with respect to a Foreign Currency in
which any of the Securities are denominated or payable other than pursuant to an
election provided for pursuant to paragraph (b) above, then with respect to each
date for the payment of principal of (and premium, if any) and interest, if any,
on the applicable Securities denominated or payable in such Foreign Currency
occurring after the last date on which such Foreign Currency was used (the
"Conversion Date"), the Dollar shall be the Currency of payment for use on each
such payment date. Unless otherwise specified pursuant to Section 301, the
Dollar amount to be paid by the Company to the Trustee and by the Trustee or any
Paying Agent to the Holders of such Securities with respect to such payment date
shall be, in the case of a Foreign Currency other than a currency unit, the
Dollar Equivalent of the Foreign Currency or, in the case of a currency unit,
the Dollar Equivalent of the Currency Unit, in each case as determined by the
Exchange Rate Agent in the manner provided in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 301, if the Holder
of a Registered Security denominated in any Currency shall have elected to be
paid in another Currency as provided in paragraph (b) above, and a Conversion
Event occurs with respect to such elected Currency, such Holder shall receive
payment in the Currency in which payment would have been made in the absence of
such election; and if a Conversion Event occurs with respect to the Currency in
which payment would have been made in the absence of such election, such Holder
shall receive payment in Dollars as provided in paragraph (d) above.
(f) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into Dollars at the
Market Exchange Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be determined
by the Exchange Rate Agent and subject to the provisions of paragraph (h) below
shall be the sum of each amount obtained by converting the Specified Amount of
each Component Currency into Dollars at the Market Exchange Rate for such
Component Currency on the Valuation Date with respect to each payment.
(h) For purposes of this Section 312 the following terms shall have
the following meanings:
A "Component Currency" shall mean any Currency which, on the Conversion
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Date, was a component currency of the relevant currency unit, including,
but not limited to, the ECU.
A "Specified Amount" of a Component Currency shall mean the number of
units of such Component Currency or fractions thereof which were
represented in the relevant currency unit, including, but not limited to,
the ECU, on the Conversion Date. If after the Conversion Date the official
unit of any Component Currency is altered by way of combination or
subdivision, the Specified Amount of such Component Currency shall be
divided or multiplied in the same proportion. If after the Conversion Date
two or more Component Currencies are consolidated into a single currency,
the respective Specified Amounts of such Component Currencies shall be
replaced by an amount in such single Currency equal to the sum of the
respective Specified Amounts of such consolidated Component Currencies
expressed in such single Currency, and such amount shall thereafter be a
Specified Amount and such single Currency shall thereafter be a Component
Currency. If after the Conversion Date any Component Currency shall be
divided into two or more currencies, the Specified Amount of such Component
Currency shall be replaced by amounts of such two or more currencies,
having an aggregate Dollar Equivalent value at the Market Exchange Rate on
the date of such replacement equal to the Dollar Equivalent value of the
Specified Amount of such former Component Currency at the Market Exchange
Rate immediately before such division and such amounts shall thereafter be
Specified Amounts and such currencies shall thereafter be Component
Currencies. If, after the Conversion Date of the relevant currency unit,
including, but not limited to, the ECU, a Conversion Event (other than any
event referred to above in this definition of "Specified Amount") occurs
with respect to any Component Currency of such currency unit and is
continuing on the applicable Valuation Date, the Specified Amount of such
Component Currency shall, for purposes of calculating the Dollar Equivalent
of the Currency Unit, be converted into Dollars at the Market Exchange Rate
in effect on the Conversion Date of such Component Currency.
"Election Date" shall mean the date for any series of Registered
Securities as specified pursuant to clause (13) of Section 301 by which the
written election referred to in paragraph (b) above may be made.
All decisions and determinations of the Exchange Rate Agent regarding
the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the
Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as
specified above shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive for all purposes and irrevocably binding upon the
Company, the Trustee and all Holders of such Securities denominated or payable
in the relevant Currency. The Exchange Rate Agent shall promptly give written
notice to the Company and the Trustee of any such decision or determination.
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In the event that the Company determines in good faith that a
Conversion Event has occurred with respect to a Foreign Currency, the Company
will immediately give written notice thereof to the Trustee and to the Exchange
Rate Agent (and the Trustee will promptly thereafter give notice in the manner
provided for in Section 106 to the affected Holders) specifying the Conversion
Date. In the event the Company so determines that a Conversion Event has
occurred with respect to the ECU or any other currency unit in which Securities
are denominated or payable, the Company will immediately give written notice
thereof to the Trustee and to the Exchange Rate Agent (and the Trustee will
promptly thereafter give notice in the manner provided for in Section 106 to the
affected Holders) specifying the Conversion Date and the Specified Amount of
each Component Currency on the Conversion Date. In the event the Company
determines in good faith that any subsequent change in any Component Currency as
set forth in the definition of Specified Amount above has occurred, the Company
will similarly give written notice to the Trustee and the Exchange Rate Agent.
The Trustee shall be fully justified and protected in relying and
acting upon information received by it from the Company and the Exchange Rate
Agent and shall not otherwise have any duty or obligation to determine the
accuracy or validity of such information independent of the Company or the
Exchange Rate Agent.
SECTION 313. Appointment and Resignation of Successor Exchange Rate
Agent.
(a) Unless otherwise specified pursuant to Section 301, if and so long
as the Securities of any series (i) are denominated in a Currency other than
Dollars or (ii) may be payable in a Currency other than Dollars, or so long as
it is required under any other provision of this Indenture, then the Company
will maintain with respect to each such series of Securities, or as so required,
at least one Exchange Rate Agent. The Company will cause the Exchange Rate Agent
to make the necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 301 for the purpose of determining the
applicable rate of exchange and, if applicable, for the purpose of converting
the issued Currency into the applicable payment Currency for the payment of
principal (and premium, if any) and interest, if any, pursuant to Section 312.
(b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become effective
until the acceptance of appointment by the successor Exchange Rate Agent as
evidenced by a written instrument delivered to the Company and the Trustee.
(c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Exchange
Rate Agent for any cause with respect to the Securities of one or more series,
the Company, by or pursuant to
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a Board Resolution, shall promptly appoint a successor Exchange Rate Agent or
Exchange Rate Agents with respect to the Securities of that or those series (it
being understood that any such successor Exchange Rate Agent may be appointed
with respect to the Securities of one or more or all of such series and that,
unless otherwise specified pursuant to Section 301, at any time there shall only
be one Exchange Rate Agent with respect to the Securities of any particular
series that are originally issued by the Company on the same date and that are
initially denominated and/or payable in the same Currency).
