<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AFFYMETRIX, INC.
(Exact Name Of Registrant As Specified In Its Charter)
------------------------------
<TABLE>
<S> <C>
DELAWARE 77-0319159
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
3380 CENTRAL EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
(408) 731-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
VERN NORVIEL, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
AFFYMETRIX, INC.
3380 CENTRAL EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
(408) 731-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPY TO:
JOHN L. SAVVA, ESQ.
SULLIVAN & CROMWELL
1888 CENTURY PARK EAST
SUITE 2100
LOS ANGELES, CALIFORNIA 90067-1725
(310) 712-6600
------------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the
effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO AGGREGATE PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
4 3/4% Convertible Subordinated Notes Due
2007...................................... $225,000,000 100%(1)(2) $225,000,000(1) $59,400
Common Stock, $0.01 par value(3)............ 700,943 shares(4) --(5) --(5) --(5)
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(i) of the Securities Act of 1933.
(2) Exclusive of accrued interest and distributions, if any.
(3) Includes associated preferred stock purchase rights. Prior to the occurrence
of specified events, these rights will not be evidenced or traded separately
from the common stock.
(4) This number represents the number of shares of common stock that are
initially issuable upon conversion of the 4 3/4% Convertible Subordinated
Notes Due 2007 registered hereby. For purposes of estimating the number of
shares of common stock to be registered, Affymetrix calculated the number of
shares issuable upon conversion of the notes based on a conversion rate of
3.1153 shares per $1,000 principal amount of notes. In addition, the number
of shares set forth in the table to be registered includes an indeterminate
number of shares of common stock issuable upon conversion of the notes, as
this amount may be adjusted as a result of stock splits, stock dividends and
antidilution provisions.
(5) No additional consideration will be received for the common stock, and
therefore no registration fee is required pursuant to Rule 457(i).
------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION - DATED MAY 11, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
P R O S P E C T U S
AFFYMETRIX, INC.
$225,000,000
4 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2007 AND
700,943 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
---------------------
You may sell the notes or the common stock into which the notes are
convertible. See "Plan of Distribution."
<TABLE>
<CAPTION>
<S> <C>
- - MATURITY - CONVERSION
The notes are due on February 15, 2007. You may convert your notes at any time
prior to maturity or redemption into
shares of our common stock at a conversion
price of $321.00 per share, subject to
adjustment.
- - INTEREST - REPURCHASE RIGHT
We will pay interest on the notes on You have the right to require us to
February 15 and August 15 of each year at the purchase all or a portion of your notes
rate of 4 3/4% per year, commencing on upon a change in control.
August 15, 2000.
- - REDEMPTION - NASDAQ NATIONAL MARKET
We may redeem some or all of the notes at Our common stock is listed on the Nasdaq
any time after February 20, 2003. We may National Market under the symbol "AFFX."
redeem the notes prior to that date if the
price of our stock for a specified period
exceeds 150% of the conversion price.
- - SUBORDINATION - LAST REPORTED SALE PRICE OF COMMON STOCK
The notes are subordinated to all of our The last reported sale price of our common
existing and future senior indebtedness. stock on the Nasdaq National Market on
May 10, 2000 was $128.06 per share.
</TABLE>
------------------------
INVESTING IN THE NOTES OR THE COMMON STOCK INTO WHICH THE NOTES ARE
CONVERTIBLE INVOLVES RISKS. PLEASE CAREFULLY CONSIDER THE "RISK FACTORS"
BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
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 , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AFFYMETRIX, INC............................................. 3
RISK FACTORS................................................ 4
FORWARD-LOOKING STATEMENTS.................................. 12
WHERE YOU CAN FIND MORE INFORMATION......................... 12
INCORPORATION BY REFERENCE.................................. 12
USE OF PROCEEDS............................................. 13
RATIO OF EARNINGS TO FIXED CHARGES.......................... 13
DESCRIPTION OF NOTES........................................ 14
U.S. FEDERAL TAX CONSIDERATIONS............................. 26
SELLING SECURITY HOLDERS.................................... 30
PLAN OF DISTRIBUTION........................................ 33
VALIDITY OF THE SECURITIES.................................. 34
EXPERTS..................................................... 34
</TABLE>
2
<PAGE>
AFFYMETRIX, INC.
We are in the business of developing and selling DNA probe arrays and
related products that allow researchers to study genetic information in order to
help improve the diagnosis, monitoring and treatment of disease. DNA, which is a
common abbreviation for DEOXYRIBONUCLEIC ACID, provides the molecular blueprint
of every living organism and is made up of individual genes which determine what
attributes or characteristics a particular organism will have. DNA probe array
refers to a collection of DNA molecules attached to a surface, such as a piece
of glass, and designed for viewing under a microscope-type device known as a
scanner. Commercial sales of our products began in April 1996. We currently sell
our products to pharmaceutical and biotechnology companies, academic research
centers and clinical reference laboratories.
ALL FINANCIAL INFORMATION IN THIS PROSPECTUS HAS BEEN RESTATED TO REFLECT
OUR ACQUISITION OF GENETIC MICROSYSTEMS, INC. IN FEBRUARY 2000, WHICH WAS
ACCOUNTED FOR USING THE POOLING-OF-INTEREST METHOD.
------------------------
RECENT DEVELOPMENTS
On April 20, 2000, we issued a press release announcing our operating
results for the first quarter of 2000. For the quarter ended March 31, 2000, our
revenue increased 104% to $40.2 million, up from revenue of $19.7 million for
the quarter ended March 31, 1999. Product sales increased 115% to $36.7 million
for the quarter ended March 31, 2000, up from $17.1 million in the comparable
period of 1999. The increase in product sales during the first quarter of 2000
over the comparable period in 1999 was the result of increased sales of
GeneChip-Registered Trademark- probe arrays, increased placements of
instruments, including the GeneChip system, the 417 Arrayer-TM- and the 418
Scanner-TM-, and increased subscription fees earned under our EasyAccess-TM-
contracts. Other revenues, which include licensing fees, royalties and research
revenue, were $3.6 million for the quarter ended March 31, 2000, compared to
$2.6 million for the quarter ended March 31, 1999. The increase in other
revenues was attributable primarily to the signing of additional licenses and
the expansion of existing licensing arrangements.
Total costs and expenses increased to $47.9 million for the quarter ended
March 31, 2000, from $27.9 million for the comparable period in 1999. Excluding
the effect of one-time charges for merger related expenses associated with our
acquisition of Genetic MicroSystems, total costs and expenses were $45.5 million
for the quarter ended March 31, 2000. The increase in operating expenses,
excluding the one-time charges for the quarter, resulted primarily from our
expansion of commercial activities including those of Genetic MicroSystems and
increased legal costs arising from ongoing patent litigation.
We reported a net loss attributable to common stockholders of $6.3 million,
or $0.23 per diluted share for the quarter ended March 31, 2000, compared to a
net loss attributable to common stockholders of $7.9 million, or $0.33 per
diluted share, for the comparable period in 1999. Excluding the effect of the
one-time charges associated with the acquisition of Genetic MicroSystems, the
net loss attributable to common stockholders was $3.9 million, or $0.14 per
diluted share, for the quarter ended March 31, 2000.
We are a Delaware corporation, and our headquarters are located at 3380
Central Expressway, Santa Clara, California 95051. Our telephone number is
(408) 731-5000.
3
<PAGE>
RISK FACTORS
RISKS RELATING TO THE NOTES
WE MAY NOT HAVE SUFFICIENT CASH FLOW FROM OUR BUSINESS TO PAY THE NOTES.
Our ability to pay the principal of and interest on our indebtedness,
including the notes, will depend on our future performance. At March 31, 2000,
we had outstanding total indebtedness of approximately $375.2 million, including
the notes. For the quarter ended March 31, 2000, our deficiency of earnings
available to cover fixed charges was approximately $6.3 million. A variety of
uncertainties and contingencies will affect our future performance, many of
which are beyond our control. We may not generate sufficient cash flow in the
future to enable us to meet our anticipated fixed charges, including our debt
service requirements with respect to the notes. The amount of our outstanding
total indebtedness is large compared to the net book value of our assets, and we
have substantial repayment obligations under our outstanding debt. As of and for
the quarter ended March 31, 2000, we had:
- total consolidated indebtedness of approximately $375.2 million, including
the notes;
- stockholders' equity of approximately $128.0 million; and
- a deficiency of earnings available to cover fixed charges of
$6.3 million.
The following table shows the aggregate amount of our principal and interest
payments due in each of the next five fiscal years:
<TABLE>
<CAPTION>
YEAR AGGREGATE PRINCIPAL AGGREGATE INTEREST
- ---- ------------------- ------------------
<S> <C> <C>
2000 199,183 13,651,704
2001 -- 18,187,500
2002 -- 18,187,500
2003 -- 18,187,500
2004 -- 18,187,500
</TABLE>
THE LARGE AMOUNT AND TERMS OF OUR OUTSTANDING DEBT MAY PREVENT US FROM TAKING
ACTIONS WE WOULD OTHERWISE CONSIDER IN OUR BEST INTEREST.
Our substantial leverage could have several important consequences for our
future operations, including:
- increasing our vulnerability to general adverse economic and industry
conditions;
- limiting our ability to obtain additional financing;
- requiring the dedication of a substantial portion of our expected cash
flow from operations to service indebtedness, thereby reducing the amount
of expected cash flow available for other purposes, including working
capital and capital expenditures;
- limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; or
- placing us at a possible competitive disadvantage compared to less
leveraged competitors and competitors that have better access to capital
resources.
IF WE BECOME INSOLVENT, WE MAY NOT HAVE SUFFICIENT ASSETS TO REPAY OUR DEBT TO
YOU.
The notes are general unsecured obligations. We may repay the notes only
after we have paid all of our existing and future senior indebtedness. Upon any
distribution of our assets because of insolvency, bankruptcy, dissolution,
winding up, liquidation or reorganization, we may pay the principal
4
<PAGE>
of and interest on the notes only to the extent provided in the indenture, and
only after we pay all of our senior indebtedness in full. Senior indebtedness
includes all indebtedness for money borrowed, other than indebtedness that is
expressly junior or equal in right of payment to the notes. As of March 31,
2000, we had approximately $199,000 of indebtedness outstanding that constituted
senior indebtedness. We anticipate that from time to time we will incur
additional indebtedness, including senior indebtedness.
IF A CHANGE IN CONTROL OCCURS, WE MAY NOT HAVE SUFFICIENT FUNDS TO PURCHASE YOUR
NOTES.
In the event of a change in control, you will have the right to require us
to purchase all or any part of your notes. If a change in control occurs, we may
not be able to pay the purchase price for all of the notes submitted for
purchase. Currently, our outstanding debt agreements do not generally prohibit
us from purchasing notes. However, future credit agreements or other agreements
relating to debt may prohibit us from purchasing any notes until we have repaid
all debt outstanding under those agreements. We also may not be able to arrange
financing to pay the purchase price, in which case we may not be able to pay in
cash.
Under the terms of the indenture we may elect to pay the purchase price for
the notes with shares of our common stock. A payment in common stock would have
a dilutive effect on holders of our common stock and could cause the market
price of our common stock and the value of the notes to decline.
A change in control occurs when:
- any person or persons acting as a group
-- becomes the beneficial owner of more than 50% of the total voting
power of our capital stock or
-- succeeds in having elected a majority of our board;
- we are a party to any transaction in which our common stock is exchanged
for securities, cash and/or property valued at more than 50% of the
average of the daily closing prices for our common stock for the five
consecutive trading days ending on the trading day immediately preceding
the date of the transaction; or
- we merge into any other entity or sell or lease substantially all of our
properties and assets.
See "Description of Notes--Right to Require Purchase of Notes Upon a Change
in Control."
IF AN ACTIVE TRADING MARKET FOR THE NOTES DOES NOT DEVELOP, THEN THE MARKET
PRICE OF THE NOTES COULD DECLINE OR YOU MAY BE UNABLE TO SELL YOUR NOTES.
The notes are currently eligible to trade on the PORTAL Market of the Nasdaq
Stock Market. Although the initial purchasers, Credit Suisse First Boston
Corporation, FleetBoston Robertson Stephens Inc., ING Barings LLC and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, have advised us that they currently
intend to make a market in the notes, they are not obligated to do so and may
discontinue market making activities at any time without notice. We do not
intend to apply for listing of the notes on any securities exchange or any
automated quotation system. If an active trading market for the notes fails to
develop or be sustained, the trading price of the notes could decline or you may
be unable to sell your notes. As a result, you may be required to bear the
financial risk of your investment in the notes for an indefinite period of time.
5
<PAGE>
RISKS RELATING TO AFFYMETRIX AND ITS BUSINESS
THE MARKET PRICE OF OUR COMMON STOCK IS EXTREMELY VOLATILE, AND THE VALUE OF OUR
COMMON STOCK MAY DECREASE SUDDENLY.
For a number of reasons, the market price of our common stock is extremely
volatile, and the value of the common stock you receive may be significantly
less than the market value of that stock today. This extreme volatility also
puts us at risk for securities class action litigation, which would cause us to
divert both financial and managerial resources, which could reduce our profits.
To demonstrate the volatility of our stock price, during the period
beginning April 1, 1999 through April 19, 2000, the volume of our common stock
traded on any given day has ranged from 48,700 to 5,372,400 shares, a 10,932%
difference. Moreover, during that period, our common stock has traded as low as
$32.50 per share and as high as $327.00 per share, a 906% difference. The market
price of our common stock has changed as much as $67.00 per share in a single
day and our stock price has changed more than $20 in a single day 44 times in
the last six months.
WE HAVE A HISTORY OF OPERATING LOSSES, EXPECT TO INCUR FUTURE LOSSES AND CANNOT
BE CERTAIN THAT WE WILL BECOME A PROFITABLE COMPANY.
We have experienced significant operating losses each year since our
inception, and we expect these losses to continue. For example, we experienced
net losses of approximately $22.8 million in 1997, $26.8 million in 1998 and
$25.5 million in 1999. We had an accumulated deficit of approximately
$96.6 million as of December 31, 1998 and approximately $124.2 million as of
December 31, 1999. Our losses have resulted principally from costs incurred in
research and development and from general and administrative costs associated
with our operations. These costs have exceeded our revenues and interest income,
which, to date, have been generated principally from product sales and
technology access fees, collaborative research and development agreements,
government research grants and from cash and investment balances. We expect to
incur additional operating losses as a result of increases in expenses for
manufacturing, marketing and sales capabilities, research and product
development and general and administrative costs. We may never achieve
profitability. Among other things, our ability to manage the transition to a
commercially successful company will depend upon our ability to:
- establish our commercial manufacturing capability for probe arrays and
consistently achieve acceptable yields from those capabilities;
- cost-effectively manufacture components of the GeneChip system;
- develop our marketing capabilities cost effectively;
- establish sales and distribution capabilities cost-effectively;
- enter into supply agreements with customers desiring to use our products;
- develop products that are accepted by the marketplace;
- create a product mix that is appealing to pharmaceutical and biotechnology
companies, academic research centers and clinical reference laboratories;
- avoid infringing on the intellectual property rights of others;
- enforce our intellectual property rights against others;
- obtain necessary regulatory approvals; and
- hire and retain qualified key personnel.
In addition, any delays in receipt of any necessary regulatory approvals or
any adverse developments with respect to our ability to enforce our intellectual
property relative to our competitors
6
<PAGE>
could seriously harm the successful commercialization of our technologies and
could have a material adverse effect on our business, financial condition and
results of operations.
OUR QUARTERLY RESULTS OF OPERATIONS HAVE HISTORICALLY FLUCTUATED SIGNIFICANTLY
PERIOD-TO-PERIOD, AND OUR STOCK MAY DECREASE IN VALUE SIGNIFICANTLY FOLLOWING AN
EARNINGS RELEASE.
Although we believe that period-to-period comparisons of our results of
operations are not a good indication of our future performance, our operating
results will likely be below the expectations of public market analysts or
investors in a future quarter or quarters and the market price of our common
stock may fall significantly.
WE HAVE A LIMITED OPERATING HISTORY, HAVE NEVER BEEN PROFITABLE AND MAY NEVER
ACHIEVE PROFITABILITY.
We are a relatively new company and, for the most part, our technologies are
still in the early stages of development. We have begun to incorporate our
technologies into commercial products. We need to make significant investments
to ensure our products perform correctly and are cost-effective. In addition, we
must obtain additional regulatory approvals to sell our product for purposes
other than research use. Even if we develop our products for commercial use and
obtain all necessary regulatory approvals, we may not be able to develop
products that:
- are accepted by the research, diagnostic or other market places;
- are accurate and effective;
- meet applicable regulatory standards in a timely manner;
- are protected from competition by others;
- do not infringe the intellectual proprietary rights of others;
- can be manufactured in sufficient quantities or at a reasonable cost; or
- can be marketed successfully.
SALES OF OUR GENECHIP PRODUCTS AND OUR OPERATING RESULTS MAY FLUCTUATE
UNPREDICTABLY FROM PERIOD TO PERIOD.
We expect that our customers' supply requirements and orders will depend,
among other things, on the frequency of experiments conducted by them, their
inventory of GeneChip products and their expectations as to how long it will
take for us to fill future orders. In addition, we expect that from time to time
we will receive relatively large orders with short lead times. As a result, our
revenues and operating results may fluctuate significantly from period to period
due in part to factors that are outside of our control and which we cannot
predict.
WE MAY LOSE CUSTOMERS UNLESS WE IMPROVE OUR ABILITY TO MANUFACTURE OUR PRODUCTS
AND ENSURE THEIR PROPER PERFORMANCE.
We produce our GeneChip products in an innovative and complicated
manufacturing process. We have experienced and may continue to experience
significant variability in the manufacturing yield of our GeneChip products
which has reduced, and we believe will continue to reduce, our gross margins and
business. We have also experienced, and anticipate that we will continue to
experience, difficulties in meeting customer, collaborator and internal demand
for some of our probe array products. If we cannot deliver products in a timely
manner, we could lose customers, delay introduction of new products or cause
demand for our products to decline. Furthermore, if we cannot deliver products
to our customers that consistently meet their performance expectations, demand
for our products will decline.
7
<PAGE>
Because we have a limited manufacturing history, we do not fully understand
all of the factors that affect our manufacturing processes. As a result,
manufacturing and quality control problems have arisen and we expect them to
continue to arise as we attempt to increase the production rate at our
manufacturing facilities. We may not be able to increase production rates at
these facilities in a timely and cost-effective manner or at commercially
reasonable cost.
OUR SURVIVAL DEPENDS ON OUR ABILITY TO AVOID INFRINGING THE INTELLECTUAL
PROPERTY OF OTHERS AS WELL AS MAINTAINING, ENFORCING AND OBTAINING INTELLECTUAL
PROPERTY RIGHTS OF OUR OWN.
Intellectual property rights are essential to our business. We are engaged
in significant litigation with our competitors regarding our intellectual
property rights. On January 6, 1998, we filed a patent infringement action
against Incyte Pharmaceuticals and Synteni to protect our U.S. Patent
No. 5,445,934. In addition, Hyseq has filed three patent infringement actions
against us and on August 18, 1998, we filed suit against Hyseq to protect our
U.S. Patent Nos. 5,795,716 and 5,744,305. On September 1, 1998, we amended our
complaint against Hyseq to protect our U.S. Patent No. 5,800,992. In addition,
Oxford Gene Technology filed patent infringement suits against us, and Oxford
Gene Therapy Limited applied to revoke our EP(UK) 0-619-321 Patent, related to
DNA arrays, in the United Kingdom. In connection with the Oxford Gene Technology
suit, on April 7, 2000, a United Kingdom court held that our 1999 purchase of
Beckman Coulter's array business was not sufficient to transfer Beckman
Coulter's license to certain patents held by Oxford Gene Technology. We plan to
appeal this decision.
All of these cases are pending and consume, and will continue to consume,
substantial portions of our financial and managerial resources. A loss of a
significant litigation could prevent us from producing our current products or
developing new ones and could also result in the payment of significant
penalties and royalties, which could make it too costly to produce some or all
of our products. If we cannot maintain, enforce or obtain intellectual property
rights, competitors can design probe array systems with similar competitive
advantages to our GeneChip technology without paying us royalties. In order to
continue our current business, we must successfully:
- defend against third parties asserting that we infringe their intellectual
property rights;
- enforce our intellectual property rights against third parties infringing
our rights;
- meet applicable regulatory standards in a timely manner;
- obtain licenses to the intellectual property we need to continue or expand
our business;
- obtain enforceable patent rights to our product and process innovations;
and
- defend the scope of our existing or pending patents in administrative
proceedings, such as oppositions or interferences.
Moreover, even if we defend and enforce our intellectual property rights,
others may independently develop similar or alternative technologies, duplicate
any of our technologies, or design around or invalidate our patented
technologies. These developments would reduce the value of our intellectual
property assets.
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS AND WE WILL BE UNABLE TO MANUFACTURE
OUR PRODUCTS IF SHIPMENTS FROM THESE SUPPLIERS ARE DELAYED OR INTERRUPTED.
Key parts of our GeneChip product line, as well as various equipment and raw
materials used in the synthesis of probe arrays, are currently available only
from a single source or a limited number of sources. We rely on Agilent
Technologies to manufacture, install and service our scanners and on Enzo to
manufacture key substances used with probe arrays and various labeling kits
needed to process samples. In addition, components of our manufacturing
equipment are available from one or only a few
8
<PAGE>
suppliers. In the event that supplies from these vendors were delayed or
interrupted for any reason, we would not be able to get manufacturing equipment,
scanners or other components for our GeneChip product in a timely fashion or in
sufficient quantities or under acceptable terms.
Even if alternative sources of supply are available, it could be time
consuming and expensive for us to qualify new vendors. In addition, we are
dependent on our vendors to provide components of appropriate quality and
reliability and to meet applicable regulatory requirements. Consequently, in the
event that supplies from these vendors were delayed or interrupted for any
reason, we could be delayed in our ability to develop and deliver products to
our customers.
IF WE CANNOT CONTINUOUSLY DEVELOP AND INTRODUCE NEW PRODUCTS WE WILL NOT BE ABLE
TO COMPETE SUCCESSFULLY IN OUR HIGHLY COMPETITIVE AND RAPIDLY CHANGING MARKET.
We compete in markets that are new, intensely competitive, highly fragmented
and rapidly changing and many of our current and potential competitors have
significantly greater financial, technical, marketing and other resources. In
addition, many current and potential competitors have greater name recognition,
more extensive customer bases and access to proprietary genetic content. We
cannot survive if we fail to respond quickly to new or emerging technologies and
changes in customer requirements.
Currently, our principal competition comes from existing DNA probe array and
other technologies that are used to perform many of the same functions for which
we market our GeneChip products. In order to compete against existing and newly
developed technologies and maintain pricing and gross margins, we need to
successfully demonstrate to potential customers that our GeneChip products
provide improved performance and capabilities. A large number of publicly traded
and privately held companies including Agilent Technologies, Corning, Inc.,
CuraGen, Gene Logic, Inc., General Scanning, Inc., Genome Solutions,
Hitachi, Ltd., Illumina, Inc., Incyte/Synteni, Lynx Therapeutics,
Motorola, Inc. and Sequenome, Inc. also are developing or have developed DNA
probe based assays or other products and services, some of which may be
competitive with ours.
IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH COLLABORATIVE PARTNERS, WE
MAY HAVE DIFFICULTY SELLING OUR PRODUCTS AND SERVICES.
We believe that our success in penetrating our target markets depends in
part on our ability to develop and maintain collaborative relationships with key
companies as well as with key academic researchers. Our collaborative partners,
however, may not be able to perform their obligations as expected or devote
sufficient resources to the development, clinical testing, supply or marketing
of our potential products developed under these collaborations
Currently, our significant collaborative partners include Agilent
Technologies in the making of our scanners, Amersham Pharmacia Biotech KK in
distributing our products in Japan and Roche Molecular Systems and bio Merieux
in the making of our diagnostic chip products. Relying on these or other
collaborative relationships is risky to our future success because:
- our partners may be developing technologies or components competitive with
our GeneChip product, such as Agilent Technologies, which is developing a
DNA probe based array;
- our existing collaborations may preclude us from entering into additional
future arrangements;
- our partners may not obtain regulatory approvals necessary to continue the
collaborations in a timely manner;
- some of our agreements may prematurely terminate due to disagreements
between us and our partners;
- our partners may not devote sufficient resources to the development and
sale of our products;
9
<PAGE>
- our partners may be unable to supply products to us on a timely basis;
- our collaborations may be unsuccessful; or
- we may not be able to negotiate future collaborative arrangements on
acceptable terms.
To date, we have not encountered any material difficulty selling our
products and services in light of these risks.
OUR CURRENT SALES, MARKETING AND TECHNICAL SUPPORT ORGANIZATION MAY LIMIT OUR
ABILITY TO SELL OUR PRODUCTS.
We currently have limited sales, marketing and technical support services.
To assist our sales and support activities, we entered into a nonexclusive
distribution agreement covering Japan with Amersham Pharmacia Biotech KK and a
service agreement for our GeneArray scanner with Agilent Technologies. Third
parties, such as Amersham Pharmacia Biotech KK and Agilent Technologies, on whom
we rely for sales, marketing and technical support may decide to develop and
sell competitive products or otherwise become our competitors, which could harm
our business. For instance, Agilent Technologies is currently developing a DNA
probe based array. Although we have invested significant other resources to
expand our direct sales force and our technical and support staff, we may not be
able to establish a sufficiently sized sales, marketing or technical support
organization to sell, market or support our products.
THE LOSS OF A KEY CUSTOMER COULD SUBSTANTIALLY REDUCE OUR REVENUES AND BE
PERCEIVED AS A LOSS OF MOMENTUM IN OUR BUSINESS.
Our customers are concentrated in a small number of pharmaceutical and
biotechnology companies, academic research centers and clinical reference
laboratories. We expect that a small number of customers, such as Aventis,
F. Hoffman-LaRoche, Ltd., Genetics Institute, Gene Logic, Inc. and other key
customers, will continue to account for a substantial portion of revenues for
the foreseeable future. If we lose a major customer, our revenues may be
substantially reduced and investors may perceive this as a loss of momentum in
our business. Moreover, if consolidation in the pharmaceutical and biotechnology
industries continues, our current and potential customer base could decrease,
reducing aggregate sales and shrinking our target market.
BECAUSE OUR BUSINESS IS HIGHLY DEPENDENT ON KEY EXECUTIVES AND SCIENTISTS, OUR
INABILITY TO RECRUIT AND RETAIN THESE PEOPLE COULD HINDER OUR BUSINESS EXPANSION
PLANS.
We are highly dependent on our executive officers and our senior scientists
and engineers, including our scientific advisors. Our product development and
marketing efforts will be delayed or curtailed if we lose the services of any of
these people.
We rely on our scientific advisors and consultants to assist us in
formulating our research, development and commercialization strategy. All of
these individuals are engaged by employers other than us and have commitments to
other entities that may limit their availability to us. Some of them also
consult for companies that may be our competitors. A scientific advisor's other
obligations may prevent him or her from assisting us in developing our technical
and business strategies.
To expand our research, product development and sales efforts we need
additional people skilled in areas such as bioinformatics, organic chemistry,
information services, regulatory affairs, manufacturing, sales, marketing and
technical support. Competition for these people is intense and their turnover
rate is high. We will not be able to expand our business if we are unable to
hire, train and retain a sufficient number of qualified employees.
10
<PAGE>
BECAUSE GLAXO OWNS A SUBSTANTIAL PORTION OF OUR OUTSTANDING CAPITAL STOCK, IT
MAY BE ABLE TO INFLUENCE THE OUTCOME OF STOCKHOLDER VOTES OR THE MARKET PRICE OF
OUR STOCK.
Glaxo Wellcome plc and its affiliates currently beneficially own
approximately 22.1% of our outstanding common stock as of May 5, 2000, and have
the right to designate three of the nine members of our Board of Directors.
Accordingly, Glaxo may be able to exercise significant influence over our
business and over matters subject to stockholder votes, including votes
concerning the election of directors, adoption of amendments to our certificate
of incorporation and bylaws and approval of mergers and other significant
corporate transactions. Moreover, our stock price may drop if Glaxo or any of
its affiliates sells a significant amount of our stock or if investors interpret
any sale of our stock by Glaxo or any of its affiliates as a sign of weakness in
our business.
11
<PAGE>
FORWARD-LOOKING STATEMENTS
All statements in this prospectus that are not historical are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, including statements regarding our "expectations,"
"beliefs," "hopes," "intentions," "strategies" or the like. These statements are
based on our management's current expectations and are subject to a number of
factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. We caution investors
that there can be no assurance that actual results or business conditions will
not differ materially from those projected or suggested in these forward-looking
statements as a result of various factors, including but not limited to, the
risk factors contained in this prospectus. We expressly disclaim any obligation
or undertaking to release publicly any updates or revisions to any forward-
looking statements contained in this prospectus to reflect any change in our
expectations with regard to these statements or any change in events, conditions
or circumstances on which any of these statements is based.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The Exchange Act file number
for our SEC filings is 0-28218. You may read and copy any document we file at
the following SEC public reference rooms:
<TABLE>
<S> <C> <C>
450 Fifth Street, N.W. 500 West Madison Street 7 World Trade Center
Room 1024 14th Floor Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60661 New York, New York 10048
</TABLE>
You may obtain information on the operation of the public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330.