SECTION 314. Designation as Senior Indebtedness. The Company hereby
confirms the designation of the Securities as "Senior Indebtedness" with respect
to any subordinated debt securities to be issued under and pursuant to an
indenture to be entered into by the Company and a bank or trust company as
trustee, within the meaning of, and as defined in, such indenture.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect with respect to any series of Securities specified in such Company
Request (except as to any surviving rights of registration of transfer or
exchange of Securities of such series expressly provided for herein or pursuant
hereto and any right to receive Additional Amounts as contemplated by Section
1005) and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such series when
(1) either
(A) all Securities of such series theretofore authenticated and
delivered and all coupons, if any, appertaining thereto (other than
(i) coupons appertaining to Bearer Securities surrendered for exchange
for Registered Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section
305, (ii) Securities and coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306, (iii) coupons appertaining to Securities
called for redemption and maturing after the relevant Redemption Date,
whose surrender has been waived as provided in Section 1106, and (iv)
Securities and coupons of such series for whose payment money has
theretofore been deposited
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in trust with the Trustee or any Paying Agent or segregated and held
in trust by the Company and thereafter repaid to the Company, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii)
below, any coupons appertaining thereto 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, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited with the Trustee
as trust funds in trust for such purpose an amount in the Currency in
which the Securities of such series are payable, sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest, if any, to the date of such deposit (in the case
of Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations of
the Trustee to any Authenticating Agent under Section 611 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
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SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities, the
coupons and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest, if any, for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, 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):
(1) default in the payment of any interest on any Security of that
series, or any related coupon, when such interest or coupon becomes due and
payable, and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the performance, or breach, of any covenant or
agreement of the Company in this Indenture, and continuance of such default
or breach for a period of 90 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(4) (A) there shall have occurred one or more defaults by the Company
or any Subsidiary in the payment of the principal of Debt (other than the
Securities or
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Non-Recourse Indebtedness) in an aggregate amount in excess of $25 million,
when the same becomes due and payable at the stated maturity thereof, and
such default or defaults shall have continued after any applicable grace
period and shall not have been cured or waived or (B) Debt (other than the
Securities or Non-Recourse Indebtedness) of the Company or any Subsidiary
aggregating in an aggregate amount in excess of $25 million shall have been
accelerated or otherwise declared due and payable, or required to be
prepaid or repurchased (other than by regularly scheduled required
prepayment), prior to the stated maturity thereof and such acceleration
shall not have been rescinded or annulled, or such indebtedness shall not
have been discharged, within 15 days after written notice to the Company by
the Trustee or to the Company and the Trustee by the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities; or
(5) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company or any Significant Subsidiary a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under the Federal Bankruptcy Code
or any other applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company or any Significant Subsidiary or of any substantial part of any
of their property, or ordering the winding up or liquidation of any of
their respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; or
(6) the institution by the Company or any Significant Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by
the Company or any Significant Subsidiary to the institution of bankruptcy
or insolvency proceedings against any of them, or the filing by any of them
of a petition or answer or consent seeking reorganization or relief under
the Federal Bankruptcy Code or any other applicable federal or state law,
or the consent by the Company or any Significant Subsidiary to the filing
of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Company
or any Significant Subsidiary or of any substantial part of any of their
respective properties, or the making by the Company or any Significant
Subsidiary of an assignment for the benefit of creditors, or the admission
by any of them in writing of its respective inability to pay their debts
generally as they become due; or
(7) any other Event of Default provided with respect to Securities of
that series.
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SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default described in clause (1), (2), (3), (4) or (7)
or, with respect to a Significant Subsidiary, clause (5) or (6), of Section 501
with respect to Securities of any series at the time Outstanding occurs and is
continuing, then in every such case the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Securities of that series may declare
the principal amount (or, if the Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
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 portion thereof) shall become immediately
due and payable. If an Event of Default specified in Section 501(5) or 501(6)
with respect to the Company occurs and is continuing, then the principal amount
of all the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with respect to
Securities of any series (or of all series, as the case may be) has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided in this Article, the Holders of a
majority in principal amount of the Outstanding Securities of that series (or of
all series, as the case may be), by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the Currency in which the Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)),
(A) all overdue interest, if any, on all Outstanding Securities
of that series (or of all series, as the case may be) and any related
coupons,
(B) all unpaid principal of (and premium, if any) any Outstanding
Securities of that series (or of all series, as the case may be) which
has become due otherwise than by such declaration of acceleration, and
interest on such unpaid principal at the rate or rates prescribed
therefor in such Securities,
(C) interest on overdue interest, if any, 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,
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its agents and counsel; and
(2) all Events of Default with respect to Securities of that series
(or of all series, as the case may be), other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on Securities
of that series (or of all series, as the case may be) which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Securities because of an Event of Default
specified in Section 501(4) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which has not been
cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Security and any related coupon when such interest becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities and coupons, the whole amount then due
and payable on such Securities and coupons for principal (and premium, if any)
and interest, if any, and interest on any overdue principal (and premium, if
any) and on any overdue interest, at the rate or rates prescribed therefor in
such Securities, 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.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series (or of
all series, as the case may be) 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 (or of all series, as the case may be) by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any), or such portion of the principal amount of any series of
Original Issue Discount Securities or Indexed Securities as may be
specified in the terms of such series, and interest, if any, owing and
unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(ii) 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
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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 the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
or coupons may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or coupons 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 and coupons in respect
of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, if any, upon presentation of the Securities or coupons, or
both, as the case may be, 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
606;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest, if any, on the Securities
and coupons 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 and coupons for
principal (and premium, if any) and interest, if any, respectively; and
Third: The balance, if any, to the Person or Persons entitled thereto.
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SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series in the case of any Event of Default
described in clause (1), (2), (3), (4) or (7) of Section 501, or, in the
case of any Event of Default described in clause (5) or (6) of Section 501,
the Holders of not less than 25% in principal amount of all Outstanding
Securities, shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority or
more in principal amount of the Outstanding Securities of that series in
the case of any Event of Default described in clause (1), (2), (3), (4) or
(7) of Section 501, or, in the case of any Event of Default described in
clause (5) or (6) of Section 501, by the Holders of a majority or more in
principal amount of all Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Securities of the same series, in the case of any Event of Default
described in clause (1), (2), (3), (4) or (7) of Section 501, or of Holders of
all Securities in the case of any Event of Default described in clause (5) or
(6) of Section 501, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all Holders of Securities of the same series, in the case of any Event of
Default described in clause (1), (2), (3), (4) or (7) of Section 501, or of
Holders of all Securities in the case of any Event of Default described in
clause (5) or (6) of Section 501.
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SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment, as provided herein (including, if applicable, Article Fourteen)
and in such Security, of the principal of (and premium, if any) and (subject to
Section 307) interest, if any, on, such Security or payment of such coupon on
the respective Stated Maturities expressed in such Security or coupon (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders of
Securities and coupons 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 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Securities or coupons is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
or coupon 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.
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SECTION 512. Control by Holders.
With respect to the Securities of any series, the Holders of not less
than a majority in principal amount of the Outstanding Securities of such 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, relating to or arising under clause (1), (2),
(3), (4) or (7) of Section 501, and, with respect to all Securities, the Holders
of not less than a majority in principal amount of all Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, not relating to or arising under clause (1),
(2), (3), (4) or (7) of Section 501, provided that in each case
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders of Securities
of such series not consenting.
SECTION 513. Waiver of Past Defaults.
Subject to Section 502, 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
described in clause (1), (2), (3), (4) or (7) of Section 501 (or, in the case of
a default described in clause (5) or (6) of Section 501, the Holders of not less
than a majority in principal amount of all Outstanding Securities may waive any
such past default), and its consequences, except a default
(1) in respect of the payment of the principal of (or premium, if any)
or interest, if any, on any Security or any related coupon, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, any 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 Event of
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Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder with
respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such default
hereunder known to the Trustee, unless such Default shall have been cured or
waived; provided, however, that, except in the case of a Default in the payment
of the principal of (or premium, if any) or interest, if any, on any Security of
such series or in the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of Securities of such series and any related coupons; and provided
further that in the case of any Default of the character specified in Section
501(3) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof.
SECTION 602. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) 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
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indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities of any series or any related coupons
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights
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or powers conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, and in any coupons shall be taken as
the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, 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 in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. Neither the Trustee
nor any Authenticating Agent shall be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or of the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities and coupons
and, subject to TIA Sections 310(b) and 311, 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 605. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
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SECTION 606. 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 any such expense,
disbursement or advance as 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 incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (or premium, if any) or interest, if
any, on particular Securities or any coupons.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(5) or (6), the expenses
(including reasonable charges and expense of its counsel) of and the
compensation for such services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the resignation or
removal of the Trustee and the termination of this Indenture.
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SECTION 607. Corporate Trustee Required; Eligibility; Conflicting
Interests.
(a) There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of Federal, State, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
(b) The following indenture shall be deemed to be specifically
described herein for the purposes of clause (i) of the first proviso contained
in TIA Section 310(b): Indenture, dated as of November 1, 1996, between the
Company and the Trustee relating to the Company's 7% Senior Notes due 2006.
SECTION 608. 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 609.
(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 609 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 not less than 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:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) 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
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(2) the Trustee shall cease to be eligible under Section 607(a) and
shall fail to resign 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
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to TIA Section 315(e),
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series). If, within one year 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, 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 hereinafter provided, 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 the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series to the
Holders of Securities of such series in the manner provided for in Section 106.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
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SECTION 609. 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 (1) 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, (2)
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
(3) 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. Whenever there is a successor Trustee with
respect to one or more (but less than all) series of securities issued pursuant
to this Indenture, the terms "Indenture" and "Securities" shall have the
meanings specified in the provisos to the respective definitions of those terms
in
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Section 101 which contemplate such situation.
(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 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 610. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities. In case
any of the Securities shall not have been authenticated by such predecessor
Trustee, any successor Trustee may authenticate such Securities either in the
name of any predecessor hereunder or in the name of the successor Trustee. In
all such cases such certificates shall have the full force and effect which this
Indenture provides for the certificate of authentication of the Trustee;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
SECTION 611. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding, 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 and the Trustee shall give written notice
of such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided for in
Section 106. 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. Any such appointment shall be evidenced
by an instrument in writing signed by a Responsible Officer of the Trustee, and
a copy of such instrument shall be promptly furnished
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to the Company. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any state thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
and if not an Affiliate of the Trustee 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 corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided for in
Section 106. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to
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be reimbursed for such payments, subject to the provisions of Section 606.
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 alternate
certificate of authentication in the following form:
Dated: ____________________
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
, as Trustee
By
as Authenticating Agent
By
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities or coupons, by receiving and holding the
same, agrees with the Company and the Trustee that none of the Company or the
Trustee or any agent of either of them shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Holders in accordance with TIA Section 312, regardless of the source from which
such information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under TIA Section
312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first May
15 after the first issuance of Securities pursuant to this Indenture, the
Trustee shall transmit to the Holders of Securities, in the manner and to the
extent provided in TIA Section 313(c), a brief report dated as of such May 15 if
required by TIA Section 313(a).
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SECTION 703. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of such Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit to all Holders, in the manner and to the extent provided
in TIA Section 313(c), within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to
time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:
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(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety (A) shall be a corporation, partnership or trust organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and (B) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the Company's obligation for the due and
punctual payment of the principal of (and premium, if any) and interest, if
any, on all the Securities and the performance and observance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and
(3) the Company or such Person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.
SECTION 802. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and in the event of any such conveyance or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this Indenture
and the Securities and the coupons and may be dissolved and liquidated.
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SECTION 803. Securities to Be Secured in Certain Events.
If, upon any such consolidation of the Company with or merger of the
Company into any other corporation, or upon any conveyance, lease or transfer of
the property of the Company as an entirety or substantially as an entirety to
any other Person, any Principal Property of the Company or of any Significant
Subsidiary, or any Restricted Securities owned immediately prior thereto, would
thereupon become subject to any Lien, then unless such Lien could be created
pursuant to Section 1009 without equally and ratably securing the Securities,
the Company, prior to or simultaneously with such consolidation, merger,
conveyance, lease or transfer, will, as to such Principal Property or Restricted
Securities, secure the Securities Outstanding hereunder (together with, if the
Company shall so determine, any other Debt of the Company now existing or
hereafter created which is not subordinate to the Securities) equally and
ratably with (or prior to) the Debt which upon such consolidation, merger,
conveyance, lease or transfer is to become secured as to such Principal Property
or Restricted Securities by such Lien, or will cause such Securities to be so
secured; provided that, for the purpose of providing such equal and ratable
security, the principal amount of Original Issue Discount Securities and Indexed
Securities shall mean that amount which would at the time of making such
effective provision be due and payable pursuant to Section 502 and the terms of
such Original Issue Discount Securities and Indexed Securities upon a
declaration of acceleration of the Maturity thereof, and the extent of such
equal and ratable security shall be adjusted, to the extent permitted by law, as
and when said amount changes over time pursuant to the terms of such Original
Issue Discount Securities and Indexed Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities and any related coupons (and if
such covenants are to be
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for the benefit of less than all series of Securities, stating that such
covenants are being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such Events of
Default are to be for the benefit of less than all series of Securities,
stating that such Events of Default are being included solely for the
benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of or any
premium or interest on Bearer Securities, to permit Bearer Securities to be
issued in exchange for Registered Securities, to permit Bearer Securities
to be issued in exchange for Bearer Securities of other authorized
denominations or to permit or facilitate the issuance of Securities in
uncertificated form; provided that any such action shall not adversely
affect the interests of the Holders of Securities of any series or any
related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture;
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to secure the Securities pursuant to the requirements of Section
803 or 1009 or otherwise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor 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
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 609(b); or
(9) to close this Indenture with respect to the authentication and
delivery of additional series of Securities, to cure any ambiguity, to
correct or supplement any provision herein which may be inconsistent with
any other provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture; provided such action
shall not adversely affect the interests of the Holders of Securities of
any series and any related coupons in any material respect; or
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(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Sections 401, 1402 and
1403; provided that any such action shall not adversely affect the
interests of the Holders of Securities of such series and any related
coupons or any other series of Securities in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of all Outstanding Securities affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of (or premium, if
any) or any installment of interest on any Security, or reduce the
principal amount thereof (or premium, if any) or the rate of interest, if
any, thereon, or change any obligation of the Company to pay Additional
Amounts contemplated by Section 1005 (except as contemplated by Section
801(1) and permitted by Section 901(1)), or reduce the amount of the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 502 or the amount thereof provable in bankruptcy pursuant to
Section 504, or adversely affect any right of repayment at the option of
any Holder of any Security, or change any Place of Payment where, or the
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
such payment on or after the Stated Maturity thereof (or, in the case of
redemption or repayment at the option of the Holder, on or after the
Redemption Date or Repayment Date, as the case may be), or adversely affect
any right to convert or exchange any Security as may be provided pursuant
to Section 301 herein, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture,
or reduce the requirements of Section 1504 for quorum or voting, or
(3) modify any of the provisions of this Section, Section 513 or
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Section 1011, 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.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental
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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.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Security affected,
in the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.
The Company covenants and agrees for the benefit of the Holders of
each series of Securities and any related coupons that it will duly and
punctually pay the principal of (and premium, if any) and interest, if any, on
the Securities of that series in accordance with the terms of the Securities,
any coupons appertaining thereto and this Indenture. Unless otherwise specified
as contemplated by Section 301 with respect to any series of Securities, any
interest installments due on Bearer Securities on or before Maturity shall be
payable only upon presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally mature.
SECTION 1002. Maintenance of Office or Agency.