We file information electronically with the SEC. Our SEC filings are
available from the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
issuers that file electronically.
Our common stock is listed on the Nasdaq National Market under the symbol
"AFFX." You may read and copy our SEC filings and other information at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
Except as described under "Incorporation by Reference," the information on
file with the SEC and the Nasdaq National Market does not constitute part of
this prospectus.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" certain documents we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information in the documents incorporated
by reference is considered to be part of this prospectus. However, to the extent
the information contained in this prospectus is inconsistent with information
previously filed with the SEC, the information contained in this prospectus
supersedes this incorporated information. Information in documents that we file
later with the SEC will automatically update and supersede information included
or incorporated by reference in this prospectus. We incorporate by reference the
documents listed below and any future filings we will make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act:
- Form 8-A filed on October 16, 1998 and Form 8-A/A filed on March 29, 2000;
- Annual Report on Form 10-K for the year ended December 31, 1999; and
- Current Report on Form 8-K filed on February 11, 2000, April 7, 2000,
April 11, 2000 and April 27, 2000.
12
<PAGE>
Upon written or oral request, we will provide at no cost to each person to
whom a prospectus is delivered, including any beneficial owner, a copy of any
and all of the information that has been incorporated by reference in this
prospectus. To request a copy of any or all of these documents, you should write
or telephone us at: 3380 Central Expressway, Santa Clara, California 95051,
(408) 731-5000, Attention: Senior Vice President and General Counsel.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes or the shares of
common stock offered by this prospectus. See "Selling Security Holders."
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
MARCH 31, ----------------------------------------------------
2000 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Deficiency of earnings
available to cover fixed
charges(1)................... $(6,269) $(27,559) $(29,121) $(22,780) $(12,227) $(10,747)
</TABLE>
- ------------------------
(1) Earnings consist of net loss available to common stockholders. Fixed charges
consist of interest expense, including amortization of debt issuance costs,
and that portion of rental expense we believe to be representative of
interest.
13
<PAGE>
DESCRIPTION OF NOTES
THE NOTES WERE ISSUED UNDER A CONTRACT CALLED AN INDENTURE, DATED AS OF
FEBRUARY 14, 2000, BETWEEN US AND THE BANK OF NEW YORK, AS TRUSTEE. THE
FOLLOWING DESCRIPTION IS ONLY A SUMMARY OF THE MATERIAL PROVISIONS OF THE
INDENTURE, THE NOTES AND THE REGISTRATION RIGHTS AGREEMENT. WE URGE YOU TO READ
THE INDENTURE, THE NOTES AND THE REGISTRATION RIGHTS AGREEMENT IN THEIR ENTIRETY
BECAUSE THEY, AND NOT THIS DESCRIPTION, DEFINE YOUR RIGHTS AS HOLDERS OF THESE
NOTES. YOU MAY REQUEST COPIES OF THESE DOCUMENTS AT OUR ADDRESS PROVIDED IN
"INCORPORATION BY REFERENCE." THE TERMS OF THE NOTES INCLUDE THOSE STATED IN THE
INDENTURE AND THOSE MADE PART OF THE INDENTURE BY REFERENCE TO THE TRUST
INDENTURE ACT OF 1939.
GENERAL
The notes are unsecured, subordinated obligations. We issued the notes in
the principal amount of $225,000,000. Interest on the notes will accrue at the
rate of 4 3/4% per year and will be payable semiannually in arrears on
February 15 or August 15 of each year, commencing on August 15, 2000. Interest
on the notes will accrue from the date of original issuance or, if interest has
already been paid, from the date it was most recently paid. We will make each
interest payment to the holders of record of the notes on the immediately
preceding February 1 or August 1, whether or not such day is a business day. The
notes will mature on February 15, 2007.
We will pay the principal of, premium, if any, and interest on the notes at
the office or agency maintained by us in the Borough of Manhattan in New York
City. Holders may register the transfer of their notes at the same location. We
reserve the right to pay interest to holders of the notes by check mailed to
their registered addresses or by wire transfer. Interest on the notes will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Except under limited circumstances, the notes will be represented by one or
more global notes. There will be no service charge for any registration of
transfer or exchange of notes. We may, however, require holders to pay a sum
sufficient to cover any tax or other governmental charge payable in connection
with any transfer or exchange.
BOOK-ENTRY, DELIVERY AND FORM
We will issue the notes in the form of one or more global notes except as
described under "Certificated Notes" below. The global notes will be deposited
with, or on behalf of, the clearing agency registered under the Exchange Act
that is designated to act as depositary for the notes and registered in the name
of the depositary or its nominee. The Depository Trust Company, or DTC, will be
the initial depositary. Except as described below, the global notes may be
transferred, in whole and not in part, only to the depositary or another nominee
of the depositary. You may hold beneficial interests in the global notes
directly through the depositary if you have an account with the depositary or
indirectly through organizations which have accounts with the depositary.
The depositary 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 under the provisions of Section 17A of the
Exchange Act.
The depositary was created to hold securities of institutions, known as
participants, that have accounts with the depositary and to facilitate the
clearance and settlement of securities transactions among its participants
through electronic book-entry changes. This system eliminates the need for
physical movement of certificates representing securities. The depositary's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and other organizations. Access to the depositary's
book-entry system is also available to others that clear through or maintain a
custodial relationship with a participant.
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<PAGE>
Upon the issuance of the global notes, the depositary credited, on its
book-entry registration and transfer system, the principal amount of notes
represented by the global notes to the accounts of participants. The initial
purchasers designated the accounts to be credited. Ownership of beneficial
interests in a global note is limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the global
notes is shown on, and the transfer of those ownership interests will be
effected only through, records maintained by the depositary and the
participants. The laws of some jurisdictions may require that purchasers of
securities take physical delivery of securities in definitive form, and these
limits and laws may impair the ability to transfer or pledge beneficial
interests in a global note.
So long as the depositary or its nominee is the registered holder and owner
of a global note, the depositary or its nominee will be considered the sole
legal owner and holder of the related notes for all purposes. Except as
described below, as an owner of a beneficial interest in a global note, you will
be subject to the following limitations:
- you will not be entitled to have the notes represented by the global notes
registered in your name;
- you will not receive or be entitled to receive physical delivery of
certificated notes; and
- you will not be considered to be the owner or holder of any notes under
the global notes.
We understand that under existing industry practice, in the event an owner
of a beneficial interest in a global note desires to take any action that the
depositary, as the holder of the global notes, is entitled to take, the
depositary would authorize the participants to take such action. The
participants would authorize beneficial owners owning through them to take the
action or would otherwise act upon the instructions of beneficial owners owning
through them.
Payment of principal of and premium, if any, and interest on notes
represented by a global note registered in the name of and held by the
depositary or its nominee will be made to the depositary or its nominee, as the
registered owner and holder of the global notes.
We expect that the depositary or its nominee, upon receipt of any payment of
principal of, premium, if any, or interest on a global note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global notes as
shown on the records of the depositary or its nominee. We also expect that
payments by participants to owners of beneficial interests in a global note held
through the participants will be governed by standing instructions and customary
practices and will be the responsibility of the participants. We will not have
any responsibility or liability:
- for any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in the global notes;
- for maintaining, supervising or reviewing any records relating to
beneficial ownership interests;
- for any other aspect of the relationship between the depositary and its
participants; or
- for any other aspect of the relationship between participants and the
owners of beneficial interests in the global notes owning through
participants.
Unless and until the global notes are exchanged in whole or in part for
certificated notes, the global notes may not be transferred except as a whole by
the depositary to a nominee of the depositary or by a nominee of the depositary
to another nominee of the depositary.
Although the depositary has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global notes among participants of the
depositary, it is under no obligation to perform or continue to perform these
procedures, and these procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility for the performance by the depositary
or its participants or indirect participants of their obligations under the
rules and procedures governing their operations.
15
<PAGE>
YEAR 2000 ISSUES RELATING TO DTC
We have been advised by DTC that it is aware that some computer
applications, systems and the like for processing dates that are dependent upon
calendar dates, including dates before, on or after January 1, 2000, may
encounter "year 2000 problems." DTC has informed its participants and other
members of the financial community that it has developed and implemented a
program so that its systems, as the same relate to the timely payment of
distributions, including principal and income payments, to securityholders,
book-entry deliveries and settlement of trades within DTC continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. DTC has not reported any material year 2000
problems.
According to DTC, the foregoing information with respect to DTC has been
provided to the industry for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
CERTIFICATED NOTES
The notes represented by the global notes are exchangeable for certificated
notes in definitive form of like tenor in denominations of $1,000 and multiples
of $1,000 if:
- the depositary notifies us that it will not continue as depositary for the
global notes;
- the depositary ceases to be a clearing agency registered under the
Exchange Act or announces an intention permanently to cease business or in
fact ceases business;
- we determine not to have all of the notes represented by the global notes;
or
- an event of default has occurred and is continuing.
Any note that becomes exchangeable may be exchanged for certificated notes
issuable in authorized denominations and registered in whatever names the
depositary directs. Subject to the foregoing, the global notes are not
exchangeable, except for global notes of the same aggregate denomination to be
registered in the name of the depositary or its nominee.
CONVERSION RIGHTS
A holder may, at any time prior to the close of business on the business day
immediately preceding the maturity date, convert a note or any portion of a note
into shares of our common stock initially at the conversion price of $321.00 per
share unless the note or portion of a note has been previously redeemed. The
right to convert a note called for redemption terminates on the earlier of
(1) the close of business on the business day immediately preceding the date
fixed for redemption, also known as the redemption date, unless we default in
making the payment due on the redemption date, and (2) the close of business on
the business day immediately preceding the maturity date of the notes. For
information as to notices of redemption, see "Optional Redemption."
We will adjust the conversion price if:
- we issue common stock as a dividend or distribution on our common stock;
- we issue to all holders of our common stock rights, warrants or options
entitling them to subscribe for or purchase common stock at less than the
current market price;
- we subdivide or combine our common stock;
- we distribute to all holders of our common stock evidences of our
indebtedness, shares of capital stock, securities, cash or property,
excluding:
-- any rights, warrants or options referred to above;
-- any dividend or distribution paid exclusively in cash; and
-- any dividend or distribution referred to above;
- we make a cash distribution to all holders of our common stock that,
together with other all-cash distributions and consideration payable in
respect of any tender or exchange offer by us
16
<PAGE>
or one of our subsidiaries for our common stock made within the preceding
12 months exceeds 12.5% of our aggregate market capitalization on the date
of the distribution; and
- we complete a tender or exchange offer for our common stock which involves
an aggregate consideration that, together with (A) any cash and other
consideration payable in respect of any tender or exchange offer by us or
one of our subsidiaries for our common stock concluded within the
preceding 12 months and (B) the amount of any all-cash distributions to
all holders of our common stock made within the preceding 12 months,
exceeds 12.5% of our aggregate market capitalization on the expiration of
the tender or exchange offer.
No adjustment of the conversion price must be made until cumulative adjustments
amount to 1% or more of the conversion price as last adjusted.
If we distribute rights or warrants, other than those referred to in the
second bullet of the preceding paragraph, pro rata to holders of common stock,
so long as the rights or warrants have not expired or been redeemed by us, the
holder of any note surrendered for conversion will be entitled to receive, in
addition to the shares of common stock issuable upon conversion, the following:
- if conversion occurs on or prior to the date for distribution of
certificates evidencing rights or warrants, the holder will be entitled to
the same number of rights or warrants that a holder of a number of shares
of common stock equal to the number of conversion shares is entitled; and
- if conversion occurs after the distribution date, the holder will be
entitled to the same number of rights or warrants that a holder of the
number of shares of common stock into which the note was convertible
immediately prior to the distribution date would have been entitled on the
distribution date, in accordance with the terms and provisions applicable
to the rights or warrants.
The conversion price of the notes will not be subject to adjustment on account
of any declaration, distribution or exercise of any rights or warrants.
If our common stock is converted into the right to receive other securities,
cash or other property as a result of reclassifications, consolidations,
mergers, sales or transfers of assets or other transactions, each note then
outstanding would, without the consent of any holders of notes, become
convertible only into the kind and amount of securities, cash and other property
receivable in the transaction by a holder of the number of shares of common
stock which would have been received by a holder immediately prior to the
transaction if the holder had converted its notes.
We will not issue fractional shares of common stock to a holder who converts
a note. Instead of issuing fractional shares, we will pay a cash adjustment
based upon the market price.
Except as described in this paragraph, no holder of notes will be entitled
upon conversion of the notes to any actual payment or adjustment on account of
accrued and unpaid interest or on account of dividends on shares of common stock
issued in connection with the conversion. If any holder surrenders a note for
conversion between the close of business on any record date for the payment of
an installment of interest and the opening of business on the related interest
payment date, the holder must deliver payment to us of an amount equal to the
interest payable on the interest payment date on the principal amount converted
together with the note being surrendered. The foregoing sentence does not apply
to notes called for redemption on a redemption date within the period between
and including the record date and interest payment date.
If we make a distribution of property to our stockholders which would be
taxable to them as a dividend for federal income tax purposes and the conversion
price of the notes is reduced, this reduction may be deemed to be the receipt of
taxable income to holders of the notes.
In addition, we may decrease the conversion price by any amount for any
period of at least 20 days, if our board of directors determines that that
decrease would be in our best interests. No decrease will be taken into account
for purposes of determining whether the closing price of our
17
<PAGE>
common stock exceeds the conversion price by 105% in connection with an event
which otherwise would be a change in control.
In addition, we may make any reductions in the conversion price that our
board deems advisable to avoid or diminish any income tax to holders of shares
of common stock resulting from any dividend or distribution of stock, or rights
to acquire stock, or from any event treated as a dividend or distribution for
income tax purposes or for any other reason.
PROVISIONAL REDEMPTION
We may redeem any portion of the notes at any time prior to February 20,
2003 at a redemption price equal to $1,000 per note plus accrued and unpaid
interest to the redemption date if (1) the closing price of our common stock has
exceeded 150% of the conversion price for at least 20 trading days in any
consecutive 30-trading day period ending on the trading day prior to the mailing
of the notice of redemption and (2) the shelf registration statement covering
resales of the notes and the common stock is effective and expected to remain
effective and available for use for the 30 days following the redemption date.
If we redeem the notes under these circumstances, we will make an additional
"make whole" payment on the redeemed notes equal to $142.50 per $1,000 note,
minus the amount of any interest we actually paid on the note prior to the date
we mailed the notice. We must make these "make whole" payments on all notes
called for redemption, including notes converted after the date we mailed the
notice.
OPTIONAL REDEMPTION
At any time on or after February 20, 2003, we may redeem all or a portion of
the notes upon at least 30 and not more than 60 days' notice by mail to the
holders of the notes by paying the redemption price plus accrued and unpaid
interest. The redemption price, expressed as a percentage of the principal
amount, is as follows for the periods shown below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------ ----------
<S> <C>
February 20, 2003 through February 14, 2004................. 102.38%
February 15, 2004 through February 14, 2005................. 101.58%
February 15, 2005 through February 14, 2006................. 100.79%
February 15, 2006 and after................................. 100.00%
</TABLE>
If we opt to redeem less than all of the notes at any time, the trustee will
select or cause to be selected the notes to be redeemed by any method it deems
fair and appropriate. In the event of a partial redemption, the trustee may
provide for selection for redemption of portions of the principal amount of any
note of a denomination larger than $1,000.
There is no sinking fund provision in the notes.
RIGHT TO REQUIRE PURCHASE OF NOTES UPON A CHANGE IN CONTROL
If a change in control occurs, each holder of notes may require that we
purchase the holder's notes on the date fixed by us that is not less than 30 nor
more than 45 days after we give notice of the change in control. We will
purchase the notes for an amount in cash equal to 100% of the principal amount
of the notes on the date of purchase plus accrued and unpaid interest, if any,
to the date of purchase. As described below, we may pay the purchase price in
our common stock.
A change in control occurs when:
- any person or persons acting together in a manner which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act
-- becomes the beneficial owner, directly or indirectly, of our capital
stock, entitling the person or persons and its or their affiliates to
exercise more than 50% of the total voting
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<PAGE>
power of all classes of our capital stock entitled to vote generally
in the election of our directors or
-- succeeds in having enough of its or their nominees elected to our
board so that the nominees, when added to any existing directors
remaining on our board after the election who are affiliates of or
acting in concert with these persons, then constitute a majority of
our board;
- we are a party to any transaction in which our common stock is converted
into the right to receive other securities, cash and/or property, and the
value distributed in the transaction and any other transaction effected
within the 12 preceding months is more than 50% of the average of the
daily closing prices for our common stock for the five consecutive trading
days ending on the trading day immediately preceding the date of the
transaction; or
- we consolidate with or merge into any other person or sell, convey,
transfer or lease our properties and assets substantially as an entirety
to any person other than one of our subsidiaries, or any other person
consolidates with or merges into us, except any consolidation or merger
where persons who are our stockholders immediately prior to the
transaction become the beneficial owners of more than 50% of the total
voting power of the surviving company's capital stock.
On or prior to the purchase date, we will deposit with a paying agent an amount
of money sufficient to pay the aggregate purchase price of the notes which is to
be paid on the purchase date.
At our option, instead of paying the purchase price in cash, we may pay the
purchase price in common stock valued at 95% of the average of the closing sales
prices of our common stock for the five trading days immediately preceding and
including the third day prior to the purchase date. We may only pay the purchase
price in common stock if we satisfy conditions required by the indenture.
We may not purchase any note when the subordination provisions of the
indenture otherwise would prohibit us from making payments of principal in
respect of the notes. Failure to purchase the notes when required under the
preceding paragraphs will constitute an event of default under the indenture
whether or not the purchase is permitted by the subordination provisions of the
indenture.
A change in control will not be deemed to have occurred:
- if the closing price of our common stock for any five trading days during
the ten trading days immediately preceding the change in control is at
least equal to 105% of the conversion price in effect immediately
preceding the change in control; or
- if at least 90% of the consideration received or to be received by the
holders of our common stock in the transaction or transactions
constituting a change in control consists of:
-- shares of common stock of an entity organized under the laws of a
U.S. jurisdiction whose shares of common stock are, or upon issuance
will be, traded on a national securities exchange in the U.S. or
through the Nasdaq Stock Market or
-- shares of common stock of an entity organized under the laws of a
jurisdiction outside of the U.S., or American Depositary Shares
representing shares of common stock, that are, or upon issuance will
be, traded on a national securities exchange in the U.S. or through
the Nasdaq Stock Market if the entity has a worldwide total market
capitalization of its equity securities of at least US$5 billion
before giving effect to the transaction or transactions constituting
a change in control.
On or before the 15th day after we know or reasonably should know a change
in control has occurred, we must mail to all holders of record of the notes a
notice of the occurrence of the change in control, stating:
- the purchase date;
- the date by which the purchase right must be exercised;
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<PAGE>
- the purchase price for the notes; and
- the procedures which a holder of notes must follow to exercise the
purchase right.
To exercise the purchase right, the holder of a note must deliver, on or
before the 30th day after the date of our notice, an irrevocable written notice
to us and the trustee of the holder's exercise of the right. This notice must be
accompanied by the certificates evidencing the note or notes with respect to
which the right is being exercised, duly endorsed for transfer. In addition, if
the purchase date falls between the relevant record date and the succeeding
interest payment date, the holder will also be required to deliver with the
notes to be purchased a payment in cash equal to the interest that the holder is
to receive on the interest payment date.
The effect of these provisions granting the holders the right to require us
to purchase the notes upon the occurrence of a change in control may make it
more difficult for any person or group to acquire control of us or to effect a
business combination with us. Moreover, under the indenture, we will not be
permitted to pay principal of or interest on, or otherwise acquire the notes,
including any purchase at the election of the holders of notes upon the
occurrence of a change in control, if a payment default on senior indebtedness
has occurred and is continuing, or in the event of our insolvency, bankruptcy,
reorganization, dissolution or other winding up where senior indebtedness is not
paid in full. Our ability to pay cash to holders of notes following the
occurrence of a change in control may be limited by our then existing financial
resources. We cannot assure you that sufficient funds will be available when
necessary to make any required purchases. See "Risk Factors--We may be unable to
purchase the notes."
If a change in control occurs and the holders exercise their rights to
require us to purchase notes, we intend to comply with applicable tender offer
rules under the Exchange Act with respect to any purchase.
The term "beneficial owner" will be determined in accordance with
Rules 13d-3 and 13d-5 of the Exchange Act, except that a person shall be deemed
to have "beneficial ownership" of all shares that the person has the right to
acquire, whether exercisable immediately or only after the passage of time.
REGISTRATION RIGHTS
We have entered into a registration rights agreement with the initial
purchasers of the notes. Under this agreement, we must use our commercially
reasonable best efforts to keep the shelf registration statement of which this
prospectus forms a part effective until the earliest of:
- the time when the notes covered by the shelf registration statement can be
sold under Rule 144 of the Securities Act;
- two years from the date the shelf registration statement is declared
effective; and
- the date on which all the notes registered under the shelf registration
statement are disposed of in accordance with the shelf registration
statement.
We have the right to suspend use of the shelf registration statement for up
to 90 days. A holder who elects to sell any securities pursuant to the shelf
registration statement:
- will be required to be named as selling security holder;
- will be required to deliver a prospectus to purchasers;
- will be subject to the civil liability provisions under the Securities Act
in connection with any sales; and
- will be bound by the provisions of the registration rights agreement which
are applicable, including indemnification obligations.
20
<PAGE>
If, after the shelf registration statement has been declared effective, we
fail to keep the shelf registration statement effective or usable in accordance
with and during the periods specified in the registration rights agreement, then
the interest rate on the notes will increase by 0.5% per year until the failure
is cured. This requirement is subject to exceptions described in the
registration rights agreement, including our right to suspend the use of the
shelf registration statement for up to 90 days.
We will have no other liabilities for monetary damages with respect to our
registration obligations, except that if we breach, fail to comply with or
violate provisions of the registration rights agreement, the holders of the
notes will be entitled to equitable relief, including injunction and specific
performance. We may not oppose the granting of this equitable relief.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of any of the notes, consolidate
with or merge into any other person or convey, transfer or lease our properties
substantially as an entirety to, any other person, if:
- the successor, transferee or lessee expressly assumes our obligations
under the indenture and the notes by means of a supplemental indenture
entered into with the trustee;
- after giving effect to the transaction, no event of default and no event
which, with notice or lapse of time, or both, would constitute an event of
default, will have occurred and be continuing;
- the successor company is organized
-- under the laws of any U.S. jurisdiction or
-- under the laws of a jurisdiction outside the U.S. and has (1) common
stock or American Depositary Shares representing the common stock
traded on a national securities exchange in the U.S. or through the
Nasdaq Stock Market and (2) a worldwide total market capitalization
of its equity securities before giving effect to the consolidation or
merger of at least US$5 billion; and
- other conditions specified in the indenture are met.
Under any consolidation, merger or any conveyance, transfer or lease of our
properties and assets as described in the preceding paragraph, the successor
company will be our successor and will succeed to, and be substituted for, and
may exercise every right and power of, Affymetrix under the indenture. Except in
the case of a lease, if the predecessor is still in existence after the
transaction, it will be released from its obligations and covenants under the
indenture and the notes.
EVENTS OF DEFAULT
Each of the following is an event of default:
- a default in the payment of any interest upon any of the notes when due
and payable, continued for 30 days, whether or not payment is prohibited
by the subordination provisions of the indenture;
- a default in the payment of the principal of and premium, if any, on any
of the notes when due, including on a redemption date, whether or not
payment is prohibited by the subordination provisions of the indenture;
- a default in our obligation to provide notice of a change in control or
default in the payment of the purchase price in respect of any note on the
purchase date, whether or not payment is prohibited by the subordination
provisions of the indenture;
21
<PAGE>
- a default by us in the performance, or breach, of any of our other
covenants in the indenture which are not remedied by the end of a period
of 60 days after written notice to us by the trustee or to us and the
trustee by the holders of at least 25% in principal amount of the
outstanding notes;
- failure to pay when due the principal of, or acceleration of, any
indebtedness for money borrowed by us in excess of $10 million, if such
indebtedness is not discharged, or the acceleration is not waived or
annulled, by the end of a period of 30 days after written notice to us by
the trustee or to us and the trustee by the holders of at least 25% of
principal amount of outstanding notes; or
- events of bankruptcy, insolvency or reorganization involving us.
If an event of default, other than of a type referred to in the last bullet
of the preceding paragraph, occurs and is continuing, either the trustee or the
holders of at least 25% in principal amount of the outstanding notes may declare
the principal amount of and accrued interest on all notes to be immediately due
and payable. This declaration may be rescinded if conditions described in the
indenture are satisfied. If an event of default of the type referred to in the
last bullet of the preceding paragraph occurs, the principal amount of and
accrued interest on the outstanding notes shall automatically become immediately
due and payable.
The holders of not less than a majority in principal amount of the
outstanding notes may direct the time, method and place of conducting any
proceedings for any remedy available to the trustee, or exercising any trust or
power conferred on the trustee; provided that the direction does not conflict
with any rule of law or with the indenture. The trustee may take any other
action deemed proper by the trustee which is not inconsistent with the
direction.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of the rights or powers under the indenture
at the request or direction of any of the holders of the notes unless those
holders have offered to the trustee reasonable indemnity or security against any
loss, liability or expense. Except to enforce the right to receive payment of
principal, premium, if any, or interest when due or the right to convert a note
in accordance with the indenture, no holder may institute any proceeding or
pursue any remedy with respect to the indenture or the notes unless:
- the holder has previously given the trustee notice that an event of
default is continuing;
- holders of at least 25% in principal amount of the outstanding notes have
requested the trustee to pursue the remedy;
- the holders have offered the trustee security or indemnity satisfactory to
the trustee against any loss, liability or expense;
- the trustee has not complied with the request within 60 days after the
receipt and the offer of security or indemnity; and
- the holders of a majority in principal amount of the outstanding notes
have not given the trustee a direction inconsistent with the request
within the 60-day period.
In addition, we are required to deliver to the trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the officers
signing the certificate know of any default by us in the performance or
observance of any of the terms of the indenture. If the officers know of a
default, the certificate must specify the status and nature of all defaults.
22
<PAGE>
MODIFICATION AND WAIVER
We and the trustee may enter into supplemental indentures that add, change
or eliminate provisions of the indenture or modify the rights of the holders of
the notes with the consent of the holders of at least a majority in principal
amount of the notes then outstanding. However, without the consent of each
holder, no supplemental indenture may:
- change the stated maturity of the principal of or any installment of
interest on any note;
- reduce the principal amount of, or the premium or rate of interest on, any
note;
- adversely affect the right of any holder to convert any note as provided
in the indenture;
- change the place of payment where, or the coin of currency in which, the
principal of any note or any premium or interest is payable;
- impair the right to institute suit for the enforcement of any payment on
or with respect to any note on or after the stated maturity, or, in the
case of redemption, on or after the redemption date;
- modify the subordination provisions of the indenture in a manner adverse
to the holders of the notes;
- modify the redemption provisions of the indenture in a manner adverse to
the holders of the notes;
- modify the provisions of the indenture relating to our requirement to
offer to purchase notes upon a change in control in a manner adverse to
the holders of the notes;
- reduce the percentage in principal amount of the outstanding notes the
consent of whose holders is required for any modification or amendment of
the indenture or for any waiver of compliance with certain provisions of
or defaults under the indenture; or
- modify the foregoing requirements.
Without the consent of any holders of notes, we and the trustee may enter
into supplemental indentures for any of the following purposes:
- to evidence a successor to us and the assumption by that successor of our
obligations under the indenture and the notes;
- to add to our covenants for the benefit of the holders of the notes or to
surrender any right or power conferred to us;
- to secure our obligations in respect of the notes;
- to make provision with respect to the conversion rights of holders of the
notes under the indenture;
- to make any changes or modifications to the indenture necessary in
connection with the registration of the notes under the Securities Act as
contemplated by the indenture;
- to cure any ambiguity or inconsistency in the indenture;
- to comply with any requirement in connection with the qualification of the
indenture under the Trust Indenture Act; or
- to make any other provisions with respect to matters or questions arising
under the indenture which are not inconsistent with the provisions of the
indenture.
23
<PAGE>
However, no supplemental indenture entered into pursuant to the fifth, sixth,
seventh, and eighth bullets of the preceding paragraph may adversely affect the
interests of the holders of the notes.
The holders of a majority in principal amount of the outstanding notes may,
on behalf of the holders of all notes:
- waive compliance by us with restrictive provisions of the indenture, as
detailed in the indenture.
- waive any past default under the indenture and its consequences, except a
default in the payment of the principal of or any premium or interest on
any note or in respect of a provision which under the indenture cannot be
modified or amended without the consent of the holder of each outstanding
note affected.