If the Securities of a series are issuable only as Registered
Securities, 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, where Securities of that series that
are convertible or exchangeable may be surrendered for conversion or exchange,
as applicable and where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the
Company will maintain (A) in The City of New York, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of
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that series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, where Securities of that series
that are convertible or exchangeable may be surrendered for conversion or
exchange, as applicable, where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served and
where Bearer Securities of that series and related coupons may be presented or
surrendered for payment in the circumstances described in the following
paragraph (and not otherwise) (B) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series which is located outside the
United States, an office or agency where Securities of that series and related
coupons may be presented and surrendered for payment; provided, however, that,
if the Securities of that series are listed on any stock exchange located
outside the United States and such stock exchange shall so require, the Company
will maintain a Paying Agent for the Securities of that series in any required
city located outside the United States so long as the Securities of that series
are listed on such exchange, and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series located outside the
United States an office or agency where any Registered Securities of that series
may be surrendered for registration of transfer, where Securities of that series
may be surrendered for exchange, where Securities of that series that are
convertible and exchangeable may be surrendered for conversion or exchange, as
applicable 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, except that Bearer Securities of any series and the
related coupons may be presented and surrendered for payment at the offices
specified in the Security, in London, and the Company hereby appoints the same
as its agents to receive such respective presentations, surrenders, notices and
demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of principal, premium or interest on Bearer Securities
shall be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that, if
the Securities of a series are payable in Dollars, payment of principal of (and
premium, if any) and interest, if any, on any Bearer Security shall be made at
the office of the Company's Paying Agent in The City of New York, if (but only
if) payment in Dollars of the full amount of such principal, premium or
interest, as the case may be, at all offices or agencies outside the United
States maintained for such purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
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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
any such designation; 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 accordance with the requirements set forth above 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. Unless otherwise specified with respect to
any Securities as contemplated by Section 301 with respect to a series of
Securities, the Company hereby designates as a Place of Payment for each series
of Securities the office or agency of the Company in the Borough of Manhattan,
The City of New York, and initially appoints the Trustee at its Corporate Trust
Office as Paying Agent in such city and as its agent to receive all such
presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are denominated
in a Currency other than Dollars or (ii) may be payable in a Currency other than
Dollars, or so long as it is required under any other provision of the
Indenture, then the Company will maintain with respect to each such series of
Securities, or as so required, at least one Exchange Rate Agent.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities and any related coupons, it will, on or
before each due date of the principal of (or premium, if any) or interest, if
any, on any of the Securities of that series, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) sufficient to pay the principal
of (or premium, if any) or interest, if any, on Securities of such series 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 and any related coupons, it will, prior to or on each due
date of the principal of (or premium, if any) or interest, if any, on any
Securities of that series, deposit with a Paying Agent a sum (in the Currency
described in the preceding paragraph) sufficient to pay the principal (or
premium, if any) or interest, if any, so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
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The Company will cause each Paying Agent (other than the Trustee) for
any series of Securities to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) and interest, if any, on Securities of such series in
trust for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of such series) in the making of any
payment of principal of (or premium, if any) or interest, if any, on the
Securities of such series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Except as provided in the Securities of any series, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (or premium, if any) or interest, if
any, on any Security of any series, or any coupon appertaining thereto, and
remaining unclaimed for two years after such principal, premium or interest has
become due and payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Security or coupon 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; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
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SECTION 1004. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this Section 1004, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 1005. Additional Amounts.
If any Securities of a series provide for the payment of additional
amounts to any Holder who is not a United States person in respect of any tax,
assessment or governmental charge ("Additional Amounts"), the Company will pay
to the Holder of any Security of such series or any coupon appertaining thereto
such Additional Amounts as may be specified as contemplated by Section 301.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal (or premium, if any) or interest, if any, on, or in respect of,
any Security of a series or payment of any related coupon or the net proceeds
received on the sale or exchange of any Security of a series, such mention shall
be deemed to include mention of the payment of Additional Amounts provided for
by the terms of such series established pursuant to Section 301 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to such terms and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Securities (or if the Securities of that series will not bear interest prior to
Maturity, the first day on which a payment of principal (and premium, if any) is
made), and at least 10 days prior to each date of payment of principal (or
premium, if any) or interest if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company will
furnish the Trustee and the Company's principal Paying Agent or Paying Agents,
if other than the Trustee, with an Officers' Certificate instructing the Trustee
and such Paying Agent or Paying Agents whether such payment of principal,
premium or interest on the Securities of that series shall be made to Holders of
Securities of that series or any related coupons who are not United States
persons without withholding for or on account of any tax, assessment or other
governmental charge described in the Securities of the series. If any such
withholding shall be required, then such Officers' Certificate shall specify by
country the amount, if any, required to be withheld on such payments to such
Holders of Securities of that series or related coupons and the Company
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will pay to the Trustee or such Paying Agent the Additional Amounts required by
the terms of such Securities. In the event that the Trustee or any Paying Agent,
as the case may be, shall not so receive the above-mentioned certificate, then
the Trustee or such Paying Agent shall be entitled to (i) assume that no such
withholding or deduction is required with respect to any payment of principal of
(or premium, if any) or interest, if any, on any Securities of a series or
related coupons until it shall have received a certificate advising otherwise
and (ii) to make all payments of principal of (and premium, if any) and
interest, if any, on the Securities of a series or related coupons without
withholding or deductions until otherwise advised. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any Officers' Certificate furnished
pursuant to this Section.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Significant
Subsidiary or upon the income, profits or property of the Company or any
Significant Subsidiary, and (2) all material lawful claims for labor, materials
and supplies which, if unpaid, might by law become a Lien upon any Principal
Property of the Company or any Significant 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.
SECTION 1007. Maintenance of Principal Properties.
The Company will cause all Principal Properties 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 in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent or restrict the sale,
abandonment or other disposition of any of such Principal Properties if such
action is, in the judgment of the Company, desirable in the conduct of the
business of the Company and its Subsidiaries as a whole and not disadvantageous
in any material respect to the Holders.
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SECTION 1008. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the rights (charter and statutory) and franchises of the Company
and any Significant Subsidiary; provided, however, that the Company shall not be
required to preserve any such right or franchise of the Company or any
Significant Subsidiary if the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries as a whole.
SECTION 1009. Limitation on Liens.
The Company will not, and will not permit any Subsidiary of the
Company to, issue, assume or guarantee any Debt if such Debt is secured by a
mortgage, pledge, security interest or lien (a "mortgage" or "mortgages") upon
any Principal Property of the Company or any Subsidiary of the Company or upon
any shares of stock or other stock or other equity interest or indebtedness
(collectively "Restricted Securities") of any Subsidiary of the Company (whether
such property, shares of stock or other equity interest or indebtedness is now
owned or hereafter acquired) which owns any Principal Property, without in any
such case effectively providing that the Securities shall be secured equally and
ratably with (or prior to) such Debt; provided, however, that the foregoing
restrictions shall not apply to:
(a) Mortgages existing on the date the Securities are originally
issued or mortgages provided for under the terms of agreements existing on
such date;
(b) Mortgages on Current Assets securing Current Liabilities;
(c) Mortgages on any property acquired, constructed, altered or
improved by the Company or any Subsidiary of the Company after the date of
the Indenture that are created or assumed contemporaneously with or within
one year after such acquisition (or in the case of property constructed,
altered or improved, after the completion and commencement of commercial
operation of such property, whichever is later) to secure or provide for
the payment of the purchase price or cost thereof, provided that in the
case of any such construction, alteration or improvement the mortgages
shall not apply to any property theretofore owned by the Company or any
Subsidiary of the Company other than (i) the property so altered or
improved and (ii) any theretofore unimproved real property on which the
property so constructed or altered, or the improvement, is located;
(d) Existing mortgages on property acquired (including mortgages on
any property acquired from a Person that is consolidated with or merged
with or into the
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Company or a Subsidiary of the Company) or mortgages outstanding at the
time any Person becomes a Subsidiary of the Company that are not incurred
in connection with such entity becoming a Subsidiary of the Company;
(e) mortgages in favor of the Company or any Subsidiary of the
Company;
(f) mortgages on any property (i) in favor of domestic or foreign
governmental bodies to secure partial, progress, advance or other payments
pursuant to any contract or statute, (ii) securing indebtedness incurred to
finance all or any part of the purchase price or cost of constructing,
installing or improving the property subject to such mortgages including
mortgages to secure Debt of the pollution control or industrial revenue
bond type, or (iii) securing indebtedness issued or guaranteed by the
United States, any State, any foreign country or any department, agency,
instrumentality or political subdivision of any such jurisdiction; and
(g) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred to
in the foregoing clause (a), (b), (c), (d), (e) or (f); provided, however,
that the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension, renewal
or replacement, together with the reasonable costs related to such
extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to all or a part of the property that secured
the mortgage so extended, renewed or replaced (plus improvements on such
property).
Notwithstanding the foregoing, the Company and any Subsidiary of the
Company may, without securing the Securities, issue, assume or guarantee secured
Debt (that would otherwise be subject to the foregoing restrictions) in an
aggregate amount that, together with all other such secured Debt and the
aggregate amount of Attributable Indebtedness of the Company and its
Subsidiaries deemed to be outstanding in respect of all Sale/Leaseback
Transactions entered into pursuant to Section 1010 (excluding any such
Sale/Leaseback Transactions the proceeds of which have been applied in
accordance with clauses (2) or (3) of Section 1010), does not exceed 10% of the
Consolidated Net Worth, as shown on a consolidated balance sheet as of a date
not more than 90 days prior to the proposed transaction prepared by the Company
in accordance with generally accepted accounting principles.
SECTION 1010. Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any of its Subsidiaries to,
enter into any Sale/Leaseback Transaction with any Person (other than the
Company or a Subsidiary of the Company) unless:
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(1) At the time of entering into such Sale/Leaseback Transaction, the
Company or such Subsidiary would be entitled to incur Debt, in a principal
amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction, secured by a mortgage on the property subject
to such Sale/Leaseback Transaction, pursuant to Section 1009 without
equally and ratably securing the Securities pursuant to such provisions;
(2) After the date on which Securities are first issued and within a
period commencing six months prior to the consummation of such
Sale/Leaseback Transaction and ending six months after the consummation
thereof, the Company or such Subsidiary shall have expended for property
used or to be used in the ordinary course of business of the Company or
such Subsidiary (including amounts expended for additions, expansions,
alterations, repairs and improvements thereto) an amount equal to all or a
portion of the net proceeds of such Sale/Leaseback Transaction, and the
Company shall have elected to designate such amount as a credit against
such Sale/Leaseback Transaction (with any such amount not being so
designated to be applied as set forth in clause (3) below); or
(3) During the 12-month period after the effective date of such
Sale/Leaseback Transaction, the Company shall have applied to the voluntary
defeasance or retirement of Securities or any pari passu indebtedness of
the Company an amount equal to the net proceeds of the sale or transfer of
the property leased in such Sale/Leaseback Transaction, which amount shall
not be less than the fair value of such property at the time of entering
into such Sale/Leaseback Transaction (adjusted to reflect any amount
expended by the Company as set forth in clause (2) above), less an amount
equal to the principal amount of such Securities and pari passu
indebtedness voluntarily defeased or retired by the Company within such
12-month period and not designated as a credit against any other
Sale/Leaseback Transaction entered into by the Company or any Subsidiary of
the Company during such period.
SECTION 1011. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 803 or Sections 1006 to 1010,
inclusive, or, as specified pursuant to Section 301(17) for Securities of such
series, in any covenants of the Company added to Article Ten pursuant to Section
301(16) or Section 301(17) in connection with Securities of such series, if the
Holders of at least a majority in principal amount of all Outstanding Securities
affected by such term, provision or condition, by Act of such Holders, waive
such compliance in such instance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition except
to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the
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Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with the terms of such Securities and
(except as otherwise specified as contemplated by Section 301 for Securities of
any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days 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 and of
the principal amount of Securities of such series to be redeemed and shall
deliver to the Trustee such documentation and records as shall enable the
Trustee to select the Securities to be redeemed pursuant to Section 1103. In the
case of any redemption of Securities prior to the expiration of any restriction
on such redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions of the principal of Securities of such series; provided,
however, that no such partial redemption shall reduce the portion of the
principal amount of a Security not redeemed to less than the minimum authorized
denomination for Securities of such series established pursuant to Section 301.
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
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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 Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Except as otherwise specified as contemplated by Section 301, notice
of redemption shall be given in the manner provided for in Section 106 not less
than 30 nor more than 60 days prior to the Redemption Date, to each Holder of
Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued
interest to the Redemption Date payable as provided in
Section 1106, if any,
(3) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the
case of partial redemption, 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 will receive, without charge, a
new Security or Securities of authorized denominations for
the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date, the Redemption Price
and accrued interest, if any, to the Redemption Date payable
as provided in Section 1106 will become due and payable upon
each such Security, or the portion thereof, to be redeemed
and, if applicable, that interest thereon will cease to
accrue on and after said date,
(6) the Place or Places of Payment where such
Securities, together in the case of Bearer Securities with
all coupons appertaining thereto, if any, maturing after the
Redemption Date, are to be surrendered for payment of the
Redemption Price and accrued interest, if any,
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(7) that the redemption is for a sinking fund, if such
is the case,
(8) that, unless otherwise specified in such notice,
Bearer Securities of any series, if any, surrendered for
redemption must be accompanied by all coupons maturing
subsequent to the Redemption Date or the amount of any such
missing coupon or coupons will be deducted from the
Redemption Price unless security or indemnity satisfactory
to the Company, the Trustee and any Paying Agent is
furnished, and
(9) if Bearer Securities of any series are to be
redeemed and any Registered Securities of such series are
not to be redeemed, and if such Bearer Securities may be
exchanged for Registered Securities not subject to
redemption on such Redemption Date pursuant to Section 305
or otherwise, the last date, as determined by the Company,
on which such exchanges may be made.
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.
SECTION 1105. Deposit of Redemption Price.
On or before any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in the Currency in which the Securities of such series are payable (except
as otherwise specified pursuant to Section 301 for the Securities of such series
and except, if applicable, as provided in Sections 312(b), 312(d) and 312(e))
sufficient to pay the Redemption Price of, and accrued interest, if any, on, all
the Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified in the Currency in which the Securities of
such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable, as provided in
Sections 312(b), 312(d) and 312(e)) (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest, if any)
such Securities shall, if the same were interest-bearing, cease to bear interest
and the coupons for such interest appertaining to any Bearer Securities so to be
redeemed, except to the extent provided below, shall be void. Upon surrender of
any such Security for redemption in accordance with said
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notice, together with all coupons, if any, appertaining thereto maturing after
the Redemption Date, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest on Bearer Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable
only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of coupons for
such interest; and provided further that installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
however, that interest represented by coupons shall be payable only at an office
or agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) set forth
in such Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article or of Article Twelve) 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 such Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, 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.