SUBORDINATION
The payment of the principal of and premium, if any, and interest on the
notes will, to the extent described in the indenture, be subordinated in right
of payment to the prior payment in full of all senior indebtedness. The holders
of all senior indebtedness will first be entitled to receive payment in full of
all amounts due or to become due on the senior indebtedness, or provision for
such payment in money or money's worth, before the holders of the notes will be
entitled to receive any payment in respect of the notes. No payments on account
of the notes or on account of the purchase or acquisition of notes may be made
if a default in any payment with respect to senior indebtedness has occurred and
is continuing or if any judicial proceeding is pending with respect to any such
default.
By reason of such subordination, in the event of insolvency, our creditors
who are not holders of senior indebtedness, including holders of the notes, may
recover less, ratably, than holders of our senior indebtedness.
At March 31, 2000, senior indebtedness was approximately $199,000, all of
which was secured. We expect from time to time to incur additional indebtedness.
The indenture does not limit or prohibit us from incurring additional senior
indebtedness or additional indebtedness.
DEFEASANCE
Upon satisfaction of the requirements described below, we may terminate all
of our obligations under the notes and the indenture, known as legal defeasance,
other than our obligation:
- to maintain a registrar and paying agents and hold moneys for payment in
trust;
- to register the transfer or exchange of the notes;
- to replace mutilated, destroyed, lost or stolen notes;
- to provide for conversion of the notes;
- to comply with the registration rights agreement; and
- to purchase the notes in the event of a change in control.
In addition, we may terminate our obligations to comply with restrictive
covenants relating to the maintenance of our properties and payment of taxes and
other claims and the operation of the cross default and cross acceleration
provisions. This termination is known as covenant defeasance.
We may exercise our legal defeasance option even if we have previously
exercised our covenant defeasance option. If we exercise either defeasance
option, payment of the notes may not be accelerated because of the occurrence of
events of default.
To exercise either defeasance option, we must irrevocably deposit in trust
with the trustee money and/or obligations backed by the full faith and credit of
the U.S. that will provide money in an amount
24
<PAGE>
sufficient in the written opinion of a nationally recognized firm of independent
public accountants to pay the principal of, premium, if any, and each
installment of interest on the outstanding notes. We may only establish this
trust if, among other things:
- no event of default, or event that with the passing of time or the giving
of notice, or both, would constitute an event of default, shall have
occurred or be continuing;
- we have delivered to the trustee an opinion of counsel to the effect that
the deposit shall not cause the trust so created to be subject to the
Investment Company Act of 1940;
- in the case of legal defeasance, we have delivered to the trustee an
opinion of counsel to the effect that we have received from, or there has
been published by, the Internal Revenue Service a ruling or there has been
a change in law, which in the opinion of our counsel, provides that
holders of the notes will not recognize gain or loss for federal income
tax purposes as a result of the action and will be subject to federal
income tax on the same amount, in the same manner and at the same times as
would have been the case if the action had not occurred;
- in the case of covenant defeasance, we have delivered to the trustee an
opinion of counsel to the effect that the holders of the notes will not
recognize gain or loss for federal income tax purposes as a result of the
action and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if the
action had not occurred; and
- we satisfy other customary conditions precedent described in the
indenture.
REGARDING THE TRUSTEE
The Bank of New York is the trustee under the indenture.
GOVERNING LAW
The indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York without regard to conflict of laws
principles.
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<PAGE>
U.S. FEDERAL TAX CONSIDERATIONS
The following is a general discussion of the material U.S. federal income
tax considerations relevant to purchasing, owning and disposing of the notes and
the common stock into which you may convert the notes. This discussion is based
on currently existing provisions of the Internal Revenue Code of 1986, existing
and proposed Treasury regulations promulgated under the Code and administrative
and judicial interpretations, all as presently in effect or proposed and all of
which are subject to change, possibly with retroactive effect or different
interpretations.
This discussion does not deal with all aspects of U.S. federal income
taxation that may be important to holders of the notes or shares of common stock
received upon conversion, and it does not include any description of the tax
laws of any state, local or foreign government. This discussion is limited to
beneficial owners who hold the notes and the shares of common stock received
upon conversion as capital assets within the meaning of Section 1221 of the
Code. Moreover, this discussion is for general information only and does not
address all of the U.S. federal income tax consequences that may be relevant to
particular purchasers. Particular purchasers may be subject to special rules.
For the purpose of this discussion, a "U.S. holder" refers to a beneficial
owner of a note or common stock who or which is:
- a citizen or resident of the U.S. for U.S. federal income tax purposes;
- a corporation, partnership or other entity created or organized in or
under the laws of the U.S. or political subdivision of the U.S., unless
otherwise provided in provisions in the case of a partnership;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source;
- a trust, if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. fiduciaries have
authority to control all substantial decisions of the trust; or
- otherwise subject to U.S. federal income tax on a net income basis in
respect of its worldwide taxable income.
The term "non-U.S. holder" refers to any beneficial owner of a note or
common stock who or which is not a U.S. holder.
PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE CONVERSION OF
THE NOTES INTO SHARES OF COMMON STOCK, AND THE EFFECT THAT THEIR PARTICULAR
CIRCUMSTANCES MAY HAVE ON THESE TAX CONSEQUENCES.
FEDERAL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS
INTEREST ON NOTES. Interest paid on the notes will be taxable to a U.S.
holder as ordinary interest income in accordance with the holder's method of tax
accounting. The notes were not issued with original issue discount within the
meaning of the Code.
CONSTRUCTIVE DIVIDEND. Some corporate transactions, such as distributions
of assets to holders of common stock, may cause a deemed distribution to the
holders of the notes if the conversion price or conversion ratio of the notes is
adjusted to reflect the corporate transaction. These distributions will be
taxable as a dividend, return of capital or capital gain in accordance with the
earnings and profits rules discussed under "--Dividends on Shares of Common
Stock."
CONVERSION OF NOTES. A U.S. holder of notes generally will not recognize
gain or loss on the conversion of the notes solely into shares of common stock,
other than cash received in lieu of
26
<PAGE>
fractional shares. The U.S. holder's tax basis in the shares of common stock
received upon conversion of the notes will be equal to the holder's aggregate
tax basis in the notes converted, less any portion allocable to cash received in
lieu of a fractional share. The holding period of the shares of common stock
received by the holder upon conversion of notes generally will include the
period during which the holder held the notes prior to the conversion.
Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for such fractional share rather than as a
dividend. Gain or loss recognized on the receipt of cash paid in lieu of
fractional shares generally will equal the difference between the amount of cash
received and the amount of tax basis allocable to the fractional share
exchanged.
DIVIDENDS ON SHARES OF COMMON STOCK. Distributions on shares of common
stock will constitute dividends for U.S. federal income tax purposes to the
extent of our current or accumulated earnings and profits as determined under
U.S. federal income tax principles. Dividends paid to holders that are U.S.
corporations may qualify for the dividends-received deduction.
To the extent that a U.S. holder receives a distribution on shares of common
stock that would otherwise constitute dividends for U.S. federal income tax
purposes but that exceed our current and accumulated earnings and profits, the
distribution will be treated first as a non-taxable return of capital reducing
the holder's basis in the shares of common stock. Any distribution in excess of
the holder's basis in the shares of common stock will be treated as capital
gain.
SALE OR EXCHANGE OF NOTES OR SHARES OF COMMON STOCK. In general, a U.S.
holder of notes will recognize gain or loss upon the sale, redemption,
retirement or other disposition of the notes measured by the difference between:
- the amount of cash and the fair market value of any property received,
except to the extent attributable to the payment of accrued interest, and
- the U.S. holder's tax basis in the notes.
A U.S. holder's tax basis in notes generally will equal the cost of the
notes to the holder. In general, each U.S. holder of common stock into which the
notes have been converted will recognize gain or loss upon the sale, exchange,
redemption, or other disposition of the common stock under rules similar to
those applicable to the notes. Special rules may apply to redemptions of the
common stock which may result in the amount paid being treated as a dividend.
Gain or loss on the disposition of the notes or shares of common stock will be
capital gain or loss and will be long-term capital gain or loss if the holding
period of the notes or the common stock that was disposed of exceeded one year.
Net capital gain realized by individual taxpayers is taxable at a maximum rate
of 20%.
FEDERAL TAX CONSIDERATIONS APPLICABLE TO NON-U.S. HOLDERS
INTEREST ON NOTES. Generally, interest paid on the notes to a non-U.S.
holder will not be subject to U.S. federal income tax if:
- the interest is not effectively connected with the conduct of a trade or
business within the U.S. by the non-U.S. holder;
- the non-U.S. holder does not actually or constructively own 10% or more of
the total voting power of all classes of our stock entitled to vote and is
not a controlled foreign corporation with respect to which we are a
"related person" within the meaning of the Code; and
- the beneficial owner, under penalty of perjury, certifies that the owner
is not a U.S. person and provides the owner's name and address.
The certification described in the last clause above may be provided by a
securities clearing organization, a bank or other financial institution that
holds customers' securities in the ordinary course
27
<PAGE>
of its trade or business. Under recently adopted U.S. Treasury regulations,
which generally are effective for payments made after December 31, 2000, the
certification may also be provided by a qualified intermediary on behalf of one
or more beneficial owners, or other intermediaries, provided that the
intermediary has entered into a withholding agreement with the Internal Revenue
Service and other conditions are met. A holder that is not exempt from tax under
these rules will be subject to U.S. federal income tax withholding at a rate of
30% unless the interest is effectively connected with the conduct of a U.S.
trade or business, in which case the interest will be subject to the U.S.
federal income tax on net income that applies to U.S. persons generally.
Corporate non-U.S. holders that receive interest income that is effectively
connected with the conduct of a trade or business within the U.S. may also be
subject to an additional "branch profits" tax on such income. Non-U.S. holders
should consult applicable income tax treaties, which may provide different
rules.
CONVERSION OF NOTES. A non-U.S. holder generally will not be subject to
U.S. federal income tax on the conversion of a note into shares of common stock.
To the extent a non-U.S. holder receives cash in lieu of a fractional share on
conversion, such cash may give rise to gain that would be subject to the
rules described below with respect to the sale or exchange of a note or common
stock.
DIVIDENDS ON SHARES OF COMMON STOCK. Generally, any distribution on shares
of common stock to a non-U.S. holder will be subject to U.S. federal income tax
withholding at a rate of 30% unless the dividend is effectively connected with
the conduct of a trade or business within the U.S. by the non-U.S. holder, in
which case the dividend will be subject to the U.S. federal income tax on net
income that applies to U.S. persons generally. Corporate non-U.S. holders that
receive dividend income that is effectively connected with the conduct of a
trade or business within the U.S. also may be subject to an additional "branch
profits" tax on such income. Non-U.S. holders should consult any applicable
income tax treaties, which may provide different rules. A non-U.S. holder and
any entities, partners, shareholders or other beneficiaries of non-U.S. holders
may be required to satisfy certification requirements in order to claim a
reduction of or exemption from withholding under the foregoing rules.
SALES OR EXCHANGE OF NOTES OR SHARES OF COMMON STOCK. A non-U.S. holder
generally will not be subject to U.S. federal income tax on gain recognized upon
the sale or other disposition of the notes or shares of common stock unless:
- the gain is, or is treated as, effectively connected with the conduct of a
trade or business within the U.S. by the non-U.S. holder; or
- in the case of a non-U.S. holder who is a nonresident alien individual and
holds the common stock as a capital asset, such holder is present in the
U.S. for 183 or more days in the taxable year.
FEDERAL ESTATE TAXES. A note beneficially owned by an individual who is a
non-U.S. holder at the time of his or her death generally will not be subject to
U.S. federal estate tax as a result of such individual's death, provided that:
- the individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of our stock entitled to vote
within the meaning of section 871(h)(3) of the Code; and
- interest payments with respect to such note would not have been, if
received at the time of the individual's death, effectively connected with
the conduct of a U.S. trade or business by the individual.
Common stock owned or treated as owned by an individual who is a non-U.S.
holder at the time of his or her death will be included in such individual's
estate for U.S. federal estate tax purposes and thus will be subject to U.S.
federal estate tax, unless an applicable estate tax treaty provides otherwise.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
UNITED STATES HOLDERS. Information reporting and backup withholding may
apply to payments of interest or dividends on or the proceeds of the sale or
other disposition of the notes or shares of common stock made by us with respect
to non-corporate U.S. holders. These holders generally will be subject to backup
withholding at a rate of 31% unless the recipient of the payment supplies a
taxpayer identification number and other information, certified under penalties
of perjury, or otherwise establishes, in the manner prescribed by law, an
exemption from backup withholding. Any amount withheld under backup withholding
is allowable as a credit against the U.S. holder's federal income tax, upon
furnishing the required information to the Internal Revenue Service.
NON-UNITED STATES HOLDERS. Generally, information reporting and backup
withholding of U.S. federal income tax at a rate of 31% may apply to payment of
principal, interest and premium, if any, to non-U.S. holders if the holder fails
to certify that the holder is a non-U.S. person or if we or our paying agent has
actual knowledge that the holder is a U.S. person.
The payment of the proceeds on the disposition of notes or shares of common
stock to or through the U.S. office of a U.S. or foreign broker will be subject
to information reporting and backup withholding unless the owner provides the
certification described above or otherwise establishes an exemption. The
proceeds of the disposition by a non-U.S. holder of notes or shares of common
stock to or through a foreign office of a broker will not be subject to backup
withholding. However, if the broker is a U.S. person, a controlled foreign
corporation for U.S. tax purposes, or a foreign person 50% or more of whose
gross income from all sources is from activities that are effectively connected
with a U.S. trade or business, information reporting will apply unless:
- the broker has documentary evidence in its files of the owner's foreign
status; or
- the owner otherwise establishes an exemption.
Both backup withholding and information reporting will apply to the proceeds
from dispositions if the broker has actual knowledge that the holder is a U.S.
holder.
Recently adopted U.S. Treasury regulations, which generally are effective
for payments made after December 31, 2000, alter the rules described above.
Among other things, these regulations provide presumptions under which a
non-U.S. holder is subject to information reporting and backup withholding at
the rate of 31% unless we receive certification from the holder of non-U.S.
status. Depending on the circumstances, this certification will need to be
provided:
- directly by the non-U.S. holder;
- in the case of a non-U.S. holder that is treated as a partnership or other
fiscally transparent entity, by the partners, shareholders or other
beneficiaries of the entity; or
- qualified financial institutions or other qualified entities on behalf of
the non-U.S. holder.
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SELLING SECURITY HOLDERS
The notes were originally issued by us and sold by the initial purchasers in
a transaction exempt from the registration requirements of the Securities Act to
persons reasonably believed by the initial purchasers to be qualified
institutional buyers or other institutional accredited investors. Selling
holders, including their transferees, pledgees or donees or their successors,
may from time to time offer and sell any or all of the notes and common stock
into which the notes are convertible.
The following table shows information with respect to the selling holders
and the principal amounts of notes and common stock they beneficially own that
may be offered under this prospectus. The information is based on information
provided by or on behalf of the selling holders. The selling holders may offer
all, some or none of the notes or common stock into which the notes are
convertible. Because the selling holders may offer all or some portion of the
notes or the common stock, no estimate can be given as to the amount of the
notes or the common stock that will be held by the selling holders upon
termination of any sales. The column showing ownership after completion of the
offering assumes that the selling holders will sell all of the securities
offered by this prospectus. In addition, the selling holders identified below
may have sold, transferred or otherwise disposed of all or a portion of their
notes since the date on which they provided the information regarding their
notes in transactions exempt from the registration requirements of the
Securities Act.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT COMMON STOCK COMMON STOCK
OF NOTES ISSUABLE UPON COMMON OWNED AFTER
BENEFICIALLY OWNED CONVERSION OF STOCK COMPLETION OF
SECURITYHOLDER AND OFFERED THE NOTES OFFERED THE OFFERING
- -------------- ------------------ ------------- -------- -------------
<S> <C> <C> <C> <C>
Allstate Insurance Company.............. $ 1,000,000 3,115 3,115 --
American National Can................... $ 250,000 779 779 --
Argent Classic Convertible Arbitrage
Fund (Bermuda) L.P.................... $ 1,000,000 3,115 3,115 --
Arkansas Public Employees Retirement
System................................ $ 425,000 1,324 1,324 --
Banca Intermobiliare Di Investimenti E
Gestoni S.P.A......................... $ 1,040,000 3,240 3,240 --
Bear Stearns............................ $ 1,000,000 3,115 3,115 --
Brahma.................................. $ 200,000 623 623 --
Children's Medical Center............... $ 250,000 779 779 --
Chrysler Corporation Master Retirement
Trust................................. $ 699,000 2,165 2,165 --
City of Richmond Retirement System...... $ 25,000 78 78 --
Conseco Fund Group--Convertible
Securities Fund....................... $ 250,000 779 779 --
Convexity Partners...................... $ 250,000 779 779 --
Cova Bond Debenture Fund................ $ 500,000 1,558 1,558 --
Dallas Police & Fire Pension System..... $ 950,000 2,959 2,959 --
Delta Air Lines Master Trust............ $ 260,000 810 810 --
Detroit Edison Employees' Retirement
Trust................................. $ 200,000 623 623 --
Detroit Medical Center Endowment/
Depreciation Fund..................... $ 50,000 156 156 --
Detroit Medical Center Pension Plan..... $ 50,000 156 156 --
Elf Aquitaine........................... $ 75,000 234 234 --
General Motors.......................... $ 6,000,000 18,692 18,692 --
General Motors Pension Fund--High Yield
Sector................................ $ 1,100,000 3,427 3,427 --
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT COMMON STOCK COMMON STOCK
OF NOTES ISSUABLE UPON COMMON OWNED AFTER
BENEFICIALLY OWNED CONVERSION OF STOCK COMPLETION OF
SECURITYHOLDER AND OFFERED THE NOTES OFFERED THE OFFERING
- -------------- ------------------ ------------- -------- -------------
<S> <C> <C> <C> <C>
Global Partners--High Yield............. $ 250,000 779 779 --
Goldman Sachs & Co...................... $ 2,532,000 7,888 7,888 --
Halliburton Company--High Yield
Sector................................ $ 125,000 389 389 --
Heritage High Yield..................... $ 125,000 389 389 --
Houston Firemen's Relief and
Pension Fund "B"...................... $ 800,000 2,492 2,492 --
Houston Municipal Employees Pension
System................................ $ 500,000 1,558 1,558 --
IBM Pension Plan........................ $ 900,000 2,804 2,804 --
Independence Blue Cross (KHPE).......... $ 124,000 386 386 --
JNL Global--High Yield.................. $ 50,000 156 156 --
Key Asset Management as Agent for the
Victory Convertible Securities Fd..... $ 500,000 1,558 1,558 --
Loomis Sayles Bond Fund................. $ 1,000,000 3,115 3,115 --
Loomis Sayles Fixed Income Fund......... $ 500,000 1,558 1,558 --
Loomis Sayles High Yield Fixed Income
Fund.................................. $ 150,000 467 467 --
Loomis Sayles High Yield Fund........... $ 100,000 312 312 --
Loomis Sayles International High Yield
Fund.................................. $ 150,000 467 467 --
Lord Abbett Bond Debenture Fund......... $ 7,675,000 23,910 23,910 --
Lord, Abbett Co. Oxford Fund............ $ 750,000 2,336 2,336 --
Lumbermens.............................. $ 250,000 779 779 --
MetLife General Motors High Yield
Pension............................... $ 250,000 779 779 --
MetLife Pension DB Separate Account
249................................... $ 350,000 1,090 1,090 --
Metropolitan Life Loomis Sayles High
Yield Bond Por........................ $ 250,000 779 779 --
Minneapolis Teachers Retirement Fund.... $ 400,000 1,246 1,246 --
Morgan Stanley Dean Witter Convertible
Securities Trust...................... $ 2,000,000 6,231 6,231 --
Motion Picture Industry Health
Plan--Active Member Fund.............. $ 85,000 265 265 --
Motion Picture Industry Health Plan--
Retiree Member Fund................... $ 40,000 125 125 --
Motors Insurance Corp................... $ 1,500,000 4,673 4,673 --
National Steel--High Yield.............. $ 250,000 779 779 --
New York Life Insurance and Annuity
Corp. (NYLIAC)........................ $ 2,500,000 7,788 7,788 --
New York Life Insurance Company
(NYLIC)............................... $ 24,000,000 74,766 74,766 --
OCM Convertible Trust................... $ 370,000 1,153 1,153 --
Oppenheimer Convertible Securities
Fund.................................. $ 8,000,000 24,922 24,922 --
Pacific Life Insurance Company.......... $ 500,000 1,558 1,558 --
Partner Reinsurance Company Ltd......... $ 145,000 452 452 --
Partners HealthCare Intermediate Pooled
Trust................................. $ 75,000 234 234 --
Partners HealthCare System Inc.......... $ 100,000 312 312 --
Partners HealthCare System Inc.
Pension............................... $ 250,000 779 779 --
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT COMMON STOCK COMMON STOCK
OF NOTES ISSUABLE UPON COMMON OWNED AFTER
BENEFICIALLY OWNED CONVERSION OF STOCK COMPLETION OF
SECURITYHOLDER AND OFFERED THE NOTES OFFERED THE OFFERING
- -------------- ------------------ ------------- -------- -------------
<S> <C> <C> <C> <C>
Pension Reserves Investment Fund........ $ 725,000 2,259 2,259 --
Peter & Elizabeth Tower Foundation...... $ 50,000 156 156 --
Premium Total Return Fund............... $ 8,500,000 26,480 26,480 --
Renaissance--High Yield................. $ 125,000 389 389 --
Salomon Brothers High Income Fund....... $ 125,000 389 389 --
Salomon Brothers HIXX--High Yield....... $ 1,250,000 3,894 3,894 --
SB Convertible Fund..................... $ 1,500,000 4,673 4,673 --
SB Series High Yield.................... $ 750,000 2,336 2,336 --
Septa................................... $ 75,000 234 234 --
State Employees' Retirement Fund of the
State of Delaware..................... $ 355,000 1,106 1,106 --
State of Connecticut Combined Investment
Funds................................. $ 795,000 2,477 2,447 --
State of Connecticut Fund "F"........... $ 1,125,000 -- -- --
State of Rhode Island Employees
Retirement System..................... $ 1,100,000 3,505 3,505 --
TCW Group, Inc.......................... $ 22,585,000 70,358 70,358 --
Teamsters Affiliates Pension Plan....... $ 400,000 1,246 1,246 --
Teamsters Retirement & Family Protection
Plan.................................. $ 50,000 156 156 --
The Travelers Indemnity Company......... $ 1,456,000 4,536 4,536 --
The Travelers Insurance Company......... $ 934,000 2,910 2,910 --
The Travelers Insurance Company Separate
Account TLAC.......................... $ 110,000 343 343 --
Unisys--High Yield...................... $ 375,000 1,168 1,168 --
United Mine Workers of America Health
and Retirement........................ $ 800,000 2,492 2,492 --
United Technologies Master Retirement
Plan.................................. $ 500,000 1,558 1,558 --
Vanguard Convertible Securities Fund,
Inc................................... $ 705,000 2,196 2,196 --
White River Securities LLC.............. $ 2,188,000 6,816 6,816 --
Winchester Convertible Plus Ltd......... $ 400,000 1,246 1,246 --
World Bank--High Yield.................. $ 375,000 1,168 1,168 --
Other Holders........................... $103,910,000 323,707 323,707
</TABLE>
None of the selling holders nor any of their affiliates, officers, directors
or principal equity holders has held any position or office or has had any
material relationship with us within the past three years.
Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this prospectus if
and when necessary. In addition, the per share conversion price and, therefore,
the number of shares of common stock issuable upon conversion of the notes, is
subject to adjustment. As a result, the aggregate principal amount of notes and
the number of shares of common stock into which the notes are convertible may
increase or decrease.
32
<PAGE>
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and the common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at prices related to the prevailing market prices, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions:
- on any national securities exchange or quotation service on which the
notes or the common stock may be listed or quoted at the time of sale;
- in the over-the-counter market;
- in transactions otherwise than on these exchanges or services or in the
over-the-counter market;
- through the writing of options, whether listed on an options exchange or
otherwise;
- through the settlement of short sales;
- through the distribution by a holder to its partners, members or
stockholders; or
- through a combination of any of the above, which may involve crosses or
block transactions.
In connection with the sale of the notes and the common stock into which the
notes are convertible or otherwise, the selling holders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the notes or the common stock into which the notes
are convertible and deliver these securities to close out those short positions,
or loan or pledge the notes or the common stock into which the notes are
convertible to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the notes or
common stock into which the notes are convertible will be the purchase price of
the notes or common stock less discounts and commissions, if any. Each of the
selling holders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of
notes or common stock to be made directly or through agents. We will not receive
any of the proceeds from this offering.
Our outstanding common stock is listed for quotation on the Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes. If a trading market
for the notes fails to develop, the trading price of the notes may decline.
In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under the
Securities
33
<PAGE>
Act. Selling holders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act. The selling holders have acknowledged that they understand
their obligations to comply with the provisions of the Exchange Act and the
rules thereunder relating to stock manipulation, particularly Regulation M.
In addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than under this prospectus. A selling holder may
not sell any notes or common stock described in this prospectus and may not
transfer, devise or gift these securities by other means not described in this
prospectus.
To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws. The registration rights agreement provides for
cross-indemnification of the selling holders and us and their and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the notes and the common stock, including
liabilities under the Securities Act. We will pay substantially all of the
expenses incurred by the selling holders incident to the offering and sale of
the notes and the common stock, provided that each selling holder will be
responsible for payment of commissions, concessions and discounts of
underwriters, broker-dealers or agents.
VALIDITY OF THE SECURITIES
The validity of the notes and of the common stock offered by this prospectus
will be passed upon for Affymetrix by Sullivan & Cromwell, Los Angeles,
California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements and schedule included in our Annual Report on Form 10-K for the year
ended December 31, 1999, as set forth in their reports, which are included in
that document and our supplemental consolidated financial statements and
schedule included in our Current Report on Form 8-K filed April 7, 2000 and
incorporated by reference in this document. Our financial statements and
schedule and supplemental consolidated financial statements and schedule are
incorporated by reference in reliance on Ernst & Young LLP's reports, given on
their authority as experts in accounting and auditing.
34
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All the amounts shown are estimates except
for the registration fee and the filing fee.
<TABLE>
<S> <C>
Registration fee............................................ $ 59,400
Legal fees and expenses..................................... 208,367
Accounting fees and expenses................................ 22,500
Nasdaq National Market filing fee........................... 17,500
Miscellaneous............................................... 192,233
--------
TOTAL..................................................... $500,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
Affymetrix' charter includes a provision that eliminates the personal liability
of a director to Affymetrix or its stockholders for monetary damages arising out
of the director's breach of his or her fiduciary duty. The charter provides,
however, that unless otherwise permitted by applicable law, a director remains
potentially liable for monetary damages for:
- breach of the director's duty of loyalty to Affymetrix or its
stockholders;
- acts or omissions not in good faith or which involve misconduct or a
knowing violation of law;
- an improper payment of a dividend or an improper redemption or repurchase
of Affymetrix' stock (as provided in Section 174 of the Delaware General
Corporation Law); or
- any transaction from which a director derives an improper personal
benefit.
Any repeal or modification of this provision will not affect any right or
protection of a director that exists at the time of such repeal or modification.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify any persons who are, or are threatened to be made,
parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation) by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such officer, director, employee or agent
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his or her conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him or her against the expenses which such officer or
director actually and reasonably incurred.
II-1
<PAGE>
Article VIII of the bylaws of Affymetrix provides in terms similar to those
of Section 145 of the Delaware General Corporation Law that Affymetrix has the
power and is required to indemnify its directors and officers in accordance with
Delaware Law.
The right to indemnification includes the right to be paid by Affymetrix the
expenses (including attorneys' fees) incurred in defending any suits brought in
advance of their final disposition; provided, however, that if the Delaware
General Corporation Law requires, an advancement of expenses incurred by an
indemnitee in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by the indemnitee, including,
without limitation, service to an employee benefit plan) will be made only upon
delivery to Affymetrix of an undertaking, by or on behalf of the indemnitee, to
repay all amounts so advanced if it will ultimately be determined by final
judicial decision from which there is no further right to appeal that the
indemnitee is not entitled to indemnification under Affymetrix' bylaws. The
rights to indemnification and to the advancement of expenses covered in Sections
1 and 2 of Article VII of Affymetrix' bylaws are contract rights and these
rights continue as to an indemnitee who has ceased to be a director or officer
and will inure to the benefit of his or her heirs, executors and administrators.
If a claim covered by Affymetrix' bylaws (Article VIII, Sections 1 and
2) is not paid in full by Affymetrix within 60 days after a written claim has
been received by Affymetrix, except in the case of advancement of expenses
pursuant to the terms of an undertaking, in which case the applicable period is
20 days, an indemnitee will be entitled to be paid also the expense of
prosecuting or defending the suit. The failure of the indemnitee to meet any
applicable standard for indemnification set forth in the Delaware General
Corporation Law:
- is a defense in any suit brought by the indemnitee to enforce a right to
indemnification (but not in a suit brought by the indemnitee to enforce a
right to an advancement of expenses); and
- entitles Affymetrix to recover an advancement of expenses pursuant to the
terms of an undertaking upon a final adjudication in any suit brought by
Affymetrix to recover an advancement of expenses pursuant to the terms of
an undertaking.