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
Retirements of Securities of any series pursuant to any sinking fund
shall be made in accordance with the terms of such Securities and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any series,
the cash amount of any mandatory sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
Subject to Section 1203, in lieu of making all or any part of any
mandatory sinking fund payment with respect to any Securities of a series in
cash, the Company may at its option (1) deliver to the Trustee Outstanding
Securities of a series (other than any previously called for redemption)
theretofore purchased or otherwise acquired by the Company together in the case
of any Bearer Securities of such series with all unmatured coupons appertaining
thereto, and/or (2) receive credit for the principal amount of Securities of
such series which have been previously delivered to the Trustee by the Company
or for Securities of such 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
mandatory sinking fund payment with respect to the Securities of the same series
required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided, however, that such Securities have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
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SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 312(b), 312(d) and 312(e)) and the portion thereof, if any,
which is to be satisfied by delivering or crediting Securities of that series
pursuant to Section 1202 (which Securities will, if not previously delivered,
accompany such certificate) and whether the Company intends to exercise its
right to make a permitted optional sinking fund payment with respect to such
series. Such certificate shall be irrevocable and upon its delivery the Company
shall be obligated to make the cash payment or payments therein referred to, if
any, on or before the next succeeding sinking fund payment date. In the case of
the failure of the Company to deliver such certificate, the sinking fund payment
due on the next succeeding sinking fund payment date for that series shall be
paid entirely in cash and shall be sufficient to redeem the principal amount of
such Securities subject to a mandatory sinking fund payment without the option
to deliver or credit Securities as provided in Section 1202 and without the
right to make any optional sinking fund payment, if any, with respect to such
series.
Not more than 60 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
Prior to any sinking fund payment date, the Company shall pay to the
Trustee or a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) in cash a sum equal to
any interest that will accrue to the date fixed for redemption of Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 1203.
Notwithstanding the foregoing, with respect to a sinking fund for any
series of Securities, if at any time the amount of cash to be paid into such
sinking fund on the next succeeding sinking fund payment date, together with any
unused balance of any preceding sinking fund payment or payments for such
series, does not exceed in the aggregate $100,000, the Trustee, unless requested
by the Company, shall not give the next succeeding notice of the redemption of
Securities of such series through the operation of the sinking fund. Any such
unused balance of moneys deposited in such sinking fund shall be added to the
sinking fund
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payment for such series to be made in cash on the next succeeding sinking fund
payment date or, at the request of the Company, shall be applied at any time or
from time to time to the purchase of Securities of such series, by public or
private purchase, in the open market or otherwise, at a purchase price for such
Securities (excluding accrued interest and brokerage commissions, for which the
Trustee or any Paying Agent will be reimbursed by the Company) not in excess of
the principal amount thereof.
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Repayment of Securities of any series before their Stated Maturity at
the option of Holders thereof shall be made in accordance with the terms of such
Securities and (except as otherwise specified as contemplated by Section 301 for
Securities of any series) in accordance with this Article.
SECTION 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in part at
the option of the Holders thereof will, unless otherwise provided in the terms
of such Securities, be repaid at a price equal to the principal amount thereof,
together with interest, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Securities. The Company covenants that on or
before the Repayment Date it will deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money in the Currency in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series and except, if
applicable, as provided in Sections 312(b), 312(d) and 312(e)) sufficient to pay
the principal (or, if so provided by the terms of the Securities of any series,
a percentage of the principal) of and (except if the Repayment Date shall be an
Interest Payment Date) accrued interest, if any, on, all the Securities or
portions thereof, as the case may be, to be repaid on such date.
SECTION 1303. Exercise of Option.
Securities of any series subject to repayment at the option of the
Holders thereof will contain an "Option to Elect Repayment" form on the reverse
of such Securities. To be repaid at the option of the Holder, any Security so
providing for such repayment, with the "Option to Elect Repayment" form on the
reverse of such Security duly completed by the
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Holder (or by the Holder's attorney duly authorized in writing), must be
received by the Company at the Place of Payment therefor specified in the terms
of such Security (or at such other place or places or which the Company shall
from time to time notify the Holders of such Securities) not earlier than 45
days nor later than 30 days prior to the Repayment Date. If less than the entire
principal amount of such Security is to be repaid in accordance with the terms
of such Security, the principal amount of such Security to be repaid, in
increments of the minimum denomination for Securities of such series, and the
denomination or denominations of the Security or Securities to be issued to the
Holder for the portion of the principal amount of such Security surrendered that
is not to be repaid, must be specified. The principal amount of any Security
providing for repayment at the option of the Holder thereof may not be repaid in
part if, following such repayment, the unpaid principal amount of such Security
would be less than the minimum authorized denomination of Securities of the
series of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become Due and
Payable.
If Securities of any series providing for repayment at the option of
the Holders thereof shall have been surrendered as provided in this Article and
as provided by or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Company on the Repayment Date therein
specified, and on and after such Repayment Date (unless the Company shall
default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest and
the coupons for such interest appertaining to any Bearer Securities so to be
repaid, except to the extent provided below, shall be void. Upon surrender of
any such Security for repayment in accordance with such provisions, together
with all coupons, if any, appertaining thereto maturing after the Repayment
Date, the principal amount of such Security so to be repaid shall be paid by the
Company, together with accrued interest, if any, to the Repayment Date;
provided, however, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons; and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated Maturity is on or
prior to the Repayment Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by
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all appurtenant coupons maturing after the Repayment Date, such Security may be
paid after deducting from the amount payable therefor as provided in Section
1302 an amount equal to the face amount of all such missing coupons, or the
surrender of such missing coupon or coupons may be waived by the Company and the
Trustee if there be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security shall surrender to the Trustee or any Paying Agent any
such missing coupon in respect of which a deduction shall have been made as
provided in the preceding sentence, such Holder shall be entitled to receive the
amount so deducted; provided, however, that interest represented by coupons
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
as contemplated by Section 301, only upon presentation and surrender of those
coupons.
If the principal amount of any Security surrendered for repayment
shall not be so repaid upon surrender thereof, such principal amount (together
with interest, if any, thereon accrued to such Repayment Date) shall, until
paid, bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part.
Upon surrender of any Registered Security which is to be repaid in
part only, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge and at the
expense of the Company, a new Registered Security or Securities of the same
series, of any authorized denomination specified by the Holder, in an aggregate
principal amount equal to and in exchange for the portion of the principal of
such Security so surrendered which is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant
Defeasance.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, the provisions of this Article Fourteen shall apply to
each series of Securities, and the Company may, at its option, effect defeasance
of the Securities of or within a series under Section 1402, or covenant
defeasance of or within a series under Section 1403 in accordance with the terms
of such Securities and in accordance with this Article.
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SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be deemed to have been discharged from its obligations with respect to such
Outstanding Securities and any related coupons on the date the conditions set
forth in Section 1404 are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Outstanding Securities
and any related coupons, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1405 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities and any related coupons and this Indenture
insofar as such Securities and any related coupons are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any related coupons to receive, solely from the trust
fund described in Section 1404 and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any) and interest, if
any, on such Securities and any related coupons when such payments are due, (B)
the Company's obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003 and with respect to the payment of Additional Amounts,
if any, on such Securities as contemplated by Section 1005, (C) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (D) this
Article Fourteen. Subject to compliance with this Article Fourteen, the Company
may exercise its option under this Section 1402 notwithstanding the prior
exercise of its option under Section 1403 with respect to such Securities and
any related coupons.
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company shall
be released from its obligations under Section 803 and Sections 1006 through
1010, and, if specified pursuant to Section 301, its obligations under any other
covenant, with respect to such Outstanding Securities and any related coupons on
and after the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "covenant defeasance"), and such Securities and any related
coupons shall thereafter be deemed not to be "Outstanding" for the purposes of
any direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding
Securities and any related coupons, 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 covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of reference in any
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such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 501(3) or Section 501(7) or otherwise, as the case may be, but, except
as specified above, the remainder of this Indenture and such Securities and any
related coupons shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
1402 or Section 1403 to any Outstanding Securities of or within a series and any
related coupons:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the provisions of this
Article Fourteen 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 such Securities and any
related coupons, (A) an amount (in such Currency in which such Securities
and any related coupons are then specified as payable at Stated Maturity),
or (B) Government Obligations applicable to such Securities (determined on
the basis of the Currency in which such Securities are then specified as
payable at Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment of
principal of and premium, if any, and interest, if any, under such
Securities and any related coupons, money in an amount, or (C) a
combination thereof, 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, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
(i) the principal of (and premium, if any) and interest, if any, on such
Outstanding Securities and any related coupons on the Stated Maturity (or
Redemption Date, if applicable) of such principal (and premium, if any) or
installment of interest, if any, and (ii) any mandatory sinking fund
payments or analogous payments applicable to such Outstanding Securities
and any related coupons on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of such
Securities and any related coupons; provided that the Trustee shall have
been irrevocably instructed to apply such money or the proceeds of such
Government Obligations to said payments with respect to such Securities and
any related coupons. Before such a deposit, the Company may give to the
Trustee, in accordance with Section 1102 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 Eleven hereof, which notice shall be irrevocable. Such irrevocable
redemption notice, if given, shall be given effect in
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applying the foregoing.
(2) No Default or Event of Default with respect to such Securities or
any related coupons shall have occurred and be continuing on the date of
such deposit or, insofar as paragraphs (5) and (6) of Section 501 are
concerned, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(3) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound.
(4) In the case of an election under Section 1402, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of execution of this
Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of such Outstanding Securities and any
related coupons will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance 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 such defeasance had not occurred.
(5) In the case of an election under Section 1403, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any related coupons will not
recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance 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 such covenant defeasance had not occurred.
(6) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations in connection
therewith pursuant to Section 301.
(7) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1402
or the covenant defeasance under Section 1403 (as the case may be) have
been complied with.
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SECTION 1405. Deposited Money and Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations (or other property as may be provided pursuant
to Section 301) (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 1405, the
"Trustee") pursuant to Section 1404 in respect of such Outstanding Securities
and any related coupons shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and any related coupons 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 Holders of such Securities and any related coupons of all sums
due and to become due thereon in respect of principal (and premium, if any) and
interest, if any, but such money need not be segregated from other funds except
to the extent required by law.
Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(1) has been made,
(a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 312(b) or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 1404(1) has been made in respect of such Security, or (b) a
Conversion Event occurs as contemplated in Section 312(d) or 312(e) or by the
terms of any Security in respect of which the deposit pursuant to Section
1404(1) has been made, the indebtedness represented by such Security and any
related coupons shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest, if any, on such Security as they become due out of the proceeds
yielded by converting (from time to time as specified below in the case of any
such election) the amount or other property deposited in respect of such
Security into the Currency in which such Security becomes payable as a result of
such election or Conversion Event based on the applicable Market Exchange Rate
for such Currency in effect on the third Business Day prior to each payment
date, except, with respect to a Conversion Event, for such Currency in effect
(as nearly as feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Securities and any related
coupons.
Anything in this Article Fourteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations (or other property and any proceeds
therefrom) held by it as provided
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in Section 1404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1406. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1405 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 such
Securities and any related coupons shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1405; provided, however, that if the Company makes any
payment of principal of (or premium, if any) or interest, if any, on any such
Security or any related coupon following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
and any related coupons to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a meeting
of Holders of Securities of such series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in The City of New York or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities of any
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided for in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
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(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Securities of such series for any purpose specified in Section 1501, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as provided herein,
then the Company or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in The City
of New York or in London for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in paragraph (a) of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Person
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series; provided, however, that, if any action is
to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than a
specified percentage in principal amount of the Outstanding Securities of a
series, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series shall constitute a quorum.
In the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Securities
of such series, be dissolved. In any other case the meeting may be adjourned,
subject to the provisions of the next paragraph, for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1502(a), except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of any adjourned meeting shall state
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expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned
for lack of a quorum the Persons entitled to vote 25% in principal amount of the
Outstanding Securities at the time shall constitute a quorum for the taking of
any action set forth in the notice of the original meeting.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of
not less than a majority in principal amount of the Outstanding Securities of
such series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of not less than such specified percentage in
principal amount of the Outstanding Securities of such series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related coupons,
whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Securities affected thereby, or of the Holders of such series and
one or more additional series:
(i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the Outstanding Securities of such series
that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under this
Indenture.
98
<PAGE>
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment
of Meetings.
(a) Notwithstanding any provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of a series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in Section 104
or by having the signature of the person executing the proxy witnessed or
guaranteed by any trust company, bank or banker authorized by Section 104 to
certify to the holding of Bearer Securities. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1502(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of Outstanding
Securities of such series held or represented by him (determined as specified in
the definition of "Outstanding" in Section 101); provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security challenged as
not Outstanding and ruled by the chairman of the meeting to be not Outstanding.
The chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
99
<PAGE>
SECTION 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the Secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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 Indenture.
100
<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.
BORG-WARNER AUTOMOTIVE, INC.
By:
Name:
Title:
[Seal]
Attest:
__________________________
By:
Name:
Title:
[Seal]
Attest:
101
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR TO OBTAIN INTEREST PAYABLE PRIOR
TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States persons(s)"), (ii) are owned by United States person(s) that are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section
2.165-12(c)(1)(v) are herein referred to as "financial institutions") purchasing
for their own account or for resale, or (b) United States person(s) who acquired
the Securities through foreign branches of United States financial institutions
and who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise Borg-Warner Automotive, Inc. or its agent that such
financial institution will comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the United States Internal Revenue Code of 1986, as amended, and
the regulations thereunder), or (iii) are owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Securities for purposes of resale directly or indirectly to
a United States person or to a person within the United States or its
possessions.
As used herein, "United States" means the United States of America
(including the states and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S.
A-1-1
<PAGE>
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not correct on such
date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certificate excepts and does not relate to [U.S.$]__________ of
such interest in the above-captioned Securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until we
do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the 15th day prior to (i) the Exchange Date or
(ii)the relevant Interest Payment Date occurring prior to the Exchange Date, as
applicable]
[Name of Person Making Certification]
(Authorized Signatory)
Name:
Title:
A-1-2
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN
CONNECTION WITH THE EXCHANGE OF A PORTION OF A
TEMPORARY GLOBAL SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$]__________ principal
amount of the above-captioned Securities (i) is owned by person(s) that are not
citizens or residents of the United States, domestic partnerships, domestic
corporations or any estate or trust the income of which is subject to United
States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States person(s) that are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v) are herein
referred to as "financial institutions") purchasing for their own account or for
resale, or (b) United States person(s) who acquired the Securities through
foreign branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date hereof
(and in either case (a) or (b), each such financial institution has agreed, on
its own behalf or through its agent, that we may advise Borg-Warner Automotive,
Inc. or its agent that such financial institution will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)) and, to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of America
(including the states and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
A-2-1
<PAGE>
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:
[To be dated no earlier than the Exchange Date or the relevant Interest Payment
Date occurring prior to the Exchange Date, as applicable]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, as Operator of the
Euroclear System]
[CEDEL S.A.]
By
A-2-2
EXHIBIT 5
[WACHTELL, LIPTON, ROSEN & KATZ LETTERHEAD]
August 10, 1999
Borg-Warner Automotive, Inc.