Neither the failure of Affymetrix, including its board of directors,
independent legal counsel or stockholders, to have made a determination prior to
the commencement of the suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by Affymetrix, including its board of directors, independent legal
counsel or stockholders, that the indemnitee has not met the applicable standard
of conduct, in the case of such a suit brought by the indemnitee, is a defense
to the suit. In any suit brought by an indemnitee to enforce a right to
indemnification or to an advancement of expenses, or any suit brought by
Affymetrix to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to an
advancement of expenses under Article VIII of the bylaws or otherwise will be
borne by Affymetrix.
The rights to indemnification and to the advancement of expenses conferred
in Affymetrix' bylaws are not exclusive of any other right which any person may
have or acquire under Affymetrix' charter, any statute, agreement, vote of
stockholders or disinterested directors or otherwise.
Affymetrix may maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of Affymetrix or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not Affymetrix would have the power to indemnify
that person against the expense, liability or loss under the Delaware General
Corporation Law.
Affymetrix may, to the extent authorized from time to time by the board of
directors, grant rights to indemnification and to the advancement of expenses to
any officer, employee or agent of Affymetrix
II-2
<PAGE>
to the fullest extent of the provisions allowed by its bylaws with respect to
the indemnification and advancement of expenses of directors and officers of
Affymetrix.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF THE DOCUMENT
- --------------------- ---------------------------
<C> <S>
(1)4.1 Amended and Restated Certificate of Incorporation of
Affymetrix, Inc.
(2)4.2 Bylaws of Affymetrix, Inc.
4.3 Registration Rights Agreement, dated as of February 14,
2000, between Affymetrix and certain purchasers listed on
the signature page thereto
4.4 Indenture, dated as of February 14, 2000, between Affymetrix
and The Bank of New York, as Trustee
(3)4.5 Agreement and Plan of Merger Between Affymetrix, Inc., a
California corporation, and Affymetrix, Inc., a Delaware
corporation
(4)4.6 Rights Agreement, dated as of October 15, 1998, between
Affymetrix, Inc. and American Stock Transfer & Trust
Company, as Rights Agent
(5)4.7 Amendment No. 1 to Rights Agreement, dated as of February 7,
2000, between Affymetrix, Inc. and American Stock Transfer &
Trust Company, as Rights Agent
5.1* Opinion of Sullivan & Cromwell
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page hereto)
25.1 Form T-1 Statement of Eligibility and Qualification of
Trustee
</TABLE>
- ------------------------
(1) Incorporated by reference to Exhibit 3.1 to our registration statement on
Form S-3 as filed on July 12, 1999 (File No. 333-82685).
(2) Incorporated by reference to Appendix B to our definitive proxy statement on
Schedule 14A as filed on April 29, 1998 (File No. 000-28218).
(3) Incorporated by reference to Exhibit 2.1 to our Form 8-K as filed on
September 29, 1998 (File No. 000-28218).
(4) Incorporated by reference to Exhibit 1 of our Form 8-A as filed on
October 16, 1998 (File No. 000-28218).
(5) Incorporated by reference to Exhibit 4.1 to our Form 8-A/A as filed on
October 14, 1999 (File No. 000-28218).
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of The
Securities Act of 1933.
II-3
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such 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.
(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.
(4) 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 Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(5) 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 provisions described in Item 15, 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 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and County of Santa Clara, State of California on
May 11, 2000.
<TABLE>
<S> <C> <C>
By: /s/ VERN NORVIEL
-----------------------------------------
Vern Norviel
Senior Vice President, General Counsel and
Corporate Secretary
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen Fodor, Edward Hurwitz, and Vern Norviel
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments, exhibits thereto and other documents in connection
therewith) to this registration statement and any subsequent registration
statement filed by the registrant pursuant to Securities and Exchange Commission
Rule 462, which relates to this registration statement and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN P.A. FODOR, PH.D.
-------------------------------------- Chief Executive Officer and May 11, 2000
Stephen P.A. Fodor, Ph.D. Chairman of the Board
Vice President and Chief
Financial Officer (Principal
-------------------------------------- Financial and Accounting May 11, 2000
Edward M. Hurwitz Officer)
-------------------------------------- Vice Chairman of the Board May 11, 2000
John D. Diekman, Ph.D.
/s/ PAUL BERG, PH.D.
-------------------------------------- Director May 11, 2000
Paul Berg, Ph.D.
-------------------------------------- Director May 11, 2000
Adrian Hennah
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
-------------------------------------- Director May 11, 2000
Vernon R. Loucks, Jr.
-------------------------------------- Director May 11, 2000
Barry C. Ross, Ph.D.
/s/ DAVID B. SINGER
-------------------------------------- Director May 11, 2000
David B. Singer
/s/ LUBERT STRYER, M.D.
-------------------------------------- Director May 11, 2000
Lubert Stryer, M.D.
/s/ JOHN A. YOUNG
-------------------------------------- Director May 11, 2000
John A. Young
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF THE DOCUMENT
- --------------------- ---------------------------
<C> <S>
(1)4.1 Amended and Restated Certificate of Incorporation of
Affymetrix, Inc.
(2)4.2 Bylaws of Affymetrix, Inc.
4.3 Registration Rights Agreement, dated as of February 14,
2000, between Affymetrix and certain purchasers listed on
the signature page thereto
4.4 Indenture, dated as of February 14, 2000, between Affymetrix
and The Bank of New York, as Trustee
(3)4.5 Agreement and Plan of Merger Between Affymetrix, Inc., a
California corporation, and Affymetrix, Inc., a Delaware
corporation
(4)4.6 Rights Agreement, dated as of October 15, 1998, between
Affymetrix, Inc. and American Stock Transfer & Trust
Company, as Rights Agent
(5)4.7 Amendment No. 1 to Rights Agreement, dated as of February 7,
2000, between Affymetrix, Inc. and American Stock Transfer &
Trust Company, as Rights Agent
5.1* Opinion of Sullivan & Cromwell
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Sullivan & Cromwell (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page hereto)
25.1 Form T-1 Statement of Eligibility and Qualification of
Trustee
</TABLE>
- ------------------------
(1) Incorporated by reference to Exhibit 3.1 to our registration statement on
Form S-3 as filed on July 12, 1999 (File No. 333-82685).
(2) Incorporated by reference to Appendix B to our definitive proxy statement on
Schedule 14A as filed on April 29, 1998 (File No. 000-28218).
(3) Incorporated by reference to Exhibit 2.1 to our Form 8-K as filed on
September 29, 1998 (File No. 000-28218).
(4) Incorporated by reference to Exhibit 1 of our Form 8-A as filed on
October 16, 1998 (File No. 000-28218).
(5) Incorporated by reference to Exhibit 4.1 to our Form 8-A/A as filed on
October 14, 1999 (File No. 000-28218).
* To be filed by amendment.
<PAGE>
EXHIBIT 4.3
Up to $225,000,000
Affymetrix, Inc.
4.75% Convertible Subordinated Notes due 2007
REGISTRATION RIGHTS AGREEMENT
February 14, 2000
Credit Suisse First Boston Corporation,
as Representative of the several Initial
Purchasers referred to herein,
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
Affymetrix, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell to Credit Suisse First Boston Corporation ("CSFBC") and the other
initial purchasers named in Schedule A to the Purchase Agreement (as defined
below) (collectively, the "Initial Purchasers"), upon the terms set forth in a
purchase agreement dated as of February 8, 2000 (the "Purchase Agreement")
between the Company and the Initial Purchasers, $175,000,000 aggregate principal
amount (plus up to an additional $50,000,000 principal amount) of 4.75%
Convertible Subordinated Notes Due 2007 (the "Notes") of the Company. The Notes
will be convertible into shares of Common Stock, par value $0.01 per share, of
the Company (the "Common Stock") at the conversion price set forth in the
Offering Circular dated February 8, 2000. The Notes will be issued pursuant to
an Indenture, dated as of February 14, 2000 (the "Indenture"), between the
Company and The Bank of New York (the "Trustee"). As an inducement to the
Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company agrees
with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders of the Notes and the Common Stock issuable
upon conversion of the Notes (collectively, the "Securities") from time to time
until such time as such Securities have been sold pursuant to a Shelf
Registration Statement (as defined below) (each of the foregoing a "Holder" and
together the "Holders"), as follows:
1. SHELF REGISTRATION. The Company shall take the following actions:
(a) The Company shall, at its cost, prepare and, as promptly as practicable
(but in no event more than 90 days after so required or requested pursuant to
this Section 1) file with the Securities and Exchange Commission (the
"Commission")
<PAGE>
and thereafter shall use its commercially reasonable best efforts to cause to be
declared effective as soon as practicable a registration statement on Form S-3
(the "Shelf Registration Statement") covering the offer and sale of the Transfer
Restricted Securities (as defined in Section 5 hereof) by the Holders thereof
from time to time in accordance with the methods of distribution set forth in
the Shelf Registration Statement and Rule 415 under the Securities Act of 1933,
as amended (the "Securities Act") (hereinafter, the "Shelf Registration");
PROVIDED, HOWEVER, that no Holder (other than the Initial Purchasers) shall be
entitled to have the Securities held by it covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by all the provisions
of this Agreement applicable to such Holder.
(b) The Company shall use its commercially reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus included therein (the "Prospectus") to be lawfully delivered by the
Holders of the relevant Securities, for a period of two years (or for such
longer period if extended pursuant to Section 2(h) below) from the date of its
effectiveness or such shorter period that will terminate when all the Securities
covered by the Shelf Registration Statement (i) have been sold pursuant thereto
or (ii) may be sold pursuant to Rule 144(k) under the Securities Act (or any
successor rule therefore), assuming for this purpose that the Holders thereof
are not affiliates of the Company (in any such case, such period being called
the "Shelf Registration Period"). The Company shall be deemed not to have used
its commercially reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not being able
to offer and sell such Securities during that period, unless such action is (i)
required by applicable law or (ii) taken by the Company in good faith and for
valid business reasons upon the occurrence of any event contemplated by Section
2(b)(v) below, and the Company thereafter complies with the requirements of
Section 2(h).
(c) Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall cause the Shelf Registration Statement and the Prospectus and
any amendment or supplement thereto, as of the effective date of the Shelf
Registration Statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations of the Commission and (ii) not to contain any 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 light of the
circumstances under which they were made, not misleading.
2. REGISTRATION PROCEDURES. In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:
2
<PAGE>
(a) The Company shall (i) furnish to each of the Initial Purchasers, prior
to the filing thereof with the Commission, a copy of the Shelf Registration
Statement and each amendment thereof and each amendment or supplement, if any,
to the prospectus included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original offering)
is participating in the Shelf Registration Statement, use its commercially
reasonable best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may propose and
(ii) include the names of the Holders who propose to sell Securities pursuant to
the Shelf Registration Statement, as selling security holders.
(b) The Company shall give written notice to the Initial Purchasers and the
Holders (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied
by an instruction to suspend the use of the prospectus until the requisite
changes have been made):
(i) when the Shelf Registration Statement or any amendment thereto has
been filed with the Commission and when the Shelf Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the Shelf Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event or circumstance that would require
the Company to make changes in the Shelf Registration Statement or the
Prospectus in order that the Shelf Registration Statement or the Prospectus
does not contain an untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, which written
notice need not provide any detail
3
<PAGE>
as to the nature of such event.
(c) The Company shall make every reasonable effort to obtain the
withdrawal, at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Securities included within
the coverage of the Shelf Registration, without charge, at least one copy of the
Shelf Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (including those, if any, incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of the Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
in connection with the offering and sale of the Securities covered by the
Prospectus, or any amendment or supplement thereto, included in the Shelf
Registration Statement.
(f) Prior to any public offering of the Securities pursuant to the Shelf
Registration Statement, the Company shall register or qualify or cooperate with
the Holders of the Securities included therein and their respective counsel in
connection with the registration or qualification of such Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any such Holder reasonably requests in writing and do any and all
other acts or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by the Shelf Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to the Shelf Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to the Shelf
4
<PAGE>
Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall, as required hereby, prepare and file a post-effective amendment to the
Shelf Registration Statement or an amendment or supplement to the Prospectus and
any other required document so that, as thereafter delivered to Holders or
purchasers of Securities, the Prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Company notifies the Initial
Purchasers and the Holders in accordance with paragraphs (ii) through (v) of
Section 2(b) above to suspend the use of the Prospectus until the requisite
changes to the Prospectus have been made, then the Initial Purchasers and the
Holders shall suspend use of such prospectus and the period of effectiveness of
the Shelf Registration Statement provided for in Section 1(b) above shall be
extended by the number of days from and including the date of giving such notice
to and including the date when the Initial Purchasers and the Holders shall have
received such amended or supplemented prospectus pursuant to this Section 2(h).
Any such amendment, supplement or document will be prepared and filed as
promptly as practicable under the circumstances, as determined in good faith by
the Company, it being understood that the Company may have bona fide reasons to
delay such preparation and filing for a period which may not in any event exceed
60 days.
(i) Not later than the effective date of the Shelf Registration Statement,
the Company will provide CUSIP numbers for the Notes and the Common Stock
registered under the Shelf Registration Statement, and provide the Trustee with
printed certificates for such Notes, in a form eligible for deposit with The
Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), in a timely
manner and containing such changes, if any, as shall be necessary for such
qualification. In the
5
<PAGE>
event that such qualification would require the appointment of a new trustee
under the Indenture, the Company shall appoint a new trustee thereunder pursuant
to the applicable provisions of the Indenture.
(l) The Company may require each Holder of Securities to be sold pursuant
to the Shelf Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of the Securities as the Company may
from time to time reasonably require for inclusion in the Shelf Registration
Statement, and the Company may exclude from such registration the Securities of
any Holder that fails to furnish such information within a reasonable time after
receiving such request.
(m) The Company shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all other
actions, if any, as any Holder shall reasonably request in order to facilitate
the disposition of the Securities pursuant to the Shelf Registration, PROVIDED,
HOWEVER, that the Company shall not be required to facilitate an underwritten
offering pursuant to the Shelf Registration Statement by any Holders unless the
offering relates to at least $50,000,000 principal amount of the Notes or the
equivalent number of shares of Common Stock into which such Notes are
convertible.
(n) The Company shall (i) make reasonably available for inspection by the
Holders, any underwriter participating in any distribution pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained by
the Holders or any such underwriter, all relevant financial and other records,
pertinent corporate documents and properties of the Company and (ii) cause the
Company's officers, directors, employees, accountants and auditors to supply all
relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be reasonably necessary to enable
such persons to conduct a reasonable investigation within the meaning of Section
11 of the Securities Act; PROVIDED, HOWEVER, that the foregoing inspection and
information gathering (i) shall be coordinated on behalf of the Initial
Purchasers by you and on behalf of the other parties, by one counsel designated
by and on behalf of the other parties as described in Section 3 hereof.
(o) The Company, if requested by any Holder of Securities covered by Shelf
Registration Statement, shall cause (i) its counsel (which may include the
Company's general counsel for one or more of the opinions) to deliver an opinion
and updates thereof relating to the Securities in customary form addressed to
such Holders and the managing underwriters, if any, thereof, and dated, in the
case of the initial opinion, the effective date of the Shelf Registration
Statement (it being agreed that the
6
<PAGE>
matters to be covered by such opinion shall include, without limitation, (A) the
due incorporation and good standing of the Company; (B) the qualification of the
Company to transact business as a foreign corporation; the due authorization,
execution and delivery of the relevant agreement of the type referred to in
Section 2(m) hereof; (C) the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the Securities; (D) the
absence of material legal or governmental proceedings involving the Company; (E)
the absence of governmental approvals required to be obtained in connection with
the Shelf Registration Statement, the offering and sale of the Securities, or
any agreement of the type referred to in Section 2(m) hereof; (F) the compliance
as to form of the Shelf Registration Statement and any documents incorporated by
reference therein and of the Indenture with the requirements of the Securities
Act and the Trust Indenture Act, respectively; and, (G) as of the date of the
opinion and as of the effective date of the Shelf Registration Statement or most
recent post-effective amendment thereto, as the case may be, the absence from
the Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, and from any documents incorporated by reference
therein of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any such documents, in the
light of the circumstances existing at the time that such documents were filed
with the Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), it being understood that the items contained in this clause (G)
may be in the form of a statement), (ii) its officers to execute and deliver all
customary documents and certificates and updates thereof requested by any
underwriters of the Securities or counsel for the Holders and (iii) its
independent public accountants and the independent public accountants with
respect to any other entity for which financial information is provided in the
Shelf Registration Statement to provide to the selling Holders of the Securities
and any underwriter therefor a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters in connection with
primary underwritten offerings, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
(p) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by the Shelf
Registration Statement.
3. REGISTRATION EXPENSES. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections
7
<PAGE>
1 and 2 hereof (including the reasonable fees and expenses, if any, of counsel
for the Initial Purchasers, incurred in connection with the Shelf Registration),
whether or not the Shelf Registration Statement is filed or becomes effective,
and shall bear or reimburse the Holders of the Securities covered by the Shelf
Registration for the reasonable fees and disbursements of one firm of counsel
designated by the Holders of a majority in principal amount of the Securities
covered by the Shelf Registration Statement (provided that Holders of Common
Stock issued upon the conversion of the Notes shall be deemed to be Holders of
the aggregate principal amount of Notes from which such Common Stock was
converted) to act as counsel for the Holders in connection therewith.
4. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless
each Holder and each person, if any, who controls such Holder within the meaning
of the Securities Act or the Exchange Act (each Holder and such controlling
persons are referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party becomes subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Shelf Registration
Statement or Prospectus, including any document incorporated by reference
therein, or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration, or arise out of, or are based
upon, the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
PROVIDED, HOWEVER, that (i) the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in the Shelf Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to the
Shelf Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company by or on behalf of such
Holder specifically for inclusion therein and (ii) with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus relating to the Shelf Registration Statement, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Holder from whom the person asserting any such losses, claims,
damages or liabilities purchased the Securities concerned, to the extent that a
prospectus relating to
8
<PAGE>
such Securities was required to be delivered by such Holder under the Securities
Act in connection with such purchase and any such loss, claim, damage or
liability of such Holder results from the fact that there was not sent or given
to such person, at or prior to the written confirmation of the sale of such
Securities to such person, a copy of the final prospectus if the Company had
previously furnished copies thereof to such Holder; PROVIDED FURTHER, HOWEVER,
that this indemnity agreement will be in addition to any liability which the
Company may otherwise have to such Indemnified Party.
The Company shall also indemnify the underwriters, their officers and
directors and each person who controls such underwriters within the meaning of
the Securities Act or the Exchange Act to the same extent as provided above with
respect to the indemnification of the Holders if requested by such Holders.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Shelf Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; and, subject to the limitation set forth immediately preceding this
clause, shall reimburse, as incurred, the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 4 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 4, notify the
indemnifying party of the
9
<PAGE>
commencement thereof; but the omission so to notify the indemnifying party will
not, in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
subsections (a) or (b) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 4 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section 4 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsections (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the registration of the Securities, pursuant
to the Shelf Registration, or (ii) if the allocation provided by the foregoing
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 indemnifying party or parties on the
one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably
10
<PAGE>
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
any other provision of this Section 4(d), the Holders shall not be required to
contribute any amount in excess of the amount by which the net proceeds received
by such Holders from the sale of the Securities pursuant to the Shelf
Registration Statement exceeds the amount of damages which such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the sale of
the Securities pursuant to the Shelf Registration Statement and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional interest
(the "Additional Interest") with respect to the Notes shall be assessed as
follows if any of the following events occur (each such event in clauses (i)
through (iii) below being herein called a "Registration Default"):
(i) the Shelf Registration Statement has not been filed with the
Commission by the 90th day after the first date of original issuance of the
Notes;
(ii) the Shelf Registration Statement has not been declared effective
by the Commission by the 150th day after the first date of original
issuance of the Notes; or
(iii) the Shelf Registration Statement is declared effective but (A)
the Shelf Registration Statement thereafter ceases to be effective; or (B)
the Shelf Registration Statement or the Prospectus ceases to be usable in
connection with resales of Transfer Restricted Securities (as defined
below) during the periods specified herein because either (1) any event
occurs as a result of which the Prospectus forming part of such Shelf
Registration Statement would include any untrue statement of a material
fact or omit to state any material fact necessary to
11
<PAGE>
make the statements therein in the light of the circumstances under which
they were made not misleading, or (2) it shall be necessary to amend such
Shelf Registration Statement or supplement the related prospectus, to
comply with the Securities Act or the Exchange Act or the respective rules
thereunder.
Additional Interest shall accrue on the Notes over and above the interest
set forth in the title of the Notes from and including the date on which any
such Registration Default shall occur, to but excluding the date on which all
such Registration Defaults have been cured, at a rate of 0.50% per annum.
(b) A Registration Default referred to in Section 5(a)(iii)(B) shall be
deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the Prospectus if (i) such Registration Default has
occurred solely as a result of (x) the filing of a post-effective amendment to
the Shelf Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) other material events, with respect to the Company
that would need to be described in the Shelf Registration Statement or the
related prospectus and (ii) in the case of clause (y), the Company is proceeding
in good faith to amend or supplement the Shelf Registration Statement and
related prospectus to describe such events as required by paragraph 2(h) hereof;
PROVIDED, HOWEVER, that in any case if such Registration Default occurs for a
continuous period in excess of 90 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to Section 5(a) will be
payable in cash on the regular interest payment dates with respect to the Notes.
The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Notes,
further multiplied by a fraction, the numerator of which is the number of days
such Additional Interest rate was applicable during such period (determined on
the basis of a 360- day year comprised of twelve 30-day months), and the
denominator of which is 360. The indebtedness represented by the Additional
Interest shall be subordinated in right of payment to all existing and future
Senior Indebtedness (as defined in the Indenture) as and to the same extent as
the Notes.
(d) "Transfer Restricted Securities" means each Security until (i) the date
on which such Security has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (ii) the
date on which such Security is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
12
<PAGE>
6. RULES 144 AND 144A. The Company shall use its best efforts to file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder, make publicly available other
information so long as necessary to permit sales of their securities pursuant to
Rules 144 and 144A. The Company covenants that it will take such further action
as any Holder may reasonably request, all to the extent required from time to
time to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitations of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
The Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Initial Purchaser upon request. Upon
the request of any Holder, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
the foregoing, nothing in this Section 6 shall be deemed to require the Company
to register any of its securities pursuant to the Exchange Act.
7. UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted Securities
covered by the Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering ("Managing Underwriters") will be selected by the
Company.
No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
8. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority in principal amount of the
Securities (provided that Holders of Common Stock issued upon conversion of
Notes shall not be deemed Holders of Common Stock, but shall be deemed to be
Holders of the aggregate principal amount of Notes from which such Common Stock
was converted) affected by such amendment, modification, supplement, waiver or
consents.
13
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(b) NOTICES. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, first-class mail, facsimile
transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company;
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
14
<PAGE>
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Fax No.: (212) 474-3700
Attention: Kris Heinzelman, Esq.
(3) if to the Company, at its address as follows:
Affymetrix, Inc.
3380 Central Expressway
Santa Clara, CA 95051
Fax No.: (408) 731-5000
Attention: Vernon A. Norviel
with a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angles, CA 90067-1725
Fax No.: (310) 712-8800
Attention: Stanley F. Farrar, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) NO INCONSISTENT AGREEMENTS. The Company has not, as of the date hereof,
entered into, nor shall it, on or after the date hereof, without the prior
consent of CSFBC, enter into, any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns.
15
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(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company submits to the
nonexclusive jurisdiction of any federal or state court in the State of New
York.
(h) SEVERABILITY. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(i) SECURITIES HELD BY THE COMPANY. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities)
<PAGE>
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
AFFYMETRIX, INC.
By:
---------------------------------
Name:
Title:
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION,
Acting on behalf of themselves and as
The Representative of the several Initial
Purchasers
CREDIT SUISSE FIRST BOSTON CORPORATION,
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.4
INDENTURE
AFFYMETRIX, INC.
to
THE BANK OF NEW YORK
Trustee
4.75% Convertible Subordinated Notes Due 2007
Dated as of February 14, 2000
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions......................................................................... 1
SECTION 1.02. Compliance Certificates and Opinions................................................ 11
SECTION 1.03. Form of Documents Delivered to Trustee.............................................. 12
SECTION 1.04. Acts of Holders; Record Dates....................................................... 12
SECTION 1.05. Notices, etc. to Trustee and Company................................................ 15
SECTION 1.06. Notice to Holders; Waiver........................................................... 15
SECTION 1.07. Conflict with Trust Indenture Act................................................... 16
SECTION 1.08. Effect of Headings and Table of Contents............................................ 16
SECTION 1.09. Successors and Assigns.............................................................. 16
SECTION 1.10. Severability Clause................................................................. 16
SECTION 1.11. Benefits of Indenture............................................................... 16
SECTION 1.12. Governing Law....................................................................... 17
SECTION 1.13. Legal Holidays...................................................................... 17
ARTICLE II SECURITY FORMS
SECTION 2.01. Forms Generally..................................................................... 17
SECTION 2.02. Form of Face of Security............................................................ 18
SECTION 2.03. Form of Reverse of Security......................................................... 23
SECTION 2.04. Form of Trustee's Certificate of Authentication..................................... 29
SECTION 2.05. Form of Conversion Notice........................................................... 30
SECTION 2.06. Form of Purchase Notice............................................................. 31
SECTION 2.07. Form of Certification............................................................... 32
ARTICLE III THE SECURITIES
SECTION 3.01. Title and Terms..................................................................... 33
SECTION 3.02. Denominations....................................................................... 34
SECTION 3.03. Execution, Authentication, Delivery and Dating...................................... 34
SECTION 3.04. Global and Non-Global Securities.................................................... 35
SECTION 3.05. Registration; Registration of Transfer and Exchange................................. 37
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities.................................... 41
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SECTION 3.07. Payment of Interest; Interest Rights Preserved...................................... 42
SECTION 3.08. Persons Deemed Owners............................................................... 44
SECTION 3.09. Cancellation........................................................................ 44
SECTION 3.10. Computation of Interest............................................................. 45
SECTION 3.11. CUSIP Numbers....................................................................... 45
ARTICLE IV SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture............................................. 45
SECTION 4.02. Application of Trust Money.......................................................... 46
ARTICLE V REMEDIES
SECTION 5.01. Events of Default................................................................... 47
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.................................. 49
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee..................... 50
SECTION 5.04. Trustee May File Proofs of Claim.................................................... 51
SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities......................... 52
SECTION 5.06. Application of Money Collected...................................................... 52
SECTION 5.07. Limitation on Suits................................................................. 52
SECTION 5.08. Unconditional Right of Holders To Receive Principal, Premium and Interest
and To Convert.................................................................... 53
SECTION 5.09. Restoration of Rights and Remedies.................................................. 54
SECTION 5.10. Rights and Remedies Cumulative...................................................... 54
SECTION 5.11. Delay or Omission Not Waiver........................................................ 54
SECTION 5.12. Control by Holders.................................................................. 54
SECTION 5.13. Waiver of Past Defaults............................................................. 55
SECTION 5.14. Undertaking for Costs............................................................... 55
SECTION 5.15. Waiver of Usury, Stay or Extension Laws............................................. 55
ARTICLE VI THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities................................................. 56
SECTION 6.02. Notice of Defaults.................................................................. 57
SECTION 6.03. Certain Rights of Trustee........................................................... 57
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities.............................. 58
SECTION 6.05. May Hold Securities................................................................. 59
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SECTION 6.06. Money Held in Trust................................................................. 59
SECTION 6.07. Compensation and Reimbursement...................................................... 59
SECTION 6.08. Disqualification; Conflicting Interests............................................. 60
SECTION 6.09. Corporate Trustee Required; Eligibility............................................. 60
SECTION 6.10. Resignation and Removal; Appointment of Successor................................... 60
SECTION 6.11. Acceptance of Appointment by Successor.............................................. 62
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business......................... 62
SECTION 6.13. Preferential Collection of Claims Against Company................................... 63
SECTION 6.14. Appointment of Authenticating Agent................................................. 63
SECTION 6.15. Appointment of Co-Trustee........................................................... 65
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. Company To Furnish Trustee Names and Addresses of Holders........................... 65
SECTION 7.02. Preservation of Information; Communications to Holders.............................. 66
SECTION 7.03. Reports by Trustee.................................................................. 66
SECTION 7.04. Reports by Company.................................................................. 67
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. Company May Consolidate, etc., Only on Certain Terms................................ 67
SECTION 8.02. Successor Substituted............................................................... 68
ARTICLE IX SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Holders.................................. 69
SECTION 9.02. Supplemental Indentures with Consent of Holders..................................... 70
SECTION 9.03. Execution of Supplemental Indentures................................................ 71
SECTION 9.04. Effect of Supplemental Indentures................................................... 71
SECTION 9.05. Conformity with Trust Indenture Act................................................. 71
SECTION 9.06. Reference in Securities to Supplemental Indentures.................................. 71
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ARTICLE X COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest.......................................... 72
SECTION 10.02. Maintenance of Office or Agency..................................................... 72
SECTION 10.03. Money for Security Payments To Be Held in Trust..................................... 72
SECTION 10.04. Statement by Officers as to Default................................................. 74
SECTION 10.05. Existence .......................................................................... 74
SECTION 10.06. Maintenance of Properties........................................................... 74
SECTION 10.07. Payment of Taxes and Other Claims................................................... 75
SECTION 10.08. Waiver of Certain Covenants......................................................... 75
SECTION 10.09. Delivery of Certain Information..................................................... 75
SECTION 10.10. Resale of Certain Securities; Reporting Issuer...................................... 76
SECTION 10.11. Registration Rights................................................................. 76
ARTICLE XI REDEMPTION OF SECURITIES
SECTION 11.01. Right of Redemption................................................................. 78
SECTION 11.02. Applicability of Article............................................................ 78
SECTION 11.03. Election to Redeem; Notice to Trustee............................................... 79
SECTION 11.04. Selection by Trustee of Securities to Be Redeemed................................... 79
SECTION 11.05. Notice of Redemption................................................................ 79
SECTION 11.06. Deposit of Redemption Price......................................................... 80
SECTION 11.07. Securities Payable on Redemption Date............................................... 81
SECTION 11.08. Securities Redeemed in Part......................................................... 81
SECTION 11.09. Conversion Arrangement on Call for Redemption....................................... 82
ARTICLE XII SUBORDINATION OF SECURITIES
SECTION 12.01. Securities Subordinate to Senior Indebtedness....................................... 83
SECTION 12.02. Payment over of Proceeds upon Dissolution, Etc...................................... 83
SECTION 12.03. No Payment When Senior Indebtedness in Default...................................... 84
SECTION 12.04. Payment Permitted If No Default..................................................... 85
SECTION 12.05. Subrogation to Rights of Holders of Senior Indebtedness............................. 85
SECTION 12.06. Provisions Solely To Define Relative Rights......................................... 85
SECTION 12.07. Trustee to Effectuate Subordination................................................. 86
SECTION 12.08. No Waiver of Subordination Provisions............................................... 86
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SECTION 12.09. Notice to Trustee.................................................................. 87
SECTION 12.10. Reliance on Judicial Order or Certificate of Liquidating Agent..................... 88
SECTION 12.11. Trustee Not Fiduciary for Holders of Senior Indebtedness........................... 88
SECTION 12.12. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights......................................... 89
SECTION 12.13. Article Applicable to Paying Agents................................................ 89
SECTION 12.14. Certain Conversions Deemed Payment................................................. 89
ARTICLE XIII CONVERSION OF SECURITIES
SECTION 13.01. Conversion Privilege and Conversion Price.......................................... 90
SECTION 13.02. Exercise of Conversion Privilege................................................... 91
SECTION 13.03. Fractions of Shares................................................................ 92
SECTION 13.04. Adjustment of Conversion Price..................................................... 92
SECTION 13.05. Notice of Adjustments of Conversion Price.......................................... 99
SECTION 13.06. Notice of Certain Corporate Action................................................. 100
SECTION 13.07. Company to Reserve Common Stock.................................................... 101
SECTION 13.08. Taxes on Conversions............................................................... 101
SECTION 13.09. Covenant as to Common Stock........................................................ 101
SECTION 13.10. Cancellation of Converted Securities............................................... 101
SECTION 13.11. Provisions in Case of Reclassification, Consolidation, Merger or Sale of Assets.... 101
SECTION 13.12. Trustee Adjustment Disclaimer...................................................... 102
ARTICLE XIV RIGHT TO REQUIRE PURCHASE
SECTION 14.01. Right to Require Purchase.......................................................... 102
SECTION 14.02. Conditions and Procedures Relating to the Company's Election
to Pay the Purchase Price in Common Stock................................ 103
SECTION 14.03. Notice, Method of Exercising Purchase Right........................................ 105
SECTION 14.04. Deposit of Purchase Price.......................................................... 106
SECTION 14.05. Securities Not Purchased on Purchase Date.......................................... 106
SECTION 14.06. Securities Purchased in Part....................................................... 106
SECTION 14.07. Certain Definitions................................................................ 107
ARTICLE XV DEFEASANCE AND COVENANT DEFEASANCE
SECTION 15.01. Company's Option to Effect Defeasance or Covenant Defeasance....................... 108
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SECTION 15.02. Defeasance and Discharge............................................................ 108
SECTION 15.03. Covenant Defeasance................................................................. 109
SECTION 15.04. Conditions to Defeasance or Covenant Defeasance..................................... 109
SECTION 15.05. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions............................. 112
SECTION 15.06. Reinstatement....................................................................... 112
ARTICLE XVI IMMUNITY
SECTION 16.01. Personal Immunity of Incorporators, Shareholders, Directors
and Officers.............................................................. 113
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<PAGE>
INDENTURE dated as of February 14, 2000, between AFFYMETRIX, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 3380 Central
Expressway, Santa Clara, California 95051, and THE BANK OF NEW YORK, as Trustee
(herein called the "Trustee").
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 4.75% Convertible Subordinated
Notes due 2007 (herein called the "Securities"), to be issued as in this
Indenture provided.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
W I T N E S S E T H :
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. 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, either directly or by reference therein, have the meanings assigned to them
therein.
3. All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of such computation.
4. Unless the context otherwise requires, any reference to an "Article" or
a
<PAGE>
2
"Section" refers to an Article or Section, as the case may be, of this
Indenture.
5. 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.
6. Unless the context otherwise requires, each reference to "premium"
includes the Make-Whole Payment, if any.
Certain terms used in Article XIV have the meanings specified therein.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.04.
"Additional Interest" has the meaning specified in Section 10.11.
"Affiliate" of any specified Person means any other Person who directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under 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.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities.
"Beneficial Owner" has the meaning specified in Section 14.07.
"Board of Directors" means either the board of directors of the Company
<PAGE>
3
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" means a day on which banking institutions are open for
business and carrying out transactions in Dollars at the relevant place of
payment.
"Change in Control" has the meaning specified in Section 14.07.
"Closing Price" on any Trading Day with respect to the per share price of
Common Stock means the last reported sales price regular way or, in case no such
reported sale takes place on such Trading Day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or, if not listed or admitted to
trading on any national securities exchange, on Nasdaq or, if the Common Stock
is not listed or admitted to trading on any national securities exchange or
Nasdaq, the average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm that is selected
from time to time by the Company for that purpose and is reasonably acceptable
to the Trustee.
"Commencement Date" has the meaning specified in Section 13.04.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company. However, subject to the
provisions
<PAGE>
4
of Section 13.11, shares issuable on conversion of Securities shall include only
shares of the class designated as Common Stock of the Company at the date of
this instrument or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; PROVIDED that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Order" has the meaning specified in the definition of Company
Request in this Section 1.01.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in the
city at which at any particular time its corporate trust business shall be
administered. As of the date hereof, the Corporate Trust Office of the Trustee
is located at 101 Barclay Street, Floor 21 West, New York, New York 10286.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Current Event" has the meaning specified in Section 13.04.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Depositary" means, with respect to the Securities issued in whole or in
part in the form of one or more Global Securities, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such
Securities as contemplated by Section 2.01 (or any successor securities clearing
agency so registered).
<PAGE>
5
"Distribution Date" has the meaning specified in Section 13.04.
"Dollar" or "U.S.$" means a Dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Event of Default" has the meaning specified in Section 5.01.
"ex date" has the meaning specified in Section 13.04.
"Exchange Act" means the Securities Exchange Act of 1934 as it may be
amended from time to time, and any successor act thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.04.
"Expiration Time" has the meaning specified in Section 13.04.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Group" has the meaning specified in Section 14.07.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
FleetBoston Robertson Stephens Inc., ING Barings LLC and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
<PAGE>
6
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issue Date" means the date of first issuance of the Securities under this
Indenture.
"Junior Securities" has the meaning specified in Section 12.14.
"Make-Whole Payment" has the meaning specified in Section 11.01.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, exercise of the purchase right
or otherwise.
"Nasdaq" means Nasdaq Stock Market, Inc.
"Notice of Default" means a written notice of the kind specified in Section
5.01(4) or 5.01(5).
"Officers' Certificate" means a certificate signed by any of the Chairman
of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President, and by any of the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee. One of the officers signing an Officers' Certificate
given pursuant to Section 10.04 shall be the principal executive, financial or
accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
internal counsel for the Company.
"Other Event" has the meaning specified in Section 13.04.
"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;
<PAGE>
7
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and separated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; PROVIDED that, if such Securities are to be
redeemed, notice of such redemption shall have been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee shall have
been made;
(iii) Securities which have been paid pursuant to Section 3.07 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; and
(iv) Securities which have been defeased pursuant to Section 15.02;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which a Responsible Officer of the Trustee knows to be
so owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or government or
any
<PAGE>
8
agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Provisional Redemption" has the meaning specified in Section 11.01.
"Provisional Redemption Date" has the meaning specified in Section 11.01.
"Purchase Date" has the meaning specified in Section 14.01.
"Purchase Price" has the meaning specified in Section 14.01.
"Purchased Shares" has the meaning specified in Section 13.04.
"Qualified Institutional Buyer" means a "qualified institutional buyer" as
defined in Rule 144A.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed as set forth in the Securities.
"Reference Date" has the meaning specified in Section 13.04.
"Registration Default" has the meaning specified in Section 10.11.
"Registration Rights Agreement" has the meaning specified in Section 10.11.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the February 1 or August 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means any
<PAGE>
9
officer in the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.
"Restricted Global Security" has the meaning specified in Section 2.01.
"Restricted Security" means a Security required to bear the restricted
securities legend set forth in Section 2.02.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.09.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture and "Security" means one of such Securities.
"Securities Act" means the Securities Act of 1933 as it may be amended from
time to time, and any successor act thereto, and the rules and regulations of
the Commission promulgated thereunder.
"Security Register" has the meaning specified in Section 3.05.
"Security Registrar" has the meaning specified in Section 3.05.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on all indebtedness of the Company for money borrowed, other than the
Securities, whether outstanding on the date of execution of the Indenture or
thereafter created, incurred, guaranteed or assumed, except such indebtedness
that by the terms of the instrument or instruments by which such indebtedness
was created or incurred expressly provides that it (i) is junior in right of
payment to the Securities or (ii) ranks PARI PASSU in right of payment to the
Securities; provided, that the 5% Subordinated
<PAGE>
10
Convertible Notes due 2006 issued pursuant to the Indenture dated as of
September 22, 1999, between the Company and the Trustee shall not constitute
Senior Indebtedness. The term "indebtedness for money borrowed" when used with
respect to the Company is defined to mean (i) any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, (ii) all obligations of the Company with respect to interest rate
hedging agreements to hedge interest rates, (iii) any deferred payment
obligation of, or any such obligation guaranteed by, the Company for the payment
of the purchase price of property or assets evidenced by a note or similar
instrument, and (iv) any obligation of, or any such obligation guaranteed by,
the Company for the payment of rent or other amounts under a lease of property
or assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles.
"Shelf Registration Statement" has the meaning specified in Section 10.11.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Surrendered Securities" has the meaning specified in Section 2.07.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"Transfer Restricted Securities" has the meaning specified in the
Registration Rights Agreement.
<PAGE>
11
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed and the rules and regulations
thereunder; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939
or such rules and regulations are amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 and such rules and regulations as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"United States" means the United States of America (including the States
thereof and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"U.S. Government Obligation" has the meaning specified in Section 15.04.
"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".
SECTION 1.02. 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, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
<PAGE>
12
(c) 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
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.03. 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 1.04. ACTS OF HOLDERS; RECORD DATES. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments.
<PAGE>
13
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 1.04.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
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.
The Company may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given or taken by Holders of
Securities; PROVIDED that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; PROVIDED that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Securities on such record date;
and PROVIDED FURTHER, that for the purpose of determining whether Holders of the
requisite principal amount of such Securities have
<PAGE>
14
taken such action, no Security shall be deemed to have been Outstanding on such
record date unless it is also Outstanding on the date such action is to become
effective. Nothing in this paragraph shall prevent the Company from setting a
new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
nor shall anything in this paragraph be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Company, at its own expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities in the manner set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to join in the giving or making
of (i) any Notice of Default, (ii) any declaration of acceleration referred to
in Section 5.02, (iii) any request to institute proceedings referred to in
Section 5.07(2), or (iv) any direction referred to in Section 5.12. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; PROVIDED that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date; and PROVIDED, FURTHER, that for the purpose of determining whether
Holders of the requisite principal amount of such Securities have taken such
action, no Security shall be deemed to have been Outstanding on such record date
unless it is also Outstanding on the date such action is to become effective.
Nothing in this paragraph shall be construed to prevent the Trustee from setting
a new record date for any action (whereupon the record date previously set shall
automatically and without any action by any Person be cancelled and of no
effect), nor shall anything in this paragraph be construed to render ineffective
any action taken by Holders of the requisite principal amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Expiration Date"
and from time to time may change the Expiration Date to any earlier or later
day; PROVIDED that no
<PAGE>
15
such change shall be effective unless notice of the proposed new Expiration Date
is given to the other party hereto in writing, and to each Holder of Securities
in the manner set forth in Section 1.06, on or before the existing Expiration
Date. Notwithstanding the foregoing, no Expiration Date shall be later than the
180th day after the applicable record date and, if an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have designated the
180th day after such record date as the Expiration Date with respect thereto.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents, each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 1.05. NOTICES, ETC. TO TRUSTEE AND COMPANY. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficiently given
if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Administration, or at any
other address previously furnished in writing to the Company by the Trustee, or
(2) the Company by the Trustee or by any Holder shall be sufficiently given
(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 instrument or at
any other address previously furnished in writing to the Trustee by the Company.
SECTION 1.06. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for
notice to Holders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date (if any), and
not earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may
<PAGE>
16
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act which
is required under such Act to be a part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture modifies or excludes
any provision of the Trust Indenture Act which may be so modified or excluded,
the latter provision shall be deemed to apply to this Indenture as so modified
or to be excluded, as the case may be. To the extent a Security conflicts with a
provision in the Indenture, the Indenture governs.
SECTION 1.08. 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 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.10. SEVERABILITY CLAUSE. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the holders of Senior Indebtedness and
the Holders of Securities, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
<PAGE>
17
SECTION 1.12. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 1.13. LEGAL HOLIDAYS. In any case where any Interest Payment Date,
Redemption Date, Purchase Date or Stated Maturity of any Security or the last
date on which a Holder has the right to convert his Securities shall not be a
Business Day then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest or principal (and premium, if any) or
conversion of the Securities need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date, Redemption Date, Purchase Date or at the Stated
Maturity, or on such last day for conversion; PROVIDED that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Purchase Date or Stated Maturity, as the case may be.
ARTICLE II
SECURITY FORMS
SECTION 2.01. FORMS GENERALLY. The Securities, the conversion notice and
the Trustee's certificates of authentication shall be in substantially the forms
set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
In certain cases described elsewhere herein, the legends set forth in the
first four paragraphs of Section 2.02 may be omitted from Securities issued
hereunder.
Upon their original issuance, Securities offered and sold as provided in
the Purchase Agreement, shall be issued in the form of a single Global Security
in definitive, fully registered form without interest coupons, substantially in
the form of Security set
<PAGE>
18
forth in Sections 2.02 and 2.03, with such applicable legends as are provided
for in Section 2.02, except as otherwise permitted herein. Such Global Security
shall be registered in the name of DTC, as Depositary, or its nominee or
successor, duly executed by the Company and authenticated by the Trustee as
hereinafter provided, and deposited with the Trustee, as custodian for DTC, for
credit by DTC to the respective accounts of beneficial owners of the Securities
represented thereby (or such other accounts as they may direct). Such Global
Security, together with its Successor Securities which are Global Securities,
are collectively herein called the "Restricted Global Security".
Except as provided in this Section 2.01 or Section 3.05, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Securities. Upon transfer of definitive
Securities to a Qualified Institutional Buyer, such definitive Securities will,
unless the Restricted Global Security has previously been exchanged, be
exchanged for an interest in the Restricted Global Security pursuant to the
provisions of Section 3.05.
Neither the Company nor the Trustee shall have any responsibility for any
defect in the CUSIP number that appears on any Security, check, advice of
payment or redemption or purchase notice, and any such document may contain a
statement to the effect that CUSIP numbers have been assigned by an independent
service for convenience of reference and that neither the Company nor the
Trustee shall be liable for any inaccuracy in such numbers.
SECTION 2.02. FORM OF FACE OF SECURITY.
[INCLUDE IF SECURITY IS A RESTRICTED SECURITY OR A DEFINITIVE SECURITY
OTHER THAN A RESTRICTED GLOBAL SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON THE
CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR IN A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO,
THE SECURITIES ACT. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY, AND THE COMMON STOCK ISSUABLE UPON
<PAGE>
19
THE CONVERSION THEREOF, MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (III) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY AND ANY SHARES OF COMMON
STOCK ISSUABLE UPON THE CONVERSION THEREOF OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE.]
[INCLUDE IF SECURITY IS A RESTRICTED GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR) WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND SUCH SECURITIES AND
THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR IN A TRANSACTION
EXEMPT FROM, OR NOT SUBJECT TO, THE SECURITIES ACT. EACH PURCHASER OF ANY
BENEFICIAL INTEREST IN THE SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF SUCH
BENEFICIAL INTEREST MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY
THIS GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THE
GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH
<PAGE>
20
DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH SUCH PARTICIPANT) AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) ANY BENEFICIAL INTEREST IN THE
SECURITIES AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (III) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES, AND (B) THE BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT
BENEFICIAL OWNER OF THIS SECURITY OR ANY SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL
INTEREST IN THE SECURITIES AND ANY SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
<PAGE>
21
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
<PAGE>
22
Affymetrix, Inc.
4.75% Convertible Subordinated Notes due 2007
CUSIP No. [ ]
No. ____U.S. $__________
Affymetrix, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ________, or registered assigns, the
principal sum of United States Dollars (U.S.$________ ) on February 15, 2007 and
to pay interest thereon from February 14, 2000, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
in arrears on February 15 and August 15 in each year, commencing August 15,
2000, at the rate of 4.75% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the February 1 or August 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
<PAGE>
23
Payment of the principal of, premium, if any, and interest (including
payment of any Additional Interest) on this Security will be made at the
Corporate Trust Office, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts by a U.S. Dollar check drawn on an account maintained with a bank in the
Borough of Manhattan, The City of New York; PROVIDED, HOWEVER, that upon written
application by the Holder to the Security Registrar setting forth wire
instructions not later than 5 days prior to the relevant payment date (in the
case of payment of principal) or not later than the relevant Record Date (in the
case of payment of interest), such Holder may receive payment by wire transfer
of Dollars to a U.S. Dollar account maintained by the payee with a bank in the
United States or in Europe and designated by the payee to the Security
Registrar. [Include if a Global Security--All payments by the Company in respect
of the Global Security shall be by wire transfer.]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
AFFYMETRIX, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
SECTION 2.03. FORM OF REVERSE OF SECURITY. This Security is one of a duly
authorized issue of Securities of the Company designated as its 4.75%
Convertible
<PAGE>
24
Subordinated Notes due 2007 (herein called the "Securities"), limited in
aggregate principal amount to U.S.$175,000,000 (subject to increase as provided
in this Indenture defined up to an additional U.S.$50,000,000 aggregate
principal amount), issued and to be issued under an Indenture, dated as of
February 14, 2000 (herein called the "Indenture"), between the Company and The
Bank of New York, as Trustee for the Holders of Securities issued under said
Indenture (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time on or before the
close of business on the Business Day immediately preceding February 15, 2007,
or in case this Security or a portion hereof is called for redemption, then in
respect of this Security or such portion hereof until and including, but (unless
the Company defaults in making the payment due upon redemption or is otherwise
due) not after, the close of business on the Business Day immediately preceding
the Redemption Date or Purchase Date, as the case may be, to convert this
Security (or any portion of the principal amount hereof which is U.S.$1,000 or
an integral multiple thereof), at the principal amount hereof, or of such
portion, into fully paid and non-assessable shares of Common Stock of the
Company at a conversion price equal to U.S.$321.00 aggregate principal amount of
Securities for each share of Common Stock (or at the current adjusted conversion
price if an adjustment has been made as provided in Article XIII of the
Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank, to the Company at its office or agency in the Borough of
Manhattan, The City of New York, accompanied by the conversion notice hereon
executed by the Holder hereof evidencing such Holder's election to convert this
Security, or if less than the entire principal amount hereof is to be converted,
the portion hereof to be converted, and, in case such surrender shall be made
during the period from the close of business on any Regular Record Date to the
opening of business on the corresponding Interest Payment Date (unless this
Security or the portion hereof being converted has been called for redemption on
a Redemption Date within such period between and including such Regular Record
Date and such Interest Payment Date), also accompanied by payment in cash of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of this Security then being converted. Subject to the aforesaid
requirement for payment of interest and, in the case of a conversion after the
close of business on any Regular Record Date and on or before the corresponding
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
<PAGE>
25
installment of interest (even if the Security has been called for redemption on
a Redemption Date within such period), no payment or adjustment is to be made on
conversion for interest accrued hereon or for dividends on the Common Stock
issued on conversion. No fractions of shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional interest the
Company shall pay a cash adjustment or round up to the next higher whole share
as provided in Article XIII of the Indenture. The conversion price is subject to
adjustment as provided in Article XIII of the Indenture. In addition, the
Indenture provides that in case of certain reclassifications, consolidations,
mergers, sales or transfers of assets or other transactions pursuant to which
the Common Stock is converted into the right to receive other securities, cash
or other property, the Indenture shall be amended automatically, without the
consent of any Holders of Securities, so that this Security, if then
outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon the transaction by a holder
of the number of shares of Common Stock into which this Security might have been
converted immediately prior to such transaction.
The Company will furnish to any Holder, upon request and without charge,
copies of the Certificate of Incorporation and By-laws of the Company then in
effect. Any such request may be addressed to the Company.
The Securities may be provisionally redeemed by the Company, in whole or in
part, at any time prior to February 20, 2003, at a Redemption Price equal to
$1,000 per security to be redeemed plus accrued and unpaid interest, if any
(including Additional Interest, if any) to the Redemption Date if (i) the
closing price of the common Stock shall have exceeded 150% of the conversion
price then in effect for at least 20 Trading Days in any consecutive 30-Trading
Day period ending on the Trading Day prior to the date of mailing of the notice
of Provisional Redemption, which date shall be no more than 60 nor less than 20
days prior to the Redemption Date and (ii) the Shelf Registration Statement is
effective and available for use and is expected to remain effective and
available for use for the 30 days immediately following the Redemption Date.
Upon any such Provisional Redemption, the Company shall make an additional
Make-Whole Payment in cash with respect to the Securities called for redemption
to Holders on the date of mailing of the notice of Provisional Redemption in an
amount equal to $142.50 per $1,000 Security, less the amount of any interest
actually paid on such Security prior to such date. The Company shall make the
Make-Whole Payment on all Securities called for Provisional Redemption,
including any Securities converted after the date of mailing of the notice of
<PAGE>
26
Provisional Redemption and prior to the Redemption Date.
The Securities are subject to redemption at the option of the Company upon
not less than 30 days' or more than 60 days' notice by mail, as a whole or from
time to time in part, at any time on or after February 20, 2003 through February
14, 2004 at 102.38% of the principal amount, and thereafter, at the following
Redemption Prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning on February 15 of the years
indicated,
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----
<S> <C>
2004 101.58%
2005 100.79%
2006 and thereafter 100%
</TABLE>
together in the case of any such redemption with accrued and unpaid interest to
(but not including) the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
In certain circumstances involving a Change in Control, each Holder shall
have the right to require the Company to redeem all or part of its Securities at
a purchase price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest through the Purchase Date. The Purchase Price is
payable in cash or, at the Company's option but subject to the satisfaction of
certain conditions set forth in the Indenture, in shares of Common Stock valued
at 95% of the average Closing Prices of the Common Stock for the five Trading
Days preceding and including the third Trading Day prior to the Purchase Date.
The Securities do not have the benefit of any sinking fund.
In the event of redemption, conversion or purchase of this Security in part
only, a new Security or Securities for the unredeemed, unconverted or
unpurchased portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
Subject to certain limitations in the Indenture, at any time when the
<PAGE>
27
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder or the holder of
shares of Common Stock issued upon conversion thereof, the Company will promptly
furnish or cause to be furnished Rule 144A Information (as defined below) to
such Holder or such holder of shares of Common Stock issued upon conversion, or
to a prospective purchaser of any such security designated by any such Holder or
holder of shares of Common Stock, as the case may be, to the extent required to
permit compliance by such Holder or holder of shares of Common Stock with Rule
144A under the United States Securities Act of 1933 (the "Securities Act"), in
connection with the resale of any such security. "Rule 144A Information" shall
be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
If this Security is a Transfer Restricted Security, then the Holder of this
Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT-(including any
Person that has a beneficial interest in this Security)] and the Common Stock
issuable upon conversion thereof is entitled to the benefits of a Registration
Rights Agreement, dated as of February 14, 2000 (the "Registration Rights
Agreement") executed by the Company. If a Registration Default occurs (as
defined in the Registration Rights Agreement and in the Indenture), Additional
Interest will accrue on this Security from and including the day following such
Registration Default to but excluding the day on which such Registration Default
has been cured. Additional Interest will be paid semi-annually in arrears, with
the first semi-annual payment due on the first Interest Payment Date in respect
of the Securities following the date on which such Additional Interest begins to
accrue, and will accrue at a rate per annum equal to an additional one-half of
one percent (0.50%) of the principal amount of the Securities.
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Additional Interest payable as described in the preceding paragraph to the
extent that, in such context, Additional Interest is, was or would be payable in
respect of such Security and express mention of the payment of Additional
Interest (if applicable) in any provisions of this Security shall not be
construed as excluding Additional Interest in those provisions of this Security
where such express mention is not made.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of
<PAGE>
28
all Senior Indebtedness, and this Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of all
the Securities may be declared due and payable in the manner and with the effect
provided in Article V of the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the written consent of the Holders
of a majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be written, with a copy delivered to the
Trustee, and shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on (including Additional Interest) this Security at the times, place
and rate, and in the coin or currency, herein prescribed or to convert this
Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the Corporate
Trust Office duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
<PAGE>
29
The Securities are issuable only in registered form without coupons in
denominations of U.S.$1,000 and any integral multiple thereof. As provided in
the Indenture and subject to certain limitations therein set forth, Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not payment of or on this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Interest on this Security shall be computed on the basis of a 360-day year
of twelve 30-day months.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES.
SECTION 2.04. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
The Bank of New York, not in its
individual capacity but solely as Trustee
Dated: By
------------- --------------------------------------
AUTHORIZED SIGNATORY
<PAGE>
30
SECTION 2.05. FORM OF CONVERSION NOTICE.
CONVERSION NOTICE
To: Affymetrix, Inc.
The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or the portion hereof (which is U.S.$1,000 or
an integral multiple thereof) below designated, at any time following the date
of original issuance thereof, into shares of Common Stock in accordance with the
terms of the Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon conversion, together with any check in payment for
a fractional share and any Security representing any unconverted principal
amount hereof, be issued and delivered to the registered owner hereof unless a
different name has been provided below. If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith a certificate in proper form certifying that
the applicable restrictions on transfer have been complied with. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
The Applicant hereby agrees that, promptly after request of the Company, he
or it will furnish such proof in support of this certification as the Company or
the Security Registrar for the Common Stock may, from time to time, request.
Dated:
----------------------------
Signature*
----------------------------
Signature Guaranty
- --------------------------------------------------------------------------------
If shares or Securities are to be Principal amount to be converted (if less
registered in the name of a Person than all):
other than the Holder, please print $ ,000
such Person's name and address:*
- --------------------------------------------------------------------------------
<PAGE>
31
<TABLE>
<CAPTION>
Social Security or
Name Taxpayer Identification Number
---- ------------------------------
<S> <C>
- -------------------------------- ------------------------------
Street Address
- -------------------------------- ------------------------------
City, state and Zip Code
</TABLE>
* Signature(s) must be guaranteed by an eligible guarantor institution (banks,
stock brokers, savings and loan associations and credit unions with membership
in an approved signature guarantee medallion program) pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be delivered,
or unconverted Securities are to be issued, other than to and in the name of the
registered owner.
SECTION 2.06. FORM OF PURCHASE NOTICE.
ELECTION OF HOLDER TO REQUIRE PURCHASE
1. Pursuant to Section 14.01 of the Indenture, the undersigned hereby
elects to have this Security purchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to pay it or
________________ an amount in cash, or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be purchased (as set forth below), plus interest accrued to the Purchase Date,
as provided in the Indenture.