200 South Michigan Avenue
Chicago, Illinois 60604
Ladies and Gentlemen:
We have acted as special counsel for Borg-Warner Automotive, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing by the Company with the Securities and Exchange Commission of a
Registration Statement on Form S-3, as it may be amended (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities
Act"), for the registration of the offer and sale by the Company, from time to
time pursuant to the provisions of Rule 415 under the Securities Act, of up to
$350 million maximum aggregate initial offering price of debt securities of the
Company (the "Debt Securities"). Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Registration Statement.
The Debt Securities will constitute either senior or subordinated
debt of the Company and will be issued under, in the case of the senior Debt
Securities, an indenture between the Company and The First National Bank of
Chicago as trustee (the "Senior Debt Indenture"), and in the case of the
subordinated Debt Securities, an indenture to be between the Company and a bank
or trust company as trustee (the "Subordinated Debt Indenture"). The Senior Debt
Indenture and the Subordinated Debt Indenture are hereinafter referred to
collectively as the "Indentures." The Indentures will be filed as exhibits to
amendments to the Registration Statement.
<PAGE>
Borg-Warner Automotive, Inc.
August 10, 1999
Page 2
In this connection, we have reviewed: (i) the Restated Certificate
of Incorporation and By-Laws of the Company; (ii) a draft of the Registration
Statement (iii) the form of Senior Debt Indenture; (iv) certain resolutions
adopted by the Board of Directors of the Company; and (v) such other documents,
records and papers as we have deemed necessary or appropriate in order to give
the opinions set forth herein. We are familiar with the proceedings heretofore
taken by the Company in connection with the authorization, registration,
issuance and sale of the Debt Securities. We have, with your consent, relied as
to the factual matters on certificates or other documents or information
furnished by the Company or its officers and by governmental authorities and
upon such other documents and data that we have deemed appropriate or necessary
as a basis for the opinions hereinafter expressed. In such review, we have
assumed the genuineness of all signatures, the authenticity of all documents,
certificates and instruments submitted to us as originals, the conformity with
the originals of all documents submitted to us as copies or as retrieved from
the Securities and Exchange Commission's EDGAR database, and the authenticity of
the originals of such latter documents.
Based upon the foregoing, we are of the opinion that, except as
limited by (i) bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors' rights generally,
(ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), (iii) requirements that a claim
with respect to any Debt Securities denominated other than in United States
dollars (or a judgment denominated other than in United States dollars with
respect of such a claim) be converted into United States dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law, and (iv)
governmental authority to limit, delay, or prohibit the making of payments
outside the United States or in foreign currency or currencies, or currency unit
or units, or composite currency or currencies:
1. When duly authorized officers of the Company have taken all
necessary action to approve the form of the Indentures, including the form of
Debt Securities, the Debt Securities and the Indentures will be duly authorized.
2. When the specific terms of a particular Debt Security and its
issuance and sale have been duly established in accordance with the Senior
Indenture or the Subordinated Indenture, as the case may be, and such Debt
Security has been duly executed and authenticated in accordance with the Senior
Indenture or Subordinated Indenture, as the case may be, and any supplemental
indenture that may be required, and duly issued and sold in accordance with the
applicable definitive purchase, underwriting or similar agreement approved by
the Board of Directors of the Company upon payment of the consideration therefor
provided for therein, such Debt Security will constitute the valid and binding
obligation of the Company.
In connection with the opinions expressed above, we have assumed
with your consent that, at or prior to the time of the delivery of any such Debt
Security, (i) the Board of Directors of the Company, themselves or as so
delegated, shall have approved the specific sale
<PAGE>
Borg-Warner Automotive, Inc.
August 10, 1999
Page 3
and issuance of such Debt Security (including the terms thereof) and shall not
have modified or rescinded the duly authorized issuance and sale of such Debt
Security, (ii) the Registration Statement shall have been declared effective and
such effectiveness shall not have been terminated or rescinded, (iii) the
Subordinated Debt Indenture shall be similar to the form of Senior Indenture
which we have reviewed with the differences noted in the Registration Statement
which we have reviewed, (iv) the final versions of the Registration Statement
and Senior Indenture shall not be substantially different from the versions we
have reviewed, (v) the applicable Trustee and the applicable Indentures shall
have been qualified under the Trust Indenture Act of 1939, as amended, and the
rules and regulations thereunder, (vi) (a) the Company shall have full power and
authority to execute, deliver and perform the obligations set forth in the
applicable documents, (b) the applicable documents shall have been duly
authorized, executed and delivered by the Company and (c) the execution and
delivery of the applicable documents and the performance by the Company of its
obligations thereunder shall not have violated, breached or otherwise given rise
to a default under the terms or provisions of its Restated Certificate of
Incorporation as then in effect or By-Laws as then in effect or of any material
contract, commitment or other obligation to which the Company is then a party,
and such execution, delivery and performance shall comply with any requirement
or restriction imposed by any court or governmental body then having
jurisdiction over the Company, and (vii) there shall not have occurred any
change in law affecting the validity or enforceability of such Debt Security. We
have also assumed that none of the terms of any Debt Security to be established
subsequent to the date hereof, nor the issuance and sale of such Debt Security,
nor the compliance by the Company with the terms of such Security, will violate
any applicable law or will result in a violation of any provision of any
instrument or agreement then binding upon the Company, or any restriction
imposed by any court or governmental body having jurisdiction over the Company.
We are not members of the Bar of any jurisdiction other than the
State of New York and, with your consent, we express no opinion as to the law of
any jurisdiction other than the laws of the State of New York and the General
Corporation Law of the State of Delaware.
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the prospectus that is a part of the Registration Statement. In
giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
General Rules and Regulations promulgated thereunder.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
DAK/jc
BORG WARNER AUTOMOTIVE, INC. EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
($ in millions)
<TABLE>
<CAPTION>
FIXED CHARGES
EARNINGS (INTEREST EXPENSE
(EARNINGS BEFORE EXCLUDING THE
CUMULATIVE EFFECT OF BENEFIT OF
ACCOUNTING CHANGE CAPITALIZED INTEREST
INCREASED BY FIXED CHARGES, INCLUDING ONE-THIRD
CAPITALIZED INTEREST OF RENTAL EXPENSE -
AMORTIZATION EXPENSE APPROXIMATE PORTION RATIO OF EARNINGS
AND INCOME TAXES) REPRESENTING INTEREST) TO FIXED CHARGES
----------------- ---------------------- ----------------
<S> <C> <C> <C>
1994................. $ 124.0 $ 15.6 7.9
1995................. $ 130.8 $ 18.6 7.0
1996................. $ 82.0 $ 26.2 3.1
1997................. $ 189.9 $ 30.8 6.2
1998................. $ 174.9 $ 32.9 5.3
Six months:
1998................. $ 82.5 $ 15.8 5.2
1999................. $ 132.9 $ 23.8 5.6
</TABLE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Borg-Warner Automotive, Inc. on Form S-3 of our report dated January 30, 1999
(February 22, 1999 as to the third paragraph of Note 14) incorporated by
reference in the Annual Report on Form 10-K of Borg-Warner Automotive, Inc. for
the year ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Chicago, Illinois
August 10, 1999
EXHIBIT 23.3
[KPMG LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Borg-Warner Automotive, Inc. of our report dated April 24, 1999
incorporated by reference in the Annual Report on Form 10-K of Borg-Warner
Automotive, Inc. for the year ended December 31, 1998 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of such
Registration Statment.
/s/ KPMG
Tokyo, Japan
August 10, 1999