Dated:
----------------
----------------------
Signature
<PAGE>
32
Signature Guaranteed
Principal amount to be purchased (must be an integral multiple of U.S. $1,000):
Remaining principal amount following such purchase:
----------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
SECTION 2.07. FORM OF CERTIFICATION. Whenever any certification is required
to be given to evidence compliance with certain restrictions relating to
transfers of Restricted Securities contemplated by Section 3.05(b)(iv), Section
3.05(c) or Section 13.02, such certification shall be provided substantially in
the form of the following certificate, with only such changes as shall be
approved by the Company and the Initial Purchasers,
TRANSFER CERTIFICATE
The undersigned Holder hereby certifies with respect to U.S.$ principal
amount of the above-captioned securities presented or surrendered on the date
hereof (the "Surrendered Securities") for registration of transfer, or for
exchange or conversion where the securities issuable upon such exchange or
conversion are to be registered in a name other than that of the undersigned
Holder (each such transaction being a "transfer"), that such transfer complies
with the restrictive legend set forth on the face of the Surrendered Securities
for the reason checked below:
The transfer of the Surrendered Securities complies
with Rule 144 under the U.S. Securities Act of 1933
(the "Securities Act"); or
The transfer of the Surrendered Securities complies
with Rule 144A under the Securities Act; or
The transfer of the Surrendered Securities is
pursuant to an effective registration statement under
the Securities Act, the prospectus delivery
requirements under the Securities Act have been
satisfied with respect to such transfer, the
undersigned Holder
<PAGE>
33
is named as a "Selling Securityholder" in the
prospectus relating to such registration statement,
or in amendments or supplements thereto, and the
aggregate principal amount of Surrendered Securities
transferred are all or a portion of the securities
listed in such prospectus opposite the undersigned's
name.
Dated:*
------------------------------
* To be dated the date of surrender.
------------------------------------
Signature
(If the registered owner is
a corporation, partnership
or fiduciary, the title of
the Person signing on
behalf of such registered
owner must be stated.)
ARTICLE III
THE SECURITIES
SECTION 3.01. TITLE AND TERMS. The aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture is limited to (a)
U.S.$175,000,000 plus (b) such aggregate principal amount (which may not exceed
U.S.$50,000,000 principal amount) of Securities as may be purchased by the
Initial Purchasers pursuant to the Initial Purchasers' option pursuant to the
Purchase Agreement dated February 8, 2000, between the Company and the Initial
Purchasers, except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Sections 3.04, 3.05, 3.06, 9.06, 11.08, 13.02 or 14.06 and except for Securities
which, pursuant to Section 3.03, are deemed never to have been authenticated and
delivered hereunder.
The Stated Maturity of the Securities shall be February 15, 2007, and they
shall bear interest at the rate of 4.75% per annum, payable semi-annually on
February 15 and August 15 of each year commencing on August 15, 2000, until the
principal thereof is paid or made available for payment.
<PAGE>
34
Payment of the principal of, premium, if any, and interest
(including payment of any Additional Interest) on this Security will be made at
the Corporate Trust Office, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts by a U.S. Dollar check drawn on an account maintained with a bank
in the Borough of Manhattan, The City of New York; PROVIDED, HOWEVER, that upon
written application by the Holder to the Security Registrar setting forth wire
instructions not later than 15 days prior to the relevant payment date (in the
case of payment of principal) or not later than the relevant Record Date (in the
case of payment of interest), such Holder may receive payment by wire transfer
of Dollars to a U.S. Dollar account maintained by the payee with a bank in the
United States or in Europe and designated by the payee to the Security
Registrar.
The Securities shall be redeemable by the Company as provided
in Article XI.
The Securities shall be subordinated in right of payment to
the prior payment in full of Senior Indebtedness as provided in Article XII.
The Securities shall be convertible as provided in Article
XIII.
The Securities shall be subject to purchase by the Company at
the option of the Holder as provided in Article XIV.
SECTION 3.02. DENOMINATIONS. The Securities shall be
issuable only in registered form without coupons and only in denominations of
U.S.$1,000 and any integral multiple thereof.
SECTION 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by any of its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to
<PAGE>
35
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 as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
The Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith shall determine that such action would expose the Trustee to
personal liability to existing Holders.
SECTION 3.04. GLOBAL AND NON-GLOBAL SECURITIES. (a) GLOBAL
SECURITIES. (i) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(ii) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (1) has notified the Company and the
Trustee that it is unwilling or unable to continue as Depositary for such Global
Security or (2) has ceased to be a clearing agency registered as such under the
Exchange Act or announces an intention permanently to cease business or in fact
does so, in each case unless a successor Depositary is appointed by the Company,
(B) there shall have occurred and be continuing an Event of Default with respect
to such Global Security, or (C) the Company in its discretion at any time
determines not to have all the Securities represented by a Global Security. Any
Global
<PAGE>
36
Security exchanged pursuant to clause (i) above shall be so exchanged in
whole and not in part and any Global Security exchanged pursuant to clause (ii)
or (iii) above may be exchanged in whole or from time to time in part as
directed by the Depositary. Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; PROVIDED that any
such Security so issued that is registered in the name of a Person other than
the Depositary or a nominee thereof shall not be a Global Security.
(iii) If any Global Security is to be exchanged for other
Securities or cancelled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article III. If any Global Security is to be
exchanged for other Securities or cancelled in part, or if another Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Security, in each case, as provided in Section 3.05, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as provided in
this Article III or (ii) the principal amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged or
cancelled, or equal to the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Trustee, as Security
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security, the Trustee shall, subject to Section 3.05(c) and as
otherwise provided in this Article III, authenticate and deliver any Securities
issuable in exchange for such Global Security (or any portion thereof) to or
upon the order of, and registered in such names as may be directed by, the
Depositary or its authorized representative. Upon the request of the Trustee in
connection with the occurrence of any of the events specified in the preceding
paragraph, the Company shall promptly make available to the Trustee a reasonable
supply of Securities that are not in the form of Global Securities. The Trustee
shall be entitled to rely upon any order, direction or request of the Depositary
or its authorized representative which is given or made pursuant to this Article
III if such order, direction or request is given or made in accordance with the
Applicable Procedures.
(iv) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Security
or any portion thereof, whether pursuant to this Article III or otherwise, shall
be authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof, in which case such
Security shall be authenticated and delivered in definitive, fully registered
form, without interest coupons.
(v) The Depositary or its nominee, as registered owner of a
Global
<PAGE>
37
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be considered
the owners or holders thereof. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or such nominee, as the case may be,
or impair, as between the Depositary, its Agent Members and any other person on
whose behalf an Agent Member may act, the operation of customary practices of
such Persons governing the exercise of the rights of a holder of any Security.
SECTION 3.05. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE. (a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 10.02 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers and exchanges thereof. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges thereof as herein provided. Upon
surrender for registration of transfer or exchange of any Security at an office
or agency of the Company designated pursuant to Section 10.02 for such purpose,
accompanied by a written instrument of transfer or exchange in the form provided
by the Company, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of any authorized denominations and of a like aggregate
principal amount.
(b) Notwithstanding any other provisions of this Indenture or
the Securities, transfers and exchanges of Securities and beneficial interests
in a Global Security of the kinds specified in this Section 3.05(b) shall be
made only in accordance with this Section 3.05(b).
(i) TRANSFER OF GLOBAL SECURITY. Other than as set forth in
Section 3.04(a), a Global Security may not be transferred, in whole or
in part, to any Person other than the Depositary or a nominee thereof,
and no such transfer to any such other Person may be registered;
PROVIDED that this Section 3.05(b)(i) shall not prohibit any transfer
of a Security that is issued in exchange for a Global Security but is
not itself a Global Security. No transfer of a Security to any Person
shall be
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38
effective under this Indenture or the Securities unless and until such
Security has been registered in the name of such Person. Nothing in
this Section 3.05(b)(i) shall prohibit or render ineffective any
transfer of a beneficial interest in a Global Security effected in
accordance with the other provisions of this Section 3.05(b).
(ii) TRANSFER OF BENEFICIAL INTERESTS IN THE GLOBAL SECURITY.
Transfer of beneficial interests in the Global Security shall be
effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depositary therefor, if applicable.
(iii) OTHER EXCHANGES. In the event that a Global Security or
any portion thereof is exchanged for Securities other than Global
Securities, such other Securities may in turn be exchanged (on transfer
or otherwise) for Securities that are not Global Securities or for
beneficial interests in a Global Security (if any is then outstanding)
only in accordance with such procedures, which shall be substantially
consistent with the provisions of this Section 3.05(b) (including the
certification requirements set forth on the reverse of the Security
intended to insure that transfers of beneficial interests in a Global
Security comply with Rule 144A or Rule 144 under the Securities Act, as
the case may be) and any Applicable Procedures, as may be from time to
time adopted by the Company and the Trustee.
(iv) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When
definitive Securities are presented to the Security Registrar with a
request:
(A) to register the transfer of such definitive
Securities; or
(B) to exchange such definitive Securities for an
equal principal amount of definitive Securities of other
authorized denominations, the Security Registrar shall
register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the definitive Securities surrendered
for transfer or exchange:
(x) shall be duly endorsed or accompanied by
a written instrument of transfer in form reasonably
satisfactory to the
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39
Company and the Security Registrar, duly executed by
the Holder thereof or his attorney duly authorized
in writing; and
(y) are being transferred or exchanged
pursuant to an effective registration statement under
the Securities Act, pursuant to Section 3.05(b)(v),
or pursuant to clause (1), (2) or (3) below, and are
accompanied by the following additional information
and documents, as applicable:
(1) if such definitive Securities
are being delivered to the Security
Registrar by a Holder for registration in
the name of such Holder, without transfer, a
certification from such Holder to that
effect (in the form set forth in Section
2.07); or
(2) if such definitive Securities
are being transferred to the Company, a
certification to that effect (in the form
set forth in Section 2.07); or
(3) if such definitive Securities
are being transferred pursuant to an
exemption from registration in accordance
with Rule 144, (i) a certification to that
effect (in the form set forth in Section
2.07) and (ii) if the Company or Security
Registrar so requests, an opinion of counsel
or other evidence reasonably satisfactory to
them as to the compliance with the
restrictions set forth in the legend set
forth in Section 2.02.
(v) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A definitive Security may not
be exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a definitive Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(A) certification in the form set forth on the
reverse of the Security that such definitive Security is being
transferred to a Qualified Institutional Buyer in accordance
with Rule 144A; and
(B) written instructions directing the Trustee to
make, or to direct
<PAGE>
40
the Securities Registrar to make, an adjustment on its books
and records with respect to such Global Security to reflect
an increase in the aggregate principal amount of the
Securities represented by the Global Security, such
instructions to contain information regarding the Depositary
account to be credited with such increase,
then the Trustee shall cancel such definitive Security and cause, or
direct the Securities Registrar to cause, in accordance with the
standing instructions and procedures existing between the Depositary
and the Securities Registrar, the aggregate principal amount of
Securities represented by the Global Security to be increased by the
aggregate principal amount of the definitive Security to be exchanged
and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global
Security equal to the principal amount of the definitive Security so
cancelled. If no Global Securities are then outstanding, the Company
shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Global
Security in the appropriate principal amount.
(c) Subject to the succeeding paragraph, every Security shall
be subject to the restrictions on transfer provided in the legends required by
Section 2.02 to be applied to such Security. Whenever any Security is presented
or surrendered for registration of transfer or for exchange for a Security
registered in a name other than that of the Holder, such Security must be
accompanied by a certificate in substantially the form set forth in Section
2.07, dated the date of such surrender and signed by the Holder of such
Security, as to compliance with such restrictions on transfer. The Security
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.
(d) The restrictions imposed by the legend set forth in the
first or fourth paragraph, as the case may be, of Section 2.02 upon the
transferability of any Security shall cease and terminate when such Security has
been sold pursuant to an effective registration statement under the Securities
Act, transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto), or after the second anniversary of the original
issuance date of the Security (or such earlier date after which the Security may
be freely transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act, as may be
provided in Rule 144(k) under the Securities Act (or any successor provision
thereto) or
<PAGE>
41
otherwise). Any Security as to which such restrictions on transfer
shall have expired in accordance with their terms or shall have terminated may,
upon surrender of such Security for exchange to the Security Registrar in
accordance with the provisions of this Section 3.05 (accompanied, in the event
that such restrictions on transfer have terminated by reason of a transfer in
compliance with Rule 144 or any successor provision, by an opinion of counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and in form
acceptable to the Company, to the effect that the transfer of such Security has
been made in compliance with Rule 144 or such successor provision), be exchanged
for a new Security, of like tenor and aggregate principal amount, which shall
not bear the restrictive legend set forth in the first paragraph of Section
2.02. The Company shall inform the Trustee of the effective date of any
registration statement registering the Securities under the Securities Act. The
Trustee shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the aforementioned opinion of counsel or notice of
an effective registration statement.
(e) As used in the preceding two paragraphs (c) and (d) of
this Section 3.05, the term "transfer" encompasses any sale, pledge, transfer,
hypothecation or other disposition of any Security.
(f) No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.04, 9.06, 11.08, 13.02 or 14.06 not
involving any transfer.
(g) The Company shall not be required (i) to issue, register
the transfer of or exchange any Security during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption under Section 11.04 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN
SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to
<PAGE>
42
their satisfaction of the destruction, loss or theft of any Security
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 written
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion,
but subject to any conversion rights, may, instead of issuing a new Security,
pay such Security.
Upon the issuance, authentication and delivery by the Trustee
of any new Security under this Section 3.06, 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 issued, authenticated and delivered by the
Trustee pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for payment of such interest.
If the Company shall be required by law to deduct any taxes
from any sum of interest payable hereunder to a Holder, (i) the Company shall
make such deductions
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43
and shall pay the full amount deducted to the relevant taxing authority in
accordance with applicable law and (ii) the amount of such deduction shall be
treated for purposes hereof as a payment of interest.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause (1) provided. Thereupon, the Trustee shall, on behalf of, and
upon the instructions of, the Company, 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, in the name and at the
expense of the Company, shall forward a notice prepared by the Company
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date at the expense of the
Company. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be
<PAGE>
44
required by such exchange, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this clause
(2), such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any
Regular Record Date and on or prior to the corresponding Interest Payment Date,
interest on such Security whose Stated Maturity is on such Interest Payment Date
shall be deemed to continue to accrue and shall be payable on such Interest
Payment Date notwithstanding such conversion and notwithstanding that such
Security may have been called for redemption on a Redemption Date within such
period, and such interest (whether or not punctually paid or duly provided for)
shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on such Regular
Record Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Security which is converted, interest whose Stated
Maturity is after the date of conversion of such Security shall not be payable.
SECTION 3.08. PERSONS DEEMED OWNERS. Prior to due presentment
of a Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Security is registered in the Security Register as the owner of such Security
for the purpose of receiving payment of principal of, premium, if any, and
(subject to Section 3.07) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.09. CANCELLATION. All Securities surrendered for
payment, redemption, purchase, registration of transfer or exchange or
conversion shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and 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 all Securities so delivered shall be promptly cancelled
by the Trustee. 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 as directed by a Company Order; PROVIDED HOWEVER, the Trustee
shall not
<PAGE>
45
be required to destroy such cancelled Securities..
SECTION 3.10. COMPUTATION OF INTEREST. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months.
SECTION 3.11 CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; PROVIDED that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the "CUSIP"
numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon Company Request cease to be of further effect (except as to
any surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 3.06 and (ii) Securities for whose
payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as
provided in Section 10.03) have been delivered to the Trustee
for cancellation;
(B) all such Securities not theretofore delivered to
the Trustee for
<PAGE>
46
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited irrevocably with the Trustee as trust funds in trust for
the benefit of Holders of Outstanding Securities in an amount sufficient to pay
and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium, if any)
and interest to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with; and
(4) no Event of Default which, with notice or lapse of time,
or both, would become an Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07, the obligations of
the Company to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.02 and the last
paragraph of Section 10.03 shall survive.
SECTION 4.02. APPLICATION OF TRUST MONEY. Subject to the
provisions of the last paragraph of Section 10.03, all money deposited with the
Trustee pursuant to
<PAGE>
47
Section 4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with the Trustee. All moneys deposited with the Trustee pursuant
to Section 4.01 (and held by it or any Paying Agent) for the payment of
Securities subsequently converted shall be returned to the Company upon Company
Request.
ARTICLE V
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XII or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest (including
Additional Interest) upon any Security when it becomes due and payable,
and continuance of such default for a period of 30 days (whether or not
such payment is prohibited by the provisions of Article XII); or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity (whether or not such payment is
prohibited by the provisions of Article XII); or
(3) failure by the Company to provide the notice of a Change
in Control in accordance with Section 14.03 or default in the payment
of the Purchase Price in respect of any Security on the Purchase Date
therefor (whether or not such payment is prohibited by the provisions
of Article XII); or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt
<PAGE>
48
with), and continuance of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in 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
(5) a default under any bonds, debentures, notes or other
evidences of indebtedness for money borrowed by the Company or a
Subsidiary or under any mortgages, indentures or instruments under
which there may be issued or by which there may be secured or evidenced
any indebtedness for money borrowed by the Company or a Subsidiary,
whether such indebtedness now exists or shall hereafter be created
which indebtedness, individually or in the aggregate, has a principal
amount outstanding in excess of U.S.$10,000,000, which default shall
constitute a failure to pay any portion of the principal of such
indebtedness when due and payable after the expiration of any
applicable grace or cure period with respect thereto or shall have
resulted in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 30
days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or a
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company or a
Subsidiary bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company or a Subsidiary under any applicable
Federal or State law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the
Company or a Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of the affairs of
the Company or a Subsidiary, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
<PAGE>
49
(7) the commencement by the Company or a Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by either the Company or a Subsidiary to the entry of a
decree or order for relief in respect of the Company or a Subsidiary in
an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
either the Company or a Subsidiary, or the filing by either the Company
or a Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or
the consent by either the Company or a Subsidiary to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or a Subsidiary or of any substantial part of
their respective properties, or the making by either the Company or a
Subsidiary of an assignment for the benefit of creditors, or the
admission by either the Company or a Subsidiary in writing of an
inability to pay the debts of either the Company or a Subsidiary
generally as they become due, or the taking of corporate action by the
Company or a Subsidiary in furtherance of any such action.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default (other than an Event of Default specified in
Section 5.01(6) or 5.01(7)) 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 may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal and
any accrued interest (including Additional Interest) thereon shall become
immediately due and payable. If an Event of Default specified in Section 5.01(6)
or 5.01(7) occurs, the principal of, and accrued interest (including Additional
Interest) on, all the Securities shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of a majority in principal amount of the Outstanding Securities, by written
notice to the Company and the Trustee,
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may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including Additional
Interest) on all Securities,
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default, other than the nonpayment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. If
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and payable
on such Securities
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for principal (and premium, if any) and interest, and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at the rate borne
by the 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.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.04. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any
judicial proceeding relative to the Company (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of
principal and interest 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
(2) to collect and receive any moneys or other property
payable or deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize
the Trustee to
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52
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; PROVIDED, HOWEVER,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06. APPLICATION OF MONEY COLLECTED. Any money
collected by the Trustee pursuant to this Article V 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, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under
Section 6.07;
SECOND: subject to Article XII, to the payment of the amounts
then due and unpaid for first, interest (including Additional Interest)
on, and, second, for principal of (and premium, if any, on) the
Securities in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities for
interest and principal (and premium, if any) respectively;
THIRD: the balance, if any, to the Person or Persons
entitled thereto, as their interest may appear or as a court of
competent jurisdiction shall direct; and
FOURTH: to the Company.
SECTION 5.07. LIMITATION ON SUITS. No Holder of any Security
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this
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53
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 a
Responsible Officer the Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee written
indemnity satisfactory to it (which indemnity shall not be
unreasonable) against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the fights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 5.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST AND TO CONVERT. Notwithstanding any other
provision in this Indenture, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Section 3.07) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or purchase, on the Redemption Date or Purchase Date, as the case may
be) and to convert such Security in accordance with Article XIII and to
institute suit for the enforcement of any such payment and right to
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54
convert, and such rights shall not be impaired without the consent of such
Holder.
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. CONTROL BY HOLDERS. The Holders of a majority in
principal amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee;
PROVIDED that the Trustee may seek the advice of counsel and
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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55
SECTION 5.13. WAIVER OF PAST DEFAULTS. The Holders of not less
than a majority in principal amount of the Outstanding Securities may on behalf
of the Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security, or
(2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon. A copy of
such waiver shall be delivered by the Company to the Trustee.
SECTION 5.14. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; PROVIDED, that this Section 5.14 shall not be deemed to
authorize any court to require such an undertaking or to make such an assessment
in any suit instituted by the Trustee or the Company or in any suit for the
enforcement of the right to convert any Security in accordance with Article
XIII.
SECTION 5.15. WAIVER OF USURY, 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 usury, 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.
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56
ARTICLE VI
THE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except
during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, EXCEPT that
(1) this paragraph (c) shall not be construed to limit the
effect of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or
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57
omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee (as Trustee, Paying Agent,
Authenticating Agent or Security Registrar) shall be subject to the provisions
of this Section.
SECTION 6.02. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder, the Trustee shall give the Holders, in the
manner provided in Section 1.06, notice of any default hereunder actually known
to a Responsible Officer of the Trustee; PROVIDED, HOWEVER, that in the case of
any default of the character specified in Section 5.01(3), no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. The
Trustee shall not be deemed to have notice of a default unless (i) the Trustee
has received written notice thereof from the Company or any Holder or (ii) a
Responsible Officer of the Trustee shall have actual knowledge thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 6.03. CERTAIN RIGHTS OF TRUSTEE. Subject to the
provisions of Section 6.01:
(a) the Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) 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 shall be sufficiently
evidenced by a Board
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Resolution;
(c) 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
require and, in the absence of bad faith on its part, conclusively rely
upon an Opinion of Counsel and Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee (which security or indemnity shall not be
unreasonable) against the costs, expenses and liabilities which might
be incurred by it in compliance with such request or direction;
(f) 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 at the Company's expense; and
(g) 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.
(h) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Securities, except the
Trustee's certificates of
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authentication, 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. 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 6.05. MAY HOLD SECURITIES. The Trustee, any
Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Section 6.08 and Section 6.13,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 6.06. 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 in
writing.
SECTION 6.07. COMPENSATION AND REIMBURSEMENT. The Company
agrees:
(1) to pay to the Trustee from time to time such compensation
as shall be agreed in writing between the Company and the Trustee 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 willful misconduct;
(3) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold each harmless against, any loss, liability or
expense incurred without negligence or willful misconduct on its part,
arising out of or in connection with the acceptance or administration
of this trust, including the costs and expenses of defending itself
against any claim (whether asserted by the Company, a Holder of
Securities or any other Person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the
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Company of any claim asserted against it for which it may seek
indemnity;
(4) all indemnifications and releases from liability granted
hereunder to the Trustee shall extend to its officers, directors,
employees, agents, successors and assigns;
(5) when the Trustee incurs expenses or renders services after
the occurrence of any Event of Default specified in Section 5.01, the
expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency
or similar laws; and
(6) the obligations of the Company under this Section shall
survive the satisfaction and discharge of this Indenture.
SECTION 6.08. DISQUALIFICATION; CONFLICTING INTERESTS. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Indenture.
SECTION 6.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There
shall at all times be a Trustee hereunder which shall be a corporation organized
and doing business under the laws of the United States, authorized under such
laws to exercise corporate trust powers, which shall have (or, in the case of a
corporation included in a bank holding company system, the related bank holding
company shall have) a combined capital and surplus of at least U.S.$50,000,000,
subject to supervision or examination by Federal or State authority, in good
standing and having an established place of business or agency in the Borough of
Manhattan, The City of New York. If such corporation or related bank holding
company 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
or related bank holding company 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 VI.
SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee
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pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 6.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.11 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company. If the instrument of acceptance by
a successor Trustee required by Section 6.11 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of removal, the
removed Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 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
(2) the Trustee shall cease to be eligible under Section 6.09
and shall fail to resign after written request therefor by the Company
or by any such Holder, 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, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor
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62
Trustee shall be appointed by Act of the Holders of a majority in principal
amount of the Outstanding Securities delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
6.11, become the successor Trustee and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 6.11, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article VI.
SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion
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63
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 VI
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. APPOINTMENT OF AUTHENTICATING AGENT. The Trustee
may appoint an Authenticating Agent or Agents which shall be authorized to act
on behalf of the Trustee to authenticate Securities issued upon original issue
and upon exchange, registration of transfer, partial conversion, partial
redemption, or partial purchase or pursuant to Section 3.06, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States, authorized under such laws to act as Authenticating Agent, which shall
have (or, in the case of a corporation included in a bank holding company
system, the related bank holding company shall have) a combined capital and
surplus of not less than U.S.$50,000,000 and be subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then, for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
or related bank holding company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all 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 6.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.14.
The Company agrees to pay to each Authenticating Agent from
time to time compensation for its services under this Section 6.14.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the
within-mentioned Indenture.
The Bank of New York
Date:
As Trustee
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65
By
As Authenticating Agent
By
Authorized Signatory
SECTION 6.15. APPOINTMENT OF CO-TRUSTEE. Subject to the
qualifications set forth in Section 6.09, the Trustee may appoint an additional
institution as a separate trustee or co-trustee. If the Trustee appoints an
additional institution as a separate trustee or co-trustee, each and every
remedy, power, fight, claim, demand, cause of action, immunity, estate, duty,
obligation, title, interest and lien expressed or intended by this Indenture to
be exercised by, vested in and conveyed by the Trustee with respect thereto
shall be exercisable by, vested in and conveyed to such separate trustee or
co-trustee, but only to the extent necessary to enable such separate trustee or
co-trustee to exercise such powers, rights and remedies, and every covenant and
obligation necessary for the exercise thereby by such separate trustee or
co-trustee shall run to and be enforceable by either of them. Should any
instrument in writing from the Company be required by the separate trustee or
co-trustee so appointed by the Trustee for more fully vesting in and confirming
to them such properties, rights, powers, trusts, duties and obligations, any and
all such instruments in writing shall, on request, be executed, acknowledged and
delivered by the Company. If any separate trustee or co-trustee, or a successor
to either, shall become incapable of acting or not qualified to act, resign or
be removed, all the estate, properties, rights, powers, trusts, duties and
obligations of such separate trustee or co-trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a
successor to such separate trustee or co-trustee. The appointment of any
separate trustee or co-trustee shall be subject to written approval of the
Company so long as no Event of Default has occurred and is continuing under this
Indenture.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES
OF HOLDERS. The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date,
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a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders
with respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 7.03. REPORTS BY TRUSTEE. (a) The Trustee shall
transmit to Holders within 60 days after May 15th of each year such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission, if applicable, and with
the Company. The Company will promptly notify the Trustee when the Securities
are listed on any stock exchange and of
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any delisting thereof.
SECTION 7.04. REPORTS BY COMPANY. (a) The Company shall file
with the Trustee and the Commission, if applicable, and transmit to Holders,
such information, documents and other reports, and such summaries thereof, as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant to such Act; PROVIDED that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission. Delivery
of such reports, information and documents to the Trustee is for informational
purposes only, and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates). Notwithstanding anything to the contrary contained
herein, the Trustee shall have no duty to review such documents for the purpose
of determining compliance with this Indenture.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(b) The Company shall provide the Trustee with at least 30
days' prior written notice of any change in location of its principal executive
offices or other principal place of business.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS. The Company shall not consolidate with or merge into any other Person or,
directly or indirectly, convey, transfer, sell, lease or otherwise dispose of
all or substantially all of its properties and assets to any Person, and the
Company shall not permit any Person to consolidate with or merge into the
Company or convey, transfer, sell, lease or otherwise dispose of all or
substantially all of its properties and assets to the Company, unless:
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(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person 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 (i) shall be a
corporation, partnership or trust, (ii) shall be an entity (A)
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia or (B) organized
and validly existing under the laws of a jurisdiction outside of the
United States of America, with its common stock, or American Depositary
Shares representing such shares of common stock, traded on a national
securities exchange in the United States of America or through Nasdaq
and a worldwide total market capitalization of its equity securities of
at least U.S. $5 billion, and (iii) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the principal of (and premium, if any) and interest (including
Additional Interest) on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the
Company to be performed or observed and shall have provided for
conversion rights in accordance with Article XIII;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with this Article VIII and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
SECTION 8.02. SUCCESSOR SUBSTITUTED. Upon any consolidation of
the Company with, or merger of the Company into, any other Person or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 8.01, 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 thereafter, except in the case of a lease, the
predecessor Person shall be released from its obligations and covenants under
this
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Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS. Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the equal and
ratable benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(3) to secure the Company's obligations in respect of the
Securities; or
(4) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XIII; or
(5) to make any changes or modifications to this Indenture
necessary in connection with the registration of any Transfer
Restricted Securities under the Securities Act as contemplated by
Section 10.11; PROVIDED that such action pursuant to this clause (5)
shall not adversely affect the interests of the Holders of Securities;
or
(6) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, to correct or supplement any provision herein which limits,
qualifies or conflicts with a provision of the Trust Indenture Act
which is required under such Act to be a part of and govern this
Indenture, in any case to the extent necessary to qualify this
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Indenture under the Trust Indenture Act, or to make any other
provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture; PROVIDED that such action pursuant to this clause (6) shall
not adversely affect the interests or legal rights of the Holders in
any material respect.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal amount
of the Outstanding Securities, by the Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or
the coin or currency in which, any Security or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption or purchase, on or after the Redemption
Date or Purchase Date, as the case may be), or adversely affect the
right to convert any Security as provided in Article XIII (except as
permitted by Section 9.01(4)), or modify the provisions of this
Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders, or modify the redemption provisions in a
manner adverse to the Holders, or modify the provisions relating to the
Company's requirement to offer to purchase Notes upon a Change in
Control in a manner adverse to the Holders, or
(2) modify any of the provisions of this Section 9.02, Section
5.13 or Section 10.08, 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, or
(3) modify the obligation of the Company to maintain an office
or agency in the Borough of Manhattan, The City of New York pursuant to
Section 10.02, or
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(4) modify any of the provisions of Section 10.09 or Section
10.10, or
(5) 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.
It shall not be necessary for any Act of Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall receive, and (subject to
Section 6.01 and Section 6.03) 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, complies with its terms and will,
upon the execution and delivery thereof, be valid and binding upon the Company
in accordance with its terms. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
SECTION 9.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation as to any matter provided for in such supplemental
indenture. If the Company shall so determine,
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new Securities so modified as to conform, in the judgment of 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.
ARTICLE X
COVENANTS
SECTION 10.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company will duly and punctually pay the principal of (and premium, if any) and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 10.02. MAINTENANCE OF OFFICE OR AGENCY. The Company
will maintain in the Borough of Manhattan, The City of New York an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange, where
Securities may be surrendered for conversion and where notices and demands to or
upon the Company in respect of the Securities and 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 or the office or agency of the Trustee in the Borough of Manhattan, The
City of New York, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York) where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 10.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN
TRUST. If the Company shall at any time act as its own Paying Agent, it will,
prior to 11:00 a.m., New York City time, on each due date of the principal of
(and premium, if any) or interest (together with any Additional Interest in
respect thereof) on any of the Securities,
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segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest (together
with any Additional Interest in respect thereof) 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, it
will, prior to each due date of the principal of (and premium, if any) or
interest (together with any Additional Interest in respect thereof) on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held in trust for the benefit of the Persons entitled to such
principal, premium, if any, or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee in writing of its action
or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section
10.03, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on Securities 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 written notice of any default by the
Company (or any other obligor upon the Securities) in the making of any
payment of principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held 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 such sums were held by the Company or
such Paying Agent; and,
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upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
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 (and
premium, if any) or interest (together with any Additional Interest in
respect thereof) on any Security and remaining unclaimed for two years
after such principal (and premium, if any) 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 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
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The
City of New York, 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.
SECTION 10.04. STATEMENT BY OFFICERS AS TO DEFAULT. The Company shall
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company ending after the date hereof, an Officers' Certificate, stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
SECTION 10.05. EXISTENCE. Subject to Article VIII, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 10.06. MAINTENANCE OF PROPERTIES. The Company shall cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and
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supplied with all necessary equipment and shall 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 10.06 shall prevent the Company
from discontinuing the operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposition is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 10.07. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
SECTION 10.08. WAIVER OF CERTAIN COVENANTS. The Company may omit in any
particular instance to comply with any covenant or condition set forth in
Sections 10.05 to 10.07, inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Securities
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
SECTION 10.09. DELIVERY OF CERTAIN INFORMATION. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a Holder or the holder of shares of Common Stock issued upon
conversion thereof, the Company shall promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder or such holder of shares
of Common Stock issued upon conversion of Securities, or to a prospective
purchaser of any such security designated by any such Holder or holder, as the
case may be, to the extent required to permit
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compliance by such Holder or holder with Rule 144A under the Securities Act in
connection with the resale of any such security. "Rule 144A Information" shall
be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act.
SECTION 10.10. RESALE OF CERTAIN SECURITIES; REPORTING ISSUER. During the
period beginning on the last date of original issuance of the Securities and
ending on the date that is two years from such date, the Company will not, and
will use its best efforts not to permit any of its "affiliates" (as defined
under Rule 144 under the Securities Act or any successor provision thereto) to,
resell (x) any Securities which constitute "restricted securities" under Rule
144 or (y) any securities into which the Securities have been converted under
this Indenture which constitute "restricted securities" under Rule 144, that in
either case have been reacquired by any of them. The Trustee shall have no
responsibility in respect of the Company's performance of its agreement in the
preceding sentence.
SECTION 10.11. REGISTRATION RIGHTS. (a) The Company agrees that the Holders
(and any Person that has a beneficial interest in a Security) from time to time
of Transfer Restricted Securities are entitled to the benefits of a Registration
Rights Agreement, dated as of February 14, 2000 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of Transfer Restricted Securities, at the Company's expense, (i) to file
within 90 days after the first date of original issuance of the Securities, a
shelf registration statement (the "Shelf Registration Statement") with the
Commission with respect to resales of the Transfer Restricted Securities, (ii)
to use its commercially reasonable best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission not later than 150 days
after the first date of original issuance of the Securities, and (iii) to use
its commercially reasonable best efforts to maintain such Shelf Registration
Statement continuously effective under the Securities Act subject to and in
accordance with the terms of the Registration Rights Agreement.
Additional interest (the "Additional Interest") with respect to the
Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below being herein called a
"Registration Default"):
(i) if on or prior to the 90th day after the first date of original
issuance of the Securities the Shelf Registration Statement has not been filed
with the Commission;
(ii) if on or prior to the 150th day after the first date of original
issuance of
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the Securities the Shelf Registration Statement has not been declared
effective by the Commission; or
(iii) if after the Shelf Registration Statement is declared effective (A)
the Shelf Registration Statement thereafter ceases to be effective; or (B) the
Shelf Registration Statement or the related prospectus ceases to be usable
subject to certain exceptions set forth in the Registration Rights Agreement,
including the right to suspend the use of the Shelf Registration Statement
under certain circumstances for up to 90 days) in connection with resales of
Transfer Restricted Securities in accordance with and during the periods
specified herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Shelf Registration Statement would
include any untrue statement of a material fact or omit to state any material
act necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or (2) it shall be necessary to
amend such Shelf Registration Statement or supplement the related prospectus,
to comply with the Securities Act or the Exchange Act or the respective rules
thereunder.
Additional Interest shall accrue on the Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur, to but excluding the date on
which all such Registration Defaults have been cured, at a rate of 0.50% per
annum. Written notice of any such Registration Default shall be provided to the
Trustee by the Company.
(b) Any amounts of Additional Interest due pursuant to clause (a)(i),
(a)(ii) or (a)(iii) of this Section 10.11 shall be payable in cash on the
regular Interest Payment Dates in the manner provided for by the Indenture. The
amount of Additional Interest shall be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Securities, multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months), and the denominator of which is
360.
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security, such mention shall be deemed to include mention of the payment of
Additional Interest provided for in this Section to the extent that, in such
context, Additional Interest are, were or would be payable in respect thereof
pursuant to the provisions of this Section 10.11 and express mention of the
payment of Additional Interest (if applicable) in any provisions hereof shall
not be construed as excluding Additional Interest in those
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provisions hereof where such express mention is not made.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.01. RIGHT OF REDEMPTION. (a) The Securities may be redeemed at
the election of the Company (an "Optional Redemption"), as a whole or from time
to time in part, at any time on or after February 20, 2003, at the Redemption
Prices specified in the form of Security hereinbefore set forth, together with
accrued interest to the Redemption Date.
(b) In addition to the right to redeem the Securities as provided in
Section 11.01(a), the Company may redeem the Securities (a "Provisional
Redemption"), in whole or in part, at any time prior to February 20, 2003, upon
notice as set forth in Section 11.05, at a redemption price equal to $1,000 per
Security to be redeemed plus accrued and unpaid interest, if any (including
Additional Interest, if any), to the date of redemption (the "Provisional
Redemption Date") if (i) the closing price of the Common Stock shall have
exceeded 150% of the conversion price then in effect for at least 20 Trading
Days in any consecutive 30-Trading Day period ending on the Trading Day prior to
the date of mailing of the notice of redemption pursuant to Section 11.05 (the
"Redemption Notice Date") and (ii) the Shelf Registration Statement is effective
and available for use and is expected to remain effective and available for use
for the 30 days immediately following the Provisional Redemption Date. Upon any
such Provisional Redemption, the Company shall make an additional payment in
cash (the "Make-Whole Payment") with respect to the Securities called for
redemption to Holders on the Redemption Notice Date in an amount equal to
$142.50 per $1,000 Security, less the amount of any interest actually paid on
such Security prior to the Redemption Notice Date. The Company shall make the
Make-Whole Payment on all Securities called for Provisional Redemption,
including any Securities converted into Common Stock pursuant to the terms
hereof after the Redemption Notice Date and prior to the Provisional Redemption
Date.
SECTION 11.02. APPLICABILITY OF ARTICLE. Redemption of Securities at the
election of the Company or otherwise, as permitted or required by any provision
of this Indenture, shall be made in accordance with such provision and this
Article XI.
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SECTION 11.03. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the
Company to redeem any Securities pursuant to Section 11.01 shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date in writing and of the principal amount of
Securities to be redeemed.
SECTION 11.04. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less
than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not less than 30 days or more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by lot or by such method as the Trustee shall
deem fair and appropriate in the circumstances and which may provide for the
selection for redemption of portions (equal to U.S.$1,000 or any integral
multiple thereof) of the principal amount of Securities of a denomination larger
than U.S.$1,000.
If any Security selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption. Securities which have been
converted during a selection of Securities to be redeemed shall be treated by
the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security Registrar
in writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 11.05. NOTICE OF REDEMPTION. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
his address appearing in the Security Register.
All notices of redemption shall describe the Securities, including CUSIP
number, and state:
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(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption of any Securities, the
principal amounts) of the particular Securities to be redeemed;
(4) whether such redemption is a Provisional Redemption or an Optional
Redemption;
(5) that on the Redemption Date the Redemption Price shall become due and
payable upon each such Security to be redeemed and that interest thereon shall
cease to accrue on and after said date;
(6) the conversion price, the date on which the right to convert the
Securities to be redeemed will terminate and the place or places where such
Securities may be surrendered for conversion;
(7) the place or places where such Securities are to be surrendered for
payment of the Redemption Price; and
(8) if such a redemption is a Provisional Redemption, the amount of the
Make-Whole Payment.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company, and shall be irrevocable.
SECTION 11.06. DEPOSIT OF REDEMPTION PRICE. Prior to 11:00 a.m., New York
City time, on any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.03) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date other than any Securities called for redemption
on that date which have been converted prior to the date of such deposit.
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If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive interest as provided in the
last paragraph of Section 3.07) be paid to the Company as soon as practicable
upon Company Request or, if then held by the Company, shall be released from
such trust.
SECTION 11.07. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and, with respect to Securities called for Provisional Redemption,
the Make-Whole Payment, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear or accrue any interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to (but not including) the Redemption Date and, with respect to Securities
called for Provisional Redemption (including Securities converted into Common
Stock pursuant to the terms hereof after the Redemption Notice Date and prior to
the Provisional Redemption Date), the Make-whole Payment; PROVIDED, HOWEVER,
that installments of interest 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
3.07; and PROVIDED FURTHER that, with respect to a Provisional Redemption, the
holder of any Securities converted into Common Stock pursuant to the terms of
this Indenture after the Redemption Notice Date and prior to the Provisional
Redemption Date shall have the right to the Make-Whole Payment, if any, with
respect to such Securities regardless of the conversion of such Securities.
If the Company shall fail to deposit the Redemption Price (and Make-Whole
Payment, if any) with the Trustee and 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 and accrue interest from the Redemption
Date at the rate borne by the Security.
SECTION 11.08. SECURITIES REDEEMED IN PART. Any Security which is to be
redeemed only in part shall be surrendered at an office or agency of the Company
designated for that purpose pursuant to Section 10.02 (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his
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attorney-in-fact 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 any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal amount of the
Security so surrendered.
SECTION 11.09. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection
with any redemption of Securities, the Company may arrange for the purchase and
conversion of any Securities by an agreement with one or more investment bankers
or other purchasers to purchase such Securities by paying to the Trustee in
trust for the Holders, on or before the Redemption Date, an amount not less than
the applicable Redemption Price, together with interest accrued to the
Redemption Date, of such Securities and in connection with a Provisional
Redemption, the Make-Whole Payment. Notwithstanding anything to the contrary
contained in this Article XI, the obligation of the Company to pay the
Redemption Price of such Securities, together with interest accrued to, but
excluding, the Redemption Date and in connection with a Provisional Redemption,
the Make-Whole Payment, shall be deemed to be satisfied and discharged to the
extent such amount is so paid by such purchasers. If such an agreement is
entered into, a copy of which shall be filed with the Trustee prior to the
Redemption Date, any Securities not duly surrendered for conversion by the
holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article XIII) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date (and the right to convert any such Securities
shall be deemed to have been extended through such time), subject to payment of
the above amount as aforesaid (including the Make-Whole Payment, if any, with
respect to all Securities called for Provisional Redemption). At the written
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Securities. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses incurred by the Trustee
in the defense of any claim or liability arising out of or in connection with
the exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture. Nothing in the preceding sentence shall be
deemed to limit the rights and
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protections afforded to the Trustee in Article VI hereof, including, but not
limited to, the right to indemnification pursuant to Section 6.07.
ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 12.01. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS. The Company
covenants and agrees, and each Holder of a Security, by his acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article XII, the indebtedness represented by the Securities
and the payment of the principal of (and premium, if any) and interest on each
and all of the Securities and all obligations of the Company under this
Indenture are hereby expressly made subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness.
SECTION 12.02. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the event
of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding-up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company, then and in any such event
the holders of Senior Indebtedness shall be entitled to receive payment in full
of all amounts due or to become due on or in respect of all Senior Indebtedness,
or provision shall be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Indebtedness, before
the Holders of the Securities are entitled to receive any payment on account of
principal of (or premium, if any) or interest on the Securities, and to that end
the holders of Senior Indebtedness shall be entitled to receive, for application
to the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, which may be payable or deliverable in
respect of the Securities in any such case, proceeding, dissolution, liquidation
or other winding-up or event.
In the event that, notwithstanding the foregoing provisions of this Section
12.02, the Trustee or the Holder of any Security shall have received any payment
or distribution of assets of the Company prohibited by the foregoing paragraph
of any kind or character, whether in cash, property or securities, before all
Senior Indebtedness
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is paid in full or payment thereof provided for, and if such fact shall, at or
prior to the time of such payment or distribution, have been made actually known
to a Responsible Officer of the Trustee or, as the case may be, such Holder,
then and in such event such payment or distribution shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior Indebtedness in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness.
For purposes of this Article XII only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which in
either case are subordinated in right of payment to all Senior Indebtedness
which may at the time be outstanding to substantially the same extent as, or to
a greater extent than, the Securities are so subordinated as provided in this
Article XII. The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
VIII shall not be deemed a dissolution, winding-up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company for the purposes of this Section 12.02 if the Person formed by
such consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article VIII.
SECTION 12.03. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT. (a) In the
event and during the continuation of any default in the payment of principal of
(or premium, if any) or interest on any Senior Indebtedness beyond any
applicable grace period with respect thereto (unless and until such payment
default shall have been cured or waived in writing by the holders of such Senior
Indebtedness), or (b) in the event any judicial proceeding shall be pending with
respect to any such default, then no payment shall be made by the Company on
account of principal of (or premium, if any) or interest on the Securities or on
account of the purchase or other acquisition of Securities (including pursuant
to Articles XI and XIII).
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing
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provisions of this Section 12.03, and if such fact shall, at or prior to the
time of such payment, have been made actually known to a Responsible Officer of
the Trustee or, as the case may be, such Holder, then and in such event such
payment shall be paid over and delivered forthwith to the Company upon Company
Request.
The provisions of this Section 12.03 shall not apply to any payment with
respect to which Section 12.02 would be applicable.
SECTION 12.04. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in this
Article XII or elsewhere in this Indenture or in any of the Securities shall
prevent (a) the Company, at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 12.02 or under the conditions described in
Section 12.03, from making payments at any time of principal of (and premium, if
any) or interest on the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
principal of (and premium, if any) or interest on the Securities or the
retention of such payment by the Holders, if, at the time of such application by
the Trustee, a Responsible Officer of the Trustee did not have actual knowledge
that such payment would have been prohibited by the provisions of this Article
XII.
SECTION 12.05. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness, and until the
Securities are paid in full, the Holders of the Securities shall be subrogated
(equally and ratably with the holders of all indebtedness of the Company which
by its express terms is subordinated to indebtedness of the Company to
substantially the same extent as the Securities are subordinated and is entitled
to like rights of subrogation) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness to the extent that payments and
distributions otherwise payable to Holders of Securities have been applied to
the payment of Senior Indebtedness as provided by this Article XII. For purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled, except for the provisions of this
Article XII, and no payments over pursuant to the provisions of this Article XII
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 12.06. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
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provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article XII or elsewhere in this Indenture or in the Securities is intended
to or shall
(a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article XII of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of (and premium, if any) and interest
on the Securities as and when the same shall become due and payable in
accordance with their terms; or
(b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior
Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XII of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 12.07. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a
Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XII and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 12.08. NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
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Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article XII or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness;
(iii) release any Person liable in any manner for the collection of Senior
Indebtedness;
(iv) exercise or refrain from exercising any rights against the Company and
any other Person;
(v) apply any and all sums received from time to time to the Senior
Indebtedness.
SECTION 12.09. NOTICE TO TRUSTEE. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article XII or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment to or by the Trustee
in respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 6.01, shall be entitled in all
respects to assume that no such facts exist; PROVIDED, HOWEVER, that if the
Trustee shall not have received the notice provided for in this Section 12.09 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (and premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money
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and to apply the same to the purpose for which such money was received and shall
not be affected by any notice to the contrary which may be received by it within
two Business Days prior to such date.
Subject to the provisions of Section 6.01, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee therefor) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XII, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article XII, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 12.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article XII, the Trustee, subject to the provisions of Section 6.01, and
the Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
XII.
SECTION 12.11. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any holders
of Senior Indebtedness
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shall be entitled by virtue of this Article XII or otherwise.
SECTION 12.12. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article XII with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.07.
SECTION 12.13. ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article XII shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article XII in addition
to or in place of the Trustee; PROVIDED, HOWEVER, that Section 12.12 shall not
apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
SECTION 12.14. CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes of this
Article XII only, (1) the issuance and delivery of junior securities upon
conversion of Securities in accordance with Article XIII shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
or interest on Securities or on account of the purchase or other acquisition of
Securities, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Security shall be
deemed to constitute payment on account of the principal of such Security. For
the purposes of this Section 12.14, the term "junior securities" means (a)
shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to the prior payment in full
of all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Securities are so subordinated as provided in this Article XII.
Nothing contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Securities, the
right, which is absolute and unconditional, of the Holder of any Security to
convert such Security in accordance with Article XIII.
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ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.01. CONVERSION PRIVILEGE AND CONVERSION PRICE. Subject to and
upon compliance with the provisions of this Article XIII, at the option of the
Holder thereof, any Security or any portion of the principal amount thereof
which is U.S.$1,000 or an integral multiple of U.S.$1,000 may be converted at
the principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares of Common Stock of the Company at any time following the
latest date of original issuance of Securities at the conversion price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall expire at the close of business on the Business Day
immediately preceding February 15, 2007, subject, in the case of conversion of
any Global Security, to any Applicable Procedures. In case a Security or portion
thereof is called for redemption at the election of the Company or the Holder
thereof exercised his right to require the Company to purchase the Security,
such conversion right in respect of the Security or portion so called shall
expire at the close of business, New York or time, on the Business Day
immediately preceding the corresponding Redemption Date or Purchase Date, as the
case may be, unless the Company defaults in making the payment due upon
redemption or purchase, as the case may be (in each case subject as aforesaid to
any Applicable Procedures with respect to any Global Security).
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially U.S.$321.00
per share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in Section 13.04.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in paragraph (4) or (5) of Section
13.04, the Holder of each Security, upon the conversion thereof pursuant to this
Article XIII subsequent to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution and prior to
the effectiveness of the conversion price adjustment in respect of such
distribution pursuant to paragraph (4) or (5) of Section 13.04, shall also be
entitled to receive for each share of Common Stock into which such Security is
converted, the portion of the evidences of indebtedness, shares of capital
stock, securities, cash and other property so distributed applicable to one
share of Common Stock; PROVIDED, HOWEVER, that, at the election of the Company
(whose election shall be evidenced by a Board Resolution) with respect to all
Holders so converting, the Company may, in lieu of distributing to such Holder
any portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal
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to the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution). If any conversion of a Security described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of the Security so converted is
entitled to receive in accordance with the immediately preceding sentence, the
Company may elect (such election to be evidenced by a Board Resolution) to
distribute to such Holder a due bill for the evidences of indebtedness, shares
of capital stock, securities, cash or assets to which such Holder is so
entitled; PROVIDED that such due bill (i) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (ii) requires payment or delivery of such evidences of
indebtedness, shares of capital stock, securities, cash or assets no later than
the date of payment or delivery thereof to holders of Common Stock receiving
such distribution.
SECTION 13.02. EXERCISE OF CONVERSION PRIVILEGE. In order to exercise the
conversion privilege, the Holder of any Security to be converted shall surrender
such Security, duly endorsed or assigned to the Company or in blank, at any
office or agency maintained by the Company pursuant to Section 10.02,
accompanied by (a) written notice (as set forth in Section 2.05 herein) to the
Company at such office or agency that the Holder elects to convert such Security
or, if less than the entire principal amount thereof is to be converted, the
portion thereof to be converted and (b) if shares or any portion of such
Security not to be converted are to be issued in the name of a Person other than
the Holder thereof, and the restrictions on transfer of such Security, set forth
in the first paragraph of Section 2.02 remain in effect, a certification of the
Holder as to compliance with such restrictions (as set forth in Section 2.07).
If the restrictions on transfer of a Security set forth in the first
paragraph of Section 2.02 remain in effect, all shares of Common Stock delivered
upon conversion thereof shall bear a restrictive legend substantially in the
form of such paragraph.
Except as described in the last paragraph of Section 3.07, no Holder of
Securities will be entitled upon conversion thereof to any payment or adjustment
on account of accrued and unpaid interest thereon or on account of dividends on
the shares of Common Stock issued in connection therewith. Securities
surrendered for conversion during the period from the close of business on any
Regular Record Date to the opening of business on the corresponding Interest
Payment Date (except Securities called for redemption on a Redemption Date
within such period between and including such
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Regular Record Date and such Interest Payment Date) must be accompanied by
payment to the Company in New York Clearing House Funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount converted.
Securities shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Securities for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share as provided
in Section 13.03.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. Any
requirements for notice, surrender or delivery of Securities pursuant to this
Article XIII shall, with respect to any Global Security, be subject to any
Applicable Procedures.
SECTION 13.03. FRACTIONS OF SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Securities. If more than one Security shall
be surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Securities (or specified portions
thereof) so surrendered. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the Closing Price
per share of the Common Stock at the close of business on the day of conversion
(or, if such day is not a Trading Day, on the Trading Day immediately preceding
such day) or, alternatively, the Company shall round up to the next higher whole
share.
SECTION 13.04. ADJUSTMENT OF CONVERSION PRICE. (1) In case the Company
shall pay or make a dividend or other distribution on its Common Stock
exclusively in Common Stock, the conversion price in effect at the opening of
business
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on the day next following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day next following the date fixed for such
determination. For the purposes of this paragraph (1), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
shall not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
(2) In case the Company shall pay or make a dividend or other distribution
on its Common Stock consisting exclusively of, or shall otherwise issue to all
holders of its Common Stock, rights, warrants or options entitling the holders
thereof to subscribe for or purchase shares of Common Stock at a price per share
less than the current market price per share (determined as provided in
paragraph (7) of this Section 13.04) of the Common Stock on the date fixed for
the determination of shareholders entitled to receive such rights, warrants or
options, the conversion price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or purchase, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes of this
paragraph (2), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company shall not issue any rights, warrants or
options in respect of shares of Common Stock held in the treasury of the
Company.
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(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) Subject to the last sentence of this paragraph (4), in case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, shares of any class of capital stock, securities,
cash or property (excluding any rights, warrants or options referred to in
paragraph (2) of this Section 13.04, any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section 13.04), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the conversion price in
effect immediately prior to the effectiveness of the conversion price reduction
contemplated by this paragraph (4) by a fraction of which the numerator shall be
the current market price per share (determined as provided in paragraph (7) of
this Section 13.04) of the Common Stock on the date of such effectiveness less
the fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution and
shall, in the case of securities being distributed for which prior thereto there
is an actual or when issued trading market, be no less than the value determined
by reference to the average of the closing prices in such market over the period
specified in the succeeding sentence), on the date of such effectiveness, of the
portion of the evidences of indebtedness, shares of capital stock, securities,
cash and property so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day next following the later of (a) the date fixed for the payment of
such distribution and (b) the date 20 days after the notice relating to such
distribution is given pursuant to Section 13.06(a) (such later date of (a) and
(b) being referred to as the "Reference Date"). If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph (4) by reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the current market price
per share pursuant to paragraph (7) of this Section. For purposes of this
paragraph (4), any
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dividend or distribution that includes shares of Common Stock or rights,
warrants or options to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (a) a dividend or distribution of the evidences of
indebtedness, cash, property, shares of capital stock or securities other than
such shares of Common Stock or such rights, warrants or options (making any
conversion price reduction required by this paragraph (4)) immediately followed
by (b) a dividend or distribution of such shares of Common Stock or such rights
(making any further conversion price reduction required by paragraph (1) or (2)
of this Section 13.04, except (i) the Reference Date of such dividend or
distribution as defined in this paragraph (4) shall be substituted as "the date
fixed for the determination of shareholders entitled to receive such dividend or
other distributions", "the date fixed for the determination of shareholders
entitled to receive such rights, warrants or options" and "the date fixed for
such determination" within the meaning of paragraphs (1) and (2) of this Section
13.04 and (ii) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of paragraph (1) of this
Section 13.04).
(5) In case the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock exclusively in cash in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no conversion price adjustment pursuant to this paragraph (5) has been
made and (ii) the aggregate of any cash plus the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of the
tender or exchange offer referred to below, of consideration payable in respect
of any tender or exchange offer by the Company or a Subsidiary for all or any
portion of the Common Stock concluded within the 12 months preceding the date of
payment of such distribution and in respect of which no conversion price
adjustment pursuant to paragraph (6) of this Section 13.04 has been made,
exceeds 12.5% of the product of the current market price per share (determined
as provided in paragraph (7) of this Section 13.04) of the Common Stock on the
date fixed for shareholders entitled to receive such distribution times the
number of shares of Common Stock outstanding on such date, the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this paragraph
(5) by a fraction of which the numerator shall be the current market price per
share (determined as
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provided in paragraph (7) of this Section 13.04) of the Common Stock on the date
of such effectiveness less the amount of cash so distributed applicable to one
share of Common Stock and the denominator shall be such current market price per
share of the Common Stock, such reduction to become effective immediately prior
to the opening of business on the later of (a) the day following the date fixed
for the payment of such distribution and (b) the date 20 days after the notice
relating to such distribution is given pursuant to Section 13.06(a).
(6) In case a successful tender or exchange offer made by the Company or
any Subsidiary for all or any portion of the Common Stock shall involve an
aggregate consideration having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended) that, together with (i) the aggregate of the cash plus the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of
the expiration of the other tender or exchange offer referred to below, of
consideration payable in respect of any other tender or exchange offer by the
Company or a Subsidiary for all or any portion of the Common Stock concluded
within the preceding 12 months and in respect of which no conversion price
adjustment pursuant to this paragraph (6) has been made and (ii) the aggregate
amount of any distributions to all holders of the Common Stock made exclusively
in cash within the preceding 12 months and in respect of which no conversion
price adjustment pursuant to paragraph (5) of this Section 13.04 has been made,
exceeds 12.5% of the product of the current market price per share (determined
as provided in paragraph (7) of this Section 13.04) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the conversion price
shall be reduced (but not increased) so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be (i) the
product of the current market price per share (determined as provided in
paragraph (7) of this Section 13.04) of the Common Stock at the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
or exchanged shares) at the Expiration Time minus (ii) the fair market value
(determined as aforesaid) of the aggregate consideration payable to shareholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and the denominator shall
be the product of (i) such current market price per share at the Expiration Time
times (ii) such number of outstanding shares at the Expiration Time less the
number of Purchased Shares, such
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reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time.
(7) For the purpose of any computation under this paragraph and paragraphs
(2), (4) and (5) of this Section 13.04, the current market price per share of
Common Stock on any date in question shall be deemed to be the average of the
daily Closing Prices for the 5 consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than, the
date in question; PROVIDED, HOWEVER, that (i) if the "ex" date (as hereinafter
defined) for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (1), (2), (3), (4), (5) or (6) above ("Other Event") occurs on or
after the 20th Trading Day prior to the date in question and prior to the "ex"
date for the issuance or distribution requiring such computation (the "Current
Event"), the Closing Price for each Trading Day prior to the "ex" date for such
Other Event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a result
of such Other Event, (ii) if the "ex" date for any Other Event occurs after the
"ex" date for the Current Event and on or prior to the date in question, the
Closing Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the conversion price is so required to be adjusted as a
result of such Other Event, (iii) if the "ex" date for any Other Event occurs on
the "ex" date for the Current Event, one of those events shall be deemed for
purposes of clauses (i) and (ii) of this proviso to have an "ex" date occurring
prior to the "ex" date for the other event, and (iv) if the "ex" date for the
Current Event is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (ii) of this proviso, the Closing
Price for each Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value on the date in
question (as determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraph (4) or
(5) of this Section 13.04, whose determination shall be conclusive and described
in a Board Resolution) of the portion of the rights, warrants, options,
evidences of indebtedness, shares of capital stock, securities, cash or property
being distributed applicable to one share of Common Stock. For the purpose of
any computation under paragraph (6) of this Section 13.04, the current market
price per share of Common Stock on any date in question shall be deemed to be
the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing on or after the latest (the "Commencement
Date") of (i) the date 20 Trading Days before the date in question, (ii) the
date of commencement of the tender
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or exchange offer requiring such computation and (iii) the date of the last
amendment, if any, of such tender or exchange offer involving a change in the
maximum number of shares for which tenders are sought or a change in the
consideration offered, and ending not later than the date of the Expiration Time
of such tender or exchange offer (or, if such Expiration Time occurs before the
close of trading on a Trading Day, not later than the Trading Day immediately
preceding the date of such Expiration Time); PROVIDED, HOWEVER, that if the "ex"
date for any Other Event (other than the tender or exchange offer requiring such
computation) occurs on or after the Commencement Date and on or prior to the
date of the Expiration Time for the tender or exchange offer requiring such
computation, the Closing Price for each Trading Day prior to the "ex" date for
such Other Event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a result
of such other event. For purposes of this paragraph, the term "ex" date, (i)
when used with respect to any issuance or distribution, means the first date on
which the Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (ii) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date on
which the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes effective, and
(iii) when used with respect to any tender or exchange offer means the first
date on which the Common Stock trades regular way on such exchange or in such
market after the Expiration Time of such tender or exchange offer.
(8) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this
Section, as it considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients, or to diminish the amount of such tax payable.
(9) To the extent permitted by applicable law, the Company may from time to
time decrease the conversion price by any amount for any period of time so long
as (i) such period of time is at least 20 days, (ii) such decrease is
irrevocable during such period and (iii) the Board of Directors has determined
that such a decrease is in the best interests of the Company, which
determination shall be conclusive. No such decrease may be taken into account
when determining whether the Closing Price of the Common Stock exceeds the
conversion price for purposes of clause (i) of the third paragraph of Section
14.07. Whenever the conversion price is decreased pursuant to the first sentence
of this paragraph (9), the Company shall give notice of the decrease to the
Holders of Securities in the manner provided in Section 1.06 at least 15 days
prior to the date the decreased conversion price takes effect, and such notice
shall state the decreased
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conversion price and the period during which it will be in effect.
(10) No adjustment in the conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
conversion price; PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph (10) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(11) In the event that the Company distributes rights or warrants (other
than those referred to in paragraph (2) above) pro rata to holders of Common
Stock, so long as any such rights or warrants have not expired or been redeemed
by the Company, the Company shall make proper provision so that the Holder of
any Security surrendered for conversion will be entitled to receive upon such
conversion, in addition to the Conversion Shares, a number of rights and
warrants to be determined as follows: (i) if such conversion occurs on or prior
to the date for the distribution to the holders of rights or warrants of
separate certificates evidencing such rights or warrants (the "Distribution
Date"), the same number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion occurs after
such Distribution Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal amount of such
Security so converted was convertible immediately prior to such Distribution
Date would have been entitled on such Distribution Date in accordance with the
terms and provisions of and applicable to the rights or warrants.
SECTION 13.05. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the
conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in accordance
with Section 13.04 and shall prepare a certificate signed by the Treasurer of
the Company setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed (with a copy to the Trustee) at each
office or agency maintained for the purpose of conversion of Securities
pursuant to Section 10.02; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required, and
as soon as practicable after it is required, such notice shall be mailed by
the Company to all Holders at their last addresses as they shall appear in the
Security Register.
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SECTION 13.06. NOTICE OF CERTAIN CORPORATE ACTION. In case:
(a) the Company shall declare a dividend (or any other distribution) on its
Common Stock that would require a conversion price adjustment pursuant to
paragraph (5) of Section 13.04; or
(b) the Company shall authorize the granting to all holders of its Common
Stock of rights, warrants or options to subscribe for or purchase any shares
of capital stock of any class or of any other rights (excluding rights
distributed pursuant to any shareholder rights plan); or
(c) of any reclassification of the Common Stock of the Company (other than
a subdivision or combination of its outstanding shares of Common Stock), or of
any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding, up
of the Company; or
(e) the Company or any Subsidiary of the Company shall commence a tender or
exchange offer for all or a portion of the Company's outstanding shares of
Common Stock (or shall amend any such tender or exchange offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.02, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, at least 20 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record, effective or expiration
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or granting of
rights, warrants or options, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, warrants or options are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification,
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consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or (z) the date on which such tender offer commenced, the date on which such
tender offer is scheduled to expire unless extended, the consideration offered
and the other material terms thereof (or the material terms of any amendment
thereto).
SECTION 13.07. COMPANY TO RESERVE COMMON STOCK. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of Securities, the whole number of shares of Common Stock then
issuable upon the conversion in full of all outstanding Securities.
SECTION 13.08. TAXES ON CONVERSIONS. The Company will pay any and all taxes
that may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.
SECTION 13.09. COVENANT AS TO COMMON STOCK. The Company covenants that all
shares of Common Stock which may be issued upon conversion of Securities will
upon issue be newly issued (and not treasury shares) and be duly authorized,
validly issued, fully paid and nonassessable and, except as provided in Section
13.08, the Company will pay all taxes, liens and charges with respect to the
issue thereof.
SECTION 13.10. CANCELLATION OF CONVERTED SECURITIES. All Securities
delivered for conversion shall be delivered to the Trustee to be cancelled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 3.09.
SECTION 13.11. PROVISIONS IN CASE OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE OF ASSETS. In the event that the Company shall be a party to any
transaction (including without limitation any (i) recapitalization or
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock), (ii) consolidation of the
Company with, or merger of the Company into, any other person. any merger of
another person into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), (iii) sale or transfer of all or
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substantially all of the assets of the Company, or (iv) other transaction)
pursuant to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made as part
of the terms of such transaction whereby the Holder of each Security then
outstanding shall have the right thereafter to convert such Security only into
(subject to funds being legally available for such purpose under applicable law
at the time of such conversion) the kind and amount of securities, cash and
other property receivable upon such transaction by a holder of the number of
shares of Common Stock into which such Security might have been converted
immediately prior to such transaction. The Company or the person formed by such
consolidation or resulting from such merger or which acquired such assets or
which acquired the Company's shares, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture establishing such rights. Such
supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section 13.11 shall similarly apply to
successive transactions of the foregoing type.
SECTION 13.12. TRUSTEE ADJUSTMENT DISCLAIMER. The Trustee has no duty to
determine when an adjustment under this Article XIII should be made, how it
should be made or what it should be. The Trustee has no duty to determine
whether a supplemental indenture need be entered into or whether any provisions
of any supplemental indenture are correct. The Trustee shall not be accountable
for and makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities. The Trustee shall not be
responsible for the Company's failure to comply with this Article XIII.
ARTICLE XIV
RIGHT TO REQUIRE PURCHASE
SECTION 14.01. RIGHT TO REQUIRE PURCHASE. In the event that there shall
occur a Change in Control, then each Holder shall have the right, at such
Holder's option, to require the Company, subject to the provisions of Section
12.03, to purchase all or any designated part of such Holder's Securities on the
date (the "Purchase Date") fixed by the Company that is not less than 30 days
nor more than 45 days after the date the Company gives notice of the Change in
Control as contemplated in Section 14.03(a) at a price (the "Purchase Price")
equal to 100% of the principal amount thereof, together with accrued and unpaid
interest through the Purchase Date. Such right to require the purchase of
Securities shall not continue after a discharge of the Company from its
obligations with
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respect to the Securities in accordance with Article IV. At the option of the
Company, the Purchase Price may be paid in cash or, subject to the fulfillment
by the Company of the conditions set forth Section 14.02 hereof, by delivery of
shares of Common Stock in accordance with Section 14.02. Whenever in this
Indenture (including Sections 2.02, 3.01, 5.01(1) and 5.08) there is a
reference, in any context, to the principal of any Security as of any time, such
reference shall be deemed to include reference to the Purchase Price payable in
respect of such Security to the extent that such Purchase Price is, was or would
be so payable at such time, and express mention of the Purchase Price in any
provision of this Indenture shall not be construed as excluding the Purchase
Price in those provisions of this Indenture when such express mention is not
made. Any requirements for notice, surrender or delivery of Securities pursuant
to this Article XIV shall, with respect to any Global Security, be subject to
any Applicable Procedures.
SECTION 14.02. CONDITIONS AND PROCEDURES RELATING TO THE COMPANY'S ELECTION
TO PAY THE PURCHASE PRICE IN COMMON STOCK. (a) The Company may elect to pay the
Purchase Price by delivery of shares of Common Stock pursuant to Section 14.01
so long as the following conditions precedent are satisfied:
(i) The shares of Common Stock deliverable in payment of the Purchase Price
shall have a fair market value as of the Purchase Date of not less than the
Purchase Price. For purposes of Section 14.01 and this Section 14.02, the fair
market value of shares of Common Stock shall be determined by the Company and
shall be equal to 95% of the average of the Closing Prices of the Common Stock
for the five consecutive Trading Days immediately preceding and including the
third Trading Day prior to the Purchase Date;
(ii) The shares of Common Stock to be issued upon purchase of Notes
pursuant to this Article XIV (A) shall not require registration under any
federal securities law before such shares may be freely transferable without
being subject to any transfer restrictions under the Securities Act upon
purchase pursuant to this Article XIV or, if such registration is required, such
registration shall be completed and shall become effective prior to the Purchase
Date, and (B) shall not require registration with or approval of any
governmental authority under any state law or any other federal law before such
shares may be validly issued or delivered upon purchase pursuant to this Article
XIV or if such registration is required or such approval must be obtained, such
registration shall be completed or such approval shall be obtained prior to the
Purchase Date;
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104
(iii) The shares of Common Stock to be issued upon purchase of Notes
pursuant to this Article XIV are, or shall have been, approved for listing on
Nasdaq or the New York Stock Exchange or listed on another national securities
exchange, in any case, prior to the Purchase Date; and
(iv) All shares of Common Stock which may be issued upon purchase of Notes
pursuant to this Article XIV will be issued out of the Company's authorized but
unissued Common Stock and, will upon issue, be duly and validly issued and fully
paid and non-assessable and free of any preemptive or similar rights.
If all of the conditions set forth in this Section 14.02(a) are not
satisfied in accordance with the terms hereof, the Purchase Price shall be paid
by the Company only in cash.
(b) Any issuance of shares of Common Stock in respect of the Purchase Price
shall be deemed to have been effected immediately prior to the close of business
on the Purchase Date and the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such purchase shall be deemed to have become on the Purchase Date the holder or
holders of record of the shares represented thereby; PROVIDED, HOWEVER, that any
surrender for purchase on a date when the stock transfer books of the Company
shall be closed shall constitute the Person or Persons in whose name or names
the certificate or certificates for such shares are to be issued as the record
holder or holders thereof for all purposes at the opening of business on the
next succeeding day on which such stock transfer books are open. No payment or
adjustment shall be made for dividends or distributions on any Common Stock
issued upon purchase of any Note pursuant to this Article XIV declared prior to
the Purchase Date.
(c) No fractions of shares shall be issued upon purchase of Notes pursuant
to this Article XIV. If more than one Note shall be purchased from the same
Holder and the Purchase Price shall be payable in shares of Common Stock, the
number of full shares which shall be issuable upon such purchase shall be
computed on the basis of the aggregate principal amount of the Notes so
purchased. Instead of any fractional share of Common Stock which would otherwise
be issuable on the purchase of any Note or Notes pursuant to this Article XIV,
the Company will deliver to the applicable Holder its check for the current
market value of such fractional share. The current market value of a fraction of
a share is determined by multiplying the Closing Price of a full share on the
Trading Day immediately preceding the Purchase Date by the fraction, and
rounding the result to the nearest cent.
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105
(d) Any issuance and delivery of certificates for shares of Common Stock on
purchase of Notes pursuant to this Article XIV shall be made without charge to
the Holder of Notes being purchased for such certificates or for any tax or duty
in respect of the issuance or delivery of such certificates or the Notes
represented thereby; PROVIDED, HOWEVER, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the Notes
being purchased, and no such issuance or delivery shall be made unless and until
the Person requesting such issuance or delivery has paid to the Company the
amount of any such tax or duty or has established, to the satisfaction of the
Company, that such tax or duty has been paid.
SECTION 14.03. NOTICE, METHOD OF EXERCISING PURCHASE RIGHT. (a) On or
before the 15th day after the Company knows or reasonably should know a Change
in Control has occurred, the Company, or at the written request of the Company,
the Trustee (in the name and at the expense of the Company), shall give notice
of the occurrence of the Change in Control and of the purchase right set forth
herein arising as a result thereof by first-class mail, postage prepaid, or by
telefacsimile with written acknowledgment of transmittal to each Holder of the
Securities at such Holder's address appearing in the Security Register. The
Company shall also deliver a copy of such notice of a purchase right to the
Trustee.
Each notice of a purchase right shall state:
(1) the Purchase Date,
(2) the date by which the purchase right must be exercised,
(3) the Purchase Price,
(4) whether the Purchase Price will be paid in the form of cash or Common
Stock as provided in this Indenture and that such determination is
irrevocable, and
(5) the instructions a Holder must follow to exercise its purchase right.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a purchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Change in
Control.
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106
(b) To exercise a purchase right, a Holder shall deliver to the Company (or
an agent designated by the Company for such purpose in the notice referred to in
(a) above) and to the Trustee on or before the 30th day after the date of
transmittal of the notice referred to in (a) above (i) written notice of the
Holder's exercise of such right, which notice shall set forth the name of the
Holder, the principal amount of the Security or Securities (or portion of a
Security) to be purchased, and a statement that an election to exercise the
purchase right is being made thereby, and (ii) the Security or Securities with
respect to which the purchase right is being exercised, duly endorsed for
transfer to the Company. Such written notice shall be irrevocable. If the
Purchase Date falls between any Regular Record Date and the corresponding
succeeding Interest Payment Date, Securities to be purchased must be accompanied
by payment from the Holder of an amount equal to the interest thereon which the
registered Holder thereof is to receive on such Interest Payment Date.
(c) In the event a purchase right shall be exercised in accordance with the
terms hereof, the Company shall on the Purchase Date pay or cause to be paid in
cash or shares of Common Stock, as provided herein, to the Holder thereof the
Purchase Price of the Security or Securities as to which the purchase right had
been exercised.
SECTION 14.04. DEPOSIT OF PURCHASE PRICE. On or prior to the Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) cash or shares of Common Stock, as provided herein,
sufficient to pay the Purchase Price of the Securities which are to be repaid on
the Purchase Date.
SECTION 14.05. SECURITIES NOT PURCHASED ON PURCHASE DATE. If any Security
surrendered for purchase shall not be so paid on the Purchase Date, the
principal of such Security shall, until paid, bear interest from the Purchase
Date at a rate borne by such Security.
SECTION 14.06. SECURITIES PURCHASED IN PART. Any Security which is to be
purchased only in part shall be surrendered at any office or agency of the
Company designated for that purpose pursuant to Section 10.02 (with, if the
Company or the Trustee so requires, due endorsement by, or written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unpurchased portion of the principal of
the Security so surrendered.
<PAGE>
107
SECTION 14.07. CERTAIN DEFINITIONS. For purposes of this Article: The term
"Beneficial Owner" shall be determined in accordance with Rules 13d-3 and 13d-5
promulgated by the Commission under the Exchange Act, or any successor provision
thereto, except that a Person shall be deemed to have "beneficial ownership" of
all shares that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time.
A "Change in Control" shall be deemed to have occurred at such time as (a)
any Person, or any Persons acting together in a manner which would constitute a
"group" (a "Group") for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto, together with any Affiliates thereof, (i) become
the Beneficial Owners, directly or indirectly, of capital stock of the Company,
entitling such Person or Persons and its or their Affiliates to exercise more
than 50% of the total voting power of all classes of the Company's capital stock
entitled to vote generally in the election of directors or (ii) shall succeed in
having sufficient of its or their nominees (who are not supported by a majority
of the then current Board of Directors of the Company) elected to the Board of
Directors of the Company such that such nominees, when added to any existing
directors remaining on the Board of Directors of the Company after such election
who are Affiliates of or acting in concert with any such Persons, shall
constitute a majority of the Board of Directors of the Company, (b) the Company
shall be a party to any transaction pursuant to which the Common Stock is
converted into the right to receive other securities (other than common stock),
cash and/or property (or the Company, by dividend, tender or exchange offer or
otherwise, distributes other securities, cash and/or property to holders of
Common Stock) and the value of all such securities, cash and/or property
distributed in such transaction and any other transaction effected within the 12
months preceding consummation of such transaction (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution) is more than 50% of the average of the daily Closing
Prices for the five consecutive Trading Days ending on the Trading Day
immediately preceding the date of such transaction (or, if earlier, the Trading
Day immediately preceding the ex date (as defined in paragraph (7) of Section
13.04) for such transaction) or (c) the Company shall consolidate with or merge
into any other Person or sell, convey, transfer or lease its properties and
assets substantially as an entirety to any Person other than a Subsidiary, or
any other Person shall consolidate with or merge into the Company (other than,
in the case of this clause (c), pursuant to any consolidation or merger where
Persons who are shareholders of the Company immediately prior thereto become the
Beneficial Owners of shares of capital stock of the surviving company entitling
such Persons to exercise more than 50% of the total voting power of all classes
of such surviving company's capital stock entitled to vote generally in the
election of directors).
<PAGE>
108
Notwithstanding the foregoing, a "Change in Control" will be deemed not to
have occurred (i) if the Closing Price of the Common Stock for any five Trading
Days during the ten Trading Days immediately preceding the Change in Control is
at least equal to 105% of the conversion price in effect immediately preceding
the Change in Control or (ii) if at least 90% of the consideration (excluding
cash payments for fractional shares or cash payments for appraisal rights)
received or to be received by the shareholders of the Company in the transaction
or transactions constituting the Change in Control consists of (x) shares of
common stock of an entity organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia the
common stock of which is, or upon issuance will be, traded on a national
securities exchange in the United States of America or through Nasdaq or (y)
shares of common stock of an entity organized and validly existing under the
laws of a jurisdiction outside of the United States of America, or American
Depositary Shares representing such shares of common stock, that are, or upon
issuance will be, traded on a national securities exchange in the United States
of America or through Nasdaq, if such entity has a worldwide total market
capitalization of its equity securities of at least U.S. $5 billion.
ARTICLE XV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 15.01. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE. The Company may at its option by Board Resolution, at any time,
elect to have either Section 15.02 or Section 15.03 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
XV.
SECTION 15.02. DEFEASANCE AND DISCHARGE. Upon the Company's exercise of the
option provided in Section 15.01 applicable to this Section, the Company shall
be deemed to have been discharged from its obligations with respect to the
Outstanding Securities (other than those specified below), the Holders and any
holders of Senior Indebtedness, and the provisions of Article XII hereof shall
cease to be effective, on the date the conditions set forth below 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 the Outstanding Securities, the Company shall be deemed to have
satisfied all their other obligations under such
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109
Securities and this Indenture insofar as such Securities 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
Securities to receive, solely from the trust fund described in Section 15.04 and
as more fully set forth in such Section, payments in respect of the principal
of, premium, if any and interest on such Securities when such payments are due,
(B) the Company's obligations with respect to such Securities under Sections
3.04, 3.05, 3.06, 10.02, 10.03, 10.11, Article XIII and Article XIV, (C) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and (D)
this Article XV. Subject to compliance with this Article XV, the Company may
exercise its option under this Section 15.02 notwithstanding the prior exercise
of its option under Section 15.03.
SECTION 15.03. COVENANT DEFEASANCE. Upon the Company's exercise of the
option provided in Section 15.01 applicable to this Section, (i) the Company
shall be released from its obligations under Section 10.06 and Section 10.07,
(ii) the occurrence of an event specified in Section 5.01(4) (with respect to
either of Section 10.06 or Section 10.07) or 5.01(5) shall not be deemed to be
an Event of Default and (iii) the provisions of Article XII hereof shall cease
to be effective on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant
defeasance means that the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or Article, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference in
any such Section or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 15.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of either Section 15.02 or
Section 15.03 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
6.09 who shall agree to comply with the provisions of this Article XV
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, (A) money in an amount, or
(B) U.S. Government Obligations 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, money in
an amount, or (C) a
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110
combination thereof, sufficient, in the written 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, the principal of, premium, if any, and each installment of interest
on the Securities on the Stated Maturity of such principal or installment of
interest in accordance with the terms of this Indenture and of such
Securities. For this purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with
respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; PROVIDED
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 15.02, 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 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 the
Outstanding Securities will not recognize gain or loss for Federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to Federal income tax on the same amount, in the same manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had not occurred.
(3) In the case of an election under Section 15.03, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders
of the
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111
Outstanding Securities will not recognize gain or loss for Federal
income tax purposes as a result of such deposit and covenant defeasance and
will be subject to Federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and covenant
defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) Such defeasance or covenant defeasance shall not cause the Trustee to
have a conflicting interest as defined in Section 6.08 and for purposes of the
Trust Indenture Act with respect to any securities of the Company.
(6) At the time of such deposit: (A) no default in the payment of all or a
portion of principal of (or premium, if any) or interest on or other
obligations in respect of any Senior Indebtedness shall have occurred and be
continuing, and no event of default with respect to any Senior Indebtedness
shall have occurred and be continuing and shall have resulted in such Senior
Indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable and (B) no other event
with respect to any Senior Indebtedness shall have occurred and be continuing
permitting (after notice or the lapse of time, or both) the holders of such
Senior Indebtedness (or a trustee on behalf of the holders thereof) to declare
such Senior Indebtedness due and payable prior to the date on which it would
otherwise have become due and payable, or, in the case of either clause (A) or
clause (B) above, each such default or event of default shall have been cured
or waived or shall have ceased to exist.
(7) No Event of Default or event which with notice or lapse of time or both
would become an Event of Default shall have occurred and be continuing on the
date of such deposit or, insofar as subsections 5.01(6) and (7) are concerned,
at any time during the period ending on the 121st day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until the expiration of such period).
(8) Such defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company is a party or by which it is bound.
(9) The Company shall have delivered to the Trustee an Officers'
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112
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 15.02
or the covenant defeasance under Section 15.03 and Section 15.04 (as the case
may be) have been complied with.
(10) Such defeasance or covenant defeasance shall not result in the trust
arising from such deposit constituting an investment company as defined in the
Investment Company Act of 1940, as amended, or such trust shall be qualified
under such act or exempt from regulation thereunder.
SECTION 15.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
paragraph of Section 10.03, all money and U.S. Government Obligations (including
the proceeds thereof) deposited with the Trustee (or other qualifying trustee
collectively, for purposes of this Section 15.05, the "Trustee") pursuant to
Section 15.04 in respect of the Securities shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium, if any, and interest. Money so held in
trust shall not be subject to the provisions of Article XII.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 15.04 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 the Outstanding Securities.
Anything in this Article XV to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 15.04 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.
SECTION 15.06. REINSTATEMENT. If the Trustee or the Paying Agent is
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113
unable to apply any money in accordance with Section 15.02 or 15.03 by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XV until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 15.02 or 15.03; PROVIDED, HOWEVER, that if the Company
makes any payment of principal of, premium, if any, or interest on any Security
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money held by the Trustee or the Paying Agent.
ARTICLE XVI
IMMUNITY
SECTION 16.01. PERSONAL IMMUNITY OF INCORPORATORS, SHAREHOLDERS, DIRECTORS
AND OFFICERS. No recourse for the payment of the principal of or interest on the
Securities, and no recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in any indenture supplemental hereto, or in the
Securities, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, or against any past, present or future shareholder,
officer or director, as such, of the Company or any successor corporation,
either directly or through the Company or any successor corporation, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities by the Holders thereof and as part of the consideration for the issue
of the Securities. Each and every Holder of the Securities, by receiving and
holding the same, agrees to the provisions of this Section 16.01 and waives and
releases any and all such recourse, claim and liability.
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114
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the day and year first above written.
AFFYMETRIX, INC.
by
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
THE BANK OF NEW YORK,
by
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) of Affymetrix, Inc. for the registration of
$225,000,000 of 4 3/4% Convertible Subordinated Notes Due 2007 (the "Notes") and
545,178 shares of its Common Stock issuable upon conversion of the Notes and to
the incorporation by reference therein of our report dated February 2, 2000 with
respect to the financial statements and schedule of Affymetrix, Inc. included in
its Annual Report (Form 10-K) for the year ended December 31, 1999, and our
report dated February 8, 2000, except for the third paragraph, Note 1 and Note
13 as to which the date is February 9, 2000, with respect to the supplemental
consolidated financial statements of Affymetrix, Inc. included in its Current
Report on Form 8-K dated April 7, 2000, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Palo Alto, California
May 11, 2000
<PAGE>
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
AFFYMETRIX, INC.
(Exact name of obligor as specified in its charter)
Delaware 77-0319159
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3350 Central Expressway
Santa Clara, California 95061
(Address of principal executive offices) (Zip code)
---------------------------
4 3/4% Convertible Subordinated Notes Due 2007
(Title of the indenture securities)
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1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
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Name Address
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<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y. 10006,
and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
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(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
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7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
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SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 8th day of May, 2000.
THE BANK OF NEW YORK
By: /s/ MARY BETH A. LEWICKI
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Name: MARY BETH A. LEWICKI
Title: VICE PRESIDENT
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Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1999, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
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<CAPTION>
Dollar Amounts
ASSETS In Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . $ 3,247,576
Interest-bearing balances .......................... 6,207,543
Securities:
Held-to-maturity securities ........................ 827,248
Available-for-sale securities ...................... 5,092,464
Federal funds sold and Securities purchased under
agreements to resell ............................... 5,306,926
Loans and lease financing receivables:
Loans and leases, net of unearned
income ........................................... 37,734,000
LESS: Allowance for loan and
lease losses ..................................... 575,224
LESS: Allocated transfer risk
reserve .......................................... 13,278
Loans and leases, net of unearned income,
allowance, and reserve ........................... 37,145,498
Trading Assets ........................................ 8,573,870
Premises and fixed assets (including capitalized
leases) ............................................ 723,214
Other real estate owned ............................... 10,962
Investments in unconsolidated subsidiaries and
associated companies ............................... 215,006
Customers' liability to this bank on acceptances
outstanding ........................................ 682,590
Intangible assets ..................................... 1,219,736
Other assets .......................................... 2,542,157
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Total assets .......................................... $ 71,794,790
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LIABILITIES
Deposits:
In domestic offices ................................ $ 27,551,017
Noninterest-bearing ................................ 11,354,172
Interest-bearing ................................... 16,196,845
In foreign offices, Edge and Agreement
subsidiaries, and IBFs ........................... 27,950,004
Noninterest-bearing ................................ 639,410
Interest-bearing ................................... 27,310,594
Federal funds purchased and Securities sold under
agreements to repurchase ........................... 1,349,708
Demand notes issued to the U.S.Treasury ............... 300,000
Trading liabilities ................................... 2,339,554
Other borrowed money:
With remaining maturity of one year or less ........ 638,106
With remaining maturity of more than one year
through three years .............................. 449
With remaining maturity of more than three years ... 31,080
Bank's liability on acceptances executed and
outstanding ........................................ 684,185
Subordinated notes and debentures ..................... 1,552,000
Other liabilities ..................................... 3,704,252
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Total liabilities ..................................... 66,100,355
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EQUITY CAPITAL
Common stock .......................................... 1,135,284
Surplus ............................................... 866,947
Undivided profits and capital reserves ................ 3,765,900
Net unrealized holding gains (losses) on
available-for-sale securities ...................... (44,599)
Cumulative foreign currency translation adjustments
(29,097)
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Total equity capital .................................. 5,694,435
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Total liabilities and equity capital .................. $ 71,794,790
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<PAGE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi
Alan R. Griffith Directors
Gerald L. Hassell
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